85R24068 MTB/EES-F

By: Capriglione, Zerwas, Roberts, Walle H.B. No. 18

Substitute the following for H.B. No. 18:

By: Dean C.S.H.B. No. 18

A BILL TO BE ENTITLED

AN ACT

relating to oversight of and requirements applicable to state contracts and other state financial and accounting issues, including the delivery of certain Medicaid medical transportation program services; providing a civil penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. GENERAL STATE CONTRACTING AND OTHER FINANCIAL ISSUES

SECTION 1.01. Section 321.013, Government Code, is amended by adding Subsection (m) to read as follows:

(m) In devising the audit plan under Subsection (c), the State Auditor shall consider the performance of audits of programs operated by health and human services agencies that:

(1) have not recently received audit coverage; and

(2) have expenditures of less than $100 million per year.

SECTION 1.02. Chapter 322, Government Code, is amended by adding Section 322.025 to read as follows:

Sec. 322.025. REPORT ON CONTRACT SPENDING. (a) In this section, "state agency" has the meaning assigned by Section 2056.001.

(b) Not later than September 15 of each year, the board shall issue a report detailing how much of each state agency's budget for the previous state fiscal year was spent on contracts.

SECTION 1.03. Section 441.1855, Government Code, is amended to read as follows:

Sec. 441.1855. RETENTION OF CONTRACT AND RELATED DOCUMENTS BY STATE AGENCIES. Notwithstanding Section 441.185 or 441.187, a state agency:

(1) for each contract entered into by the agency, shall retain in its records, to the extent the documents exist, [each contract entered into by the state agency and] all contract planning, solicitation, evaluation, monitoring, modification, and closeout documents related to the contract, including at a minimum:

(A) a copy of all general and internal correspondence related to the contract;

(B) the records or minutes of all internal or external meetings related to the contract, including sign-in sheets or agendas;

(C) a copy of all contractor invoices provided under the contract;

(D) any information relating to discount provisions for prompt payment under the contract and any letters related to contract price deductions or fee adjustments;

(E) a copy of all supporting documentation for contractor payments or progress payments under the contract;

(F) a copy of any audits performed involving the contract; and

(G) a copy of all conflict of interest documentation and forms required by law related to the contract; and

(2) shall retain [may destroy] the contract and documents described by Subdivision (1) until:

(A) [only after the seventh anniversary of] the date[:

[(A)] the contract is completed or expires; and [or]

(B) if [all] issues [that] arise from any litigation, claim, negotiation, audit, open records request, administrative review, or other action involving the contract or documents, the seventh anniversary of the date the issues are resolved.

SECTION 1.04. Section 531.102, Government Code, is amended by adding Subsection (a-7) to read as follows:

(a-7) The inspector general shall appoint oversight personnel to audit, review, and investigate high-risk contracts and procurement and contracting processes of the commission, as identified by the office of inspector general, and provide on a quarterly basis reports on the monitoring to the inspector general, attorney general, and governor. The quarterly reports must be posted on the commission's publicly accessible Internet website. The oversight personnel may work with the state auditor's office, governor's office, Legislative Budget Board, attorney general's office, quality assurance team established under Section 2054.158, and contract advisory team established under Subchapter C, Chapter 2262, in performing the oversight personnel's duties under this subsection.

SECTION 1.05. Section 2102.0091(c), Government Code, is amended to read as follows:

(c) In addition to the requirements of Subsection (a), a state agency shall file with the Governor's Office of Budget, Planning, and Policy, the state auditor, and the Legislative Budget Board an [any] action plan or other response issued by the state agency's governing board or the administrator of the state agency if the state agency does not have a governing board in response to every issue identified in the report of the state agency's internal auditor.

SECTION 1.06. Chapter 2115, Government Code, is amended by adding Section 2115.006 to read as follows:

Sec. 2115.006. OVERPAYMENTS BY STATE AGENCY. (a) If a state agency makes an overpayment to a vendor, the vendor must return the amount overpaid by the agency before the 91st calendar day after the date either party discovers the overpayment. If the amount overpaid by the state agency is not returned before the 91st calendar day, the vendor is subject to a civil penalty in an amount equal to three times the amount of the overpayment and the agency shall refer the matter to the attorney general for action.

(b) The attorney general may institute an action in district court to recover a civil penalty under this section. A civil penalty recovered in an action brought by the attorney general shall be deposited in the state treasury.

SECTION 1.07. Section 2155.074(c), Government Code, is amended to read as follows:

(c) A state agency shall consult with and receive approval from the comptroller in an open meeting [commission] before considering factors other than price and meeting specifications when the agency procures through competitive bidding goods or services with a value that exceeds $100 million [$100,000]. The state agency shall retain in the agency's records a copy of the meeting minutes with the final executed contract.

SECTION 1.08. Section 2155.077(a-2), Government Code, is amended to read as follows:

(a-2) The comptroller shall [may] bar a vendor from participating in state contracts that are subject to this subtitle, including contracts for which purchasing authority is delegated to a state agency, if more than two contracts between the vendor and the state have been terminated by the state for cause based on unsatisfactory vendor performance during the preceding three years.

SECTION 1.09. Subchapter B, Chapter 2155, Government Code, is amended by adding Section 2155.090 to read as follows:

Sec. 2155.090. REPORT ON PERFORMANCE BY AGENCY FOR CERTAIN PROCUREMENTS. (a) This section applies only to a procurement for services with a value of at least $1 million but not more than $5 million.

(b) Before a purchase of services under this chapter, each state agency, including the comptroller, must:

(1) create a written report evaluating the feasibility of the agency performing the service that is the subject of the proposed purchase; and

(2) if the agency determines from the evaluation that it is not feasible for the agency to perform the service, provide an explanation of why the agency reached that determination.

(c) A report created under this section must be included in the procurement analysis for the purchase.

SECTION 1.10. Subchapter B, Chapter 2251, Government Code, is amended by adding Section 2251.031 to read as follows:

Sec. 2251.031. PAYMENT TO VENDOR. (a) A state agency may not:

(1) pay an invoice from a vendor unless the invoice directly correlates to a corresponding contract with the vendor; or

(2) make a payment to a vendor more than once per month.

(b) A payment by a state agency to a vendor under a contract must receive:

(1) the approval and signature of two employees of the state agency; or

(2) if a contract manager, as defined by Section 2262.001, has been assigned to the contract by the state agency, the approval and signature of the contract manager and one other employee of the state agency.

(c) If a finding is made that a payment was made without the signatures required under Subsection (b), the state agency may revoke the payment at any time.

SECTION 1.11. Subchapter C, Chapter 2261, Government Code, is amended by adding Section 2261.103 to read as follows:

Sec. 2261.103. REQUIRED CONTRACT PROVISIONS. (a) An attorney representing a state agency shall assist in the drafting of a contract to be entered into by the agency in order to include at a minimum the provisions listed in Subsection (b) and other applicable provisions recommended in the contract management guide developed under Section 2262.051.

(b) The following are required provisions in each contract to which the provisions are applicable:

(1) amendments;

(2) antitrust;

(3) applicable law and venue;

(4) applicable law and conforming amendments;

(5) assignments;

(6) confidentiality and public information act;

(7) equal opportunity;

(8) federal, state, and local law requirements;

(9) felony criminal convictions;

(10) financial interests and gifts;

(11) immigration;

(12) no conflicts; and

(13) right to audit.

SECTION 1.12. Subchapter D, Chapter 2261, Government Code, is amended by adding Section 2261.152 to read as follows:

Sec. 2261.152. DOCUMENTATION REQUIRED FOR PAYMENT. (a) A state agency may not make a payment to a vendor without a contract, invoice, or other documentation that clearly demonstrates the agency's obligation to make a payment.

(b) This section does not apply to the return of any amount overpaid by a state agency to a vendor because of an incorrect contract, invoice, or other documentation.

SECTION 1.13. Subchapter F, Chapter 2261, Government Code, is amended by adding Section 2261.258 to read as follows:

Sec. 2261.258. REPORTING OF CONTRACT VIOLATION. (a) A state employee or member of the public may report to the comptroller a state contracting violation. The comptroller shall investigate a report made under this subsection.

(b) A state agency may not suspend or terminate the employment of, or take other adverse personnel action against, a state employee who in good faith reports a violation to the comptroller under this section.

(c) If, as a result of an investigation under this section of a state contracting violation that occurred before March 8, 2017, savings to the state are realized, the comptroller shall verify the amount of savings and an amount equal to 30 percent of the savings may be appropriated to the comptroller only for distribution to the state employee or member of the public who reported the violation that initiated the investigation.

SECTION 1.14. Section 2262.005, Government Code, is amended to read as follows:

Sec. 2262.005. CONSULTATION WITH INTERESTED PARTIES [STATE AGENCIES]. The comptroller shall consult with state agencies, vendors, and other interested parties in developing rules, forms, contract terms, guides, manuals, and criteria required under this chapter.

SECTION 1.15. Section 2262.051, Government Code, is amended by amending Subsections (a), (b), (c), (d), and (g) and adding Subsections (i) and (j) to read as follows:

(a) In consultation with the attorney general, the Department of Information Resources, the [comptroller, and the] state auditor, and state agencies that award major contracts, the comptroller [commission] shall develop and [or] periodically update a contract management guide for use by state agencies. Participation by the state auditor under this subsection is subject to approval by the legislative audit committee for inclusion in the audit plan under Section 321.013(c).

(b) The comptroller [commission] may adopt rules necessary to develop or update the guide.

(c) The guide must provide information regarding the primary duties of a contract manager, including how to:

(1) develop and negotiate a contract;

(2) select a contractor; [and]

(3) monitor contractor and subcontractor performance under a contract; and

(4) encourage competition for goods and services purchased by this state.

(d) The guide must include model provisions for state agency contracts. The guide must:

(1) distinguish between essential provisions that a state agency must include in a contract to protect the interests of this state and recommended provisions that a state agency may include in a contract;

(2) recognize the unique contracting needs of an individual state agency or program based on the size, nature, and type of goods or services purchased by the state agency or program and provide sufficient flexibility to accommodate those needs, consistent with protecting the interests of this state;

(3) include maximum contract periods under which a new competitive solicitation is not necessary; and

(4) include the model contract management process developed under Section 2262.104 and recommendations on the appropriate use of the model.

(g) The guide must establish procedures under which a state agency is required to:

(1) solicit explanations from qualified potential respondents who did not respond to a competitive solicitation for a contract on which fewer than two qualified bids were received by the agency; and

(2) develop and implement improved procurement practices.

(i) The guide must suggest best practices related to procurement metrics used by a state agency to measure and monitor the effectiveness of the state agency's procurement methods, including the:

(1) number and value of procurements made by the state agency;

(2) number of canceled procurements by the state agency;

(3) reasons for canceled procurements;

(4) common exceptions to the state agency's terms and conditions by a respondent;

(5) number of responses per competitive solicitation; and

(6) average length of time for each phase of the state agency's procurement processes, including the length of time:

(A) between the date the state agency issues the competitive solicitation and the date the state agency begins receiving responses to the solicitation;

(B) for the evaluation of responses to a competitive solicitation;

(C) of the negotiation between the state agency and a vendor; and

(D) between the date the state agency issues the competitive solicitation and the date the state agency awards a contract to a vendor.

(j) The guide may include references to procurement maturity models and procurement readiness assessments used by other large public and private enterprises.

SECTION 1.16. Subchapter B, Chapter 2262, Government Code, is amended by adding Section 2262.056 to read as follows:

Sec. 2262.056. CONTRACT MANAGERS REQUIRED FOR MAJOR CONTRACTS. A state agency, at a minimum, shall assign a contract manager for each major contract of the agency to manage the oversight of the contract.

SECTION 1.17. Chapter 2262, Government Code, is amended by adding Subchapter E to read as follows:

SUBCHAPTER E. CONTRACT OUTSIDE TACTICAL TEAM

Sec. 2262.201. DEFINITIONS. In this subchapter:

(1) "Information resources" has the meaning assigned by Section 2054.003.

(2) "Team" means a contract outside tactical team established under authority provided by this subchapter.

Sec. 2262.202. CONTRACT OUTSIDE TACTICAL TEAM. (a) From appropriated funds, a state agency shall enter into a contract with a team for assistance in improving information resources contract management practices for contracts that have a value of at least $100 million. The team shall review and make recommendations on the solicitation documents, contract documents, scope of work, project timeline and management, documentation requirements, audit schedule and audit scope, and technical issues for the contract.

(b) A team consists of the following members selected by the state agency:

(1) outside legal counsel; or

(2) providers of professional consulting services with expertise in the subject matter of the contract.

(c) A state agency may not select a provider of professional consulting services or a group or association of providers or award a contract for the services on the basis of competitive bids submitted for the contract or for the services, but shall make the selection and award:

(1) on the basis of demonstrated competence and qualifications to perform the services; and

(2) for a fair and reasonable price.

(d) A state agency shall:

(1) comply with a recommendation made under Subsection (a); or

(2) submit a written explanation regarding why the recommendation is not applicable to the contract under review.

ARTICLE 2. DELIVERY OF MEDICAID MEDICAL TRANSPORTATION PROGRAM

SERVICES

SECTION 2.01. Section 531.0057(b), Government Code, is amended to read as follows:

(b) Subject to Section 531.024141, the [The] commission may contract with any public or private transportation provider or with any regional transportation broker for the provision of public transportation services.

SECTION 2.02. Section 531.02412, Government Code, is amended by adding Subsection (b) to read as follows:

(b) As part of the quality review assessment of the Medicaid medical transportation program under Subsection (a)(3), the commission shall hire a single independent vendor with appropriate expertise to conduct surveys of:

(1) the satisfaction rates of Medicaid recipients who are receiving medical transportation program services; and

(2) the unmet transportation needs of Medicaid recipients who are not receiving medical transportation program services and who are having difficulty obtaining transportation to health care appointments.

SECTION 2.03. Section 531.02414(d), Government Code, is amended to read as follows:

(d) Subject to Sections 531.024141 and [Section] 533.00257, the commission may contract with a public transportation provider, as defined by Section 461.002, Transportation Code, a private transportation provider, or a regional transportation broker for the provision of public transportation services, as defined by Section 461.002, Transportation Code, under the medical transportation program.

SECTION 2.04. Subchapter B, Chapter 531, Government Code, is amended by adding Section 531.024141 to read as follows:

Sec. 531.024141. DELIVERY OF MEDICAID MEDICAL TRANSPORTATION PROGRAM SERVICES. (a) In this section:

(1) "Managed transportation organization" has the meaning assigned by Section 533.00257.

(2) "Medical transportation program" has the meaning assigned by Section 531.02414.

(b) Notwithstanding any other law, the commission shall use the most cost-effective delivery model for the provision of medical transportation program services throughout the state. In determining the most cost-effective delivery model, the commission shall, on a regional basis, consider using:

(1) a managed transportation delivery model in which managed transportation organizations and providers operate under a capitated rate system in accordance with Section 533.00257;

(2) a fee-for-service delivery model; or

(3) other delivery models deemed appropriate by the commission.

(c) Before soliciting bids for the provision of medical transportation program services in a region through a managed transportation delivery model or another selected delivery model deemed appropriate by the commission under Subsection (b)(3), the commission must conduct an assessment to determine if the applicable model is more cost-effective than a fee-for-service delivery model. If the commission determines that the managed transportation delivery model or other selected delivery model is potentially more cost-effective than a fee-for-service delivery model, the commission shall establish a cost threshold for accepting bids for the provision of medical transportation program services in the region through a managed transportation delivery model or the other selected delivery model.

(d) A cost threshold established under Subsection (c) must be:

(1) expressed as a cost per unit, such as a cost per recipient or a cost per trip; and

(2) based on historical data for the provision of medical transportation program services through a fee-for-service delivery model in the region.

(e) If the commission receives bids at or below the cost threshold established under Subsection (c) from qualified managed transportation organizations or qualified vendors seeking to provide services under the other selected delivery model, the commission shall provide medical transportation program services in the region through a managed transportation delivery model or the other selected delivery model, as applicable, and shall award contracts to managed transportation organizations or vendors based on the price and quality of the services to be provided by the organization or vendor.

(f) If the commission is unable to solicit bids from qualified managed transportation organizations or vendors at or below the cost threshold established under Subsection (c), the commission shall provide medical transportation program services through a fee-for-service delivery model in the region.

(g) For purposes of this section, a delivery model's cost-effectiveness is based on the price and quality of the services delivered through the model, in addition to any other requirements established by applicable state and federal procurement laws.

SECTION 2.05. Sections 533.00257(b) and (c), Government Code, are amended to read as follows:

(b) If [Subject to Subsection (i),] the commission provides [shall provide] medical transportation program services [on a regional basis] through a managed transportation delivery model in accordance with Section 531.024141, the commission shall use [using] managed transportation organizations and providers, as appropriate, that:

(1) operate under a capitated rate system;

(2) assume financial responsibility under a full-risk model;

(3) operate a call center;

(4) use fixed routes when available and appropriate; and

(5) agree to provide data to the commission if the commission determines that the data is required to receive federal matching funds.

(c) Subject to Section 531.024141, the [The] commission shall procure managed transportation organizations [under the medical transportation program] through a competitive bidding process [for each managed transportation region as determined by the commission].

SECTION 2.06. Sections 533.00257(i) and (j), Government Code, are repealed.

SECTION 2.07. Section 531.024141, Government Code, as added by this article, applies to a contract entered into or renewed on or after the effective date of this Act. A contract entered into or renewed before that date is governed by the law in effect immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 2.08. If before implementing any provision of this article a state agency determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, the agency affected by the provision shall request the waiver or authorization and may delay implementing that provision until the waiver or authorization is granted.

ARTICLE 3. TRANSITION AND EFFECTIVE DATE

SECTION 3.01. Except as otherwise provided by this Act, this Act applies only in relation to a contract for which a state agency first advertises or otherwise solicits bids, proposals, offers, or qualifications on or after the effective date of this Act, and to a payment made under a contract described by this section.

SECTION 3.02. This Act takes effect September 1, 2017.