83R2767 AJZ-D
	By: Dukes	H.B. No. 486

	A BILL TO BE ENTITLED
	AN ACT
	relating to outsourcing a service performed by a health and human
	services agency to a private commercial contractor.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Chapter 2162, Government Code, is amended by
	adding Subchapter D to read as follows:
	SUBCHAPTER D.  OUTSOURCING MAJOR FUNCTIONS
	Sec. 2162.151.  DEFINITION. In this subchapter, "health and
	human services agency" has the meaning assigned by Section 531.001.
	Sec. 2162.152.  APPLICABILITY.  This subchapter applies in
	relation to a contract, contract amendment, or contract extension
	made or proposed to be made between a health and human services
	agency and a private commercial contractor only if:
	(1)  a service performed by the agency at the time the
	contract is awarded, amended, or extended will be outsourced under
	the contract, contract amendment, or contract extension; and
	(2)  the contract, contract amendment, or contract
	extension, as applicable:
	(A)  will lead to the loss of 100 or more state
	employee positions; or
	(B)  has a value of $10 million or more.
	Sec. 2162.153.  COST ANALYSIS AND CONTRACT CONSIDERATIONS
	FOR OUTSOURCING STATE SERVICES. (a) Before awarding, amending, or
	extending a contract to which this subchapter applies, a health and
	human services agency shall perform a cost analysis comparing the
	agency's costs of performing the service to be outsourced to the
	costs of outsourcing the service as provided by this section. The
	council, in making a determination under Section 2162.102(a), shall
	perform a cost analysis comparing a health and human services
	agency's costs of performing a service to the costs of outsourcing
	the service as provided by this section.
	(b)  In determining a health and human services agency's
	costs of performing the service, an analysis shall be prepared that
	includes:
	(1)  the health and human services agency's actual cost
	of providing the service currently, including:
	(A)  services provided by the comptroller,
	attorney general, and other support agencies; and
	(B)  other indirect expenses related to the health
	and human services agency's performance of the service;
	(2)  the assumptions and documentation supporting the
	actual cost determination under Subdivision (1); and
	(3)  recommendations for improving the health and human
	services agency's performance by developing the most efficient
	organizational model to provide the service, if applicable,
	including implementing recommendations of state oversight agencies
	such as the Legislative Budget Board, the state auditor, and the
	Sunset Advisory Commission.
	(c)  In comparing the cost of providing the service under
	this section, the health and human services agency or council
	shall:
	(1)  include the costs of a private contractor to
	perform the state service and the cost to the health and human
	services agency of monitoring the contractor's performance against
	the terms of the contract;
	(2)  include an assessment of whether the private
	contractor can provide a level of service comparable to that
	provided by the health and human services agency that most recently
	provided the service; and
	(3)  prepare and consider an estimate of the costs of
	returning the performance of the service from the private
	contractor to the health and human services agency in the event that
	it proves necessary to do so, including a reasonable proposed
	timetable for actions necessary to return the service to the health
	and human services agency.
	(d)  A health and human services agency performing a cost
	analysis under this section may consider a reorganized service
	delivery method to compete directly with the performance of a
	private contractor.
	(e)  A bid or contract must include an analysis of health
	care benefits, retirement, and workers' compensation insurance for
	a private contractor's employees that are reasonably comparable to
	the health care benefits, retirement, and workers' compensation
	insurance of the state.
	(f)  A cost analysis under this section must cover a period
	of at least one year and not more than five years.
	(g)  A health and human services agency shall send the
	analysis and supporting documentation required by Subsection (b) to
	the governor, the chairs of the appropriate legislative committees,
	the Legislative Budget Board, and the state auditor. The analysis
	and supporting documentation must be sent to the state auditor
	before extending a solicitation for bids for, amending, or
	extending a contract to which this subchapter applies.
	(h)  Based on a risk assessment, the state auditor may review
	and comment on the methodology used to determine the health and
	human services agency's cost required by Subsection (a). The state
	auditor shall provide the results of the review and comment to the
	affected health and human services agency, the governor, the chairs
	of the appropriate legislative committees, and the Legislative
	Budget Board.
	Sec. 2162.154.  AUDIT AUTHORITY. (a) Based on a risk
	assessment performed by the state auditor, a cost analysis under
	Section 2162.153 is subject to audit by the state auditor in
	accordance with Chapter 321.
	(b)  Based on a risk assessment performed by the state
	auditor, a contract to which this subchapter applies is subject to
	audit by the state auditor in accordance with Chapter 321. The
	private contractor shall pay the costs of an audit conducted under
	this subsection. In conducting the audit, the state auditor may:
	(1)  assess whether cost savings have been realized
	from the contract; and
	(2)  address compliance under the terms of the
	contract, including amounts paid under the contract.
	(c)  A contract to which this subchapter applies must include
	a provision that authorizes the state auditor to have access to any
	information the state auditor considers relevant in performing the
	state auditor's duties under this section.
	(d)  The state auditor shall file an audit report for audits
	performed under Subsections (a) and (b).
	(e)  Reports filed by the state auditor under Subsection (d)
	shall be provided to:
	(1)  the affected health and human services agency;
	(2)  the governor;
	(3)  the chairs of the appropriate legislative
	committees;
	(4)  the Legislative Budget Board;
	(5)  the council, if applicable;
	(6)  the attorney general; and
	(7)  the private contractor, if applicable.
	Sec. 2162.155.  REQUIRED NOTIFICATION. A health and human
	services agency that enters into a contract or agrees to a contract
	amendment or extension that is subject to this subchapter shall
	notify the state auditor of the existence of the contract not later
	than the date the contract, contract amendment, or contract
	extension takes effect.
	Sec. 2162.156.  RECOVERY OF FUNDS. If, in the performance of
	an audit under this subchapter, the state auditor identifies
	amounts overpaid, amounts paid for unperformed services, or
	unallowable costs, the attorney general and the affected health and
	human services agency shall cooperate in taking action to recover
	the amounts owed to the state.
	Sec. 2162.157.  CONTRACT TERMINATION. If the governing body
	of the health and human services agency, after reviewing an audit
	report by the state auditor under this subchapter, any response by
	the private contractor, and applicable agency performance
	evaluations of the private contractor, concludes that the private
	contractor did not perform satisfactorily under the contract, the
	governing body shall terminate the contract as soon as practicable.
	Sec. 2162.158.  ACTIONS FOLLOWING RETURN OF SERVICE. If a
	service obligation is returned to a health and human services
	agency after a contract is terminated under Section 2162.157, the
	health and human services agency shall:
	(1)  immediately complete a performance evaluation to
	design a program to improve the delivery of the service and
	implement the program designed; or
	(2)  rebid the contract.
	SECTION 2.  Section 2162.103(a), Government Code, is amended
	to read as follows:
	(a)  Except as otherwise provided by Section 2162.153, in
	[In] comparing the cost of providing a service, the council shall
	consider the:
	(1)  cost of supervising the work of a private
	contractor; and
	(2)  cost of a state agency's performance of the
	service, including:
	(A)  the costs of the comptroller, attorney
	general, and other support agencies; and
	(B)  other indirect costs related to the agency's
	performance of the service.
	SECTION 3.  The changes in law made by this Act apply only
	to:
	(1)  the activities of the State Council on Competitive
	Government, the Department of Aging and Disability Services, the
	Department of Assistive and Rehabilitative Services, the
	Department of Family and Protective Services, or the Department of
	State Health Services concerning a proposal to contract with a
	private contractor to provide services being performed by the
	Department of Aging and Disability Services, the Department of
	Assistive and Rehabilitative Services, the Department of Family and
	Protective Services, or the Department of State Health Services, on
	or after the effective date of this Act; and
	(2)  the evaluation of the services performed by a
	private contractor under a contract, contract amendment, or
	contract extension made on or after the effective date of this Act.
	SECTION 4.  This Act takes effect September 1, 2013.