Bill Text: TX SB20 | 2015-2016 | 84th Legislature | Engrossed


Bill Title: Relating to state agency contracting; creating an offense.

Spectrum: Bipartisan Bill

Status: (Engrossed) 2015-04-15 - Referred to State Affairs [SB20 Detail]

Download: Texas-2015-SB20-Engrossed.html
 
 
  By: Nelson, et al. S.B. No. 20
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to state agency contracting; creating an offense.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 321.013, Government Code, is amended by
  adding Subsections (k) and (l) to read as follows:
         (k)  In devising the audit plan under Subsection (c), the
  State Auditor shall consider the performance of audits on contracts
  entered into by the Health and Human Services Commission that
  exceed $100 million in annual value, including a contract between
  the commission and a managed care organization. The State Auditor
  shall collaborate with the financial managers in the Medicaid/CHIP
  Division of the commission in performing an audit described by this
  subsection.  An audit described by this subsection:
               (1)  may be limited in scope to target an area of the
  contract that the State Auditor determines poses the highest
  financial risk to this state; and
               (2)  must determine whether the entity contracting with
  the commission has spent state money in accordance with the
  purposes authorized in the contract.
         (l)  The State Auditor may contract with a private auditor to
  audit a contract under Subsection (k).
         SECTION 2.  Subchapter B, Chapter 403, Government Code, is
  amended by adding Section 403.03057 to read as follows:
         Sec. 403.03057.  CENTRALIZED STATE PURCHASING STUDY.
  (a)  The comptroller, in cooperation with the governor's budget and
  policy staff, shall conduct a study examining the feasibility and
  practicality of consolidating state purchasing functions into
  fewer state agencies or one state agency. The study must examine
  the cost savings to this state that may be achieved through:
               (1)  abolishing offices or departments of state
  agencies that have a dedicated office or department for purchasing;
  and
               (2)  consolidating or reducing the number of vendors
  authorized to contract with this state to allow this state to better
  leverage its purchasing power.
         (b)  The comptroller shall prepare and deliver to the
  governor, the lieutenant governor, and each member of the
  legislature a report on the findings of the study conducted under
  Subsection (a), including:
               (1)  a detailed projection of expected savings or costs
  to this state in consolidating state purchasing;
               (2)  a report on the process for the legislature or the
  executive branch to implement the consolidation of state
  purchasing;
               (3)  a list of state agencies, including dedicated
  offices or departments in those agencies, with purchasing
  responsibilities; and
               (4)  the total cost to this state of the purchasing
  responsibilities for each state agency, including the dedicated
  office or department in the agency with purchasing responsibility.
         (c)  The comptroller shall prepare, deliver, and post on the
  comptroller's Internet website the report required by this section
  not later than December 31, 2016.
         (d)  This section expires January 1, 2018.
         SECTION 3.  Subchapter L, Chapter 441, Government Code, is
  amended by adding Section 441.1855 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)  shall retain in its records each contract entered
  into by the state agency and all contract solicitation documents
  related to the contract; and
               (2)  may destroy the contract and documents only after
  the fourth anniversary of the date the contract is completed or
  expires.
         SECTION 4.  Subchapter C, Chapter 572, Government Code, is
  amended by adding Section 572.069 to read as follows:
         Sec. 572.069.  CERTAIN EMPLOYMENT FOR FORMER STATE OFFICER
  OR EMPLOYEE RESTRICTED; CRIMINAL PENALTY. (a)  A former state
  officer or employee of a state agency who during the period of state
  service or employment participated on behalf of a state agency in a
  procurement or contract negotiation involving a person may not
  accept employment from that person before the second anniversary of
  the date the officer's or employee's service or employment with the
  state agency ceased.
         (b)  An individual commits an offense if the individual
  violates this section. An offense under this subsection is a Class
  A misdemeanor.
         SECTION 5.  Section 2101.001(1), Government Code, is amended
  to read as follows:
               (1)  "Enterprise resource planning" includes the
  administration of a state agency's:
                     (A)  general ledger;
                     (B)  accounts payable;
                     (C)  accounts receivable;
                     (D)  budgeting;
                     (E)  inventory;
                     (F)  asset management;
                     (G)  billing;
                     (H)  payroll;
                     (I)  projects;
                     (J)  grants;
                     (K)  human resources, including administration of
  performance measures, time spent on tasks, and other personnel and
  labor issues; and
                     (L)  purchasing, including solicitations and
  contracting.
         SECTION 6.  Section 2101.035, Government Code, is amended by
  adding Subsection (i) to read as follows:
         (i)  State agencies shall report contract and purchasing
  information in the uniform manner required by the comptroller.
         SECTION 7.  Section 2101.036, Government Code, is amended by
  adding Subsection (e) to read as follows:
         (e)  Notwithstanding Subsection (d), a state agency in the
  legislative branch may elect to participate in the enterprise
  resource planning system developed under this section.
         SECTION 8.  Section 2155.078, Government Code, is amended by
  amending Subsections (a) and (b) and adding Subsection (a-1) to
  read as follows:
         (a)  The commission shall establish and administer a system
  of training, continuing education, and certification for state
  agency purchasing personnel. The training and continuing education
  for state agency purchasing personnel must include ethics training.
  The commission may establish and offer appropriate training to
  vendors on a cost recovery basis. The commission may adopt rules to
  administer this section, including rules relating to monitoring a
  certified purchaser's compliance with the continuing education
  requirements of this section.
         (a-1)  The training, continuing education, and certification
  required under Subsection (a) must include:
               (1)  training on the selection of an appropriate
  procurement method by project type; and
               (2)  training conducted by the Department of
  Information Resources on purchasing technologies.
         (b)  Notwithstanding [Except as provided by] Subsection (n),
  all state agency purchasing personnel, including agencies exempted
  from the purchasing authority of the commission, must receive the
  training and continuing education to the extent required by rule of
  the commission. The training and continuing education must include
  ethics training. A state agency employee who is required to receive
  the training may not participate in purchases by the employing
  agency unless the employee has received the required training or
  received equivalent training from a national association
  recognized by the commission. The equivalent training may count,
  as provided by Subsection (k), toward the continuing education
  requirements.
         SECTION 9.  Subchapter B, Chapter 2155, Government Code, is
  amended by adding Sections 2155.089 and 2155.090 to read as
  follows:
         Sec. 2155.089.  REPORTING VENDOR PERFORMANCE. (a)  After a
  contract is completed or otherwise terminated, each state agency
  shall review the vendor's performance under the contract.
         (b)  The state agency shall report to the comptroller, using
  the tracking system described by Section 2155.090, on the results
  of the review regarding a vendor's performance under a contract.
         (c)  This section does not apply to an enrollment contract
  described by 1 T.A.C. Section 391.183 as that section existed on
  September 1, 2015.
         Sec. 2155.090.  VENDOR PERFORMANCE TRACKING SYSTEM.
  (a)  The comptroller shall evaluate a vendor's performance based on
  the information reported under Section 2155.089 and criteria
  established by the comptroller.
         (b)  The comptroller shall establish an evaluation process
  that allows vendors who receive an unfavorable performance review
  to protest any classification given by the comptroller.
         (c)  The comptroller shall include the performance reviews
  in a vendor performance tracking system.
         (d)  A state agency may use the vendor performance tracking
  system to determine whether to award a contract to a vendor reviewed
  in the database.
         (e)  The comptroller shall make the vendor performance
  tracking system accessible to the public on the comptroller's
  Internet website.
         SECTION 10.  Subchapter I, Chapter 2155, Government Code, is
  amended by adding Section 2155.5035 to read as follows:
         Sec. 2155.5035.  USE OF SCHEDULE BY STATE AGENCY.  (a)  A
  state agency purchasing goods or services under a contract listed
  on the schedule:
               (1)  for a purchase with a value of $50,000 or less, may
  directly award a contract to a vendor included on the schedule
  without submission of a request for pricing to other vendors on the
  list;
               (2)  for a purchase with a value of more than $50,000
  but not more than $150,000, shall submit a request for pricing to at
  least three vendors included on the schedule in the category to
  which the purchase relates;
               (3)  for a purchase with a value of more than $150,000
  but not more than $1 million, shall submit a request for pricing to
  at least six vendors included on the schedule in the category to
  which the purchase relates or all vendors on the schedule if the
  category has fewer than six vendors; and
               (4)  may not purchase under the contract goods or
  services that have a total value exceeding $1 million.
         (b)  The price listed for a good or service under a multiple
  award contract is a maximum price.  A state agency may negotiate a
  lower price for goods or services under a contract listed on a
  schedule developed under this chapter.
         SECTION 11.  Section 2155.504, Government Code, is amended
  to read as follows:
         Sec. 2155.504.  USE OF SCHEDULE BY GOVERNMENTAL ENTITIES.
  (a)  A [state agency or] local government may purchase goods or
  services directly from a vendor under a contract listed on a
  schedule developed under this subchapter. A purchase authorized by
  this section satisfies any requirement of state law relating to
  competitive bids or proposals and satisfies any applicable
  requirements of Chapter 2157.
         (b)  The price listed for a good or service under a multiple
  award contract is a maximum price. A [An agency or] local
  government may negotiate a lower price for goods or services under a
  contract listed on a schedule developed under this subchapter.
         SECTION 12.  Section 2157.068, Government Code, is amended
  by adding Subsections (e-1) and (e-2) to read as follows:
         (e-1)  A state agency contracting to purchase a commodity
  item shall use the list maintained as required by Subsection (e) as
  follows:
               (1)  for a contract with a value of $50,000 or less, the
  agency may directly award the contract to a vendor included on the
  list without submission of a request for pricing to other vendors on
  the list;
               (2)  for a contract with a value of more than $50,000
  but not more than $150,000, the agency must submit a request for
  pricing to at least three vendors included on the list in the
  category to which the contract relates; and
               (3)  for a contract with a value of more than $150,000
  but not more than $1 million, the agency must submit a request for
  pricing to at least six vendors included on the list in the category
  to which the contract relates or all vendors on the schedule if the
  category has fewer than six vendors.
         (e-2)  A state agency may not enter into a contract to
  purchase a commodity item if the value of the contract exceeds $1
  million.
         SECTION 13.  Subchapter B, Chapter 2157, Government Code, is
  amended by adding Section 2157.0685 to read as follows:
         Sec. 2157.0685.  CONTRACT REQUIREMENTS FOR CERTAIN
  SERVICES.  (a)  In this section, "statement of work" means a
  document that states the requirements for a contract, including
  deliverables, performance specifications, and other requirements,
  specific to the vendor under that contract that are not specified in
  a contract awarded by the department under Section 2157.068 for
  contracts more than $50,000.
         (b)  For a contract awarded by the department under Section
  2157.068 that requires a state agency to develop and execute a
  statement of work to initiate services under the contract, the
  state agency must:
               (1)  consult with the department before submission of
  the statement of work to a vendor; and
               (2)  post each statement of work entered into by the
  agency on the agency's Internet website in the manner required by
  department rule.
         (c)  A statement of work executed by a state agency under a
  contract awarded by the department under Section 2157.068 is not
  valid and money may not be paid to the vendor under the terms of the
  statement of work unless the department first signs the statement
  of work.
         SECTION 14.  Subchapter Z, Chapter 2252, Government Code, is
  amended by adding Section 2252.9011 to read as follows:
         Sec. 2252.9011.  EMPLOYMENT OF OR CONTRACTS WITH FORMER OR
  RETIRED PRIVATE VENDOR EMPLOYEES. A state agency may not hire, or
  enter into an employment contract, a professional services contract
  under Chapter 2254, or a consulting services contract under Chapter
  2254 with, an individual who is a former or retired employee of a
  private vendor under which the individual will perform services for
  the agency related to the individual's former duties for the vendor
  for which the vendor contracted with the agency before the second
  anniversary of the last date on which the individual was employed by
  the private vendor.
         SECTION 15.  Section 2261.001(a), Government Code, is
  amended to read as follows:
         (a)  This chapter, other than Subchapter F, applies only to
  each procurement of goods or services made by a state agency that is
  neither made by the comptroller nor made under purchasing authority
  delegated to the agency by or under Section 51.9335 or 73.115,
  Education Code, or Section 2155.131 or 2155.132.
         SECTION 16.  Chapter 2261, Government Code, is amended by
  adding Subchapter F to read as follows:
  SUBCHAPTER F.  ETHICS, REPORTING, AND APPROVAL REQUIREMENTS FOR
  CERTAIN CONTRACTS
         Sec. 2261.251.  APPLICABILITY OF SUBCHAPTER.
  Notwithstanding Section 2261.001, this subchapter applies to the
  Texas Department of Transportation and to an institution of higher
  education acquiring goods or services under Section 51.9335 or
  73.115, Education Code.
         Sec. 2261.252.  DISCLOSURE OF POTENTIAL CONFLICTS OF
  INTEREST; CERTAIN CONTRACTS PROHIBITED. (a)  Each state agency
  employee or official who is involved in procurement or in contract
  management for a state agency shall disclose to the agency any
  potential conflict of interest specified by state law or agency
  policy that is known by the employee or official with respect to any
  contract with a private vendor or bid for the purchase of goods or
  services from a private vendor by the agency.
         (b)  A state agency may not enter into a contract for the
  purchase of goods or services with a private vendor with whom any of
  the following agency employees or officials have a financial
  interest:
               (1)  a member of the agency's governing body;
               (2)  the governing official, executive director,
  general counsel, chief procurement officer, or procurement
  director of the agency; or
               (3)  a family member related to an employee or official
  described by Subdivision (1) or (2) within the second degree by
  affinity or consanguinity.
         (c)  A state agency employee or official has a financial
  interest in a person if the employee or official:
               (1)  owns or controls, directly or indirectly, an
  ownership interest of at least one percent in the person, including
  the right to share in profits, proceeds, or capital gains; or
               (2)  could reasonably foresee that a contract with the
  person could result in a financial benefit to the employee or
  official.
         (d)  A financial interest prohibited by this section does not
  include a retirement plan, a blind trust, insurance coverage, or an
  ownership interest of less than one percent in a corporation.
         Sec. 2261.253.  REQUIRED POSTING OF CERTAIN CONTRACTS;
  ENHANCED CONTRACT AND PERFORMANCE MONITORING. (a)  For each
  contract for the purchase of goods or services from a private
  vendor, each state agency shall post on its Internet website:
               (1)  each contract the agency enters into, including
  contracts entered into without inviting, advertising for, or
  otherwise requiring competitive bidding before selection of the
  contractor, until the contract expires or is completed;
               (2)  the statutory or other authority under which a
  contract that is not competitively bid under Subdivision (1) is
  entered into without compliance with competitive bidding
  procedures; and
               (3)  the request for proposals related to a
  competitively bid contract included under Subdivision (1) until the
  contract expires or is completed.
         (b)  A state agency monthly may post contracts described by
  Subsection (a) that are valued at less than $15,000.
         (c)  Each state agency by rule shall establish a procedure to
  identify each contract that requires enhanced contract or
  performance monitoring and submit information on the contract to
  the agency's governing body or, if the agency is not governed by a
  multimember governing body, the officer who governs the agency.
  The agency's contract management office or procurement director
  shall immediately notify the agency's governing body or governing
  official, as appropriate, of any serious issue or risk that is
  identified with respect to a contract monitored under this
  subsection.
         (d)  This section does not apply to a memoranda of
  understanding, interagency contract, interlocal agreement, or
  contract for which there is not a cost.
         Sec. 2261.254.  CONTRACTS WITH VALUE EXCEEDING $1 MILLION.
  (a)  For each contract for the purchase of goods or services that
  has a value exceeding $1 million, a state agency shall develop and
  implement contract reporting requirements that provide information
  on:
               (1)  compliance with financial provisions and delivery
  schedules under the contract;
               (2)  corrective action plans required under the
  contract and the status of any active corrective action plan; and
               (3)  any liquidated damages assessed or collected under
  the contract.
         (b)  Each state agency shall verify:
               (1)  the accuracy of any information reported under
  Subsection (a) that is based on information provided by a
  contractor; and
               (2)  the delivery time of goods or services scheduled
  for delivery under the contract.
         (c)  Except as provided by Subsection (d), a state agency may
  enter into a contract for the purchase of goods or services that has
  a value exceeding $1 million only if:
               (1)  the governing body of the state agency approves
  the contract and the approved contract is signed by the presiding
  officer of the governing body; or
               (2)  for a state agency that is not governed by a
  multimember governing body, the officer who governs the agency
  approves and signs the contract.
         (d)  The governing body or governing official of a state
  agency, as appropriate, may delegate to the executive director of
  the agency the approval and signature authority under Subsection
  (c).
         (e)  A highway construction or maintenance contract that is
  awarded by the Texas Department of Transportation under Subchapter
  A, Chapter 223, Transportation Code, is not required to be signed by
  a member of the Texas Transportation Commission or the executive
  director of the department.  This exception does not apply to
  expedited highway improvement contracts under Subchapter C,
  Chapter 223, Transportation Code, a comprehensive development
  agreement entered into under Subchapter E, Chapter 223,
  Transportation Code, a design-build contract entered into under
  Subchapter F, Chapter 223, Transportation Code, or any other
  contract entered into by the Texas Department of Transportation.
         Sec. 2261.255.  CONTRACTS WITH VALUE EXCEEDING $5 MILLION.
  For each state agency contract for the purchase of goods or services
  that has a value exceeding $5 million, the contract management
  office or procurement director of the agency must:
               (1)  verify in writing that the solicitation and
  purchasing methods and contractor selection process comply with
  state law and agency policy; and
               (2)  submit to the governing body of the agency, or
  governing official of the agency if the agency is not governed by a
  multimember governing body, information on any potential issue that
  may arise in the solicitation, purchasing, or contractor selection
  process.
         Sec. 2261.256.  RISK ANALYSIS PROCEDURE; CONTRACT
  MANAGEMENT HANDBOOK. (a)  Each state agency shall develop and
  comply with a risk analysis procedure. The procedure must provide
  for:
               (1)  assessing the risk of fraud, abuse, or waste in the
  contractor selection process, contract provisions, and payment and
  reimbursement rates and methods for the different types of goods
  and services for which the agency contracts; and
               (2)  identifying contracts that require enhanced
  contract monitoring.
         (b)  Each state agency shall publish a contract management
  handbook that establishes consistent contracting policies and
  practices to be followed by the agency and that is consistent with
  the comptroller's contract management guide. The agency handbook
  may include standard contract provisions and formats for the agency
  to incorporate in contracts.
         Sec. 2261.257.  CONTRACT DATABASE. (a)  Each state agency
  that becomes a participant in the centralized accounting and
  payroll systems as authorized by Sections 2101.035 and 2101.036
  shall use the system to identify and record each contract entered
  into by the agency as specified by the rules, policies, or
  procedures developed by the comptroller.
         (b)  The comptroller shall provide as necessary information
  and state agency contract data contained in the centralized
  accounting and payroll systems to other state agencies with
  oversight duties, including the Legislative Budget Board, the state
  auditor's office, and the Department of Information Resources.
         SECTION 17.  Section 2262.101, Government Code, as amended
  by Chapters 676 (H.B. 1965) and 1227 (S.B. 1681), Acts of the 83rd
  Legislature, Regular Session, 2013, is reenacted and amended to
  read as follows:
         Sec. 2262.101.  CREATION; DUTIES.  (a)  The Contract
  Advisory Team is created to assist state agencies in improving
  contract management practices by:
               (1)  reviewing and making recommendations on the
  solicitation documents and contract documents for contracts of
  state agencies that have a value of at least $10 million;
               (2)  reviewing any findings or recommendations made by
  the state auditor, including those made under Section 2262.052(b),
  regarding a state agency's compliance with the contract management
  guide;
               (3)  providing recommendations to the comptroller
  regarding:
                     (A)  the development of the contract management
  guide; and
                     (B)  the training under Section 2262.053;
               (4)  providing recommendations and assistance to state
  agency personnel throughout the contract management process;
               (5)  coordinating and consulting with the quality
  assurance team established under Section 2054.158 on all contracts
  relating to a major information resources project; [and]
               (6) [(4)]  developing and recommending policies and
  procedures to improve state agency contract management practices;
               (7) [(5)]  developing and recommending procedures to
  improve state agency contracting practices by including
  consideration for best value; [and]
               (8) [(6)]  creating and periodically performing a risk
  assessment to determine the appropriate level of management and
  oversight of contracts by state agencies; and
               (9)  after being notified by a state agency of a change
  order, contract amendment, contract renewal or extension, or other
  proposed action that would result in a change to the monetary value
  of a contract reviewed under Subdivision (1) by more than 20
  percent, reviewing the justification for the change order, contract
  amendment, contract renewal or extension, or other proposed action,
  as applicable, to:
                     (A)  determine whether the justification is
  reasonable considering the circumstances; and
                     (B)  if the team determines the justification is
  not reasonable, contact the state agency for additional
  justification, and if not satisfactory, forward the contract to the
  comptroller for notification under Subsection (h).
         (b)  The risk assessment created and performed [reviewed]
  under Subsection (a)(8) [(a)(6)] must include[, but is not limited
  to] the following criteria:
               (1)  the amount of appropriations to the agency;
               (2)  total contract value as a percentage of
  appropriations to the agency; and [or]
               (3)  the impact of the functions and duties of the state
  agency on the health, safety, and well-being of residents
  [citizens].
         (c)  The comptroller shall oversee the activities of the
  team, including ensuring that the team carries out its duties under
  Subsections (a)(1), [Subsection] (a)(5), and (a)(7).
         (d)  A state agency shall:
               (1)  comply with a recommendation made under Subsection
  (a)(1); or
               (2)  submit a written explanation regarding why the
  recommendation is not applicable to the contract under review.
         (e)  The team may review documents under Subsection (a)(1)
  only for compliance with contract management and best practices
  principles and may not make a recommendation regarding the purpose
  or subject of the contract.
         (f)  The team may develop an expedited process for reviewing
  solicitations under Subsection (a)(1) for contracts:
               (1)  that the team identifies as posing a low risk of
  loss to the state; or
               (2)  for which templates will be used more than once by
  a state agency.
         (g)  A state agency that notifies the team of a change order,
  contract amendment, contract renewal or extension, or other
  proposed action under Subsection (a)(9) must include with the
  notification a justification for the proposed action in the form
  and containing the information specified by the team.
         (h)  The comptroller shall, for each contract of a state
  agency forwarded under Subsection (a)(9), notify:
               (1)  the governing body of the agency or the single
  state officer who governs the agency;
               (2)  the Legislative Budget Board; and
               (3)  each member of the senate and house of
  representatives.
         SECTION 18.  Section 2262.102(a), Government Code, is
  amended to read as follows:
         (a)  The team consists of the following nine [six] members:
               (1)  one member from the Health and Human Services
  Commission;
               (2)  one member from the comptroller's office;
               (3)  one member from the Department of Information
  Resources;
               (4)  one member from the Texas Facilities Commission;
               (5)  one member from the governor's office; [and]
               (6)  one member from a small state agency;
               (7)  one member from the Texas Department of
  Transportation;
               (8)  one member from the Texas Education Agency; and
               (9)  one member from the Texas Commission on
  Environmental Quality.
         SECTION 19.  Subchapter C, Chapter 2262, Government Code, is
  amended by adding Section 2262.105 to read as follows:
         Sec. 2262.105.  QUARTERLY REPORT TO LEGISLATIVE BUDGET
  BOARD. The contract advisory team shall submit a quarterly report
  to the Legislative Budget Board on:
               (1)  the number of solicitation documents and contracts
  reviewed by the team in the preceding quarter; and
               (2)  whether state agencies accepted or rejected the
  team's recommendations and any reasons provided by the state
  agencies for rejecting the recommendations.
         SECTION 20.  Section 51.9335(d), Education Code, is amended
  to read as follows:
         (d)  Subject to Section 51.9337, Subtitle D, Title 10,
  Government Code, and Subchapter B, Chapter 2254, Government Code,
  do not apply to the acquisition of goods and services under this
  section, except that an institution of higher education must comply
  with any provision of those laws, or a rule adopted under a
  provision of those laws, relating to contracting with historically
  underutilized businesses or relating to the procurement of goods
  and services from persons with disabilities.  An institution of
  higher education may, but is not required to, acquire goods or
  services as provided by Subtitle D, Title 10, Government Code.
         SECTION 21.  Subchapter Z, Chapter 51, Education Code, is
  amended by adding Section 51.9337 to read as follows:
         Sec. 51.9337.  PURCHASING AUTHORITY CONDITIONAL; REQUIRED
  STANDARDS.  (a)  An institution of higher education may not
  exercise the acquisition authority granted by Section 51.9335 or
  73.115 unless the institution complies with this section. An
  institution that is determined under Subsection (j) to not be in
  compliance with this section is subject to the laws governing
  acquisition of goods and services by state agencies, including
  Subtitle D, Title 10, Government Code, and Chapter 2254, Government
  Code.
         (b)  The board of regents of an institution of higher
  education by rule shall establish for each institution under the
  management and control of the board:
               (1)  a code of ethics for the institution's officers and
  employees, including provisions governing officers and employees
  authorized to execute contracts for the institution or to exercise
  discretion in awarding contracts, subject to Subsection (c);
               (2)  policies for the internal investigation of
  suspected defalcation, misappropriation, and other fiscal
  irregularities and an institutional or systemwide compliance
  program designed to promote ethical behavior and ensure compliance
  with all applicable policies, laws, and rules governing higher
  education, including research and health care to the extent
  applicable;
               (3)  a contract management handbook that provides
  consistent contracting policies and practices and contract review
  procedures, including a risk analysis procedure, subject to
  Subsection (d);
               (4)  contracting delegation guidelines, subject to
  Subsections (e) and (f);
               (5)  training for officers and employees authorized to
  execute contracts for the institution or to exercise discretion in
  awarding contracts, including training in ethics, selection of
  appropriate procurement methods, and information resources
  purchasing technologies; and
               (6)  internal audit protocols, subject to Subsection
  (g).
         (c)  The code of ethics governing an institution of higher
  education must include:
               (1)  general standards of conduct and a statement that
  each officer or employee is expected to obey all federal, state, and
  local laws and is subject to disciplinary action for a violation of
  those laws;
               (2)  policies governing conflicts of interest,
  conflicts of commitment, and outside activities, ensuring that the
  primary responsibility of officers and employees is to accomplish
  the duties and responsibilities assigned to that position;
               (3)  a conflict of interest policy that prohibits
  employees from having a direct or indirect financial or other
  interest, engaging in a business transaction or professional
  activity, or incurring any obligation that is in substantial
  conflict with the proper discharge of the employee's duties related
  to the public interest;
               (4)  a conflict of commitment policy that prohibits an
  employee's activities outside the institution from interfering
  with the employee's duties and responsibilities to the institution;
               (5)  a policy governing an officer's or employee's
  outside activities, including compensated employment and board
  service, that clearly delineates the nature and amount of
  permissible outside activities and that includes processes for
  disclosing the outside activities and for obtaining and documenting
  institutional approval to perform the activities;
               (6)  a policy that prohibits an officer or employee
  from acting as an agent for another person in the negotiation of the
  terms of an agreement relating to the provision of money, services,
  or property to the institution;
               (7)  a policy governing the use of institutional
  resources; and
               (8)  a policy providing for the regular training of
  officers and employees on the policies described by this
  subsection.
         (d)  An institution of higher education shall establish
  contract review procedures and a contract review checklist that
  must be reviewed and approved by the institution's legal counsel
  before implementation. The review procedures and checklist must
  include:
               (1)  a description of each step of the procedure that an
  institution must use to evaluate and process contracts;
               (2)  a checklist that describes each process that must
  be completed before contract execution; and
               (3)  a value threshold that initiates the required
  review by the institution's legal counsel unless the contract is a
  standard contract previously approved by the counsel.
         (e)  An institution of higher education's policies governing
  contracting authority must clearly specify the types and values of
  contracts that must be approved by the board of regents and the
  types and values of contracts for which contracting authority is
  delegated by the board to the chief executive officer and by the
  chief executive officer to other officers and employees of the
  institution. An officer or employee may not execute a document for
  the board unless the officer or employee has authority to act for
  the board and the authority is exercised in compliance with
  applicable conditions and restrictions.
         (f)  An institution of higher education may not enter into a
  contract with a value of more than $1 million, including any
  amendment, extension, or renewal of the contract that increases the
  value of the original contract to more than $1 million, unless the
  institution's board of regents approves the contract, expressly
  delegates authority to exceed that amount, or expressly adopts an
  exception for that contract.  The board must approve any amendment,
  extension, or renewal of a contract with a value that exceeds 25
  percent of the value of the original contract approved by the board
  unless the authority to exceed the approved amount is expressly
  delegated by the board or an exception is expressly adopted by the
  board for that contract.
         (g)  The board of regents of an institution of higher
  education shall adopt standards for internal audits conducted by
  the institution to provide a systematic, disciplined approach to
  evaluate and improve the effectiveness of the institution's risk
  management, control, and governance processes related to contracts
  and to require risk-based testing of contract administration. The
  internal auditor must have full and unrestricted access to all
  institutional property, personnel, and records. An internal
  auditor must report directly to the board of regents in accordance
  with Chapter 2102, Government Code.
         (h)  The chief auditor of an institution of higher education
  shall annually assess whether the institution has adopted the rules
  and policies required by this section and shall submit a report of
  findings to the state auditor. In auditing the purchase of goods
  and services by the institution, the state auditor shall determine
  whether an institution has adopted the required rules and policies.
         (i)  If the state auditor determines that an institution of
  higher education has failed to adopt the required rules and
  policies, the auditor shall report that failure to the legislature
  and to the institution's board of regents and shall, in
  consultation with the institution, adopt a remediation plan to
  bring the institution into compliance.  If the institution fails to
  comply within the time established by the state auditor, the
  auditor shall find the institution to be in noncompliance and
  report that finding to the legislature and comptroller.
         (j)  In accordance with a schedule adopted by the state
  auditor in consultation with the comptroller, the authority of an
  institution of higher education to acquire goods and services as
  provided by Section 51.9335 or 73.115 is suspended if the
  institution fails to comply with the remediation plan under
  Subsection (i) within the time established by the state auditor.  As
  a result of the suspension, the laws, including Subtitle D, Title
  10, Government Code, and Chapter 2254, Government Code, governing
  acquisition of goods and services by state agencies from which the
  institution is otherwise exempt, shall apply to the institution's
  acquisition of goods and services.
         SECTION 22.  Sections 73.115(e) and (f), Education Code, are
  amended to read as follows:
         (e)  To the extent of any conflict, this section prevails
  over any other law relating to the purchasing of goods and services
  other than Section 51.9337 and [except] a law relating to
  contracting with historically underutilized businesses.
         (f)  Except as otherwise provided by this section and Section
  51.9337, Subtitle D, Title 10, Government Code, and Chapter 2254,
  Government Code, do not apply to purchases of goods and services
  made under this section.
         SECTION 23.  Section 2155.502(d), Government Code, is
  repealed.
         SECTION 24.  (a)  As soon as is practicable after the
  effective date of this Act, the executive directors of the Texas
  Department of Transportation, the Texas Education Agency, and the
  Texas Commission on Environmental Quality shall each appoint a
  member to the contract advisory team as required by Section
  2262.102, Government Code, as amended by this Act.
         (b)  As soon as is practicable after the effective date of
  this Act, the comptroller of public accounts, and each affected
  state agency as necessary, shall adopt the rules and procedures and
  take the actions necessary to implement the changes in law made by
  this Act.
         SECTION 25.  To the extent of any conflict, this Act prevails
  over another Act of the 84th Legislature, Regular Session, 2015,
  relating to nonsubstantive additions to and corrections in enacted
  codes.
         SECTION 26.  Section 572.069, Government Code, as added by
  this Act, applies only to a state officer or employee whose service
  or employment with a state agency ceases on or after the effective
  date of this Act.
         SECTION 27.  The changes in law made by this Act apply only
  to a contract entered into on or after the effective date of this
  Act. A contract entered into before that date is governed by the
  law in effect immediately before the effective date of this Act, and
  the former law is continued in effect for that purpose.
         SECTION 28.  This Act takes effect September 1, 2015.
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