Bill Text: TX SB543 | 2015-2016 | 84th Legislature | Comm Sub

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Bill Title: Relating to oversight of and requirements applicable to state contracts and other state financial and accounting issues; authorizing fees.

Sponsorship: Slight Partisan Bill (Democrat 7-4)

Status: (Engrossed - Dead) 2015-05-13 - Committee report sent to Calendars [SB543 Detail]

Download: Texas-2015-SB543-Comm_Sub.html

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84R27887 MTB-D
By: Zaffirini, et al. S.B. No. 543
(Elkins, Otto, Walle, Gutierrez, Leach, et al.)
Substitute the following for S.B. No. 543: No.

A BILL TO BE ENTITLED
AN ACT
relating to oversight of and requirements applicable to state
contracts and other state financial and accounting issues;
authorizing fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 821.009(b), Government Code, is amended
to read as follows:
(b) Notwithstanding any other law and in addition to the
requirements of Subchapter E, Chapter 2262, before a contract
described by Subsection (a) may be entered into by the retirement
system, a representative of the office of the attorney general
shall review the form and terms of the contract and may make
recommendations to the retirement system for changes to the
contract if the attorney general determines that the office of the
attorney general has sufficient subject matter expertise and
resources available to provide this service.
SECTION 2. Section 825.103(g), Government Code, is amended
to read as follows:
(g) Notwithstanding any other law and except as provided by
Section 2262.202, Chapters 2261 and 2262 do not apply to the
retirement system. The Contract Management and Oversight
[Advisory] Team shall assist the retirement system at the request
of the retirement system. The retirement system may use the
training program for contract management provided under Chapter
2262.
SECTION 3. Section 2054.065(a)(2), Government Code, is
amended to read as follows:
(2) "Team" means the Contract Management and Oversight
[Advisory] Team established under Subchapter E [C], Chapter 2262.
SECTION 4. 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 5. Section 2101.011, Government Code, is amended by
adding Subsection (e) to read as follows:
(e) A state agency's annual financial report must include
any claims made against the agency for the preceding fiscal year and
the amount paid by the agency in relation to each claim.
SECTION 6. Section 2101.035, Government Code, is amended by
adding Subsections (i), (j), and (k) to read as follows:
(i) State agencies other than a university system or an
institution of higher education as defined by Section 61.003,
Education Code, shall report contract and purchasing information in
the uniform manner required by the comptroller.
(j) The centralized accounting and payroll system, or any
successor system used to implement the enterprise resource planning
component of the uniform statewide accounting project, developed
under this section and Section 2101.036 must provide alerts to the
comptroller to notify the comptroller of a state contract other
than a contract of a university system or an institution of higher
education as defined by Section 61.003, Education Code, that has a
high risk of loss to the state based on parameters identified by
rule by the comptroller, including:
(1) a change order of more than 20 percent of the value
of the original contract; and
(2) a contract entered into in an amount that exceeds a
predetermined threshold amount.
(k) If, through the uniform statewide accounting system or a
component of that system, the comptroller or an officer or employee
of the comptroller's office releases or publishes information that
is confidential or excepted from required disclosure in reliance on
a determination made by a state agency about the status of the
information as confidential or excepted from disclosure, the
comptroller, officer, or employee, as appropriate, is:
(1) immune from any civil or criminal liability for
releasing or publishing the information; and
(2) not required to comply with the notification
requirements of Section 2054.1125 of this code and Chapter 521,
Business & Commerce Code, in relation to the release or publication
of the information.
SECTION 7. Section 2101.036, Government Code, is amended by
amending Subsection (d) and adding Subsection (e) to read as
follows:
(d) Notwithstanding any other provision of this chapter or
other law and except as provided by Subsection (e), this section and
any rules implementing this section apply only in relation to a
state agency as defined by Section 2054.003.
(e) A state agency in the legislative branch of state
government may elect to participate in the centralized accounting
and payroll system, or any successor system used to implement the
enterprise resource planning component of the uniform statewide
accounting project, developed under this section.
SECTION 8. Section 2102.005, Government Code, is amended to
read as follows:
Sec. 2102.005. INTERNAL AUDITING REQUIRED. A state agency
shall conduct a program of internal auditing that includes:
(1) an annual audit plan that is prepared using risk
assessment techniques and that identifies the individual audits to
be conducted during the year; and
(2) periodic audits of:
(A) the agency's major systems and controls,
including:
(i) [(A)] accounting systems and controls;
(ii) [(B)] administrative systems and
controls; [and]
(iii) [(C)] electronic data processing
systems and controls; and
(iv) contract management processes and
controls; and
(B) one or more of the agency's contracts with
high-risk factors.
SECTION 9. Section 2113.102(a), Government Code, is amended
to read as follows:
(a) A state agency may not use appropriated money to
contract with a person to audit [the financial records or accounts
of] the agency except:
(1) as provided by[:
[(1)] Subsections (b), (c), and (d); and
(2) in accordance with Section 321.020 [Chapter 466,
pertaining to the state lottery;
[(3) Chapter 2306, pertaining to the Texas Department
of Housing and Community Affairs; and
[(4) Chapter 361, Transportation Code, pertaining to
the Texas Turnpike Authority division of the Texas Department of
Transportation].
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 that exceed $50,000 under
a contract listed on the schedule shall submit a request for pricing
to:
(1) at least three vendors included on the schedule in
the category to which the purchase relates; or
(2) all vendors included on the schedule in the
category to which the purchase relates if fewer than three vendors
are included in the category.
(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 LOCAL GOVERNMENTS
[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 2162.103(a), Government Code, is
amended to read as follows:
(a) 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;
(3) installation costs and any other initial costs
associated with a contract with a private contractor;
(4) other costs associated with the transition to
using a private contractor's services; and
(5) cost savings to the state if a private contractor
were awarded the contract.
SECTION 13. Sections 2165.356(a) and (b), Government Code,
are amended to read as follows:
(a) Not later than the 60th day before the date the
commission is scheduled to vote on approval of a qualifying project
contract, the commission must submit to the Contract Management and
Oversight [Advisory] Team established under Subchapter E [C],
Chapter 2262, documentation of the modifications to a proposed
qualifying project made during the commission's evaluation and
negotiation process for the project, including a copy of:
(1) the final draft of the contract;
(2) the detailed qualifying project proposal; and
(3) any executed interim or other agreement.
(b) The Contract Management and Oversight [Advisory] Team
shall review the documentation submitted under Subsection (a) and
provide written comments and recommendations to the
commission. The review must focus on, but not be limited to, best
practices for contract management and administration.
SECTION 14. Section 2166.2551, Government Code, is amended
to read as follows:
Sec. 2166.2551. CONTRACT NOTIFICATION. The commission or
an agency whose project is exempted from all or part of this chapter
under Section 2166.003 shall provide written notice to the
Legislative Budget Board of a contract for a construction project
if the amount of the contract, including an amendment,
modification, renewal, or extension of the contract, exceeds
$50,000 [$14,000]. The notice must be on a form prescribed by the
Legislative Budget Board and filed not later than the 10th day after
the date the agency enters into the contract.
SECTION 15. Section 2254.006, Government Code, is amended
to read as follows:
Sec. 2254.006. CONTRACT NOTIFICATION. A state agency,
including an institution of higher education as defined by Section
61.003, Education Code, shall provide written notice to the
Legislative Budget Board of a contract for professional services,
other than a contract for physician or optometric services, if the
amount of the contract, including an amendment, modification,
renewal, or extension of the contract, exceeds $50,000 [$14,000].
The notice must be on a form prescribed by the Legislative Budget
Board and filed not later than the 10th day after the date the
agency enters into the contract.
SECTION 16. Section 2254.0301(a), Government Code, is
amended to read as follows:
(a) A state agency shall provide written notice to the
Legislative Budget Board of a contract for consulting services if
the amount of the contract, including an amendment, modification,
renewal, or extension of the contract, exceeds $50,000 [$14,000].
The notice must be on a form prescribed by the Legislative Budget
Board and filed not later than the 10th day after the date the
entity enters into the contract.
SECTION 17. Sections 2261.001(a) and (c), Government Code,
are amended to read as follows:
(a) This chapter 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.
(c) The comptroller on request shall determine whether a
procurement or type of procurement:
(1) is made under purchasing authority delegated to an
agency by or under Section [2155.131 or] 2155.132; or
(2) is made under some other source of purchasing
authority.
SECTION 18. Section 2261.002, Government Code, is amended
to read as follows:
Sec. 2261.002. DEFINITIONS. In this chapter:
(1) "Contract" includes an agreement or other written
expression of terms of agreement, including an amendment, a
modification, a renewal, or an extension, for the purchase of goods
or services that is entered into or paid for, wholly or partly, by a
state agency during a fiscal year and a grant, other than a grant
made to a school district or a grant made for other academic
purposes, under which the recipient of the grant is required to
perform a specific act or service, supply a specific type of
product, or both.
(2) "Contract deliverable" means a unit or increment
of work required by a contract, including goods, services, reports,
or documents.
(3) "Contract manager" means a person who:
(A) is employed by a state agency; and
(B) has significant contract management duties
for the state agency.
(4) "Executive director" means the administrative
head of a state agency.
(5) "General counsel" means the general counsel of a
state agency.
(6) "Major contract" means a contract, including a
renewal of a contract, that has a value of at least $1 million. The
term includes a service contract.
(7) "State agency" has the meaning assigned by Section
2151.002.
SECTION 19. Subchapter A, Chapter 2261, Government Code, is
amended by adding Sections 2261.004, 2261.005, 2261.006, 2261.007,
2261.008, and 2261.009 to read as follows:
Sec. 2261.004. STATE AGENCY REPOSITORY AND RECORDS.
(a) Each state agency shall maintain in a central location all
contracts for that agency.
(b) Each state agency shall maintain a comprehensive list of
all contracts for that agency.
(c) In this subsection, "contract" includes a sole source
contract. Each state agency shall maintain accurate records of all
essential information relating to agency contracts, including
information on:
(1) a contract delay or changes to a contract in which
total expenditures under the contract increase by more than 20
percent from the original contract amount; and
(2) cost overruns, including a written explanation of
why expenditures have increased under a contract.
(d) Notwithstanding Section 441.185, contracts and other
related information required to be maintained under this section by
a state agency must be retained for the duration of the contract.
Sec. 2261.005. CONTRACT REPORTING. (a) In this section,
"contract" includes a construction contract.
(b) The following sections prescribe reporting requirements
for certain contracts:
(1) Section 322.020;
(2) Section 2054.008;
(3) Section 2166.2551;
(4) Section 2254.006;
(5) Section 2254.028; and
(6) Section 2254.0301.
Sec. 2261.006. PROFESSIONAL SERVICES. A state agency shall
procure professional services in accordance with Subchapter A,
Chapter 2254.
Sec. 2261.007. CONTRACT GUIDELINES AND PROCEDURES. Each
state agency shall establish formal guidelines and procedures for
all employees involved in the contracting process:
(1) regarding who may approve a contract for the
agency;
(2) for contract planning and solicitation;
(3) for contract negotiations;
(4) for contract management; and
(5) for contract oversight.
Sec. 2261.008. INTERAGENCY AGREEMENTS AND CONTRACTS. An
interagency agreement or contract of a state agency is governed by
Chapter 771.
Sec. 2261.009. INTERLOCAL CONTRACTS. An interlocal
contract to which a state agency is a party is governed by Chapter
791.
SECTION 20. Subchapter B, Chapter 2261, Government Code, is
amended by adding Section 2261.054 to read as follows:
Sec. 2261.054. BEST VALUE STANDARD FOR CONTRACTING FOR
GOODS AND SERVICES. In determining the best value for the state,
the purchase price and whether the goods or services meet
specifications are the most important considerations. A state
agency may consider, subject to Sections 2155.074(c) and 2155.075,
other relevant factors, including:
(1) installation costs;
(2) life cycle costs;
(3) the quality and reliability of the goods and
services;
(4) the delivery terms;
(5) indicators of probable vendor performance under
the contract such as past vendor performance, the vendor's
financial resources and ability to perform, the vendor's experience
or demonstrated capability and responsibility, and the vendor's
ability to provide reliable maintenance agreements and support;
(6) the cost of any employee training associated with
a purchase;
(7) the effect of a purchase on agency productivity;
(8) the vendor's anticipated economic impact on the
state or a subdivision of the state, including potential tax
revenue and employment; and
(9) other factors relevant to determining the best
value for the state in the context of a particular purchase.
SECTION 21. The heading to Subchapter C, Chapter 2261,
Government Code, is amended to read as follows:
SUBCHAPTER C. CONTRACT FORMATION AND PROVISIONS
SECTION 22. Subchapter C, Chapter 2261, Government Code, is
amended by adding Sections 2261.103, 2261.104, 2261.105, 2261.106,
and 2261.107 to read as follows:
Sec. 2261.103. USE OF UNIFORM FORMS. A state agency may use
any forms developed by the comptroller as templates, guides, or
samples for contracts entered into by the agency.
Sec. 2261.104. ESSENTIAL CONTRACT PROVISIONS. (a) The
following are required provisions in each contract to which the
provisions are applicable, other than a grant:
(1) legal authority;
(2) statement of work;
(3) indemnification or damage claims;
(4) consideration;
(5) specifications;
(6) funding out clause;
(7) antitrust;
(8) payment;
(9) dispute resolution;
(10) term of contract;
(11) confidential information;
(12) abandonment or default;
(13) right to audit;
(14) force majeure;
(15) independent contractor; and
(16) termination.
(b) If a state agency determines that the circumstances of a
proposed contract require more protection for the state than the
provisions in Subsection (a) provide, the agency shall include a
provision in the contract providing for that protection.
Sec. 2261.105. CONTRACT PROVISIONS REQUIRED BY STATE LAW.
(a) In any contract for the acquisition of goods or services to
which a state agency is a party, a provision required by other
applicable law to be included in the contract is considered to be a
part of the executed contract without regard to whether:
(1) the provision appears on the face of the contract;
or
(2) the contract includes any provision to the
contrary.
(b) If a state agency determines that the circumstances of a
proposed contract require more protection for the state than the
provisions described by Subsection (a) provide, the agency shall
include a provision in the contract providing for that protection.
Sec. 2261.106. CONTRACT RENEWAL. A state agency shall
establish a standardized process for renewing all contracts of the
agency.
Sec. 2261.107. CONTRACT DURATION. (a) A state agency:
(1) must establish a reasonable term for a contract
before solicitation of the contract; and
(2) shall make an effort to keep the maximum length of
a contract to four years without reissuing a competitive
solicitation, including any contract renewals or extensions.
(b) A contract term established under Subsection (a)(1)
must be included in a solicitation document.
(c) A state agency may not enter into a contract that has an
indefinite term.
SECTION 23. Subchapter D, Chapter 2261, Government Code, is
amended by adding Section 2261.152 to read as follows:
Sec. 2261.152. CONTRACT PAYMENT. (a) For each contract for
goods or services that is subject to this chapter, a state agency
shall require that payment under the contract be linked to clear and
measurable achievements, such as length of time of work, contract
deliverables, or performance measures.
(b) A state agency may not make a final payment on a contract
for goods or services that is subject to this chapter unless the
agency verifies that all contract deliverables have been received.
SECTION 24. The heading to Subchapter E, Chapter 2261,
Government Code, is amended to read as follows:
SUBCHAPTER E. CONTRACT MONITORING AND [CONTRACTOR] OVERSIGHT
SECTION 25. Section 2261.202, Government Code, is amended
to read as follows:
Sec. 2261.202. CONTRACT MONITORING RESPONSIBILITIES. (a)
As one of its contract management policies, each state agency that
makes procurements to which this chapter applies shall establish
and adopt by rule a policy that clearly defines the contract
monitoring roles and responsibilities, if any, of agency staff,
including internal audit staff and other inspection,
investigative, or audit staff.
(b) The policy must establish clear lines of
accountability, staff roles and responsibilities, and
decision-making authority for program staff, contract management
staff, and executive management staff.
SECTION 26. Subchapter E, Chapter 2261, Government Code, is
amended by adding Sections 2261.204, 2261.205, 2261.206, 2261.207,
2261.208, 2261.209, 2261.210, 2261.211, 2261.212, 2261.213, and
2261.214 to read as follows:
Sec. 2261.204. INFORMATION ON CONTRACTOR PERFORMANCE.
After a contract with a value of $25,000 or more is completed or
otherwise terminated, each state agency shall review the
contractor's performance under the contract and report to the
comptroller on the results of the review using forms made available
to the state agency.
Sec. 2261.205. CONTRACTING STAFF. (a) Each state agency
that enters into contracts other than interagency contracts shall
establish a career ladder program for contract management in the
agency.
(b) An employee hired as a contract manager may participate
in procurement planning, contract solicitation, contract
formation, price establishment, and other contract activities.
(c) Each state agency shall determine, in consultation with
the state auditor, the amount and significance of contract
management duties sufficient for an employee to be considered a
contract manager, program staff, or a contract specialist.
Sec. 2261.206. APPROVAL OF CONTRACTS. (a) Each state
agency shall adopt a policy to establish a monetary threshold above
which agency contracts and amendments to or extensions of agency
contracts require written authorization by the agency executive
director.
(b) Each state agency shall annually report to the
comptroller a list of persons authorized to approve contracts at
the agency. The list must include each person's name, position, and
supervisory responsibility, if any.
Sec. 2261.207. NEGOTIATION OF MAJOR CONTRACT BY SINGLE
EMPLOYEE PROHIBITED. A state agency may not negotiate a major
contract with only one employee engaging in the negotiation.
Sec. 2261.208. CONTRACT REVIEW; REPORTING. (a) A
contractor's performance must be periodically reviewed throughout
the term of a contract.
(b) A state agency shall ensure ongoing communication
between executive management staff, contract management staff, and
program staff of the results of the reviews performed under
Subsection (a) with specific attention to contracts that are:
(1) anticipated to be completed later than originally
estimated; or
(2) expected to cost more than the amount that was
originally budgeted.
(c) To implement this section, a state agency shall create a
system for agency-wide reporting on the status of, activity on, and
contractor performance for each contract.
Sec. 2261.209. CONTRACT ADMINISTRATION TEAM. (a) This
section applies to a state agency that has a contract with a value
of $5 million or more.
(b) A state agency to which this section applies shall
create a contract administration team to:
(1) ensure and verify the performance of agency
contracts with a value of $5 million or more; and
(2) maintain within the agency contract oversight
expertise to effectively manage contractors.
Sec. 2261.210. CONTRACT MONITORING PROCESS. A state agency
shall establish and implement a monitoring process for agency
contracts that includes:
(1) identifying the appropriate criteria for use in
measuring contract performance;
(2) creating a schedule for monitoring contract
performance;
(3) comparing work accomplished to work planned to be
accomplished;
(4) analyzing contract performance variances; and
(5) addressing contracting performance problems with
corrective action.
Sec. 2261.211. RISK MANAGEMENT PROCESS. (a) A state agency
shall establish and implement a:
(1) process for evaluating the potential risk to the
state, such as product risk, process risk, financial risk, and
schedule risk, if contract implementation or performance problems
occur, including a process for:
(A) risk identification or identifying items
that may prevent the agency from achieving contracting goals or
objectives;
(B) risk analysis or assessing the impact and
likelihood of a risk;
(C) risk evaluation or developing strategies or
approaches to address risks that have been identified and analyzed;
(D) risk treatment or the managerial approach to
risk;
(E) risk reduction or planning and performing
actions to mitigate risk due to a managerial decision to reduce
risk;
(F) contingency planning or developing plans for
corrective action to be taken if a potential risk occurs; and
(G) risk monitoring or tracking the
implementation of a risk reduction plan until the risk is
sufficiently mitigated; and
(2) procedure for corrective action to be used when
contract implementation or performance problems occur.
(b) In creating the process required by Subsection (a)(1),
the state agency shall consider:
(1) the complexity and subject matter of agency
contracts;
(2) the dollar value of agency contracts, including
contract extensions and amendments, and whether the procurement
will result in a major contract;
(3) the anticipated payment methodology;
(4) the experience of agency staff with the type of
procurement;
(5) whether the results of the procurement will impact
the public or only impact the agency;
(6) time constraints or the expected duration of the
procurement; and
(7) the type, availability, and experience of staff
resources required to implement the objectives of the procurement.
(c) Based on the assessed risk of a state agency contract,
the agency shall, for each contract:
(1) determine the appropriate frequency and method of
contract monitoring;
(2) allocate contract monitoring resources; and
(3) develop a contract auditing plan.
Sec. 2261.212. CONTRACT COMMUNICATION. (a) A state agency
shall maintain effective communication procedures regarding
contract performance.
(b) The chief financial officer of a state agency, or an
individual designated by the executive director with similar
contract administration duties and responsibilities, shall report
at least monthly to the executive director on the status of agency
contracts. The report must include a clear indication of:
(1) any contract cost overruns or contracts that are
performing poorly; and
(2) contracts that may cause the state to delay or
default on service delivery.
Sec. 2261.213. REPORT ON CERTAIN PURCHASES. (a) Not later
than December 1 of each year, the comptroller shall publish a report
on the number and dollar value of sole source and emergency
purchases made in the previous fiscal year.
(b) Each state agency shall timely provide to the
comptroller the information the comptroller requires for the
purpose of creating the report under Subsection (a) in the manner
and form specified by the comptroller.
(c) The comptroller shall establish requirements for the
provision of information under Subsection (b) in consultation with
the Contract Management and Oversight Team created under Subchapter
E, Chapter 2262, the Health and Human Services Commission, and the
Texas Department of Transportation.
(d) The comptroller may not require a state agency to
provide information under Subsection (b) on a contract related to
health and human services if:
(1) the value of the contract cannot be determined at
the time of execution of the contract; and
(2) any qualified vendor is eligible for the contract.
Sec. 2261.214. CONTRACT DATABASE. (a) Each state agency
that becomes a participant in the centralized accounting and
payroll system as authorized by Sections 2101.035 and 2101.036, or
any successor system used to implement the enterprise resource
planning component of the uniform statewide accounting project,
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, after consultation with
the Department of Information Resources.
(b) The comptroller shall provide as necessary information
and state agency contract data contained in the centralized
accounting and payroll system to other state agencies with
oversight duties, including the Legislative Budget Board, the state
auditor's office, and the Department of Information Resources.
SECTION 27. Chapter 2261, Government Code, is amended by
adding Subchapters F, G, H, and I to read as follows:
SUBCHAPTER F. CHANGES TO CONTRACTS
Sec. 2261.251. CONTRACT AMENDMENTS, EXTENSIONS, AND CHANGE
ORDERS. (a) This section does not apply to a contract amendment,
extension, or change order that does not change the cost or terms of
the contract.
(b) An extension of or amendment to a state agency contract,
including a change order, is subject to the same agency approval
processes as the original contract.
(c) A state agency may not extend or amend a contract unless
the agency complies with the same agency approval processes for the
extension or amendment as required for the original contract and
the agency states in writing why the extension or amendment is
necessary or advantageous to the state.
(d) This section does not affect whether a state agency is
required to undertake a new solicitation process in the manner
required for a new contract in order to extend or amend a contract.
(e) For state agency contracts valued in excess of $1
million, the agency executive director must authorize a contract
amendment in writing.
Sec. 2261.252. LARGE CHANGE IN CONTRACT VALUE; COST
OVERRUNS. (a) If a proposed contract amendment or extension
changes the monetary value of a major contract by at least 20
percent or $1 million, the state agency must submit the amendment or
extension for review to the agency's executive director before the
agency amends or extends the contract.
(b) Subsection (a) does not apply to a proposed contract
amendment required by a state or federal statute.
(c) The executive director shall be timely notified of any
unanticipated contract cost overrun.
Sec. 2261.253. CERTAIN CONTRACT EXTENSIONS AND RENEWALS.
This subchapter does not apply to contract extensions or renewals
that are specifically established as a component of the original
procurement.
SUBCHAPTER G. TRAINING
Sec. 2261.301. TRAINING FOR CONTRACT MANAGERS. (a) A
state agency shall require a contract manager to complete the
training program for contract managers developed and administered
by the comptroller.
(b) A state agency shall maintain a list of contract
managers who have completed the training program for contract
managers.
(c) A state agency may develop qualified contract manager
training to supplement the training required under this section.
Sec. 2261.302. TRAINING FOR GOVERNING BODIES. All members
of the governing body of a state agency shall complete at least one
abbreviated course of the training program for contract managers
developed and administered by the comptroller. This section does
not apply to a state agency that does not enter into any contracts.
SUBCHAPTER H. CONTRACT PLANNING AND SOLICITATION
Sec. 2261.351. CONTRACT PLANNING. Before a state agency
solicits a contract, the agency must:
(1) identify, justify, and document the need for the
good or service;
(2) identify general contracting objectives,
assumptions, and constraints;
(3) consider alternatives to soliciting the contract;
and
(4) determine the preferred method of delivery for the
good or service.
Sec. 2261.352. SOLICITATION OF CONTRACT. (a) A
solicitation for a contract must include the following:
(1) a description of the work;
(2) a specific and measurable standard of performance;
(3) a list of the test conditions, methods, or
procedures for verifying that the contract deliverable meets the
standard;
(4) a method or process to monitor and ensure quality
in the contract deliverable;
(5) an acceptance process for each contract
deliverable that is expected to be delivered;
(6) a compensation structure that is consistent with
the type and value of work performed; and
(7) a remedy, if appropriate, for failure to meet
contract deliverables.
(b) In preparing a contract solicitation, a state agency
must include in the requirements for the contract deliverables:
(1) the quality level of the good or service;
(2) the amount of completion that is required;
(3) the suitability of the good or service for the work
to be done for the agency; and
(4) a defined and documented method of evaluation to
be used in making the award and in determining the best value bid
for the procurement.
SUBCHAPTER I. CONTRACT CLOSING
Sec. 2261.401. CLOSING PROCEDURE. A state agency shall
create and follow a procedure for contract closing that includes
procedures for:
(1) verification that all:
(A) required goods or services have been
delivered or performed, inspected, and accepted; and
(B) existing options have been exercised or have
expired;
(2) issuance of a contract completion notice by one of
the parties;
(3) acquisition of all required forms, reports, and
clearances;
(4) verification that other applicable terms have been
met;
(5) verification that there are no outstanding claims
or disputes; and
(6) final payment.
SECTION 28. Section 2262.001(1), Government Code, is
amended to read as follows:
(1) "Team" means the Contract Management and Oversight
[Advisory] Team created under Subchapter E [C].
SECTION 29. Section 2262.0015, Government Code, is amended
to read as follows:
Sec. 2262.0015. APPLICABILITY TO CERTAIN CONTRACTS.
(a) The comptroller by rule shall establish threshold
requirements that exclude small or routine contracts, including
purchase orders, from the application of Subchapters A, B, and D
[this chapter].
(b) Subchapters A, B, and D do [This chapter does] not apply
to an enrollment contract described by 1 T.A.C. Section 391.183 as
that section existed on November 1, 2013.
SECTION 30. Section 2262.002(b), Government Code, is
amended to read as follows:
(b) Except as otherwise provided by this chapter, this
[This] chapter does not apply to contracts of the Texas Department
of Transportation that:
(1) relate to highway construction or highway
engineering; or
(2) are subject to Section 201.112, Transportation
Code.
SECTION 31. Sections 2262.051(c) and (d), Government Code,
are amended to read as follows:
(c) The guide must provide required and recommended
contracting processes and procedures and information regarding the
primary duties of [a] contract management [manager], including how
to:
(1) develop and negotiate a contract;
(2) fairly and objectively select a contractor; [and]
(3) monitor contractor and subcontractor performance
under a contract and ensure compliance with provisions in a
contract that hold the contractor accountable for performance
results;
(4) develop an accurate and comprehensive statement of
work and conform contract documents to the statement of work;
(5) evaluate and ensure compliance with contract
deliverables and performance metrics and any associated remedies
and incentives;
(6) maintain required documentation for contracting
decisions, contract changes, and problems with a contract;
(7) communicate any serious issue or risk that is
identified with a contract in a timely manner to the agency's
governing body or the single state officer who governs the agency;
(8) create a risk management process under Section
2261.211;
(9) build and maintain a working relationship with the
contractor, including instruction on communication and timely
management of problems;
(10) create a procedure for selecting and applying a
preferred dispute resolution method;
(11) implement an escalation process to address
contract disagreements;
(12) evaluate and approve requests for payments that
are consistent with the contract; and
(13) develop a process for contract closure and
performance evaluation of a contractor under a contract.
(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 and provide procedures for
documenting agency decisions that do not follow required
contracting processes and procedures but are [sufficient
flexibility to accommodate those needs,] consistent with
protecting the interests of this state; and
(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].
SECTION 32. Section 2262.053(d), Government Code, is
amended to read as follows:
(d) The comptroller shall administer training under this
section and may assess a fee for the training in an amount
sufficient to recover the comptroller's costs under this section.
SECTION 33. Section 2262.0535, Government Code, is amended
by adding Subsection (c) to read as follows:
(c) The comptroller may assess a fee for the training
provided under this section in an amount sufficient to recover the
comptroller's costs under this section.
SECTION 34. Chapter 2262, Government Code, is amended by
adding Subchapters E and F to read as follows:
SUBCHAPTER E. CONTRACT MANAGEMENT AND OVERSIGHT TEAM
Sec. 2262.201. DEFINITIONS. In this subchapter:
(1) "High-risk contract" means a state agency contract
or purchase order that:
(A) has a value of at least $10 million;
(B) has a value of less than $10 million, but has
high-risk factors as identified by the team;
(C) is entered into with an entity that is
incorporated outside of the United States;
(D) is entered into with an entity that, during
the five-year period preceding the date of the purchase or award of
the contract, has had a contract with a state agency or federal
governmental entity terminated or canceled for:
(i) a violation of, or noncompliance with,
the terms of the contract;
(ii) delivery of an ineffective product,
service, or system;
(iii) significant delays or cost overruns;
(iv) fraud;
(v) misconduct; or
(vi) any other event that resulted in the
termination or cancellation of the contract for cause; or
(E) meets other criteria that may be established
by the team, including that the contract or purchase order:
(i) is awarded by an agency with
significant audit findings related to contracting in the previous
two fiscal years;
(ii) is expected to cost more than 20
percent of the awarding agency's budget available from all sources;
(iii) outsources a program or key function
of a program of the awarding agency;
(iv) has a value of more than $1 million and
is awarded on an emergency basis or is a sole source contract; or
(v) has a value of more than $1 million and
has change orders that increase the cost of the contract by more
than 20 percent of the original contract cost, excluding routine
contract renewals.
(2) "Major information resources project" has the
meaning assigned by Section 2054.003(10).
(3) "Quality assurance team" means the quality
assurance team established under Section 2054.158.
(4) "Solicitation" means a solicitation for bids,
offers, qualifications, proposals, or similar expressions of
interest for a high-risk contract.
Sec. 2262.202. APPLICABILITY OF SUBCHAPTER. (a) This
subchapter applies to contracts of the Texas Department of
Transportation that:
(1) do not relate to highway construction or highway
engineering; or
(2) are not subject to Section 201.112, Transportation
Code.
(b) This subchapter does not apply to a contract of the
Employees Retirement System of Texas or the Teacher Retirement
System of Texas except for a contract with a nongovernmental entity
for claims administration of a group health benefit plan under
Subtitle H, Title 8, Insurance Code.
Sec. 2262.203. ESTABLISHMENT; GENERAL DUTIES. The
Legislative Budget Board shall establish a Contract Management and
Oversight Team to:
(1) develop criteria for identifying high-risk
factors in contracts;
(2) consult with state agencies on and review
high-risk contracts as provided by Section 2262.204;
(3) provide recommendations and assistance to state
agency personnel throughout the contract management process;
(4) coordinate and consult with the quality assurance
team on all high-risk contracts relating to a major information
resources project; and
(5) coordinate and consult with the comptroller to:
(A) develop criteria for high-risk contracts
under Section 2262.201(1)(E);
(B) identify strategies to mitigate contract
risks; and
(C) monitor contract activity using information
from the centralized accounting and payroll system or any successor
system used to implement the enterprise resource planning component
of the uniform statewide accounting project developed under
Sections 2101.035 and 2101.036.
Sec. 2262.204. NOTICE AND REVIEW; WAIVER. (a) Each state
agency must provide written notice to the team not later than the
30th day before the date the agency publicly releases solicitation
documents for a high-risk contract.
(b) A state agency must submit to the team information and
documentation requested by the team that relate to a high-risk
contract, including information on contract development, vendor
selection, and ongoing contract oversight.
(c) The team shall review information and documentation
submitted under Subsection (b) and make recommendations to ensure
that potential risks related to the high-risk contract have been
identified and mitigated.
(d) A state agency shall implement the team's
recommendations and provide any additional documentation required
by the team to demonstrate that risks related to the high-risk
contract have been mitigated. If a recommendation made by the team
is not implemented, the agency must provide written notice to the
team before the 31st day after the date the agency received the
recommendation.
(e) If, after receiving notice provided under Subsection
(d), the team determines that significant risks related to the
high-risk contract remain, the team shall provide written notice of
that fact to the Legislative Budget Board, the governor, and the
comptroller with a description of the risk and recommendations to
mitigate the risk, including cancellation of the high-risk
contract.
(f) The team may adopt criteria for waiving the consultation
and review requirements of this section.
Sec. 2262.205. SOLICITATION AND CONTRACT CANCELLATION.
After review of the written notice provided by the team under
Section 2262.204(e), the Legislative Budget Board, the governor, or
the comptroller may recommend that a state agency cancel a
solicitation or a high-risk contract if:
(1) a proposed contract would place the state at an
unacceptable risk if executed; or
(2) an executed contract is experiencing performance
failure or payment irregularities.
SUBCHAPTER F. VENDOR RISK MANAGEMENT PROGRAM FOR STATE CONTRACTS
Sec. 2262.251. DEFINITION. In this subchapter, "office"
means the State Office of Risk Management.
Sec. 2262.2515. APPLICABILITY. This subchapter does not
apply to a contract for goods with a value of $50,000 or less.
Sec. 2262.252. COMPLIANCE VERIFICATION. (a) Each state
agency shall submit to the office ongoing contracts of the agency
for verification of vendor compliance with contract terms and
requirements and to correct contract compliance deficiencies as
provided by rules adopted by the office under Section 2262.253.
(b) The office may contract with a third-party
credentialing organization to provide compliance verification as
provided by this subchapter.
(c) Not later than December 31 of each even-numbered year,
the office shall provide a report to the legislature on the office's
findings under this subchapter and recommendations to ensure state
contract compliance and mitigate risk to the state.
(d) Notwithstanding Subsection (a), the office may not
require a state agency to submit for compliance verification a
contract related to health and human services if:
(1) the value of the contract cannot be determined at
the time of execution of the contract; and
(2) any qualified vendor is eligible for the contract.
Sec. 2262.253. RULES RELATING TO COMPLIANCE VERIFICATION.
(a) The office shall adopt rules to implement this subchapter.
(b) At a minimum, rules adopted under Subsection (a) must:
(1) provide standards for:
(A) selecting and submitting a statistically
significant sampling of contracts for review under this subchapter;
(B) identifying vendor noncompliance or
deficiency as a result of a contract review under this subchapter;
and
(C) implementing corrective action in relation
to vendor noncompliance or deficiency;
(2) in relation to verification system requirements,
provide criteria for:
(A) monitoring of vendor compliance with
contract terms and requirements through the life cycle of the
contract; and
(B) implementation of Internet-based software
that has the capability to exchange information and facilitate
payments and real-time reporting of collected information;
(3) in relation to requirements for contract
compliance verification:
(A) designate verification checklists, including
requirements for interviews and recordkeeping, exposure analyses,
equipment and facility forms, and pre-verification and
post-verification compliance;
(B) provide standards for verifying vendor
certificates of insurance, policy types and limits, policy
expirations and renewals, and endorsements;
(C) provide standards for additional vendor
screenings, including:
(i) financial screening, including
reviewing profit and loss statements, cash flow statements, balance
statements, and federal employer identification numbers and other
taxpayer identification numbers;
(ii) license screening, including any
required certifications and professional licenses;
(iii) state and federal debarment and
exclusion screening;
(iv) compliance with legal requirements;
(v) compliance with safety standards,
including workers' compensation and automobile insurance coverage;
and
(vi) review of vendor compliance with
security standards for information systems; and
(D) address any additional issues the office
determines to be necessary to achieve best practices in the
verification of contracts for compliance with contract terms and
requirements and to correct contract compliance deficiencies; and
(4) set a reasonable fee to be paid by a vendor who
enters into a contract with a state agency in an amount that is
sufficient to recover the office's costs under this subchapter and
that is less than one percent of the contract, not to exceed $1,000.
Sec. 2262.254. REQUIRED CONTRACT PROVISION RELATING TO
VENDOR RISK MANAGEMENT PROGRAM. Each state agency shall include in
each of its contracts a clause that provides that the vendor agrees
that the vendor may be charged a reasonable fee as provided by
Section 2262.253(b)(4).
SECTION 35. Subchapter C, Chapter 2262, Government Code, is
repealed.
SECTION 36. (a) The Contract Advisory Team is abolished.
(b) The validity of an action taken by the Contract Advisory
Team before the team was abolished by this Act is not affected by
the abolition.
(c) All powers and duties of the Contract Advisory Team are
transferred to the Contract Management and Oversight Team
established by this Act.
(d) A rule, form, policy, procedure, or decision of the
Contract Advisory Team continues in effect as a rule, form, policy,
procedure, or decision of the Contract Management and Oversight
Team until superseded by an act of the Contract Management and
Oversight Team.
(e) A reference in law to the Contract Advisory Team means
the Contract Management and Oversight Team.
(f) Any action or proceeding involving the Contract
Advisory Team is transferred without change in status to the
Contract Management and Oversight Team, and the Contract Management
and Oversight Team assumes, without a change in status, the
position of the Contract Advisory Team in a negotiation or
proceeding to which the Contract Advisory Team is a party.
SECTION 37. Except as otherwise provided by this Act, this
Act applies only in relation to a contract:
(1) for which a state agency first advertises or
otherwise solicits bids, proposals, offers, or qualifications on or
after the effective date of this Act;
(2) that is extended or modified on or after the
effective date of this Act; or
(3) for which a change order is submitted on or after
the effective date of this Act.
SECTION 38. Sections 2166.2551, 2254.006, and
2254.0301(a), Government Code, as amended by this Act, apply only
to a state agency contract for which the agency is required to
provide notice to the Legislative Budget Board that is entered into
on or after the effective date of this Act.
SECTION 39. To the extent of any conflict, this Act prevails
over another Act of the 84th Legislature, Regular Session, 2015,
relating to state agency contracting and oversight.
SECTION 40. This Act takes effect September 1, 2015.