By: Otto, et al. (Senate Sponsor - Eltife) H.B. No. 15
         (In the Senate - Received from the House May 6, 2015;
  May 7, 2015, read first time and referred to Committee on Finance;
  May 20, 2015, reported favorably by the following vote:  Yeas 11,
  Nays 0; May 20, 2015, sent to printer.)
Click here to see the committee vote
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the management and oversight of state contracts,
  including contracts for information technology commodity items.
         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.  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 5.  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 6.  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 7.  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 8.  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 9.  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 10.  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 11.  Chapter 2262, Government Code, is amended by
  adding Subchapter E 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.
         SECTION 12.  Subchapter C, Chapter 2262, Government Code, is
  repealed.
         SECTION 13.  (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 14.  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 15.  This Act takes effect September 1, 2015.
 
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