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Below is the HillCo client report from the May 21 joint House Government Efficiency & Reform and House Technology Committee hearing.

This report focuses only on discussion of the following charge:

Study the current laws, rules, and processes in place for the Department of Information Resources' Cooperative Contracts and recommend improvements to the 84th Legislature.
 
Cesar Salazar, State Auditor’s Office

  • Discussed the audit report for DIR’s cooperative contracts from November 2013
  • The audit’s purpose was to determine if proper controls are in place for procurements
  • Between 2011-2013 DIR had 2.4B in sales with the cooperative contracts program
  • Use the contracts to get discounts
  • Suggestions:
    • DIR should require vendors to disclose a “not to exceed price” in contracts
    • Need to assess statewide needs more closely
    • Have regular contract monitoring to review and verify accurate sales data
      • Require managers to verify that the vendors are giving the appropriate discounts
    • Calculate program cost savings across all contracts
    • A quality assurance program should be implemented
    • Ensure security of passwords
  • Gonzalez –  Did you look into a non-password security method that could be used?
    • No, just looked at current system
  • Button – do you have an overall assessment for cyber security risk?
    • No, just looked at current contracts
  • Perry – this is voluntary program at DIR, are cost savings there? DIR can approve exemptions?
    • In the last 18 months DIR approved 1200 exemptions
      • 80% were approved for goods and services not available in current contracts
    • Did you look at the coordination with the Comptroller?
      • Out of the scope of their audit
    • We need to assess the coordination with DIR, LBB and the Comptroller
  • There was a separate audit conducted that studied how the different agencies used cooperative contracts
    • Will provide it later
  • Perry – is this an effective concept if it isn’t mandatory?
  • Gonzalez – you suggest to improve password controls – is there currently a problem with that?
    • Yes
  • Elkins – you all met with the agency after the audit, did they agree with your assessment?
    • Yes

 
Department of Information Resources

  • HB 1516 in 2005 instructs the department to buy services through cooperative contracts
  • Enables the state to leverage buying power for discounts
  • Require that the vendors to maintain websites with accurate pricing
  • Last 3 years they increased their purchases by 16%
    • Biggest customer is K-12
  • Saw 300,000 in savings in 2013
    • Eliminates duplication
  • Did a computer replacement for 14 agencies
    • Did a bulk buy for 7 of these agencies in November for 900 desktops and 90 laptops
  • Gonzalez – there is a backlog in updating technology, and the longer we wait to replace outdated equipment the more it will cost
  • Elkins – there are still 50,000 computers running on XP which is becoming obsolete
  • DIR suggestion to expand the customer base to private school, ERCOT, etc.
  • Perry – are there checks and balances on what deals other states are getting compared to Texas?
    • Contracts are renewed on an annual basis and benchmark prices are set
  • Perry – are agencies that opt out getting better pricing?
    • Biggest exemptions are for cameras, something the state does not contract for
  • Gonzalez – hard to do apples to apples comparison – some agencies need more robust equipment than others ex: DPS
  • Perry – do you automatically buy warranties? Would like to know the payback
    • Optional