The Committee met to take up and consider SB 20.
SB 20 – Nelson, Relating to state agency contracting
- Strengthens accountability, increases transparency and ensures fair competitive bids of state contracts
- Procurement officers must report any potential issues with contracts over $5 million
- Increases the size and reporting requirements for contract advisory team
- Introduced committee substitute addresses removing the following from bill text:
- Junior colleges – entities are operated by local government
- The requirement of a maximum of 35% approval of the number of vendors that competitively bid to provide a particular good under a multiple award contact
- Sen. West noted people are prosecuted for welfare fraud but individual vendors committing contract fraud receive minimal consequences
General Questions
Robert Wood, Texas Comptroller’s Office
- Chairman Nelson asked how much money in state contracts are issued out each biennium
- There is not an exact number or method for total contract costs – well over $50 billion
- Sen. West asked if the number of reported spending is accurate
- The media is reporting different numbers than listed in the Comptroller’s Office – greater collaboration and understanding of contracts will help find a better answer
- Sen. Uresti asked if agencies have to list the contracts used by their agency
- Yes, to an extent. Significant budget funding is used in the forms of grants for many agencies that do not require contracts
- Sen. Schwertner concerned contract monitoring and oversight is overseen by those that are negotiating those contracts – best practices would be to have a random sample of high-value contracts evaluated on a continuous basis
- Sen. Huffman approved of Sen. Schwertner’s random sample idea and added that small million dollar contracts should be evaluated as closely as large ones
- Sen. Uresti announced he was working on a bill to require TxDOT and Higher ED to also be included in contracting conversation – legislature should aim to save at least 3% of contracting budget this session
Kelly Linder, State Auditor’s Office
- Bill includes a centralized database that will attempt to consolidate information and create more accurate spending totals
- Sen. West questioned if there is a list of contractors in use available
- Yes, agencies are required to report contracts on a frequent basis. Contractors previously used are evaluated based on past performance before agreeing to a new contract
- Sen. Kolkhorst declared this might be one of the most important bills of the session
- Sen. Schwertner asked what power the State Auditor’s office has in influencing agency decisions
- Auditor’s office can only make recommendations – no statutory obligation by agencies
- Sen. Seliger asked why Higher ED has not been audited
- There has been a tremendous focus on state agency contracts but there have been no auditing of higher education institutions
Testimony
Robert Wood, Texas Comptroller’s Office
- Less than 10% of contracting is done at TPASS or DIR
- Contract management and training will be strengthened in SB 20
- RFPs over $10 million are reviewed with assistance by LBB and Attorney General’s Office – agencies require authority be delegated back to the agency in making decisions
- Sen. West asked if Comptroller’s office has looked at what other states are doing regarding contract transparency
- Yes, there is an ongoing dialogue on transparency issues – more specific best practices from each state will be made available
- Sen. Uresti asked for instances where an agency would not accept a recommendation by Comptroller
- Agency determined for their specialized nature of the contract is not appropriate
- No enforcement mechanism if agencies do not report contract data
- 15% of agencies report data but the rest of the 85% do not all participate in contracts
Todd Kimbriel, DIR
- Support the bill
- FY 12-14 budget total of $1.7 billion for services – DBITS, security services, website design, IT training
- SB 20 will implement better control over contracts and increase further competition
- Bulk-buy program of specific commodity or item should be included or considered in SB 20
- Sen. West noted TEA and TxDOT included in purchasing master contracts
- TEA participates on a voluntary basis – Higher ED is not mandated by statute
- Sen. Bettencourt wanted more preventative measures – agencies do not have minimum information needed to know if contract bids are legitimate in workgroup discussions
- Sen. Watson asked if there are a number of contracts that SB 20
- No, that number will be collected
- Sen. Nichols believed DIR is a great opportunity to save the state some money – DIR needs to be more competitive in its contract bidding; the state of Texas paid much more for Dell computers than those used in Florida
- Florida computers were of much lesser quality than the ones used in Texas
- Sunset Review demonstrated DIR in compliance with recommendations from first review, but DIR updated more revisions suggested in last session review even though suggestions were eventually vetoed by the Governor
- Sen. Nichols recognized DIR as the root of the contracting problem
- Texas is in a pilot agreement with Oklahoma to help become more competitive in procurement
- Chairman Nelson noted Sunset Commission reviewed 124 agencies in FY 10 that were ball parked at $60 billon – FY13 $24.1 billion in contracting for just HHSC
Public Testimony
Tom Smith, Texas Anti-Corruption Plan
- Support the bill
- Bill should be significantly broader to deal with all other agencies discussed
- Provision includes what a person knows but should include what person ‘should’ know
- Include family members – person cannot leave a state agency and come back and contract
Bill left pending.