A major Texas procurement law has raised concerns among information technology (IT) companies that contract with the state. Among the numerous bills debated in the 84th Texas legislative session that focused on state contracting reform, Senate Bill 20 garnered both chambers’ approval. The bill signed by Gov. Greg Abbott on June 4 will put procurement reforms into law that follow earlier administration direction to state agency heads with the goal of achieving greater accountability and transparency.
While the bill was amended to positively respond to vendors’ concerns, Senate Bill 20 undoubtedly will change IT procurement for the foreseeable future in Texas – making the process unnecessarily long, complicated, and more expensive in some respects.
Here are some of its highlights:
Contract procedures and approvals. The law will require each state agency to develop a contract management handbook and each contract manager to not only approve each contract, but also acknowledge that the agency complied with its contract management guide for each purchase. Moreover, an agency’s contract manager must approve each state agency contract where the best value standard is required and ensure that the agency documents the best value standard used for a contract.
Cooperative contracts. Users of the state’s cooperative contract will be required to issue an additional request for pricing to vendors for contracts valued over $50,000, with six vendors being contacted if a contract is valued between $150,000 and $1 million. The law also restricts an agency from purchasing commodities under the state’s cooperative contract if the value of a contract exceeds $1 million.
Detailed recordkeeping. State agencies will be required to retain contract documents for a period of seven years, report vendor performance information to the state’s vendor performance tracking system, and post solicitation documents and contracts to the state’s centralized accounting and payroll system.
Greater public transparency. State agencies will be required to post their contracts on their websites and the comptroller must make its vendor performance tracking system publicly available on its website.
High-value contracts. For contracts with value exceeding $1 million, a state agency must develop contract reporting requirements that provide information regarding compliance with financial provisions and delivery schedules, corrective action plans, and any liquidated damages assessed or collected. Along this line, each agency must verify the accuracy of any information reported by a contractor and the delivery time of goods or services scheduled for delivery. Additionally, no contract valued over $1 million can be entered into without the approval of an agency’s governing body and the signature of the presiding officer.
For contracts valued over $5 million, state agency staff must verify, in writing, that the solicitation and purchasing methods and contractor selection process complied with state law and agency policy and submit information of any potential issues that may arise to an agency’s governing body.
Risk monitoring. The new law will also expand risk monitoring of state contracts by requiring state agencies to establish a procedure to identify those contracts requiring enhanced performance monitoring; creating and complying with a purchasing accountability and risk analysis procedure that, among other things, assesses the risk of fraud, abuse, or waste in the contractor selection process and contract provisions; and establishing clear levels of purchasing accountability and staff responsibilities related to purchasing.
State Report. The comptroller and the governor’s budget and policy staff are directed to issue a report by December 31, 2016 about the feasibility of consolidating state purchasing functions into fewer state agencies or one state agency and consolidating or reducing the number of vendors authorized to contract with the state.
Vendor performance. Each state agency will be required to conduct a vendor performance review in accordance with the rules promulgated by the state comptroller. The law also incorporates language that a vendor can be barred from participating in state contracts when there are repeated unfavorable performance reviews or classifications after considering the following factors:
- the severity of the substandard performance by the vendor;
- the impact to the state of the substandard performance;
- any recommendations by a contracting state agency that provides an unfavorable performance review;
- whether debarment of the vendor is in the best interest of the state; and
- any other factor that the comptroller considers relevant.
It also authorizes the state comptroller to bar a vendor from participating in state contracts, including contracts for which purchasing authority is delegated to a state agency, if more than two contracts between the vendor and the state have been terminated by the state for unsatisfactory vendor performance during the preceding three years.
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