Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Sen. Padilla
/Reps. Lundstrom and Garratt
LAST UPDATED
ORIGINAL DATE 2/06/25
SHORT TITLE Procurement Changes
BILL
NUMBER Senate Bill 206
ANALYST Fischer
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
Total
At least
$55,000.0
At least
$55,000.0
At least
$110,000.0
Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
LFC Program Evaluation Unit Reports:
Progress Report: Obtaining and Maximizing Value in State Procurement, October 2021
Program Evaluation: Maximizing Value in Procurement, October 2019
Program Evaluation: Obtaining Value in State Procurement and Issues with Non-
Competitive Methods, October 2016
Agency Analysis Received From
General Services Department Department of Information Technology
Commission of Public Records
State Ethics Commission
Department of Cultural Affairs
Early Childhood Education and Care Department
SUMMARY
Synopsis of Senate Bill 206
Senate Bill 206 (SB206) contains several changes to the state’s Procurement Code in Section 13
NMSA 1978, which establishes the rules, procedures, and ethical standards governing how New
Mexico government entities purchase goods, services, and construction projects.
The bill would add several new exemptions from the Procurement Code. These exemptions
would not only exempt these procurements from the requirement of a sealed, competitive bid or
proposal process, but also from the basic disclosure, anti-corruption, and conflict-of-interest
provisions of the code, set forth in Sections 13-1-190 through 13-1-195 NMSA 1978, which
together prohibit bribes and kickbacks, require disclosure of campaign contributions, prohibit
contemporaneous employment with both the government and contracting party, and prohibit the Senate Bill 206 – Page 2
use of confidential information for private gain. Those new exemptions are for:
o Contracts between the Early Childhood Education and Care Department
(ECECD) and childcare businesses and for slots for childcare assistance,
o Contracts for the Department of Information Technology (DoIT) to acquire and
replace capital licenses used to provide IT enterprise services,
o Contracts for the digitization of state or federal records, and
o Contracts for appraisals or surveys for the sale or purchase of real property.
Under additional provisions that would remove or lessen restriction, the bill would:
Increase the cost threshold for local and state public works projects from $50 thousand to
$100 thousand, an amount which triggers the required use of competitive, sealed
qualifications-based proposals;
Double the maximum time for professional services contracts from four to eight years but
exempt newly defined public-private partnership agreements from that time limit;
Increase the small purchase procurement exception to the use of competitive, sealed bids
from $60 thousand to $100 thousand;
Increase the dollar threshold by which agencies can procure goods or services via a direct
purchase order (i.e., outside another contract vehicle and without gathering quotes) from
$20 thousand to $60 thousand.
Raise the cap of small purchases not subject to procurement officer review from $1,500
to $10 thousand;
Decrease the required posting time for invitations to bid from 10 days to three days, and
allows state purchasing to advertise the invitation to bid (ITB) notice on its website rather
than in general circulation state newspapers;
Increase the dollar threshold for alerting interested businesses to posted ITBs from $20
thousand to $100 thousand;
Decrease the amount of time agencies must post potential sole-source contracts on the
state Sunshine Portal from 30 days to 15 days;
Increase the dollar threshold by which contractors need to submit cost or pricing data
from $25 thousand to $60 thousand and require it only if the contract is to be awarded by
requests for proposal (RFP) or ITB;
Increase the dollar threshold for the procurement exemption for magazine or other
subscriptions, conference registration fees, and other similar purchases from $10
thousand to $100 thousand;
Limit sole source contracts to four years, including all extensions and renewals—
currently DFA sets limitations of sole sources to one year, with room for exceptions
Other changes in SB206 seek to add new clarification or guardrails on how the state spends
public dollars. The bill would:
Clarify that the existing procurement exemption for advertising does not include
marketing purchases,
Clarify that the existing procurement exemption for subscriptions is not for software
licenses or maintenance agreements, where prepayments are required.
Senate Bill 206 – Page 3
Finally, SB206 makes a number of changes to procurement processes within state government
that would:
Allow for delegation of the sufficiency review of professional services contracts by the
General Services Department (GSD),
Allow state agencies and local public bodies to have up to two chief procurement officers
instead of just one,
Allow bids containing a mistake discovered before bid opening to be modified or withdrawn
by electronic notice provided to the procurement manager or the individual identified in the
request for proposal,
Require the state purchasing agent at GSD to maintain, rather than establish, a list of all
chief procurement officers and to set up an alternative continuing education process for
agency and local chief procurement officers to be recertified;
Expand the pool of state employees that can negotiate contracts for architectural,
landscape architectural, engineering, or surveying services—currently limited the GSD
and the Department of Transportation (NMDOT) secretaries or their designees—to also
include the Cultural Affairs Department and the GSD Facilities Management Division
director or their designees.
The General Services Department noted SB206 is an agency-endorsed bill. The effective date of
this bill is July 1, 2025.
FISCAL IMPLICATIONS
The LFC has, since 2016, issued three Program Evaluation Unit reports noting the hazards of
noncompetitive procurement processes. In an ideal world, all the goods and services that New
Mexico government entities buy with taxpayer dollars would be competitively sourced, with
vendors competing to offer the best discounts to secure the state as a customer. The state would
facilitate this situation by employing a central group of professionals responsible for ensuring the
state gets the best deals. This type of procurement would naturally combat the waste, fraud, and
abuse of taxpayer dollars that can inadvertently or purposefully occur without such oversight and
guardrails. However, as highlighted by LFC evaluations, overuse of Procurement Code
exemptions and other loopholes have often led to state overspending for purchases ranging from
everyday acquisitions of laptops and cars to noncompetitively sourced contracts worth hundreds
of millions of dollars. Any continued widening of these exemptions and additions of
noncompetitive procurement processes would only increase opportunities for waste, fraud, and
abuse to streamline and speed up bureaucratic processes.
Multiple sources indicate a well-run procurement program can save an organization 5 percent to
10 percent on costs. Assuming the removal of guardrails on professional services contracts in
SB206 would drive up prices by a very moderate 5 percent, the fiscal impact is likely to be at
least $55 million, based on the $1.1 billion in professional services contracts process by GSD’s
Contract Review Bureau in FY24. The impact of the bill, however, extends beyond professional
services contracts and lifts restrictions on childcare assistance contracts—representing $308
million in spending—digitization services, small purchases and small public works projects, and
direct purchase orders. It is likely the overall cost could be substantially higher.
Senate Bill 206 – Page 4
SIGNIFICANT ISSUES
The Ethics Commission flags similar concerns about removing guardrails from the Procurement
Code:
The Procurement Code’s default rule is that government procurement of goods and services
should follow a competitive, sealed process. See § 13-1-102. However, the Procurement
Code is mainly a catalog of exceptions to this default rule, providing that the procuring
government agency has significant or complete discretion to decide how to select a contractor
the government will do business with. See generally § 13-1-102 through -199. This is
favoritism under law: the executive’s relatively unconstrained ability to select government
contractors without the use of any competitive selection process. This unfettered discretion
exists because of legislative decisions to limit the reach and application of the Procurement
Code’s default rule of a requirement of a competitive, sealed process. While such discretion
makes government procurement mercifully less cumbersome for government agencies, it
concomitantly increases the scope for favoritism in contracting by those executive officials
and employees who ultimately make procurement decisions in their respective agencies.”
Along the same lines, but specific to the new exemption for contracts to digitize records, the
Commission on Public Records notes, “By adding an exception to Procurement Code for
digitation of federal or state records, proposed Subsection KK (p.12 of the bill), there is a
potential for abuse regarding this exception due to a lack of accountability. This exception
provides for no oversight over contracts entered into by the General Services Department unless
the vendor is listed on the statewide price agreement.”
Several agencies note positive aspects of SB206, particularly that many of the changes in SB206
simplify and speed up the process of procurement and may potentially make procurement more
accessible to small businesses, less lengthy, and in the case where the state can negotiate lower
prices for longer contracts, save the state money. The Department of Cultural Affairs (DCA)
notes the increase in Section 12 of SB206, allowing agencies to buy up to $60 thousand from a
vendor by simply issuing a purchase order, could increase the competitiveness of smaller
vendors while allowing agencies to make purchases with fewer quotes from vendors. Similarly,
DCA notes the increase of raising the cap of small purchases not subject to central purchasing
jurisdiction from $1,500 to $10 thousand would allow agencies to make small purchases quicker
and reduce the volume of approvals for central purchasing staff.
Cultural Affairs and GSD also note that the changes in SB206 to allow a second chief
procurement officer (CPO) appointment would improve efficiency by providing backup capacity
to approve transactions. Changes to broaden acceptable continuing education for CPOs will help
ensure that the requirements for continuing education are met. The Department of Information
Technology (DoIT) also notes the agency flexibility provided by SB206, noting it could speed up
the procurement process. (DoIT points out current GSD procurements can take up to 180 days.)
Section 6 of SB206 amends the exemption in Section 13-1-98(V) NMSA to confirm that the
phrase “purchases of advertising in all media” does not include purchases of marketing services.
Since 2016, LFC staff have flagged agencies’ use of this advertisement exemption to avoid
conducting competitive procurement for marketing or public relations services. The Ethics
Commission noted it is actively litigating this issue of statutory interpretation in state district
court. See Compl., State Ethics Comm’n v. Lindsey, et al., D-809-CV-2024-00091 (8th Jud. Dist.
Ct., Jun. 20, 2024). The change in Section 6 of SB206 would appear to clarify the exemption to
only include advertisements. Senate Bill 206 – Page 5
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
SB206 relates to Senate Bill 217, which clarifies the Department of Information Technology’s
role in approving information technology projects.
TECHNICAL ISSUES
The State Ethics Commission notes that Section 2 of SB206 creates a new definition of public-
private partnership agreement as “an agreement between at least one public partner and one private
partner in which the public partner accepts a private contribution to the research, development,
design, construction, financing, implementation, operation or maintenance of any public asset or
public benefit.” It is not obvious from this definition what such agreements are (and are not)—i.e.,
whether they are a species of professional services contracts that the government seeks to procure.
Nor is it clear how the Procurement Code speaks to how such agreements are to be procured.
Relatedly, the Procurement Code does not separately define “public partner” or “private partner.”
The change limiting sole source contracts to now more than four years is somewhat in conflict with
the regulatory Model Accounting Practices (MAPs) set and enforced by the Department of Finance
and Administration. MAPs states, “Sole source procurements cannot have a term more than 12
months. Any exception to this term must be granted by the State Controller. Such exemption entitles
the agency to extend a sole source contract but only if the proper amendment and laws, rules
and policies are followed.”
DoIT notes that Section 13-1-38.1 NMSA defines the chief procurement officer (CPO) role using
the singular term “person.” To the extent that this implies an agency can only have one CPO, the
proposed changes in Section 5 of the bill clarify that an agency can have up to two CPOs.
ALTERNATIVES
The State Ethics Commission recommends that, as the Legislature exempts more and more
government procurement from procurement law, Section 13-1-98 perhaps should be amended to read
that the “provisions of Section 13-1-102 [the Procurement Code] shall not apply to: . . .” That
amendment would exempt the categories of procurement set forth in Section 13-1-98 from the
requirement of a competitive, sealed process while leaving the anti-corruption and disclosure
provisions of the Procurement Code applicable to that same set of government purchases and
contracts.
LFC staff, in past program evaluations, have recommended that the statute providing for
Procurement Code exemptions be limited to a specific dollar threshold. If the exemptions in SB206
are considered, the Legislature may want to combine them with cost limits, i.e., exemptions for
contracts for
the digitization of state or federal records up to ten thousand dollars ($10,000).
MF/hj/hg