Texas 2009 - 81st Regular

Texas Senate Bill SB1805 Compare Versions

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Old	New	Differences
1	1	81R5994 MTB-D
2	2	By: Zaffirini S.B. No. 1805
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to contracting issues of state agencies, including ethics
8	8	issues related to state contracting.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 322.020, Government Code, is amended by
11	11	amending Subsections (b), (c), and (e) and adding Subsection (g) to
12	12	read as follows:
13	13	(b) Each state agency shall provide the Legislative Budget
14	14	Board:
15	15	(1) copies of the following documents:
16	16	(A) [(1)] each major contract entered into by the
17	17	agency; and
18	18	(B) [(2)] each request for proposal, invitation
19	19	to bid, or comparable solicitation related to the major contract;
20	20	and
21	21	(2) information regarding each major contract entered
22	22	into by the agency, including:
23	23	(A) the name of the contractor;
24	24	(B) the contract value;
25	25	(C) the beginning date and end date of the
26	26	contract;
27	27	(D) a description of any amendments made to the
28	28	contract;
29	29	(E) cumulative payments and encumbrances under
30	30	the contract;
31	31	(F) key contract terms that are out of compliance
32	32	in terms of timeliness standards; and
33	33	(G) any other information that the board
34	34	considers necessary.
35	35	(c) The Legislative Budget Board shall post on the Internet:
36	36	(1) each major contract of a state agency; [and]
37	37	(2) each request for proposal, invitation to bid, or
38	38	comparable solicitation related to the major contract; and
39	39	(3) information provided to the board under Subsection
40	40	(b)(2) regarding a major contract.
41	41	(e) The Legislative Budget Board shall make the information
42	42	searchable by contract value, state agency, [and] vendor, and date,
43	43	including both the beginning date and the end date of the contract.
44	44	The Legislative Budget Board may make the information searchable by
45	45	other subjects as appropriate.
46	46	(g) The Legislative Budget Board shall set appropriate
47	47	criteria to determine when and what information should be updated.
48	48	SECTION 2. Section 2113.102(a), Government Code, is amended
49	49	to read as follows:
50	50	(a) A state agency may not use appropriated money to
51	51	contract with a person to audit [the financial records or accounts
52	52	of] the agency except:
53	53	(1) as provided by[:
54	54	[(1)] Subsections (b), (c), and (d); and
55	55	(2) in accordance with Section 321.020 [Chapter 466,
56	56	pertaining to the state lottery;
57	57	[(3) Chapter 2306, pertaining to the Texas Department
58	58	of Housing and Community Affairs; and
59	59	[(4) Chapter 361, Transportation Code, pertaining to
60	60	the Texas Turnpike Authority division of the Texas Department of
61	61	Transportation].
62	62	SECTION 3. Section 2162.103(a), Government Code, is amended
63	63	to read as follows:
64	64	(a) In comparing the cost of providing a service, the
65	65	council shall consider the:
66	66	(1) cost of supervising the work of a private
67	67	contractor; [and]
68	68	(2) cost of a state agency's performance of the
69	69	service, including:
70	70	(A) the costs of the comptroller, attorney
71	71	general, and other support agencies; and
72	72	(B) other indirect costs related to the agency's
73	73	performance of the service;
74	74	(3) installation costs and any other initial costs
75	75	associated with a contract with a private contractor;
76	76	(4) other costs associated with the transition to
77	77	using a private contractor's goods or services; and
78	78	(5) cost savings to the state if a private contractor
79	79	were awarded the contract.
80	80	SECTION 4. Section 2262.001, Government Code, is amended by
81	81	amending Subdivisions (3) and (4) and adding Subdivision (3-a) to
82	82	read as follows:
83	83	(3) "Contract manager" means a person who:
84	84	(A) is employed by a state agency; and
85	85	(B) has significant contract management duties
86	86	for the state agency[, as determined by the agency in consultation
87	87	with the state auditor].
88	88	(3-a) "Executive director" means the administrative
89	89	head of a state agency.
90	90	(4) "Major contract" means a contract, including a
91	91	renewal of a contract, that has a value of at least $1 million.
92	92	SECTION 5. Subchapter A, Chapter 2262, Government Code, is
93	93	amended by adding Section 2262.0015 to read as follows:
94	94	Sec. 2262.0015. APPLICABILITY TO CERTAIN CONTRACTS. (a)
95	95	The comptroller by rule shall establish threshold requirements that
96	96	exclude small or routine contracts, including purchase orders, from
97	97	the application of this chapter.
98	98	(b) This chapter does not apply to an enrollment contract
99	99	described by 1 T.A.C. Section 391.183 as that section existed on
100	100	November 1, 2007.
101	101	SECTION 6. The heading to Section 2262.053, Government
102	102	Code, is amended to read as follows:
103	103	Sec. 2262.053. TRAINING FOR CONTRACT MANAGERS.
104	104	SECTION 7. Section 2262.053, Government Code, is amended by
105	105	amending Subsections (a) and (d) and adding Subsections (e), (f),
106	106	and (g) to read as follows:
107	107	(a) In coordination with the [comptroller,] Department of
108	108	Information Resources, [and] state auditor, and Health and Human
109	109	Services Commission, the comptroller or a private vendor selected
110	110	by the comptroller [commission] shall develop [or administer] a
111	111	training program for contract managers.
112	112	(d) The comptroller [Texas Building and Procurement
113	113	Commission] shall administer the training program under this
114	114	section.
115	115	(e) The comptroller shall certify contract managers who
116	116	have completed the contract management training required under this
117	117	section and keep a list of those contract managers.
118	118	(f) The program developed under this section must include a
119	119	separate class on ethics and contracting.
120	120	(g) A state agency or educational entity may develop
121	121	qualified contract manager training to supplement the training
122	122	required under this section. The comptroller may incorporate the
123	123	training developed by the agency or entity into the training
124	124	program under this section.
125	125	SECTION 8. Subchapter B, Chapter 2262, Government Code, is
126	126	amended by adding Section 2262.0535 and Sections 2262.055 through
127	127	2262.066 to read as follows:
128	128	Sec. 2262.0535. TRAINING FOR GOVERNING BODIES. (a) The
129	129	comptroller or a private vendor selected by the comptroller shall
130	130	adapt the program developed under Section 2262.053 to develop an
131	131	abbreviated program for training the members of the governing
132	132	bodies of state agencies. The training may be provided together
133	133	with other required training for members of state agency governing
134	134	bodies.
135	135	(b) All members of the governing body of a state agency
136	136	shall complete at least one course of the training developed under
137	137	this section. This subsection does not apply to a state agency that
138	138	does not enter into any contracts.
139	139	Sec. 2262.055. FEES FOR TRAINING. The comptroller shall
140	140	set and collect a fee from state agencies that receive training
141	141	under this subchapter in an amount that recovers the comptroller's
142	142	costs for the training.
143	143	Sec. 2262.056. STATE AGENCY REPOSITORY. Each state agency
144	144	shall maintain in a central location all contracts for that agency.
145	145	Sec. 2262.057. REPORTING CONTRACTOR PERFORMANCE. (a)
146	146	After a contract is completed or otherwise terminated, each state
147	147	agency shall review the contractor's performance under the
148	148	contract.
149	149	(b) Using the forms developed by the team under Sections
150	150	2262.104 and 2262.105, the state agency shall report to the
151	151	comptroller on the results of the review regarding the contractor's
152	152	performance under the contract.
153	153	Sec. 2262.058. CONTRACTOR PERFORMANCE DATABASE. (a) The
154	154	comptroller shall store in a database contractor performance
155	155	reviews as provided by this section.
156	156	(b) The comptroller shall evaluate the contractor's
157	157	performance based on the information reported under Section
158	158	2262.057 and criteria established by the comptroller.
159	159	(c) The comptroller shall establish an evaluation process
160	160	that allows vendors who receive an unfavorable performance review
161	161	to protest any classification given by the comptroller.
162	162	(d) The comptroller shall develop a database that
163	163	incorporates the performance reviews and aggregates the reviews for
164	164	each contractor.
165	165	(e) A state agency may use the performance review database
166	166	to determine whether to award a contract to a contractor reviewed in
167	167	the database.
168	168	Sec. 2262.059. EXCLUDING CONTRACTOR FROM SOLICITATION
169	169	PROCESS. Based on its own contractor performance reviews and on
170	170	information in the database developed under Section 2262.058, a
171	171	state agency may exclude a contractor from the solicitation process
172	172	for a contract if the agency determines the contractor has
173	173	performed poorly on a previous state contract without regard to
174	174	whether the contractor has been barred under Section 2155.077.
175	175	Sec. 2262.060. PERFORMANCE MEASURES; REPORTS. (a) Each
176	176	state agency shall develop a plan for incorporating performance
177	177	measures into all contracts entered into by the agency. This
178	178	includes ensuring that performance measures are written into each
179	179	contract prior to execution.
180	180	(b) Not later than March 1 of each year, each state agency
181	181	shall report to the team, governor, lieutenant governor, and
182	182	speaker of the house of representatives regarding performance
183	183	measures in the agency's contracts. The report must describe the
184	184	agency's efforts to include performance-based provisions in the
185	185	agency's contracts.
186	186	(c) The state agency shall make the report accessible to the
187	187	public on the agency's website.
188	188	Sec. 2262.061. CONTRACT MANAGERS. (a) Each state agency
189	189	that enters into contracts other than interagency contracts shall
190	190	establish a career ladder program for contract management in the
191	191	agency.
192	192	(b) An employee hired as a contract manager may engage in
193	193	procurement planning, contract solicitation, contract formation,
194	194	price establishment, and other contract activities.
195	195	(c) Each state agency shall determine, in consultation with
196	196	the state auditor, the amount and significance of contract
197	197	management duties sufficient for an employee to be considered a
198	198	contract manager under this chapter.
199	199	Sec. 2262.062. APPROVAL OF CONTRACTS. (a) Each state
200	200	agency shall establish formal guidelines regarding who may approve
201	201	a contract for the agency.
202	202	(b) Each state agency shall adopt administrative rules to
203	203	establish a monetary threshold above which agency contracts and
204	204	amendments to or extensions of agency contracts require written
205	205	authorization by the agency executive director.
206	206	(c) For state agency contracts valued in excess of $1
207	207	million the agency executive director must authorize a contract
208	208	amendment in writing.
209	209	(d) Each state agency shall annually report to the
210	210	comptroller a list of each person authorized to approve contracts
211	211	at the agency. The list must include the person's name, position,
212	212	and supervisory responsibility, if any.
213	213	Sec. 2262.063. NEGOTIATION OF CONTRACT BY SINGLE EMPLOYEE
214	214	PROHIBITED. A state agency may not negotiate a contract with only
215	215	one employee engaging in the negotiation.
216	216	Sec. 2262.064. DEVELOPMENT OF OPTIMIZED MODEL FOR CERTAIN
217	217	CONTRACTS. (a) If a state agency determines that a proposed
218	218	contract or proposed contract extension or amendment would
219	219	outsource existing services or functions performed by the agency
220	220	that have a value of $10 million or more, or that would lead to the
221	221	loss of 100 or more existing state employee positions, the agency
222	222	shall create an optimized model for the identified functions or
223	223	services to determine how and at what cost the agency could most
224	224	efficiently provide the functions or services.
225	225	(b) The model must show consideration of all relevant
226	226	factors, including:
227	227	(1) best practices in this state and other states;
228	228	(2) available technology;
229	229	(3) access to benefits and services for clients;
230	230	(4) program integrity; and
231	231	(5) assessment of state agency skills available
232	232	throughout the life of the project.
233	233	(c) An agency that develops an optimized model under this
234	234	section shall use it as the basis for cost comparison when deciding
235	235	whether to outsource the identified functions or services.
236	236	(d) A model developed under this section is confidential and
237	237	is not subject to disclosure under Chapter 552 until a final
238	238	determination has been made to award the contract for which the
239	239	model was developed.
240	240	Sec. 2262.065. ANALYSIS OF SERVICES AND FUNCTIONS. (a) In
241	241	this section, "inherently governmental in nature" means a function
242	242	or service that involves the exercise or use of governmental
243	243	authority or discretion.
244	244	(b) If a state agency determines that a proposed contract or
245	245	proposed contract extension or amendment would outsource existing
246	246	services or functions performed by the agency that have a value of
247	247	$10 million or more, or would lead to the loss of 100 or more
248	248	existing state employee positions, then before the agency may issue
249	249	a competitive solicitation for the contract or amend or extend the
250	250	contract the agency shall contract with the State Council on
251	251	Competitive Government for its staff to perform an analysis to
252	252	determine if any of the services or functions to be performed under
253	253	the contract or contract extension or amendment are inherently
254	254	governmental in nature.
255	255	(c) Except as provided by Subsection (e), if the State
256	256	Council on Competitive Government determines that a service or
257	257	function to be performed under the contract or contract extension
258	258	or amendment is inherently governmental in nature, the state agency
259	259	may not:
260	260	(1) contract with a private entity to perform the
261	261	service or function; or
262	262	(2) amend or extend the contract, if a private entity
263	263	is to perform the service or function under the contract extension
264	264	or amendment.
265	265	(d) The analysis required under this section must use the
266	266	standards and policies contained in the Office of Federal
267	267	Procurement Policy, Policy Letter 92-1, or comparable guidelines
268	268	developed by the State Council on Competitive Government.
269	269	(e) A state agency may contract with a private entity to
270	270	perform a service or function or amend or extend an existing
271	271	contract to allow a private entity to perform a service or function
272	272	that the State Council on Competitive Government determines to be
273	273	inherently governmental in nature if the chief administrative
274	274	officer of the agency issues a report stating that there is a
275	275	compelling state interest in outsourcing the service or function.
276	276	Sec. 2262.066. FULL AND FAIR COST COMPARISON. (a) If a
277	277	state agency determines that a proposed contract or proposed
278	278	contract extension or amendment would outsource existing services
279	279	or functions performed by the agency that have a value of $10
280	280	million or more, or that would lead to the loss of 100 or more
281	281	existing state employee positions, the agency shall:
282	282	(1) conduct a full and fair cost comparison to
283	283	determine whether a private entity could perform the service or
284	284	function with a comparable or better level of quality at a cost
285	285	savings to the state; and
286	286	(2) prepare a business case providing the initial
287	287	justification for the proposed contract or proposed contract
288	288	extension or amendment that includes:
289	289	(A) the results of the comparison required under
290	290	Subdivision (1); and
291	291	(B) the anticipated return on investment in terms
292	292	of cost savings and efficiency for the proposed contract or
293	293	proposed contract extension or amendment.
294	294	(b) To perform the comparison required by Subsection
295	295	(a)(1), a state agency may:
296	296	(1) contract with the State Council on Competitive
297	297	Government to have its staff perform the comparison; or
298	298	(2) use the methodology provided in Section 2162.103.
299	299	(c) A state agency shall submit the business case required
300	300	under Subsection (a)(2) to the governor, lieutenant governor,
301	301	speaker of the house of representatives, Legislative Budget Board,
302	302	and standing committees of the legislature that have primary
303	303	jurisdiction over the agency, over state appropriations, and over
304	304	state purchasing.
305	305	SECTION 9. Section 2262.101, Government Code, is amended to
306	306	read as follows:
307	307	Sec. 2262.101. CREATION; DUTIES. (a) The Contract
308	308	Advisory Team is created to assist state agencies in improving
309	309	contract management practices by:
310	310	(1) [reviewing the solicitation of major contracts by
311	311	state agencies;
312	312	[(2)] reviewing any findings or recommendations made
313	313	by the state auditor, including those made under Section
314	314	2262.052(b), regarding a state agency's compliance with the
315	315	contract management guide; [and]
316	316	(2) [(3)] providing recommendations to the
317	317	comptroller [commission] regarding:
318	318	(A) the development of the contract management
319	319	guide; and
320	320	(B) the training under Section 2262.053; and
321	321	(3) certifying that state agencies have complied with
322	322	Sections 2262.064 and 2262.066.
323	323	(b) The team shall consult with state agencies in developing
324	324	forms, contract terms, guidelines, and criteria required under this
325	325	chapter.
326	326	SECTION 10. Section 2262.102(a), Government Code, is
327	327	amended to read as follows:
328	328	(a) The team consists of the following five members:
329	329	(1) one member from the attorney general's office;
330	330	(2) one member from the comptroller's office;
331	331	(3) one member from the Department of Information
332	332	Resources;
333	333	(4) [one member from the Texas Building and
334	334	Procurement Commission; and
335	335	[(5)] one member from the governor's office; and
336	336	(5) one member from the State Council on Competitive
337	337	Government.
338	338	SECTION 11. Subchapter C, Chapter 2262, Government Code, is
339	339	amended by adding Sections 2262.104 and 2262.105 to read as
340	340	follows:
341	341	Sec. 2262.104. UNIFORM DEFINITIONS AND FORMS. (a) The team
342	342	shall develop and publish a uniform set of definitions for use as
343	343	applicable in state contracts.
344	344	(b) The team shall develop and publish a uniform and
345	345	automated set of forms that a state agency may use in the different
346	346	stages of the contracting process.
347	347	Sec. 2262.105. FORMS FOR REPORTING CONTRACTOR PERFORMANCE.
348	348	As part of the uniform forms published under Section 2262.104, the
349	349	team shall develop forms for use by state agencies in reporting a
350	350	contractor's performance under Section 2262.057.
351	351	SECTION 12. Chapter 2262, Government Code, is amended by
352	352	adding Subchapters D, E, F, and G to read as follows:
353	353	SUBCHAPTER D. CONTRACT PROVISIONS
354	354	Sec. 2262.151. USE OF UNIFORM FORMS. A state agency may use
355	355	the forms developed under Section 2262.104 as templates, guides, or
356	356	samples for contracts entered into by the agency.
357	357	Sec. 2262.152. CONTRACT TERMS RELATING TO NONCOMPLIANCE.
358	358	(a) The team shall develop recommendations for contract terms
359	359	regarding penalties for contractors who do not comply with a
360	360	contract, including penalties for contractors who do not disclose
361	361	conflicts of interest under Section 2262.201. The team may develop
362	362	recommended contract terms that are generally applicable to state
363	363	contracts and terms that are applicable to important types of state
364	364	contracts.
365	365	(b) A state agency may include applicable recommended terms
366	366	in a contract entered into by the agency.
367	367	Sec. 2262.153. REQUIRED PROVISION RELATING TO
368	368	SUBCONTRACTOR COMPLIANCE. Each state agency contract must require
369	369	that each contractor provide a list of all subcontractors for the
370	370	contract and include a provision that:
371	371	(1) holds the contractor responsible for the conduct
372	372	of all subcontractors in complying with the contractor's contract
373	373	with the state agency; and
374	374	(2) requires each subcontractor to disclose all
375	375	potential conflicts of interest to the state agency, according to
376	376	guidelines developed under Section 2262.201(b), when the
377	377	subcontractor contracts with or is otherwise hired by the
378	378	contractor.
379	379	Sec. 2262.154. REQUIRED CONTRACTOR DISCLOSURE STATEMENT;
380	380	STATE AGENCY EMPLOYEES. Before entering into a contract with the
381	381	state, a contractor and subcontractor shall disclose each employee:
382	382	(1) who was employed by:
383	383	(A) the state at any time during the two years
384	384	before the date of the disclosure and is now employed by the
385	385	contractor or subcontractor; or
386	386	(B) the contractor or subcontractor at any time
387	387	during the year before the date of the disclosure and is now
388	388	employed by the state; and
389	389	(2) who is materially involved in the development of
390	390	the contract terms or the management of the contract.
391	391	Sec. 2262.155. REQUIRED CONTRACTOR DISCLOSURE STATEMENT;
392	392	OUTSOURCING. (a) Each contract entered into by a state agency must
393	393	include a provision requiring disclosure of any services materially
394	394	necessary to fulfill the contract, including services performed by
395	395	a subcontractor, that will be or are performed in a country other
396	396	than the United States. This section does not apply to services
397	397	that are occasional, minor, or incidental to fulfilling the
398	398	contract.
399	399	(b) The contract must include a provision allowing the state
400	400	agency to terminate the contract and solicit a new contract, except
401	401	as provided by Subsection (d), if:
402	402	(1) the contractor or a subcontractor of the
403	403	contractor performs a service materially necessary to fulfill the
404	404	contract in a country other than the United States; and
405	405	(2) the contractor does not disclose in the contract
406	406	that the service will be performed in a country other than the
407	407	United States.
408	408	(c) A state agency that decides not to solicit a new
409	409	contract under circumstances in which the agency is authorized to
410	410	do so under a contract provision required by Subsection (b) shall
411	411	report this decision to:
412	412	(1) the governor;
413	413	(2) the lieutenant governor;
414	414	(3) the speaker of the house of representatives; and
415	415	(4) the team.
416	416	(d) A contractor may replace a subcontractor without
417	417	termination of a contract under this section if the contractor
418	418	determines that the subcontractor is performing a service
419	419	materially necessary to fulfill the contract in a country other
420	420	than the United States and did not disclose that fact to the
421	421	contractor.
422	422	Sec. 2262.156. HIRING PREFERENCE PROVISION FOR CERTAIN
423	423	LARGE CONTRACTS. If a state agency determines that a proposed
424	424	contract or proposed contract extension or amendment would
425	425	outsource existing services or functions performed by the agency
426	426	that have a value of $10 million or more, or that would lead to the
427	427	loss of 100 or more existing state employee positions, the contract
428	428	or contract amendment must contain a provision that requires the
429	429	contractor to give preference in hiring to former employees of a
430	430	state agency:
431	431	(1) whose employment is terminated because of the
432	432	contract or contract extension or amendment;
433	433	(2) who satisfy the contactor's hiring criteria for
434	434	that position; and
435	435	(3) whose salary requirements are competitive with
436	436	market rates for positions with equivalent skills and experience.
437	437	SUBCHAPTER E. ETHICS; CONFLICT OF INTEREST
438	438	Sec. 2262.201. CONTRACTOR CONFLICTS OF INTEREST. (a) Each
439	439	contractor who responds to a state agency's contract solicitation
440	440	shall disclose in its response all potential conflicts of interest
441	441	to the agency.
442	442	(b) The team shall develop guidelines to aid contractors and
443	443	state agencies in identifying potential conflicts of interest.
444	444	Sec. 2262.202. EXECUTIVE DIRECTORS; ETHICS IN CONTRACTING
445	445	CLASS. Each executive director of a state agency shall annually
446	446	complete the ethics and contracting class developed under Section
447	447	2262.053(f). This section does not apply to a state agency that
448	448	does not enter into any contracts.
449	449	SUBCHAPTER F. CHANGES TO CONTRACTS
450	450	Sec. 2262.251. CONTRACT AMENDMENTS, EXTENSIONS, AND CHANGE
451	451	ORDERS. (a) An extension of or amendment to a contract, including
452	452	a change order, is subject to the same approval processes as the
453	453	original contract.
454	454	(b) A state agency may not extend or amend a contract
455	455	unless:
456	456	(1) the agency complies with the same approval
457	457	processes for the extension or amendment as required for the
458	458	original contract; and
459	459	(2) a contract manager for the agency states in
460	460	writing why the extension or amendment is necessary.
461	461	(c) This section does not affect whether a state agency is
462	462	required to undertake a new solicitation process in the manner
463	463	required for a new contract in order to extend or amend a contract.
464	464	Sec. 2262.252. LARGE CHANGE IN CONTRACT VALUE. (a) If a
465	465	proposed contract amendment or extension changes the monetary value
466	466	of a contract by $1 million or more, the state agency must obtain
467	467	review and approval from the team and the agency's executive
468	468	director before the agency amends or extends the contract.
469	469	(b) This section does not apply to a proposed contract
470	470	amendment required by a state or federal statute.
471	471	Sec. 2262.253. CERTAIN CONTRACT EXTENSIONS. This
472	472	subchapter does not apply to contract extensions that are
473	473	specifically established as a component of the original
474	474	procurement.
475	475	SUBCHAPTER G. STATE OFFICE OF CONTRACT MANAGEMENT
476	476	Sec. 2262.301. DEFINITIONS. In this subchapter:
477	477	(1) "High-risk contract" means a state agency contract
478	478	that:
479	479	(A) has a value of at least $10 million; or
480	480	(B) has a value of less than $10 million, but has
481	481	high-risk factors as identified by the office.
482	482	(2) "Major information resources project" has the
483	483	meaning assigned by Section 2054.003(10).
484	484	(3) "Office" means the state office of contract
485	485	management.
486	486	(4) "Quality assurance team" means the quality
487	487	assurance team established under Section 2054.158.
488	488	(5) "Solicitation" means a solicitation for bids,
489	489	offers, qualifications, proposals, or similar expressions of
490	490	interest for a high-risk contract.
491	491	Sec. 2262.302. ESTABLISHMENT; GENERAL DUTIES. The
492	492	comptroller shall establish a state office of contract management
493	493	to:
494	494	(1) develop criteria for identifying high-risk
495	495	factors in contracts;
496	496	(2) review and approve an action related to a
497	497	high-risk contract as provided by Section 2262.303;
498	498	(3) provide recommendations and assistance to state
499	499	agency personnel throughout the contract management process; and
500	500	(4) coordinate and consult with the quality assurance
501	501	team on all high-risk contracts relating to a major information
502	502	resources project.
503	503	Sec. 2262.303. REVIEW AND APPROVAL; WAIVER. (a) Each state
504	504	agency must receive approval from the office before taking the
505	505	following actions in relation to a high-risk contract:
506	506	(1) publicly releasing solicitation documents;
507	507	(2) executing a final contract; and
508	508	(3) making a payment or a series of payments that equal
509	509	half of the contract value.
510	510	(b) In determining whether to approve an action described by
511	511	Subsection (a), the office shall review related documentation to
512	512	ensure that potential risks related to the high-risk contract have
513	513	been identified and mitigated.
514	514	(c) The comptroller by rule may adopt criteria for waiving
515	515	the review and approval requirements under Subsections (a) and (b).
516	516	Sec. 2262.304. SOLICITATION AND CONTRACT CANCELLATION.
517	517	After review of and comment on the matter by the Legislative Budget
518	518	Board and the governor, the office may recommend the cancellation
519	519	of a solicitation or a contract during the review process under
520	520	Section 2262.303 if:
521	521	(1) a proposed solicitation is not in the best
522	522	interest of the state;
523	523	(2) a proposed contract would place the state at an
524	524	unacceptable risk if executed; or
525	525	(3) an executed contract is experiencing performance
526	526	failure or payment irregularities.
527	527	SECTION 13. Section 2262.003, Government Code, is
528	528	transferred to Subchapter D, Chapter 2262, Government Code, as
529	529	added by this Act, is redesignated as Section 2262.157, Government
530	530	Code, and is amended to read as follows:
531	531	Sec. 2262.157 [2262.003]. REQUIRED [CONTRACT] PROVISION
532	532	RELATING TO AUDITING. (a) Each state agency shall include in each
533	533	of its contracts a term that provides that:
534	534	(1) the state auditor may conduct an audit or
535	535	investigation of any entity receiving funds from the state directly
536	536	under the contract or indirectly through a subcontract under the
537	537	contract;
538	538	(2) acceptance of funds directly under the contract or
539	539	indirectly through a subcontract under the contract acts as
540	540	acceptance of the authority of the state auditor, under the
541	541	direction of the legislative audit committee, to conduct an audit
542	542	or investigation in connection with those funds; and
543	543	(3) under the direction of the legislative audit
544	544	committee, an entity that is the subject of an audit or
545	545	investigation by the state auditor must provide the state auditor
546	546	with access to any information the state auditor considers relevant
547	547	to the investigation or audit.
548	548	(b) The state auditor shall provide assistance to a state
549	549	agency in developing the contract provisions.
550	550	SECTION 14. Section 51.923, Education Code, is amended to
551	551	read as follows:
552	552	Sec. 51.923. QUALIFICATIONS OF CERTAIN BUSINESS ENTITIES TO
553	553	ENTER INTO CONTRACTS WITH AN INSTITUTION OF HIGHER EDUCATION. (a)
554	554	In this section:
555	555	(1) "Business entity [Corporation]" means any entity
556	556	recognized by law through which business for profit is conducted,
557	557	including a sole proprietorship, partnership, firm, corporation,
558	558	limited liability company, holding company, joint stock company,
559	559	receivership, or trust [a corporation for profit organized under
560	560	the laws of this state or under laws other than the laws of this
561	561	state].
562	562	(2) "Governing board" has the meaning assigned by
563	563	Section 61.003 [of this code].
564	564	(3) "Institution of higher education" has the meaning
565	565	assigned by Section 61.003 [of this code].
566	566	(4) "Nonprofit corporation" means any organization
567	567	exempt from federal income tax under Section 501 of the Internal
568	568	Revenue Code of 1986 that does not distribute any part of its income
569	569	to any member, director, or officer.
570	570	(b) A nonprofit corporation is not disqualified from
571	571	entering into a contract or other transaction with an institution
572	572	of higher education even though one or more members of the governing
573	573	board of the institution of higher education also serves as a
574	574	member, [or] director, or officer of the nonprofit corporation.
575	575	(c) A business entity [corporation] is not disqualified
576	576	from entering into a contract or other transaction with an
577	577	institution of higher education even though one or more members of
578	578	the governing board of the institution of higher education has a
579	579	substantial interest in the business entity [also serves as a
580	580	stockholder or director of the corporation provided that no member
581	581	of the governing board owns or has a beneficial interest in more
582	582	than five percent of the corporation's outstanding capital stock
583	583	and further provided that the contract or transaction is:
584	584	[(1) an affiliation, licensing, or sponsored research
585	585	agreement; or
586	586	[(2) awarded by competitive bidding or competitive
587	587	sealed proposals].
588	588	(d) An institution of higher education is not prohibited
589	589	from entering into a contract or other transaction with a business
590	590	entity in which a member of the governing board of the institution
591	591	of higher education has a substantial interest [described in this
592	592	section] if the [any] board member [having an interest described in
593	593	this section in the contract or transaction] discloses that
594	594	interest in a meeting held in compliance with Chapter 551,
595	595	Government Code, and refrains from voting on the contract or
596	596	transaction. Any such contract or transaction requiring board
597	597	approval must be approved by an affirmative majority of the board
598	598	members voting on the contract or transaction.
599	599	(e) For purposes of this section, a member of a governing
600	600	board has a substantial interest in a business entity if:
601	601	(1) the member owns 10 percent or more of the voting
602	602	stock or shares of the business entity or owns either 10 percent or
603	603	more or $15,000 or more of the fair market value of the business
604	604	entity;
605	605	(2) funds received by the member from the business
606	606	entity exceed 10 percent of the member's gross income for the
607	607	previous year; or
608	608	(3) an individual related to the member in the first
609	609	degree by consanguinity or affinity, as determined under Chapter
610	610	573, Government Code, has an interest in the business entity as
611	611	described by Subdivision (1) or (2).
612	612	(f) A violation of this section does not render an action of
613	613	the governing board voidable unless the contract or transaction
614	614	that was the subject of the action would not have passed the
615	615	governing board without the vote of the member who violated this
616	616	section.
617	617	(g) This section preempts the common law of conflict of
618	618	interests as applied to members of a governing board of an
619	619	institution of higher education.
620	620	SECTION 15. Section 2262.051(f), Government Code, is
621	621	repealed.
622	622	SECTION 16. (a) Sections 2262.063 through 2262.066 and
623	623	2262.154, Government Code, and Subchapter G, Chapter 2262,
624	624	Government Code, as added by this Act, apply only to a contract for
625	625	which a state agency first advertises or otherwise solicits bids,
626	626	proposals, offers, or qualifications on or after the effective date
627	627	of this Act.
628	628	(b) Section 2262.201(a), Government Code, as added by this
629	629	Act, applies only in relation to a contract for which a state agency
630	630	first solicits bids, proposals, offers, or qualifications on or
631	631	after the date that the Contract Advisory Team's guidelines
632	632	regarding potential conflicts of interest take effect.
633	633	SECTION 17. Not later than May 1, 2010, the comptroller of
634	634	public accounts shall develop the training program, including the
635	635	ethics and contracting class, required by Section 2262.053,
636	636	Government Code, as amended by this Act, and Section 2262.0535,
637	637	Government Code, as added by this Act.
638	638	SECTION 18. A member of a governing body of a state agency
639	639	is not required to complete the training developed under Section
640	640	2262.0535, Government Code, as added by this Act, until September
641	641	1, 2011.
642	642	SECTION 19. An executive director of a state agency is not
643	643	required to comply with Section 2262.202, Government Code, as added
644	644	by this Act, until September 1, 2011.
645	645	SECTION 20. A contract manager is not required to be
646	646	certified under Chapter 2262, Government Code, as amended by this
647	647	Act, until September 1, 2011.
648	648	SECTION 21. (a) As soon as practicable, and not later than
649	649	May 1, 2010, the Contract Advisory Team shall develop the forms,
650	650	criteria, recommendations, and provisions required by this Act,
651	651	including Sections 2262.104, 2262.105, 2262.152, and 2262.201(b),
652	652	Government Code, as added by this Act.
653	653	(b) A state agency is not required to comply with Sections
654	654	2262.056 through 2262.062 and Sections 2262.153, 2262.155, and
655	655	2262.156, Government Code, as added by this Act, until September 1,
656	656	2011. A state agency may comply earlier if the forms, electronic
657	657	requirements, database, or other items are available before that
658	658	date.
659	659	SECTION 22. This Act takes effect November 1, 2009.