Texas 2015 - 84th Regular

Texas Senate Bill SB543 Compare Versions

Version 1 (Old)

Version 2 (New)

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1		-	By: Zaffirini, Garcia S.B. No. 543
2		-	(In the Senate - Filed February 11, 2015; February 18, 2015,
3		-	read first time and referred to Committee on Business and Commerce;
4		-	April 1, 2015, reported adversely, with favorable Committee
5		-	Substitute by the following vote: Yeas 7, Nays 0; April 1, 2015,
6		-	sent to printer.)
7		-	Click here to see the committee vote
8		-	COMMITTEE SUBSTITUTE FOR S.B. No. 543 By: Eltife
	1	+	84R27887 MTB-D
	2	+	By: Zaffirini, et al. S.B. No. 543
	3	+	(Elkins, Otto, Walle, Gutierrez, Leach, et al.)
	4	+	Substitute the following for S.B. No. 543: No.
9	5
10	6
11	7		A BILL TO BE ENTITLED
12	8		AN ACT
13		-	relating to certain requirements applicable to contracts entered
14		-	into by, and the contract management process of, state agencies.
	9	+	relating to oversight of and requirements applicable to state
	10	+	contracts and other state financial and accounting issues;
	11	+	authorizing fees.
15	12		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
16		-	SECTION 1. Section 2102.005, Government Code, is amended to
	13	+	SECTION 1. Section 821.009(b), Government Code, is amended
	14	+	to read as follows:
	15	+	(b) Notwithstanding any other law and in addition to the
	16	+	requirements of Subchapter E, Chapter 2262, before a contract
	17	+	described by Subsection (a) may be entered into by the retirement
	18	+	system, a representative of the office of the attorney general
	19	+	shall review the form and terms of the contract and may make
	20	+	recommendations to the retirement system for changes to the
	21	+	contract if the attorney general determines that the office of the
	22	+	attorney general has sufficient subject matter expertise and
	23	+	resources available to provide this service.
	24	+	SECTION 2. Section 825.103(g), Government Code, is amended
	25	+	to read as follows:
	26	+	(g) Notwithstanding any other law and except as provided by
	27	+	Section 2262.202, Chapters 2261 and 2262 do not apply to the
	28	+	retirement system. The Contract Management and Oversight
	29	+	[Advisory] Team shall assist the retirement system at the request
	30	+	of the retirement system. The retirement system may use the
	31	+	training program for contract management provided under Chapter
	32	+	2262.
	33	+	SECTION 3. Section 2054.065(a)(2), Government Code, is
	34	+	amended to read as follows:
	35	+	(2) "Team" means the Contract Management and Oversight
	36	+	[Advisory] Team established under Subchapter E [C], Chapter 2262.
	37	+	SECTION 4. Section 2101.001(1), Government Code, is amended
	38	+	to read as follows:
	39	+	(1) "Enterprise resource planning" includes the
	40	+	administration of a state agency's:
	41	+	(A) general ledger;
	42	+	(B) accounts payable;
	43	+	(C) accounts receivable;
	44	+	(D) budgeting;
	45	+	(E) inventory;
	46	+	(F) asset management;
	47	+	(G) billing;
	48	+	(H) payroll;
	49	+	(I) projects;
	50	+	(J) grants;
	51	+	(K) human resources, including administration of
	52	+	performance measures, time spent on tasks, and other personnel and
	53	+	labor issues; and
	54	+	(L) purchasing, including solicitations and
	55	+	contracting.
	56	+	SECTION 5. Section 2101.011, Government Code, is amended by
	57	+	adding Subsection (e) to read as follows:
	58	+	(e) A state agency's annual financial report must include
	59	+	any claims made against the agency for the preceding fiscal year and
	60	+	the amount paid by the agency in relation to each claim.
	61	+	SECTION 6. Section 2101.035, Government Code, is amended by
	62	+	adding Subsections (i), (j), and (k) to read as follows:
	63	+	(i) State agencies other than a university system or an
	64	+	institution of higher education as defined by Section 61.003,
	65	+	Education Code, shall report contract and purchasing information in
	66	+	the uniform manner required by the comptroller.
	67	+	(j) The centralized accounting and payroll system, or any
	68	+	successor system used to implement the enterprise resource planning
	69	+	component of the uniform statewide accounting project, developed
	70	+	under this section and Section 2101.036 must provide alerts to the
	71	+	comptroller to notify the comptroller of a state contract other
	72	+	than a contract of a university system or an institution of higher
	73	+	education as defined by Section 61.003, Education Code, that has a
	74	+	high risk of loss to the state based on parameters identified by
	75	+	rule by the comptroller, including:
	76	+	(1) a change order of more than 20 percent of the value
	77	+	of the original contract; and
	78	+	(2) a contract entered into in an amount that exceeds a
	79	+	predetermined threshold amount.
	80	+	(k) If, through the uniform statewide accounting system or a
	81	+	component of that system, the comptroller or an officer or employee
	82	+	of the comptroller's office releases or publishes information that
	83	+	is confidential or excepted from required disclosure in reliance on
	84	+	a determination made by a state agency about the status of the
	85	+	information as confidential or excepted from disclosure, the
	86	+	comptroller, officer, or employee, as appropriate, is:
	87	+	(1) immune from any civil or criminal liability for
	88	+	releasing or publishing the information; and
	89	+	(2) not required to comply with the notification
	90	+	requirements of Section 2054.1125 of this code and Chapter 521,
	91	+	Business & Commerce Code, in relation to the release or publication
	92	+	of the information.
	93	+	SECTION 7. Section 2101.036, Government Code, is amended by
	94	+	amending Subsection (d) and adding Subsection (e) to read as
	95	+	follows:
	96	+	(d) Notwithstanding any other provision of this chapter or
	97	+	other law and except as provided by Subsection (e), this section and
	98	+	any rules implementing this section apply only in relation to a
	99	+	state agency as defined by Section 2054.003.
	100	+	(e) A state agency in the legislative branch of state
	101	+	government may elect to participate in the centralized accounting
	102	+	and payroll system, or any successor system used to implement the
	103	+	enterprise resource planning component of the uniform statewide
	104	+	accounting project, developed under this section.
	105	+	SECTION 8. Section 2102.005, Government Code, is amended to
17	106		read as follows:
18	107		Sec. 2102.005. INTERNAL AUDITING REQUIRED. A state agency
19	108		shall conduct a program of internal auditing that includes:
20	109		(1) an annual audit plan that is prepared using risk
21	110		assessment techniques and that identifies the individual audits to
22		-	be conducted during the year, including an annual audit of the
23		-	agency's contracts; and
24		-	(2) periodic audits of the agency's major systems and
25		-	controls, including:
26		-	(A) accounting systems and controls;
27		-	(B) administrative systems and controls; and
28		-	(C) electronic data processing systems and
29		-	controls.
30		-	SECTION 2. Section 2113.102(a), Government Code, is amended
	111	+	be conducted during the year; and
	112	+	(2) periodic audits of:
	113	+	(A) the agency's major systems and controls,
	114	+	including:
	115	+	(i) [(A)] accounting systems and controls;
	116	+	(ii) [(B)] administrative systems and
	117	+	controls; [and]
	118	+	(iii) [(C)] electronic data processing
	119	+	systems and controls; and
	120	+	(iv) contract management processes and
	121	+	controls; and
	122	+	(B) one or more of the agency's contracts with
	123	+	high-risk factors.
	124	+	SECTION 9. Section 2113.102(a), Government Code, is amended
31	125		to read as follows:
32	126		(a) A state agency may not use appropriated money to
33	127		contract with a person to audit [the financial records or accounts
34	128		of] the agency except:
35	129		(1) as provided by[:
36	130		[(1)] Subsections (b), (c), and (d); and
37	131		(2) in accordance with Section 321.020 [Chapter 466,
38	132		pertaining to the state lottery;
39	133		[(3) Chapter 2306, pertaining to the Texas Department
40	134		of Housing and Community Affairs; and
41	135		[(4) Chapter 361, Transportation Code, pertaining to
42	136		the Texas Turnpike Authority division of the Texas Department of
43	137		Transportation].
44		-	SECTION 3. Section 2162.103(a), Government Code, is amended
	138	+	SECTION 10. Subchapter I, Chapter 2155, Government Code, is
	139	+	amended by adding Section 2155.5035 to read as follows:
	140	+	Sec. 2155.5035. USE OF SCHEDULE BY STATE AGENCY. (a) A
	141	+	state agency purchasing goods or services that exceed $50,000 under
	142	+	a contract listed on the schedule shall submit a request for pricing
	143	+	to:
	144	+	(1) at least three vendors included on the schedule in
	145	+	the category to which the purchase relates; or
	146	+	(2) all vendors included on the schedule in the
	147	+	category to which the purchase relates if fewer than three vendors
	148	+	are included in the category.
	149	+	(b) The price listed for a good or service under a multiple
	150	+	award contract is a maximum price. A state agency may negotiate a
	151	+	lower price for goods or services under a contract listed on a
	152	+	schedule developed under this chapter.
	153	+	SECTION 11. Section 2155.504, Government Code, is amended
45	154		to read as follows:
	155	+	Sec. 2155.504. USE OF SCHEDULE BY LOCAL GOVERNMENTS
	156	+	[GOVERNMENTAL ENTITIES]. (a) A [state agency or] local government
	157	+	may purchase goods or services directly from a vendor under a
	158	+	contract listed on a schedule developed under this subchapter. A
	159	+	purchase authorized by this section satisfies any requirement of
	160	+	state law relating to competitive bids or proposals and satisfies
	161	+	any applicable requirements of Chapter 2157.
	162	+	(b) The price listed for a good or service under a multiple
	163	+	award contract is a maximum price. A [An agency or] local
	164	+	government may negotiate a lower price for goods or services under a
	165	+	contract listed on a schedule developed under this subchapter.
	166	+	SECTION 12. Section 2162.103(a), Government Code, is
	167	+	amended to read as follows:
46	168		(a) In comparing the cost of providing a service, the
47	169		council shall consider the:
48	170		(1) cost of supervising the work of a private
49	171		contractor; [and]
50	172		(2) cost of a state agency's performance of the
51	173		service, including:
52	174		(A) the costs of the comptroller, attorney
53	175		general, and other support agencies; and
54	176		(B) other indirect costs related to the agency's
55	177		performance of the service;
56	178		(3) installation costs and any other initial costs
57	179		associated with a contract with a private contractor;
58	180		(4) other costs associated with the transition to
59		-	using a private contractor's ~~goods or~~ services; and
	181	+	using a private contractor's services; and
60	182		(5) cost savings to the state if a private contractor
61	183		were awarded the contract.
62		-	SECTION 4. Section 2261.002, Government Code, is amended
63		-	read as follows:
	184	+	SECTION 13. Sections 2165.356(a) and (b), Government Code,
	185	+	are amended to read as follows:
	186	+	(a) Not later than the 60th day before the date the
	187	+	commission is scheduled to vote on approval of a qualifying project
	188	+	contract, the commission must submit to the Contract Management and
	189	+	Oversight [Advisory] Team established under Subchapter E [C],
	190	+	Chapter 2262, documentation of the modifications to a proposed
	191	+	qualifying project made during the commission's evaluation and
	192	+	negotiation process for the project, including a copy of:
	193	+	(1) the final draft of the contract;
	194	+	(2) the detailed qualifying project proposal; and
	195	+	(3) any executed interim or other agreement.
	196	+	(b) The Contract Management and Oversight [Advisory] Team
	197	+	shall review the documentation submitted under Subsection (a) and
	198	+	provide written comments and recommendations to the
	199	+	commission. The review must focus on, but not be limited to, best
	200	+	practices for contract management and administration.
	201	+	SECTION 14. Section 2166.2551, Government Code, is amended
	202	+	to read as follows:
	203	+	Sec. 2166.2551. CONTRACT NOTIFICATION. The commission or
	204	+	an agency whose project is exempted from all or part of this chapter
	205	+	under Section 2166.003 shall provide written notice to the
	206	+	Legislative Budget Board of a contract for a construction project
	207	+	if the amount of the contract, including an amendment,
	208	+	modification, renewal, or extension of the contract, exceeds
	209	+	$50,000 [$14,000]. The notice must be on a form prescribed by the
	210	+	Legislative Budget Board and filed not later than the 10th day after
	211	+	the date the agency enters into the contract.
	212	+	SECTION 15. Section 2254.006, Government Code, is amended
	213	+	to read as follows:
	214	+	Sec. 2254.006. CONTRACT NOTIFICATION. A state agency,
	215	+	including an institution of higher education as defined by Section
	216	+	61.003, Education Code, shall provide written notice to the
	217	+	Legislative Budget Board of a contract for professional services,
	218	+	other than a contract for physician or optometric services, if the
	219	+	amount of the contract, including an amendment, modification,
	220	+	renewal, or extension of the contract, exceeds $50,000 [$14,000].
	221	+	The notice must be on a form prescribed by the Legislative Budget
	222	+	Board and filed not later than the 10th day after the date the
	223	+	agency enters into the contract.
	224	+	SECTION 16. Section 2254.0301(a), Government Code, is
	225	+	amended to read as follows:
	226	+	(a) A state agency shall provide written notice to the
	227	+	Legislative Budget Board of a contract for consulting services if
	228	+	the amount of the contract, including an amendment, modification,
	229	+	renewal, or extension of the contract, exceeds $50,000 [$14,000].
	230	+	The notice must be on a form prescribed by the Legislative Budget
	231	+	Board and filed not later than the 10th day after the date the
	232	+	entity enters into the contract.
	233	+	SECTION 17. Sections 2261.001(a) and (c), Government Code,
	234	+	are amended to read as follows:
	235	+	(a) This chapter applies only to each procurement of goods
	236	+	or services made by a state agency that is neither made by the
	237	+	comptroller nor made under purchasing authority delegated to the
	238	+	agency by or under Section 51.9335 or 73.115, Education Code, or
	239	+	Section [2155.131 or] 2155.132.
	240	+	(c) The comptroller on request shall determine whether a
	241	+	procurement or type of procurement:
	242	+	(1) is made under purchasing authority delegated to an
	243	+	agency by or under Section [2155.131 or] 2155.132; or
	244	+	(2) is made under some other source of purchasing
	245	+	authority.
	246	+	SECTION 18. Section 2261.002, Government Code, is amended
	247	+	to read as follows:
64	248		Sec. 2261.002. DEFINITIONS. In this chapter:
65	249		(1) "Contract" includes an agreement or other written
66	250		expression of terms of agreement, including an amendment, a
67		-	modification, a renewal, or an extension, for the purchase ~~or sale~~
68		-	~~of goods~~ or services that is entered into or paid for, wholly or
69		-	~~partly, by a~~ state agency during a fiscal year and a grant, other
70		-	~~than a grant~~ made to a school district or a grant made for other
71		-	~~academic~~ purposes, under which the recipient of the grant is
72		-	~~required to~~ perform a specific act or service, supply a specific
73		-	~~type of~~ product, or both.
	251	+	modification, a renewal, or an extension, for the purchase of goods
	252	+	or services that is entered into or paid for, wholly or partly, by a
	253	+	state agency during a fiscal year and a grant, other than a grant
	254	+	made to a school district or a grant made for other academic
	255	+	purposes, under which the recipient of the grant is required to
	256	+	perform a specific act or service, supply a specific type of
	257	+	product, or both.
74	258		(2) "Contract deliverable" means a unit or increment
75	259		of work required by a contract, including goods, services, reports,
76	260		or documents.
77	261		(3) "Contract manager" means a person who:
78	262		(A) is employed by a state agency; and
79	263		(B) has significant contract management duties
80	264		for the state agency.
81	265		(4) "Executive director" means the administrative
82	266		head of a state agency.
83	267		(5) "General counsel" means the general counsel of a
84	268		state agency.
85	269		(6) "Major contract" means a contract, including a
86	270		renewal of a contract, that has a value of at least $1 million. The
87	271		term includes a service contract.
88	272		(7) "State agency" has the meaning assigned by Section
89	273		2151.002.
90		-	SECTION 5. Subchapter A, Chapter 2261, Government Code, is
91		-	amended by adding Sections 2261.004, 2261.005, 2261.006, ~~and~~
92		-	2261.~~007~~ to read as follows:
	274	+	SECTION 19. Subchapter A, Chapter 2261, Government Code, is
	275	+	amended by adding Sections 2261.004, 2261.005, 2261.006, 2261.007,
	276	+	2261.008, and 2261.009 to read as follows:
93	277		Sec. 2261.004. STATE AGENCY REPOSITORY AND RECORDS.
94	278		(a) Each state agency shall maintain in a central location all
95	279		contracts for that agency.
96	280		(b) Each state agency shall maintain a comprehensive list of
97	281		all contracts for that agency.
98		-	(c) In this subsection, "contract" includes a sole-source
	282	+	(c) In this subsection, "contract" includes a sole source
99	283		contract. Each state agency shall maintain accurate records of all
100	284		essential information relating to agency contracts, including
101	285		information on:
102	286		(1) a contract delay or changes to a contract in which
103		-	total expenditures under the contract increase by more than 35
	287	+	total expenditures under the contract increase by more than 20
104	288		percent from the original contract amount; and
105	289		(2) cost overruns, including a written explanation of
106	290		why expenditures have increased under a contract.
107	291		(d) Notwithstanding Section 441.185, contracts and other
108	292		related information required to be maintained under this section by
109	293		a state agency must be retained for the duration of the contract.
110	294		Sec. 2261.005. CONTRACT REPORTING. (a) In this section,
111	295		"contract" includes a construction contract.
112	296		(b) The following sections prescribe reporting requirements
113	297		for certain contracts:
114	298		(1) Section 322.020;
115	299		(2) Section 2054.008;
116	300		(3) Section 2166.2551;
117		-	(4) Section 2254.006; and
118		-	(5) Section 2254.0301.
	301	+	(4) Section 2254.006;
	302	+	(5) Section 2254.028; and
	303	+	(6) Section 2254.0301.
119	304		Sec. 2261.006. PROFESSIONAL SERVICES. A state agency shall
120	305		procure professional services in accordance with Subchapter A,
121	306		Chapter 2254.
122	307		Sec. 2261.007. CONTRACT GUIDELINES AND PROCEDURES. Each
123	308		state agency shall establish formal guidelines and procedures for
124	309		all employees involved in the contracting process:
125	310		(1) regarding who may approve a contract for the
126	311		agency;
127	312		(2) for contract planning and solicitation;
128	313		(3) for contract negotiations;
129	314		(4) for contract management; and
130	315		(5) for contract oversight.
131		-	SECTION 6. Subchapter B, Chapter 2261, Government Code, is
	316	+	Sec. 2261.008. INTERAGENCY AGREEMENTS AND CONTRACTS. An
	317	+	interagency agreement or contract of a state agency is governed by
	318	+	Chapter 771.
	319	+	Sec. 2261.009. INTERLOCAL CONTRACTS. An interlocal
	320	+	contract to which a state agency is a party is governed by Chapter
	321	+	791.
	322	+	SECTION 20. Subchapter B, Chapter 2261, Government Code, is
132	323		amended by adding Section 2261.054 to read as follows:
133	324		Sec. 2261.054. BEST VALUE STANDARD FOR CONTRACTING FOR
134	325		GOODS AND SERVICES. In determining the best value for the state,
135	326		the purchase price and whether the goods or services meet
136	327		specifications are the most important considerations. A state
137	328		agency may consider, subject to Sections 2155.074(c) and 2155.075,
138	329		other relevant factors, including:
139	330		(1) installation costs;
140	331		(2) life cycle costs;
141	332		(3) the quality and reliability of the goods and
142	333		services;
143	334		(4) the delivery terms;
144	335		(5) indicators of probable vendor performance under
145	336		the contract such as past vendor performance, the vendor's
146	337		financial resources and ability to perform, the vendor's experience
147	338		or demonstrated capability and responsibility, and the vendor's
148	339		ability to provide reliable maintenance agreements and support;
149	340		(6) the cost of any employee training associated with
150	341		a purchase;
151	342		(7) the effect of a purchase on agency productivity;
152	343		(8) the vendor's anticipated economic impact on the
153	344		state or a subdivision of the state, including potential tax
154	345		revenue and employment; and
155	346		(9) other factors relevant to determining the best
156	347		value for the state in the context of a particular purchase.
157		-	SECTION 7. The heading to Subchapter C, Chapter 2261,
	348	+	SECTION 21. The heading to Subchapter C, Chapter 2261,
158	349		Government Code, is amended to read as follows:
159	350		SUBCHAPTER C. CONTRACT FORMATION AND PROVISIONS
160		-	SECTION 8. Subchapter C, Chapter 2261, Government Code, is
	351	+	SECTION 22. Subchapter C, Chapter 2261, Government Code, is
161	352		amended by adding Sections 2261.103, 2261.104, 2261.105, 2261.106,
162	353		and 2261.107 to read as follows:
163	354		Sec. 2261.103. USE OF UNIFORM FORMS. A state agency may use
164	355		any forms developed by the comptroller as templates, guides, or
165	356		samples for contracts entered into by the agency.
166		-	Sec. 2261.104. ESSENTIAL CONTRACT PROVISIONS. The
	357	+	Sec. 2261.104. ESSENTIAL CONTRACT PROVISIONS. (a) The
167	358		following are required provisions in each contract to which the
168	359		provisions are applicable, other than a grant:
169	360		(1) legal authority;
170	361		(2) statement of work;
171	362		(3) indemnification or damage claims;
172	363		(4) consideration;
173	364		(5) specifications;
174	365		(6) funding out clause;
175	366		(7) antitrust;
176	367		(8) payment;
177	368		(9) dispute resolution;
178	369		(10) term of contract;
179	370		(11) confidential information;
180	371		(12) abandonment or default;
181	372		(13) right to audit;
182	373		(14) force majeure;
183	374		(15) independent contractor; and
184	375		(16) termination.
	376	+	(b) If a state agency determines that the circumstances of a
	377	+	proposed contract require more protection for the state than the
	378	+	provisions in Subsection (a) provide, the agency shall include a
	379	+	provision in the contract providing for that protection.
185	380		Sec. 2261.105. CONTRACT PROVISIONS REQUIRED BY STATE LAW.
186		-	In any contract for the acquisition of goods or services to ~~which a~~
187		-	state agency is a party, a provision required by ~~applicable law to~~
188		-	be included in the contract is considered to be a ~~part of the~~
189		-	executed contract without regard to whether:
	381	+	(a) In any contract for the acquisition of goods or services to
	382	+	which a state agency is a party, a provision required by other
	383	+	applicable law to be included in the contract is considered to be a
	384	+	part of the executed contract without regard to whether:
190	385		(1) the provision appears on the face of the contract;
191	386		or
192	387		(2) the contract includes any provision to the
193	388		contrary.
	389	+	(b) If a state agency determines that the circumstances of a
	390	+	proposed contract require more protection for the state than the
	391	+	provisions described by Subsection (a) provide, the agency shall
	392	+	include a provision in the contract providing for that protection.
194	393		Sec. 2261.106. CONTRACT RENEWAL. A state agency shall
195	394		establish a standardized process for renewing all contracts of the
196	395		agency.
197	396		Sec. 2261.107. CONTRACT DURATION. (a) A state agency:
198	397		(1) must establish a reasonable term for a contract
199	398		before solicitation of the contract; and
200	399		(2) shall make an effort to keep the maximum length of
201	400		a contract to four years without reissuing a competitive
202	401		solicitation, including any contract renewals or extensions.
203	402		(b) A contract term established under Subsection (a)(1)
204	403		must be included in a solicitation document.
205	404		(c) A state agency may not enter into a contract that has an
206	405		indefinite term.
207		-	SECTION 9. Subchapter D, Chapter 2261, Government Code, is
	406	+	SECTION 23. Subchapter D, Chapter 2261, Government Code, is
208	407		amended by adding Section 2261.152 to read as follows:
209		-	Sec. 2261.152. CONTRACT PAYMENT. (a) For each contract
210		-	~~for~~ goods or services that is subject to this chapter, a state
211		-	~~agency~~ shall require that payment under the contract be linked to
212		-	~~clear and~~ measurable achievements, such as length of time of work or
213		-	~~contract~~ deliverables.
	408	+	Sec. 2261.152. CONTRACT PAYMENT. (a) For each contract for
	409	+	goods or services that is subject to this chapter, a state agency
	410	+	shall require that payment under the contract be linked to clear and
	411	+	measurable achievements, such as length of time of work, contract
	412	+	deliverables, or performance measures.
214	413		(b) A state agency may not make a final payment on a contract
215	414		for goods or services that is subject to this chapter unless the
216	415		agency verifies that all contract deliverables have been received.
217		-	SECTION 10. The heading to Subchapter E, Chapter 2261,
	416	+	SECTION 24. The heading to Subchapter E, Chapter 2261,
218	417		Government Code, is amended to read as follows:
219	418		SUBCHAPTER E. CONTRACT MONITORING AND [CONTRACTOR] OVERSIGHT
220		-	SECTION 11. Section 2261.202, Government Code, is amended
	419	+	SECTION 25. Section 2261.202, Government Code, is amended
221	420		to read as follows:
222		-	Sec. 2261.202. CONTRACT MONITORING RESPONSIBILITIES.
223		-	~~(a)~~ As one of its contract management policies, each state agency
224		-	~~that~~ makes procurements to which this chapter applies shall
225		-	~~establish~~ and adopt by rule a policy that clearly defines the
226		-	~~contract~~ monitoring roles and responsibilities, if any, of agency
227		-	~~staff,~~ including internal audit staff and other inspection,
	421	+	Sec. 2261.202. CONTRACT MONITORING RESPONSIBILITIES. (a)
	422	+	As one of its contract management policies, each state agency that
	423	+	makes procurements to which this chapter applies shall establish
	424	+	and adopt by rule a policy that clearly defines the contract
	425	+	monitoring roles and responsibilities, if any, of agency staff,
	426	+	including internal audit staff and other inspection,
228	427		investigative, or audit staff.
229	428		(b) The policy must establish clear lines of
230	429		accountability, staff roles and responsibilities, and
231	430		decision-making authority for program staff, contract management
232	431		staff, and executive management staff.
233		-	SECTION 12. Subchapter E, Chapter 2261, Government Code, is
	432	+	SECTION 26. Subchapter E, Chapter 2261, Government Code, is
234	433		amended by adding Sections 2261.204, 2261.205, 2261.206, 2261.207,
235	434		2261.208, 2261.209, 2261.210, 2261.211, 2261.212, 2261.213, and
236	435		2261.214 to read as follows:
237	436		Sec. 2261.204. INFORMATION ON CONTRACTOR PERFORMANCE.
238		-	(a) After a contract is completed or otherwise terminated, each
239		-	state agency shall review the contractor's performance under the
240		-	contract.
241		-	(b) Using forms made available to the state agency, a state
242		-	agency shall report to the comptroller on the results of the review
243		-	regarding a contractor's performance under a major contract.
244		-	(c) A state agency may use any vendor performance tracking
245		-	system available to state agencies to determine whether to award a
246		-	contract to a person reviewed in the database.
247		-	Sec. 2261.205. EXCLUDING CONTRACTOR FROM SOLICITATION
248		-	PROCESS. Based on its own contractor performance reviews and on
249		-	information in any vendor performance tracking system available to
250		-	state agencies, a state agency may exclude a contractor from the
251		-	solicitation process for a contract if the agency determines the
252		-	contractor has performed poorly on a previous state contract
253		-	without regard to whether the contractor has been barred under
254		-	Section 2155.077.
255		-	Sec. 2261.206. CONTRACTING STAFF. (a) Each state agency
	437	+	After a contract with a value of $25,000 or more is completed or
	438	+	otherwise terminated, each state agency shall review the
	439	+	contractor's performance under the contract and report to the
	440	+	comptroller on the results of the review using forms made available
	441	+	to the state agency.
	442	+	Sec. 2261.205. CONTRACTING STAFF. (a) Each state agency
256	443		that enters into contracts other than interagency contracts shall
257	444		establish a career ladder program for contract management in the
258	445		agency.
259	446		(b) An employee hired as a contract manager may participate
260	447		in procurement planning, contract solicitation, contract
261	448		formation, price establishment, and other contract activities.
262	449		(c) Each state agency shall determine, in consultation with
263	450		the state auditor, the amount and significance of contract
264	451		management duties sufficient for an employee to be considered a
265	452		contract manager, program staff, or a contract specialist.
266		-	Sec. 2261.~~207~~. APPROVAL OF CONTRACTS. (a) Each state
	453	+	Sec. 2261.206. APPROVAL OF CONTRACTS. (a) Each state
267	454		agency shall adopt a policy to establish a monetary threshold above
268	455		which agency contracts and amendments to or extensions of agency
269	456		contracts require written authorization by the agency executive
270	457		director.
271		-	(b) For state agency contracts valued in excess of $1
272		-	million, the agency executive director must authorize a contract
273		-	amendment in writing.
274		-	(c) Each state agency shall annually report to the
	458	+	(b) Each state agency shall annually report to the
275	459		comptroller a list of persons authorized to approve contracts at
276	460		the agency. The list must include each person's name, position, and
277	461		supervisory responsibility, if any.
278		-	Sec. 2261.~~208~~. NEGOTIATION OF MAJOR CONTRACT BY SINGLE
	462	+	Sec. 2261.207. NEGOTIATION OF MAJOR CONTRACT BY SINGLE
279	463		EMPLOYEE PROHIBITED. A state agency may not negotiate a major
280	464		contract with only one employee engaging in the negotiation.
281		-	Sec. 2261.~~209~~. CONTRACT REVIEW; REPORTING. (a) A
	465	+	Sec. 2261.208. CONTRACT REVIEW; REPORTING. (a) A
282	466		contractor's performance must be periodically reviewed throughout
283	467		the term of a contract.
284	468		(b) A state agency shall ensure ongoing communication
285	469		between executive management staff, contract management staff, and
286	470		program staff of the results of the reviews performed under
287	471		Subsection (a) with specific attention to contracts that are:
288	472		(1) anticipated to be completed later than originally
289	473		estimated; or
290	474		(2) expected to cost more than the amount that was
291	475		originally budgeted.
292	476		(c) To implement this section, a state agency shall create a
293	477		system for agency-wide reporting on the status of, activity on, and
294	478		contractor performance for each contract.
295		-	Sec. 2261.~~210~~. CONTRACT ADMINISTRATION TEAM. (a) This
	479	+	Sec. 2261.209. CONTRACT ADMINISTRATION TEAM. (a) This
296	480		section applies to a state agency that has a contract with a value
297	481		of $5 million or more.
298	482		(b) A state agency to which this section applies shall
299	483		create a contract administration team to:
300	484		(1) ensure and verify the performance of agency
301	485		contracts with a value of $5 million or more; and
302	486		(2) maintain within the agency contract oversight
303	487		expertise to effectively manage contractors.
304		-	Sec. 2261.~~211~~. CONTRACT MONITORING PROCESS. A state agency
	488	+	Sec. 2261.210. CONTRACT MONITORING PROCESS. A state agency
305	489		shall establish and implement a monitoring process for agency
306	490		contracts that includes:
307	491		(1) identifying the appropriate criteria for use in
308	492		measuring contract performance;
309	493		(2) creating a schedule for monitoring contract
310	494		performance;
311	495		(3) comparing work accomplished to work planned to be
312	496		accomplished;
313	497		(4) analyzing contract performance variances; and
314	498		(5) addressing contracting performance problems with
315	499		corrective action.
316		-	Sec. 2261.~~212~~. RISK MANAGEMENT PROCESS. (a) A state
317		-	~~agency~~ shall establish and implement a:
	500	+	Sec. 2261.211. RISK MANAGEMENT PROCESS. (a) A state agency
	501	+	shall establish and implement a:
318	502		(1) process for evaluating the potential risk to the
319	503		state, such as product risk, process risk, financial risk, and
320	504		schedule risk, if contract implementation or performance problems
321	505		occur, including a process for:
322	506		(A) risk identification or identifying items
323	507		that may prevent the agency from achieving contracting goals or
324	508		objectives;
325	509		(B) risk analysis or assessing the impact and
326	510		likelihood of a risk;
327	511		(C) risk evaluation or developing strategies or
328	512		approaches to address risks that have been identified and analyzed;
329	513		(D) risk treatment or the managerial approach to
330	514		risk;
331	515		(E) risk reduction or planning and performing
332	516		actions to mitigate risk due to a managerial decision to reduce
333	517		risk;
334	518		(F) contingency planning or developing plans for
335	519		corrective action to be taken if a potential risk occurs; and
336	520		(G) risk monitoring or tracking the
337	521		implementation of a risk reduction plan until the risk is
338	522		sufficiently mitigated; and
339	523		(2) procedure for corrective action to be used when
340	524		contract implementation or performance problems occur.
341	525		(b) In creating the process required by Subsection (a)(1),
342	526		the state agency shall consider:
343	527		(1) the complexity and subject matter of agency
344	528		contracts;
345	529		(2) the dollar value of agency contracts, including
346	530		contract extensions and amendments, and whether the procurement
347	531		will result in a major contract;
348	532		(3) the anticipated payment methodology;
349	533		(4) the experience of agency staff with the type of
350	534		procurement;
351	535		(5) whether the results of the procurement will impact
352	536		the public or only impact the agency;
353	537		(6) time constraints or the expected duration of the
354	538		procurement; and
355	539		(7) the type, availability, and experience of staff
356	540		resources required to implement the objectives of the procurement.
357	541		(c) Based on the assessed risk of a state agency contract,
358	542		the agency shall, for each contract:
359	543		(1) determine the appropriate frequency and method of
360	544		contract monitoring;
361	545		(2) allocate contract monitoring resources; and
362	546		(3) develop a contract auditing plan.
363		-	Sec. 2261.~~213~~. CONTRACT COMMUNICATION. (a) A state agency
	547	+	Sec. 2261.212. CONTRACT COMMUNICATION. (a) A state agency
364	548		shall maintain effective communication procedures regarding
365	549		contract performance.
366	550		(b) The chief financial officer of a state agency, or an
367		-	individual designated by the executive director with similar ~~duties~~
368		-	and ~~skills as a chief financial officer~~, shall report ~~at least~~
369		-	monthly to the executive director on the status of agency
	551	+	individual designated by the executive director with similar
	552	+	contract administration duties and responsibilities, shall report
	553	+	at least monthly to the executive director on the status of agency
370	554		contracts. The report must include a clear indication of:
371	555		(1) any contract cost overruns or contracts that are
372	556		performing poorly; and
373	557		(2) contracts that may cause the state to delay or
374	558		default on service delivery.
375		-	Sec. 2261.~~214~~. REPORT ON CERTAIN PURCHASES. (a) Not later
376		-	than ~~August~~ 1 of each year, the comptroller shall publish a report
	559	+	Sec. 2261.213. REPORT ON CERTAIN PURCHASES. (a) Not later
	560	+	than December 1 of each year, the comptroller shall publish a report
377	561		on the number and dollar value of sole source and emergency
378		-	purchases made in the previous calendar year. The report must
379		-	compare the total dollar value of all sole source and emergency
380		-	purchases made with the total dollar value of all competitively
381		-	awarded contracts.
	562	+	purchases made in the previous fiscal year.
382	563		(b) Each state agency shall timely provide to the
383	564		comptroller the information the comptroller requires for the
384		-	purpose of creating the report under Subsection (a).
	565	+	purpose of creating the report under Subsection (a) in the manner
	566	+	and form specified by the comptroller.
385	567		(c) The comptroller shall establish requirements for the
386	568		provision of information under Subsection (b) in consultation with
387		-	the Contract ~~Advisory~~ Team created under Subchapter ~~C, Chapter~~
388		-	2262, the Health and Human Services Commission, and the ~~Texas~~
389		-	Department of Transportation.
	569	+	the Contract Management and Oversight Team created under Subchapter
	570	+	E, Chapter 2262, the Health and Human Services Commission, and the
	571	+	Texas Department of Transportation.
390	572		(d) The comptroller may not require a state agency to
391	573		provide information under Subsection (b) on a contract related to
392	574		health and human services if:
393	575		(1) the value of the contract cannot be determined at
394	576		the time of execution of the contract; and
395	577		(2) any qualified vendor is eligible for the contract.
396		-	SECTION 13. Chapter 2261, Government Code, is amended by
	578	+	Sec. 2261.214. CONTRACT DATABASE. (a) Each state agency
	579	+	that becomes a participant in the centralized accounting and
	580	+	payroll system as authorized by Sections 2101.035 and 2101.036, or
	581	+	any successor system used to implement the enterprise resource
	582	+	planning component of the uniform statewide accounting project,
	583	+	shall use the system to identify and record each contract entered
	584	+	into by the agency as specified by the rules, policies, or
	585	+	procedures developed by the comptroller, after consultation with
	586	+	the Department of Information Resources.
	587	+	(b) The comptroller shall provide as necessary information
	588	+	and state agency contract data contained in the centralized
	589	+	accounting and payroll system to other state agencies with
	590	+	oversight duties, including the Legislative Budget Board, the state
	591	+	auditor's office, and the Department of Information Resources.
	592	+	SECTION 27. Chapter 2261, Government Code, is amended by
397	593		adding Subchapters F, G, H, and I to read as follows:
398	594		SUBCHAPTER F. CHANGES TO CONTRACTS
399	595		Sec. 2261.251. CONTRACT AMENDMENTS, EXTENSIONS, AND CHANGE
400		-	ORDERS. (a) An extension of or amendment to a state agency
401		-	contract, including a change order, is subject to the same agency
402		-	approval processes as the original contract.
403		-	(b) A state agency may not extend or amend a contract unless
	596	+	ORDERS. (a) This section does not apply to a contract amendment,
	597	+	extension, or change order that does not change the cost or terms of
	598	+	the contract.
	599	+	(b) An extension of or amendment to a state agency contract,
	600	+	including a change order, is subject to the same agency approval
	601	+	processes as the original contract.
	602	+	(c) A state agency may not extend or amend a contract unless
404	603		the agency complies with the same agency approval processes for the
405	604		extension or amendment as required for the original contract and
406	605		the agency states in writing why the extension or amendment is
407	606		necessary or advantageous to the state.
408		-	(c) This section does not affect whether a state agency is
	607	+	(d) This section does not affect whether a state agency is
409	608		required to undertake a new solicitation process in the manner
410	609		required for a new contract in order to extend or amend a contract.
	610	+	(e) For state agency contracts valued in excess of $1
	611	+	million, the agency executive director must authorize a contract
	612	+	amendment in writing.
411	613		Sec. 2261.252. LARGE CHANGE IN CONTRACT VALUE; COST
412	614		OVERRUNS. (a) If a proposed contract amendment or extension
413		-	changes the monetary value of a major contract by at least 35
	615	+	changes the monetary value of a major contract by at least 20
414	616		percent or $1 million, the state agency must submit the amendment or
415	617		extension for review to the agency's executive director before the
416	618		agency amends or extends the contract.
417	619		(b) Subsection (a) does not apply to a proposed contract
418	620		amendment required by a state or federal statute.
419	621		(c) The executive director shall be timely notified of any
420	622		unanticipated contract cost overrun.
421		-	Sec. 2261.253. CERTAIN CONTRACT EXTENSIONS. ~~This~~
422		-	subchapter does not apply to contract extensions ~~that are~~
423		-	specifically established as a component of the original
	623	+	Sec. 2261.253. CERTAIN CONTRACT EXTENSIONS AND RENEWALS.
	624	+	This subchapter does not apply to contract extensions or renewals
	625	+	that are specifically established as a component of the original
424	626		procurement.
425	627		SUBCHAPTER G. TRAINING
426	628		Sec. 2261.301. TRAINING FOR CONTRACT MANAGERS. (a) A
427	629		state agency shall require a contract manager to complete the
428	630		training program for contract managers developed and administered
429	631		by the comptroller.
430	632		(b) A state agency shall maintain a list of contract
431	633		managers who have completed the training program for contract
432	634		managers.
433	635		(c) A state agency may develop qualified contract manager
434	636		training to supplement the training required under this section.
435	637		Sec. 2261.302. TRAINING FOR GOVERNING BODIES. All members
436	638		of the governing body of a state agency shall complete at least one
437	639		abbreviated course of the training program for contract managers
438	640		developed and administered by the comptroller. This section does
439	641		not apply to a state agency that does not enter into any contracts.
440	642		SUBCHAPTER H. CONTRACT PLANNING AND SOLICITATION
441	643		Sec. 2261.351. CONTRACT PLANNING. Before a state agency
442	644		solicits a contract, the agency must:
443	645		(1) identify, justify, and document the need for the
444	646		good or service;
445	647		(2) identify general contracting objectives,
446	648		assumptions, and constraints;
447	649		(3) consider alternatives to soliciting the contract;
448	650		and
449	651		(4) determine the preferred method of delivery for the
450	652		good or service.
451	653		Sec. 2261.352. SOLICITATION OF CONTRACT. (a) A
452	654		solicitation for a contract must include the following:
453	655		(1) a description of the work;
454	656		(2) a specific and measurable standard of performance;
455		-	(3) a list of the test conditions, ~~method~~, or
456		-	~~procedure~~ for verifying that the contract deliverable meets the
	657	+	(3) a list of the test conditions, methods, or
	658	+	procedures for verifying that the contract deliverable meets the
457	659		standard;
458	660		(4) a method or process to monitor and ensure quality
459	661		in the contract deliverable;
460	662		(5) an acceptance process for each contract
461	663		deliverable that is expected to be delivered;
462	664		(6) a compensation structure that is consistent with
463	665		the type and value of work performed; and
464	666		(7) a remedy, if appropriate, for failure to meet
465	667		contract deliverables.
466	668		(b) In preparing a contract solicitation, a state agency
467	669		must include in the requirements for the contract deliverables:
468	670		(1) the quality level of the good or service;
469	671		(2) the amount of completion that is required;
470	672		(3) the suitability of the good or service for the work
471	673		to be done for the agency; and
472	674		(4) a defined and documented method of evaluation to
473	675		be used in making the award and in determining the best value bid
474	676		for the procurement.
475	677		SUBCHAPTER I. CONTRACT CLOSING
476	678		Sec. 2261.401. CLOSING PROCEDURE. A state agency shall
477	679		create and follow a procedure for contract closing that includes
478	680		procedures for:
479	681		(1) verification that all:
480	682		(A) required goods or services have been
481	683		delivered or performed, inspected, and accepted; and
482	684		(B) existing options have been exercised or have
483	685		expired;
484		-	(2) issuance of a contract completion notice by one
485		-	of the parties;
	686	+	(2) issuance of a contract completion notice by one of
	687	+	the parties;
486	688		(3) acquisition of all required forms, reports, and
487	689		clearances;
488	690		(4) verification that other applicable terms have been
489	691		met;
490	692		(5) verification that there are no outstanding claims
491	693		or disputes; and
492	694		(6) final payment.
493		-	SECTION 14. Sections 2262.051(c) and (d), Government Code,
	695	+	SECTION 28. Section 2262.001(1), Government Code, is
	696	+	amended to read as follows:
	697	+	(1) "Team" means the Contract Management and Oversight
	698	+	[Advisory] Team created under Subchapter E [C].
	699	+	SECTION 29. Section 2262.0015, Government Code, is amended
	700	+	to read as follows:
	701	+	Sec. 2262.0015. APPLICABILITY TO CERTAIN CONTRACTS.
	702	+	(a) The comptroller by rule shall establish threshold
	703	+	requirements that exclude small or routine contracts, including
	704	+	purchase orders, from the application of Subchapters A, B, and D
	705	+	[this chapter].
	706	+	(b) Subchapters A, B, and D do [This chapter does] not apply
	707	+	to an enrollment contract described by 1 T.A.C. Section 391.183 as
	708	+	that section existed on November 1, 2013.
	709	+	SECTION 30. Section 2262.002(b), Government Code, is
	710	+	amended to read as follows:
	711	+	(b) Except as otherwise provided by this chapter, this
	712	+	[This] chapter does not apply to contracts of the Texas Department
	713	+	of Transportation that:
	714	+	(1) relate to highway construction or highway
	715	+	engineering; or
	716	+	(2) are subject to Section 201.112, Transportation
	717	+	Code.
	718	+	SECTION 31. Sections 2262.051(c) and (d), Government Code,
494	719		are amended to read as follows:
495	720		(c) The guide must provide required and recommended
496	721		contracting processes and procedures and information regarding the
497	722		primary duties of [a] contract management [manager], including how
498	723		to:
499	724		(1) develop and negotiate a contract;
500	725		(2) fairly and objectively select a contractor; [and]
501	726		(3) monitor contractor and subcontractor performance
502	727		under a contract and ensure compliance with provisions in a
503	728		contract that hold the contractor accountable for performance
504	729		results;
505	730		(4) develop an accurate and comprehensive statement of
506	731		work and conform contract documents to the statement of work;
507	732		(5) evaluate and ensure compliance with contract
508	733		deliverables and performance metrics and any associated remedies
509	734		and incentives;
510	735		(6) maintain required documentation for contracting
511	736		decisions, contract changes, and problems with a contract;
512	737		(7) communicate any serious issue or risk that is
513	738		identified with a contract in a timely manner to the agency's
514	739		governing body or the single state officer who governs the agency;
515	740		(8) create a risk management process under Section
516		-	2261.~~212~~;
	741	+	2261.211;
517	742		(9) build and maintain a working relationship with the
518	743		contractor, including instruction on communication and timely
519	744		management of problems;
520	745		(10) create a procedure for selecting and applying a
521	746		preferred dispute resolution method;
522	747		(11) implement an escalation process to address
523	748		contract disagreements;
524	749		(12) evaluate and approve requests for payments that
525	750		are consistent with the contract; and
526	751		(13) develop a process for contract closure and
527	752		performance evaluation of a contractor under a contract.
528	753		(d) The guide must include model provisions for state agency
529	754		contracts. The guide must:
530	755		(1) distinguish between essential provisions that a
531	756		state agency must include in a contract to protect the interests of
532	757		this state and recommended provisions that a state agency may
533	758		include in a contract;
534	759		(2) recognize the unique contracting needs of an
535	760		individual state agency or program and provide procedures for
536	761		documenting agency decisions that do not follow required
537	762		contracting processes and procedures but are [sufficient
538	763		flexibility to accommodate those needs,] consistent with
539		-	protecting the interests of this state;
	764	+	protecting the interests of this state; and
540	765		(3) include maximum contract periods under which a new
541		-	competitive solicitation is not necessary; and
542		-	(4) include the model contract management process
	766	+	competitive solicitation is not necessary[; and
	767	+	[(4) include the model contract management process
543	768		developed under Section 2262.104 and recommendations on the
544		-	appropriate use of the model.
545		-	SECTION 15. Sections 2261.104, 2261.105, 2261.107,
546		-	2261.208, 2261.351, and 2261.352, Government Code, as added by this
547		-	Act, apply only to a contract for which a state agency first
548		-	advertises or otherwise solicits bids, proposals, offers, or
549		-	qualifications on or after the effective date of this Act.
550		-	SECTION 16. A contract manager is not required to complete
551		-	the training required under Section 2261.301, Government Code, as
552		-	added by this Act, until September 1, 2017.
553		-	SECTION 17. A member of a governing body of a state agency
554		-	is not required to complete the training required under Section
555		-	2261.302, Government Code, as added by this Act, until September 1,
556		-	2017.
557		-	SECTION 18. A state agency is not required to comply with
558		-	Section 2261.202, Government Code, as amended by this Act, and
559		-	Section 2261.004 and Sections 2261.204 through 2261.213,
560		-	Government Code, as added by this Act, until September 1, 2017.
561		-	SECTION 19. This Act takes effect November 1, 2015.
562		-	* * * * *
	769	+	appropriate use of the model].
	770	+	SECTION 32. Section 2262.053(d), Government Code, is
	771	+	amended to read as follows:
	772	+	(d) The comptroller shall administer training under this
	773	+	section and may assess a fee for the training in an amount
	774	+	sufficient to recover the comptroller's costs under this section.
	775	+	SECTION 33. Section 2262.0535, Government Code, is amended
	776	+	by adding Subsection (c) to read as follows:
	777	+	(c) The comptroller may assess a fee for the training
	778	+	provided under this section in an amount sufficient to recover the
	779	+	comptroller's costs under this section.
	780	+	SECTION 34. Chapter 2262, Government Code, is amended by
	781	+	adding Subchapters E and F to read as follows:
	782	+	SUBCHAPTER E. CONTRACT MANAGEMENT AND OVERSIGHT TEAM
	783	+	Sec. 2262.201. DEFINITIONS. In this subchapter:
	784	+	(1) "High-risk contract" means a state agency contract
	785	+	or purchase order that:
	786	+	(A) has a value of at least $10 million;
	787	+	(B) has a value of less than $10 million, but has
	788	+	high-risk factors as identified by the team;
	789	+	(C) is entered into with an entity that is
	790	+	incorporated outside of the United States;
	791	+	(D) is entered into with an entity that, during
	792	+	the five-year period preceding the date of the purchase or award of
	793	+	the contract, has had a contract with a state agency or federal
	794	+	governmental entity terminated or canceled for:
	795	+	(i) a violation of, or noncompliance with,
	796	+	the terms of the contract;
	797	+	(ii) delivery of an ineffective product,
	798	+	service, or system;
	799	+	(iii) significant delays or cost overruns;
	800	+	(iv) fraud;
	801	+	(v) misconduct; or
	802	+	(vi) any other event that resulted in the
	803	+	termination or cancellation of the contract for cause; or
	804	+	(E) meets other criteria that may be established
	805	+	by the team, including that the contract or purchase order:
	806	+	(i) is awarded by an agency with
	807	+	significant audit findings related to contracting in the previous
	808	+	two fiscal years;
	809	+	(ii) is expected to cost more than 20
	810	+	percent of the awarding agency's budget available from all sources;
	811	+	(iii) outsources a program or key function
	812	+	of a program of the awarding agency;
	813	+	(iv) has a value of more than $1 million and
	814	+	is awarded on an emergency basis or is a sole source contract; or
	815	+	(v) has a value of more than $1 million and
	816	+	has change orders that increase the cost of the contract by more
	817	+	than 20 percent of the original contract cost, excluding routine
	818	+	contract renewals.
	819	+	(2) "Major information resources project" has the
	820	+	meaning assigned by Section 2054.003(10).
	821	+	(3) "Quality assurance team" means the quality
	822	+	assurance team established under Section 2054.158.
	823	+	(4) "Solicitation" means a solicitation for bids,
	824	+	offers, qualifications, proposals, or similar expressions of
	825	+	interest for a high-risk contract.
	826	+	Sec. 2262.202. APPLICABILITY OF SUBCHAPTER. (a) This
	827	+	subchapter applies to contracts of the Texas Department of
	828	+	Transportation that:
	829	+	(1) do not relate to highway construction or highway
	830	+	engineering; or
	831	+	(2) are not subject to Section 201.112, Transportation
	832	+	Code.
	833	+	(b) This subchapter does not apply to a contract of the
	834	+	Employees Retirement System of Texas or the Teacher Retirement
	835	+	System of Texas except for a contract with a nongovernmental entity
	836	+	for claims administration of a group health benefit plan under
	837	+	Subtitle H, Title 8, Insurance Code.
	838	+	Sec. 2262.203. ESTABLISHMENT; GENERAL DUTIES. The
	839	+	Legislative Budget Board shall establish a Contract Management and
	840	+	Oversight Team to:
	841	+	(1) develop criteria for identifying high-risk
	842	+	factors in contracts;
	843	+	(2) consult with state agencies on and review
	844	+	high-risk contracts as provided by Section 2262.204;
	845	+	(3) provide recommendations and assistance to state
	846	+	agency personnel throughout the contract management process;
	847	+	(4) coordinate and consult with the quality assurance
	848	+	team on all high-risk contracts relating to a major information
	849	+	resources project; and
	850	+	(5) coordinate and consult with the comptroller to:
	851	+	(A) develop criteria for high-risk contracts
	852	+	under Section 2262.201(1)(E);
	853	+	(B) identify strategies to mitigate contract
	854	+	risks; and
	855	+	(C) monitor contract activity using information
	856	+	from the centralized accounting and payroll system or any successor
	857	+	system used to implement the enterprise resource planning component
	858	+	of the uniform statewide accounting project developed under
	859	+	Sections 2101.035 and 2101.036.
	860	+	Sec. 2262.204. NOTICE AND REVIEW; WAIVER. (a) Each state
	861	+	agency must provide written notice to the team not later than the
	862	+	30th day before the date the agency publicly releases solicitation
	863	+	documents for a high-risk contract.
	864	+	(b) A state agency must submit to the team information and
	865	+	documentation requested by the team that relate to a high-risk
	866	+	contract, including information on contract development, vendor
	867	+	selection, and ongoing contract oversight.
	868	+	(c) The team shall review information and documentation
	869	+	submitted under Subsection (b) and make recommendations to ensure
	870	+	that potential risks related to the high-risk contract have been
	871	+	identified and mitigated.
	872	+	(d) A state agency shall implement the team's
	873	+	recommendations and provide any additional documentation required
	874	+	by the team to demonstrate that risks related to the high-risk
	875	+	contract have been mitigated. If a recommendation made by the team
	876	+	is not implemented, the agency must provide written notice to the
	877	+	team before the 31st day after the date the agency received the
	878	+	recommendation.
	879	+	(e) If, after receiving notice provided under Subsection
	880	+	(d), the team determines that significant risks related to the
	881	+	high-risk contract remain, the team shall provide written notice of
	882	+	that fact to the Legislative Budget Board, the governor, and the
	883	+	comptroller with a description of the risk and recommendations to
	884	+	mitigate the risk, including cancellation of the high-risk
	885	+	contract.
	886	+	(f) The team may adopt criteria for waiving the consultation
	887	+	and review requirements of this section.
	888	+	Sec. 2262.205. SOLICITATION AND CONTRACT CANCELLATION.
	889	+	After review of the written notice provided by the team under
	890	+	Section 2262.204(e), the Legislative Budget Board, the governor, or
	891	+	the comptroller may recommend that a state agency cancel a
	892	+	solicitation or a high-risk contract if:
	893	+	(1) a proposed contract would place the state at an
	894	+	unacceptable risk if executed; or
	895	+	(2) an executed contract is experiencing performance
	896	+	failure or payment irregularities.
	897	+	SUBCHAPTER F. VENDOR RISK MANAGEMENT PROGRAM FOR STATE CONTRACTS
	898	+	Sec. 2262.251. DEFINITION. In this subchapter, "office"
	899	+	means the State Office of Risk Management.
	900	+	Sec. 2262.2515. APPLICABILITY. This subchapter does not
	901	+	apply to a contract for goods with a value of $50,000 or less.
	902	+	Sec. 2262.252. COMPLIANCE VERIFICATION. (a) Each state
	903	+	agency shall submit to the office ongoing contracts of the agency
	904	+	for verification of vendor compliance with contract terms and
	905	+	requirements and to correct contract compliance deficiencies as
	906	+	provided by rules adopted by the office under Section 2262.253.
	907	+	(b) The office may contract with a third-party
	908	+	credentialing organization to provide compliance verification as
	909	+	provided by this subchapter.
	910	+	(c) Not later than December 31 of each even-numbered year,
	911	+	the office shall provide a report to the legislature on the office's
	912	+	findings under this subchapter and recommendations to ensure state
	913	+	contract compliance and mitigate risk to the state.
	914	+	(d) Notwithstanding Subsection (a), the office may not
	915	+	require a state agency to submit for compliance verification a
	916	+	contract related to health and human services if:
	917	+	(1) the value of the contract cannot be determined at
	918	+	the time of execution of the contract; and
	919	+	(2) any qualified vendor is eligible for the contract.
	920	+	Sec. 2262.253. RULES RELATING TO COMPLIANCE VERIFICATION.
	921	+	(a) The office shall adopt rules to implement this subchapter.
	922	+	(b) At a minimum, rules adopted under Subsection (a) must:
	923	+	(1) provide standards for:
	924	+	(A) selecting and submitting a statistically
	925	+	significant sampling of contracts for review under this subchapter;
	926	+	(B) identifying vendor noncompliance or
	927	+	deficiency as a result of a contract review under this subchapter;
	928	+	and
	929	+	(C) implementing corrective action in relation
	930	+	to vendor noncompliance or deficiency;
	931	+	(2) in relation to verification system requirements,
	932	+	provide criteria for:
	933	+	(A) monitoring of vendor compliance with
	934	+	contract terms and requirements through the life cycle of the
	935	+	contract; and
	936	+	(B) implementation of Internet-based software
	937	+	that has the capability to exchange information and facilitate
	938	+	payments and real-time reporting of collected information;
	939	+	(3) in relation to requirements for contract
	940	+	compliance verification:
	941	+	(A) designate verification checklists, including
	942	+	requirements for interviews and recordkeeping, exposure analyses,
	943	+	equipment and facility forms, and pre-verification and
	944	+	post-verification compliance;
	945	+	(B) provide standards for verifying vendor
	946	+	certificates of insurance, policy types and limits, policy
	947	+	expirations and renewals, and endorsements;
	948	+	(C) provide standards for additional vendor
	949	+	screenings, including:
	950	+	(i) financial screening, including
	951	+	reviewing profit and loss statements, cash flow statements, balance
	952	+	statements, and federal employer identification numbers and other
	953	+	taxpayer identification numbers;
	954	+	(ii) license screening, including any
	955	+	required certifications and professional licenses;
	956	+	(iii) state and federal debarment and
	957	+	exclusion screening;
	958	+	(iv) compliance with legal requirements;
	959	+	(v) compliance with safety standards,
	960	+	including workers' compensation and automobile insurance coverage;
	961	+	and
	962	+	(vi) review of vendor compliance with
	963	+	security standards for information systems; and
	964	+	(D) address any additional issues the office
	965	+	determines to be necessary to achieve best practices in the
	966	+	verification of contracts for compliance with contract terms and
	967	+	requirements and to correct contract compliance deficiencies; and
	968	+	(4) set a reasonable fee to be paid by a vendor who
	969	+	enters into a contract with a state agency in an amount that is
	970	+	sufficient to recover the office's costs under this subchapter and
	971	+	that is less than one percent of the contract, not to exceed $1,000.
	972	+	Sec. 2262.254. REQUIRED CONTRACT PROVISION RELATING TO
	973	+	VENDOR RISK MANAGEMENT PROGRAM. Each state agency shall include in
	974	+	each of its contracts a clause that provides that the vendor agrees
	975	+	that the vendor may be charged a reasonable fee as provided by
	976	+	Section 2262.253(b)(4).
	977	+	SECTION 35. Subchapter C, Chapter 2262, Government Code, is
	978	+	repealed.
	979	+	SECTION 36. (a) The Contract Advisory Team is abolished.
	980	+	(b) The validity of an action taken by the Contract Advisory
	981	+	Team before the team was abolished by this Act is not affected by
	982	+	the abolition.
	983	+	(c) All powers and duties of the Contract Advisory Team are
	984	+	transferred to the Contract Management and Oversight Team
	985	+	established by this Act.
	986	+	(d) A rule, form, policy, procedure, or decision of the
	987	+	Contract Advisory Team continues in effect as a rule, form, policy,
	988	+	procedure, or decision of the Contract Management and Oversight
	989	+	Team until superseded by an act of the Contract Management and
	990	+	Oversight Team.
	991	+	(e) A reference in law to the Contract Advisory Team means
	992	+	the Contract Management and Oversight Team.
	993	+	(f) Any action or proceeding involving the Contract
	994	+	Advisory Team is transferred without change in status to the
	995	+	Contract Management and Oversight Team, and the Contract Management
	996	+	and Oversight Team assumes, without a change in status, the
	997	+	position of the Contract Advisory Team in a negotiation or
	998	+	proceeding to which the Contract Advisory Team is a party.
	999	+	SECTION 37. Except as otherwise provided by this Act, this
	1000	+	Act applies only in relation to a contract:
	1001	+	(1) for which a state agency first advertises or
	1002	+	otherwise solicits bids, proposals, offers, or qualifications on or
	1003	+	after the effective date of this Act;
	1004	+	(2) that is extended or modified on or after the
	1005	+	effective date of this Act; or
	1006	+	(3) for which a change order is submitted on or after
	1007	+	the effective date of this Act.
	1008	+	SECTION 38. Sections 2166.2551, 2254.006, and
	1009	+	2254.0301(a), Government Code, as amended by this Act, apply only
	1010	+	to a state agency contract for which the agency is required to
	1011	+	provide notice to the Legislative Budget Board that is entered into
	1012	+	on or after the effective date of this Act.
	1013	+	SECTION 39. To the extent of any conflict, this Act prevails
	1014	+	over another Act of the 84th Legislature, Regular Session, 2015,
	1015	+	relating to state agency contracting and oversight.
	1016	+	SECTION 40. This Act takes effect September 1, 2015.