84R27887 MTB-D
	By: Zaffirini, et al.	S.B. No. 543
	(Elkins, Otto, Walle, Gutierrez, Leach, et al.)
	Substitute the following for S.B. No. 543:  No.

	A BILL TO BE ENTITLED
	AN ACT
	relating to oversight of and requirements applicable to state
	contracts and other state financial and accounting issues;
	authorizing fees.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 821.009(b), Government Code, is amended
	to read as follows:
	(b)  Notwithstanding any other law and in addition to the
	requirements of Subchapter E, Chapter 2262, before a contract
	described by Subsection (a) may be entered into by the retirement
	system, a representative of the office of the attorney general
	shall review the form and terms of the contract and may make
	recommendations to the retirement system for changes to the
	contract if the attorney general determines that the office of the
	attorney general has sufficient subject matter expertise and
	resources available to provide this service.
	SECTION 2.  Section 825.103(g), Government Code, is amended
	to read as follows:
	(g)  Notwithstanding any other law and except as provided by
	Section 2262.202, Chapters 2261 and 2262 do not apply to the
	retirement system.  The Contract Management and Oversight
	[Advisory] Team shall assist the retirement system at the request
	of the retirement system.  The retirement system may use the
	training program for contract management provided under Chapter
	2262.
	SECTION 3.  Section 2054.065(a)(2), Government Code, is
	amended to read as follows:
	(2)  "Team" means the Contract Management and Oversight
	[Advisory] Team established under Subchapter E [C], Chapter 2262.
	SECTION 4.  Section 2101.001(1), Government Code, is amended
	to read as follows:
	(1)  "Enterprise resource planning" includes the
	administration of a state agency's:
	(A)  general ledger;
	(B)  accounts payable;
	(C)  accounts receivable;
	(D)  budgeting;
	(E)  inventory;
	(F)  asset management;
	(G)  billing;
	(H)  payroll;
	(I)  projects;
	(J)  grants;
	(K)  human resources, including administration of
	performance measures, time spent on tasks, and other personnel and
	labor issues; and
	(L)  purchasing, including solicitations and
	contracting.
	SECTION 5.  Section 2101.011, Government Code, is amended by
	adding Subsection (e) to read as follows:
	(e)  A state agency's annual financial report must include
	any claims made against the agency for the preceding fiscal year and
	the amount paid by the agency in relation to each claim.
	SECTION 6.  Section 2101.035, Government Code, is amended by
	adding Subsections (i), (j), and (k) to read as follows:
	(i)  State agencies other than a university system or an
	institution of higher education as defined by Section 61.003,
	Education Code, shall report contract and purchasing information in
	the uniform manner required by the comptroller.
	(j)  The centralized accounting and payroll system, or any
	successor system used to implement the enterprise resource planning
	component of the uniform statewide accounting project, developed
	under this section and Section 2101.036 must provide alerts to the
	comptroller to notify the comptroller of a state contract other
	than a contract of a university system or an institution of higher
	education as defined by Section 61.003, Education Code, that has a
	high risk of loss to the state based on parameters identified by
	rule by the comptroller, including:
	(1)  a change order of more than 20 percent of the value
	of the original contract; and
	(2)  a contract entered into in an amount that exceeds a
	predetermined threshold amount.
	(k)  If, through the uniform statewide accounting system or a
	component of that system, the comptroller or an officer or employee
	of the comptroller's office releases or publishes information that
	is confidential or excepted from required disclosure in reliance on
	a determination made by a state agency about the status of the
	information as confidential or excepted from disclosure, the
	comptroller, officer, or employee, as appropriate, is:
	(1)  immune from any civil or criminal liability for
	releasing or publishing the information; and
	(2)  not required to comply with the notification
	requirements of Section 2054.1125 of this code and Chapter 521,
	Business & Commerce Code, in relation to the release or publication
	of the information.
	SECTION 7.  Section 2101.036, Government Code, is amended by
	amending Subsection (d) and adding Subsection (e) to read as
	follows:
	(d)  Notwithstanding any other provision of this chapter or
	other law and except as provided by Subsection (e), this section and
	any rules implementing this section apply only in relation to a
	state agency as defined by Section 2054.003.
	(e)  A state agency in the legislative branch of state
	government may elect to participate in the centralized accounting
	and payroll system, or any successor system used to implement the
	enterprise resource planning component of the uniform statewide
	accounting project, developed under this section.
	SECTION 8.  Section 2102.005, Government Code, is amended to
	read as follows:
	Sec. 2102.005.  INTERNAL AUDITING REQUIRED. A state agency
	shall conduct a program of internal auditing that includes:
	(1)  an annual audit plan that is prepared using risk
	assessment techniques and that identifies the individual audits to
	be conducted during the year; and
	(2)  periodic audits of:
	(A)  the agency's major systems and controls,
	including:
	(i) [(A)]  accounting systems and controls;
	(ii) [(B)]  administrative systems and
	controls; [and]
	(iii) [(C)]  electronic data processing
	systems and controls; and
	(iv)  contract management processes and
	controls; and
	(B)  one or more of the agency's contracts with
	high-risk factors.
	SECTION 9.  Section 2113.102(a), Government Code, is amended
	to read as follows:
	(a)  A state agency may not use appropriated money to
	contract with a person to audit [the financial records or accounts
	of] the agency except:
	(1)  as provided by[:
	[(1)]  Subsections (b), (c), and (d); and
	(2)  in accordance with Section 321.020 [Chapter 466,
	pertaining to the state lottery;
	[(3)     Chapter 2306, pertaining to the Texas Department
	of Housing and Community Affairs; and
	[(4)     Chapter 361, Transportation Code, pertaining to
	the Texas Turnpike Authority division of the Texas Department of
	Transportation].
	SECTION 10.  Subchapter I, Chapter 2155, Government Code, is
	amended by adding Section 2155.5035 to read as follows:
	Sec. 2155.5035.  USE OF SCHEDULE BY STATE AGENCY.  (a)  A
	state agency purchasing goods or services that exceed $50,000 under
	a contract listed on the schedule shall submit a request for pricing
	to:
	(1)  at least three vendors included on the schedule in
	the category to which the purchase relates; or
	(2)  all vendors included on the schedule in the
	category to which the purchase relates if fewer than three vendors
	are included in the category.
	(b)  The price listed for a good or service under a multiple
	award contract is a maximum price.  A state agency may negotiate a
	lower price for goods or services under a contract listed on a
	schedule developed under this chapter.
	SECTION 11.  Section 2155.504, Government Code, is amended
	to read as follows:
	Sec. 2155.504.  USE OF SCHEDULE BY LOCAL GOVERNMENTS
	[GOVERNMENTAL ENTITIES]. (a)  A [state agency or] local government
	may purchase goods or services directly from a vendor under a
	contract listed on a schedule developed under this subchapter. A
	purchase authorized by this section satisfies any requirement of
	state law relating to competitive bids or proposals and satisfies
	any applicable requirements of Chapter 2157.
	(b)  The price listed for a good or service under a multiple
	award contract is a maximum price. A [An agency or] local
	government may negotiate a lower price for goods or services under a
	contract listed on a schedule developed under this subchapter.
	SECTION 12.  Section 2162.103(a), Government Code, is
	amended to read as follows:
	(a)  In comparing the cost of providing a service, the
	council shall consider the:
	(1)  cost of supervising the work of a private
	contractor; [and]
	(2)  cost of a state agency's performance of the
	service, including:
	(A)  the costs of the comptroller, attorney
	general, and other support agencies; and
	(B)  other indirect costs related to the agency's
	performance of the service;
	(3)  installation costs and any other initial costs
	associated with a contract with a private contractor;
	(4)  other costs associated with the transition to
	using a private contractor's services; and
	(5)  cost savings to the state if a private contractor
	were awarded the contract.
	SECTION 13.  Sections 2165.356(a) and (b), Government Code,
	are amended to read as follows:
	(a)  Not later than the 60th day before the date the
	commission is scheduled to vote on approval of a qualifying project
	contract, the commission must submit to the Contract Management and
	Oversight [Advisory] Team established under Subchapter E [C],
	Chapter 2262, documentation of the modifications to a proposed
	qualifying project made during the commission's evaluation and
	negotiation process for the project, including a copy of:
	(1)  the final draft of the contract;
	(2)  the detailed qualifying project proposal; and
	(3)  any executed interim or other agreement.
	(b)  The Contract Management and Oversight [Advisory] Team
	shall review the documentation submitted under Subsection (a) and
	provide written comments and recommendations to the
	commission.  The review must focus on, but not be limited to, best
	practices for contract management and administration.
	SECTION 14.  Section 2166.2551, Government Code, is amended
	to read as follows:
	Sec. 2166.2551.  CONTRACT NOTIFICATION. The commission or
	an agency whose project is exempted from all or part of this chapter
	under Section 2166.003 shall provide written notice to the
	Legislative Budget Board of a contract for a construction project
	if the amount of the contract, including an amendment,
	modification, renewal, or extension of the contract, exceeds
	$50,000 [$14,000]. The notice must be on a form prescribed by the
	Legislative Budget Board and filed not later than the 10th day after
	the date the agency enters into the contract.
	SECTION 15.  Section 2254.006, Government Code, is amended
	to read as follows:
	Sec. 2254.006.  CONTRACT NOTIFICATION. A state agency,
	including an institution of higher education as defined by Section
	61.003, Education Code, shall provide written notice to the
	Legislative Budget Board of a contract for professional services,
	other than a contract for physician or optometric services, if the
	amount of the contract, including an amendment, modification,
	renewal, or extension of the contract, exceeds $50,000 [$14,000].
	The notice must be on a form prescribed by the Legislative Budget
	Board and filed not later than the 10th day after the date the
	agency enters into the contract.
	SECTION 16.  Section 2254.0301(a), Government Code, is
	amended to read as follows:
	(a)  A state agency shall provide written notice to the
	Legislative Budget Board of a contract for consulting services if
	the amount of the contract, including an amendment, modification,
	renewal, or extension of the contract, exceeds $50,000 [$14,000].
	The notice must be on a form prescribed by the Legislative Budget
	Board and filed not later than the 10th day after the date the
	entity enters into the contract.
	SECTION 17.  Sections 2261.001(a) and (c), Government Code,
	are amended to read as follows:
	(a)  This chapter applies only to each procurement of goods
	or services made by a state agency that is neither made by the
	comptroller nor made under purchasing authority delegated to the
	agency by or under Section 51.9335 or 73.115, Education Code, or
	Section [2155.131 or] 2155.132.
	(c)  The comptroller on request shall determine whether a
	procurement or type of procurement:
	(1)  is made under purchasing authority delegated to an
	agency by or under Section [2155.131 or] 2155.132; or
	(2)  is made under some other source of purchasing
	authority.
	SECTION 18.  Section 2261.002, Government Code, is amended
	to read as follows:
	Sec. 2261.002.  DEFINITIONS. In this chapter:
	(1)  "Contract" includes an agreement or other written
	expression of terms of agreement, including an amendment, a
	modification, a renewal, or an extension, for the purchase of goods
	or services that is entered into or paid for, wholly or partly, by a
	state agency during a fiscal year and a grant, other than a grant
	made to a school district or a grant made for other academic
	purposes, under which the recipient of the grant is required to
	perform a specific act or service, supply a specific type of
	product, or both.
	(2)  "Contract deliverable" means a unit or increment
	of work required by a contract, including goods, services, reports,
	or documents.
	(3)  "Contract manager" means a person who:
	(A)  is employed by a state agency; and
	(B)  has significant contract management duties
	for the state agency.
	(4)  "Executive director" means the administrative
	head of a state agency.
	(5)  "General counsel" means the general counsel of a
	state agency.
	(6)  "Major contract" means a contract, including a
	renewal of a contract, that has a value of at least $1 million. The
	term includes a service contract.
	(7)  "State agency" has the meaning assigned by Section
	2151.002.
	SECTION 19.  Subchapter A, Chapter 2261, Government Code, is
	amended by adding Sections 2261.004, 2261.005, 2261.006, 2261.007,
	2261.008, and 2261.009 to read as follows:
	Sec. 2261.004.  STATE AGENCY REPOSITORY AND RECORDS.
	(a)  Each state agency shall maintain in a central location all
	contracts for that agency.
	(b)  Each state agency shall maintain a comprehensive list of
	all contracts for that agency.
	(c)  In this subsection, "contract" includes a sole source
	contract.  Each state agency shall maintain accurate records of all
	essential information relating to agency contracts, including
	information on:
	(1)  a contract delay or changes to a contract in which
	total expenditures under the contract increase by more than 20
	percent from the original contract amount; and
	(2)  cost overruns, including a written explanation of
	why expenditures have increased under a contract.
	(d)  Notwithstanding Section 441.185, contracts and other
	related information required to be maintained under this section by
	a state agency must be retained for the duration of the contract.
	Sec. 2261.005.  CONTRACT REPORTING. (a)  In this section,
	"contract" includes a construction contract.
	(b)  The following sections prescribe reporting requirements
	for certain contracts:
	(1)  Section 322.020;
	(2)  Section 2054.008;
	(3)  Section 2166.2551;
	(4)  Section 2254.006;
	(5)  Section 2254.028; and
	(6)  Section 2254.0301.
	Sec. 2261.006.  PROFESSIONAL SERVICES. A state agency shall
	procure professional services in accordance with Subchapter A,
	Chapter 2254.
	Sec. 2261.007.  CONTRACT GUIDELINES AND PROCEDURES. Each
	state agency shall establish formal guidelines and procedures for
	all employees involved in the contracting process:
	(1)  regarding who may approve a contract for the
	agency;
	(2)  for contract planning and solicitation;
	(3)  for contract negotiations;
	(4)  for contract management; and
	(5)  for contract oversight.
	Sec. 2261.008.  INTERAGENCY AGREEMENTS AND CONTRACTS. An
	interagency agreement or contract of a state agency is governed by
	Chapter 771.
	Sec. 2261.009.  INTERLOCAL CONTRACTS. An interlocal
	contract to which a state agency is a party is governed by Chapter
	791.
	SECTION 20.  Subchapter B, Chapter 2261, Government Code, is
	amended by adding Section 2261.054 to read as follows:
	Sec. 2261.054.  BEST VALUE STANDARD FOR CONTRACTING FOR
	GOODS AND SERVICES. In determining the best value for the state,
	the purchase price and whether the goods or services meet
	specifications are the most important considerations. A state
	agency may consider, subject to Sections 2155.074(c) and 2155.075,
	other relevant factors, including:
	(1)  installation costs;
	(2)  life cycle costs;
	(3)  the quality and reliability of the goods and
	services;
	(4)  the delivery terms;
	(5)  indicators of probable vendor performance under
	the contract such as past vendor performance, the vendor's
	financial resources and ability to perform, the vendor's experience
	or demonstrated capability and responsibility, and the vendor's
	ability to provide reliable maintenance agreements and support;
	(6)  the cost of any employee training associated with
	a purchase;
	(7)  the effect of a purchase on agency productivity;
	(8)  the vendor's anticipated economic impact on the
	state or a subdivision of the state, including potential tax
	revenue and employment; and
	(9)  other factors relevant to determining the best
	value for the state in the context of a particular purchase.
	SECTION 21.  The heading to Subchapter C, Chapter 2261,
	Government Code, is amended to read as follows:
	SUBCHAPTER C. CONTRACT FORMATION AND PROVISIONS
	SECTION 22.  Subchapter C, Chapter 2261, Government Code, is
	amended by adding Sections 2261.103, 2261.104, 2261.105, 2261.106,
	and 2261.107 to read as follows:
	Sec. 2261.103.  USE OF UNIFORM FORMS.  A state agency may use
	any forms developed by the comptroller as templates, guides, or
	samples for contracts entered into by the agency.
	Sec. 2261.104.  ESSENTIAL CONTRACT PROVISIONS. (a)  The
	following are required provisions in each contract to which the
	provisions are applicable, other than a grant:
	(1)  legal authority;
	(2)  statement of work;
	(3)  indemnification or damage claims;
	(4)  consideration;
	(5)  specifications;
	(6)  funding out clause;
	(7)  antitrust;
	(8)  payment;
	(9)  dispute resolution;
	(10)  term of contract;
	(11)  confidential information;
	(12)  abandonment or default;
	(13)  right to audit;
	(14)  force majeure;
	(15)  independent contractor; and
	(16)  termination.
	(b)  If a state agency determines that the circumstances of a
	proposed contract require more protection for the state than the
	provisions in Subsection (a) provide, the agency shall include a
	provision in the contract providing for that protection.
	Sec. 2261.105.  CONTRACT PROVISIONS REQUIRED BY STATE LAW.
	(a)  In any contract for the acquisition of goods or services to
	which a state agency is a party, a provision required by other
	applicable law to be included in the contract is considered to be a
	part of the executed contract without regard to whether:
	(1)  the provision appears on the face of the contract;
	or
	(2)  the contract includes any provision to the
	contrary.
	(b)  If a state agency determines that the circumstances of a
	proposed contract require more protection for the state than the
	provisions described by Subsection (a) provide, the agency shall
	include a provision in the contract providing for that protection.
	Sec. 2261.106.  CONTRACT RENEWAL. A state agency shall
	establish a standardized process for renewing all contracts of the
	agency.
	Sec. 2261.107.  CONTRACT DURATION. (a) A state agency:
	(1)  must establish a reasonable term for a contract
	before solicitation of the contract; and
	(2)  shall make an effort to keep the maximum length of
	a contract to four years without reissuing a competitive
	solicitation, including any contract renewals or extensions.
	(b)  A contract term established under Subsection (a)(1)
	must be included in a solicitation document.
	(c)  A state agency may not enter into a contract that has an
	indefinite term.
	SECTION 23.  Subchapter D, Chapter 2261, Government Code, is
	amended by adding Section 2261.152 to read as follows:
	Sec. 2261.152.  CONTRACT PAYMENT. (a) For each contract for
	goods or services that is subject to this chapter, a state agency
	shall require that payment under the contract be linked to clear and
	measurable achievements, such as length of time of work, contract
	deliverables, or performance measures.
	(b)  A state agency may not make a final payment on a contract
	for goods or services that is subject to this chapter unless the
	agency verifies that all contract deliverables have been received.
	SECTION 24.  The heading to Subchapter E, Chapter 2261,
	Government Code, is amended to read as follows:
	SUBCHAPTER E.  CONTRACT MONITORING AND [CONTRACTOR] OVERSIGHT
	SECTION 25.  Section 2261.202, Government Code, is amended
	to read as follows:
	Sec. 2261.202.  CONTRACT MONITORING RESPONSIBILITIES.  (a)
	As one of its contract management policies, each state agency that
	makes procurements to which this chapter applies shall establish
	and adopt by rule a policy that clearly defines the contract
	monitoring roles and responsibilities, if any, of agency staff,
	including internal audit staff and other inspection,
	investigative, or audit staff.
	(b)  The policy must establish clear lines of
	accountability, staff roles and responsibilities, and
	decision-making authority for program staff, contract management
	staff, and executive management staff.
	SECTION 26.  Subchapter E, Chapter 2261, Government Code, is
	amended by adding Sections 2261.204, 2261.205, 2261.206, 2261.207,
	2261.208, 2261.209, 2261.210, 2261.211, 2261.212, 2261.213, and
	2261.214 to read as follows:
	Sec. 2261.204.  INFORMATION ON CONTRACTOR PERFORMANCE.
	After a contract with a value of $25,000 or more is completed or
	otherwise terminated, each state agency shall review the
	contractor's performance under the contract and report to the
	comptroller on the results of the review using forms made available
	to the state agency.
	Sec. 2261.205.  CONTRACTING STAFF. (a)  Each state agency
	that enters into contracts other than interagency contracts shall
	establish a career ladder program for contract management in the
	agency.
	(b)  An employee hired as a contract manager may participate
	in procurement planning, contract solicitation, contract
	formation, price establishment, and other contract activities.
	(c)  Each state agency shall determine, in consultation with
	the state auditor, the amount and significance of contract
	management duties sufficient for an employee to be considered a
	contract manager, program staff, or a contract specialist.
	Sec. 2261.206.  APPROVAL OF CONTRACTS. (a) Each state
	agency shall adopt a policy to establish a monetary threshold above
	which agency contracts and amendments to or extensions of agency
	contracts require written authorization by the agency executive
	director.
	(b)  Each state agency shall annually report to the
	comptroller a list of persons authorized to approve contracts at
	the agency. The list must include each person's name, position, and
	supervisory responsibility, if any.
	Sec. 2261.207.  NEGOTIATION OF MAJOR CONTRACT BY SINGLE
	EMPLOYEE PROHIBITED. A state agency may not negotiate a major
	contract with only one employee engaging in the negotiation.
	Sec. 2261.208.  CONTRACT REVIEW; REPORTING. (a)  A
	contractor's performance must be periodically reviewed throughout
	the term of a contract.
	(b)  A state agency shall ensure ongoing communication
	between executive management staff, contract management staff, and
	program staff of the results of the reviews performed under
	Subsection (a) with specific attention to contracts that are:
	(1)  anticipated to be completed later than originally
	estimated; or
	(2)  expected to cost more than the amount that was
	originally budgeted.
	(c)  To implement this section, a state agency shall create a
	system for agency-wide reporting on the status of, activity on, and
	contractor performance for each contract.
	Sec. 2261.209.  CONTRACT ADMINISTRATION TEAM. (a) This
	section applies to a state agency that has a contract with a value
	of $5 million or more.
	(b)  A state agency to which this section applies shall
	create a contract administration team to:
	(1)  ensure and verify the performance of agency
	contracts with a value of $5 million or more; and
	(2)  maintain within the agency contract oversight
	expertise to effectively manage contractors.
	Sec. 2261.210.  CONTRACT MONITORING PROCESS. A state agency
	shall establish and implement a monitoring process for agency
	contracts that includes:
	(1)  identifying the appropriate criteria for use in
	measuring contract performance;
	(2)  creating a schedule for monitoring contract
	performance;
	(3)  comparing work accomplished to work planned to be
	accomplished;
	(4)  analyzing contract performance variances; and
	(5)  addressing contracting performance problems with
	corrective action.
	Sec. 2261.211.  RISK MANAGEMENT PROCESS. (a) A state agency
	shall establish and implement a:
	(1)  process for evaluating the potential risk to the
	state, such as product risk, process risk, financial risk, and
	schedule risk, if contract implementation or performance problems
	occur, including a process for:
	(A)  risk identification or identifying items
	that may prevent the agency from achieving contracting goals or
	objectives;
	(B)  risk analysis or assessing the impact and
	likelihood of a risk;
	(C)  risk evaluation or developing strategies or
	approaches to address risks that have been identified and analyzed;
	(D)  risk treatment or the managerial approach to
	risk;
	(E)  risk reduction or planning and performing
	actions to mitigate risk due to a managerial decision to reduce
	risk;
	(F)  contingency planning or developing plans for
	corrective action to be taken if a potential risk occurs; and
	(G)  risk monitoring or tracking the
	implementation of a risk reduction plan until the risk is
	sufficiently mitigated; and
	(2)  procedure for corrective action to be used when
	contract implementation or performance problems occur.
	(b)  In creating the process required by Subsection (a)(1),
	the state agency shall consider:
	(1)  the complexity and subject matter of agency
	contracts;
	(2)  the dollar value of agency contracts, including
	contract extensions and amendments, and whether the procurement
	will result in a major contract;
	(3)  the anticipated payment methodology;
	(4)  the experience of agency staff with the type of
	procurement;
	(5)  whether the results of the procurement will impact
	the public or only impact the agency;
	(6)  time constraints or the expected duration of the
	procurement; and
	(7)  the type, availability, and experience of staff
	resources required to implement the objectives of the procurement.
	(c)  Based on the assessed risk of a state agency contract,
	the agency shall, for each contract:
	(1)  determine the appropriate frequency and method of
	contract monitoring;
	(2)  allocate contract monitoring resources; and
	(3)  develop a contract auditing plan.
	Sec. 2261.212.  CONTRACT COMMUNICATION. (a) A state agency
	shall maintain effective communication procedures regarding
	contract performance.
	(b)  The chief financial officer of a state agency, or an
	individual designated by the executive director with similar
	contract administration duties and responsibilities, shall report
	at least monthly to the executive director on the status of agency
	contracts. The report must include a clear indication of:
	(1)  any contract cost overruns or contracts that are
	performing poorly; and
	(2)  contracts that may cause the state to delay or
	default on service delivery.
	Sec. 2261.213.  REPORT ON CERTAIN PURCHASES.  (a)  Not later
	than December 1 of each year, the comptroller shall publish a report
	on the number and dollar value of sole source and emergency
	purchases made in the previous fiscal year.
	(b)  Each state agency shall timely provide to the
	comptroller the information the comptroller requires for the
	purpose of creating the report under Subsection (a) in the manner
	and form specified by the comptroller.
	(c)  The comptroller shall establish requirements for the
	provision of information under Subsection (b) in consultation with
	the Contract Management and Oversight Team created under Subchapter
	E, Chapter 2262, the Health and Human Services Commission, and the
	Texas Department of Transportation.
	(d)  The comptroller may not require a state agency to
	provide information under Subsection (b) on a contract related to
	health and human services if:
	(1)  the value of the contract cannot be determined at
	the time of execution of the contract; and
	(2)  any qualified vendor is eligible for the contract.
	Sec. 2261.214.  CONTRACT DATABASE. (a)  Each state agency
	that becomes a participant in the centralized accounting and
	payroll system as authorized by Sections 2101.035 and 2101.036, or
	any successor system used to implement the enterprise resource
	planning component of the uniform statewide accounting project,
	shall use the system to identify and record each contract entered
	into by the agency as specified by the rules, policies, or
	procedures developed by the comptroller, after consultation with
	the Department of Information Resources.
	(b)  The comptroller shall provide as necessary information
	and state agency contract data contained in the centralized
	accounting and payroll system to other state agencies with
	oversight duties, including the Legislative Budget Board, the state
	auditor's office, and the Department of Information Resources.
	SECTION 27.  Chapter 2261, Government Code, is amended by
	adding Subchapters F, G, H, and I to read as follows:
	SUBCHAPTER F.  CHANGES TO CONTRACTS
	Sec. 2261.251.  CONTRACT AMENDMENTS, EXTENSIONS, AND CHANGE
	ORDERS. (a) This section does not apply to a contract amendment,
	extension, or change order that does not change the cost or terms of
	the contract.
	(b)  An extension of or amendment to a state agency contract,
	including a change order, is subject to the same agency approval
	processes as the original contract.
	(c)  A state agency may not extend or amend a contract unless
	the agency complies with the same agency approval processes for the
	extension or amendment as required for the original contract and
	the agency states in writing why the extension or amendment is
	necessary or advantageous to the state.
	(d)  This section does not affect whether a state agency is
	required to undertake a new solicitation process in the manner
	required for a new contract in order to extend or amend a contract.
	(e)  For state agency contracts valued in excess of $1
	million, the agency executive director must authorize a contract
	amendment in writing.
	Sec. 2261.252.  LARGE CHANGE IN CONTRACT VALUE; COST
	OVERRUNS.  (a)  If a proposed contract amendment or extension
	changes the monetary value of a major contract by at least 20
	percent or $1 million, the state agency must submit the amendment or
	extension for review to the agency's executive director before the
	agency amends or extends the contract.
	(b)  Subsection (a) does not apply to a proposed contract
	amendment required by a state or federal statute.
	(c)  The executive director shall be timely notified of any
	unanticipated contract cost overrun.
	Sec. 2261.253.  CERTAIN CONTRACT EXTENSIONS AND RENEWALS.
	This subchapter does not apply to contract extensions or renewals
	that are specifically established as a component of the original
	procurement.
	SUBCHAPTER G.  TRAINING
	Sec. 2261.301.  TRAINING FOR CONTRACT MANAGERS. (a)  A
	state agency shall require a contract manager to complete the
	training program for contract managers developed and administered
	by the comptroller.
	(b)  A state agency shall maintain a list of contract
	managers who have completed the training program for contract
	managers.
	(c)  A state agency may develop qualified contract manager
	training to supplement the training required under this section.
	Sec. 2261.302.  TRAINING FOR GOVERNING BODIES.  All members
	of the governing body of a state agency shall complete at least one
	abbreviated course of the training program for contract managers
	developed and administered by the comptroller. This section does
	not apply to a state agency that does not enter into any contracts.
	SUBCHAPTER H. CONTRACT PLANNING AND SOLICITATION
	Sec. 2261.351.  CONTRACT PLANNING. Before a state agency
	solicits a contract, the agency must:
	(1)  identify, justify, and document the need for the
	good or service;
	(2)  identify general contracting objectives,
	assumptions, and constraints;
	(3)  consider alternatives to soliciting the contract;
	and
	(4)  determine the preferred method of delivery for the
	good or service.
	Sec. 2261.352.  SOLICITATION OF CONTRACT. (a) A
	solicitation for a contract must include the following:
	(1)  a description of the work;
	(2)  a specific and measurable standard of performance;
	(3)  a list of the test conditions, methods, or
	procedures for verifying that the contract deliverable meets the
	standard;
	(4)  a method or process to monitor and ensure quality
	in the contract deliverable;
	(5)  an acceptance process for each contract
	deliverable that is expected to be delivered;
	(6)  a compensation structure that is consistent with
	the type and value of work performed; and
	(7)  a remedy, if appropriate, for failure to meet
	contract deliverables.
	(b)  In preparing a contract solicitation, a state agency
	must include in the requirements for the contract deliverables:
	(1)  the quality level of the good or service;
	(2)  the amount of completion that is required;
	(3)  the suitability of the good or service for the work
	to be done for the agency; and
	(4)  a defined and documented method of evaluation to
	be used in making the award and in determining the best value bid
	for the procurement.
	SUBCHAPTER I. CONTRACT CLOSING
	Sec. 2261.401.  CLOSING PROCEDURE. A state agency shall
	create and follow a procedure for contract closing that includes
	procedures for:
	(1)  verification that all:
	(A)  required goods or services have been
	delivered or performed, inspected, and accepted; and
	(B)  existing options have been exercised or have
	expired;
	(2)  issuance of a contract completion notice by one of
	the parties;
	(3)  acquisition of all required forms, reports, and
	clearances;
	(4)  verification that other applicable terms have been
	met;
	(5)  verification that there are no outstanding claims
	or disputes; and
	(6)  final payment.
	SECTION 28.  Section 2262.001(1), Government Code, is
	amended to read as follows:
	(1)  "Team" means the Contract Management and Oversight
	[Advisory] Team created under Subchapter E [C].
	SECTION 29.  Section 2262.0015, Government Code, is amended
	to read as follows:
	Sec. 2262.0015.  APPLICABILITY TO CERTAIN CONTRACTS.
	(a)  The comptroller by rule shall establish threshold
	requirements that exclude small or routine contracts, including
	purchase orders, from the application of Subchapters A, B, and D
	[this chapter].
	(b)  Subchapters A, B, and D do [This chapter does] not apply
	to an enrollment contract described by 1 T.A.C. Section 391.183 as
	that section existed on November 1, 2013.
	SECTION 30.  Section 2262.002(b), Government Code, is
	amended to read as follows:
	(b)  Except as otherwise provided by this chapter, this
	[This] chapter does not apply to contracts of the Texas Department
	of Transportation that:
	(1)  relate to highway construction or highway
	engineering; or
	(2)  are subject to Section 201.112, Transportation
	Code.
	SECTION 31.  Sections 2262.051(c) and (d), Government Code,
	are amended to read as follows:
	(c)  The guide must provide required and recommended
	contracting processes and procedures and information regarding the
	primary duties of [a] contract management [manager], including how
	to:
	(1)  develop and negotiate a contract;
	(2)  fairly and objectively select a contractor; [and]
	(3)  monitor contractor and subcontractor performance
	under a contract and ensure compliance with provisions in a
	contract that hold the contractor accountable for performance
	results;
	(4)  develop an accurate and comprehensive statement of
	work and conform contract documents to the statement of work;
	(5)  evaluate and ensure compliance with contract
	deliverables and performance metrics and any associated remedies
	and incentives;
	(6)  maintain required documentation for contracting
	decisions, contract changes, and problems with a contract;
	(7)  communicate any serious issue or risk that is
	identified with a contract in a timely manner to the agency's
	governing body or the single state officer who governs the agency;
	(8)  create a risk management process under Section
	2261.211;
	(9)  build and maintain a working relationship with the
	contractor, including instruction on communication and timely
	management of problems;
	(10)  create a procedure for selecting and applying a
	preferred dispute resolution method;
	(11)  implement an escalation process to address
	contract disagreements;
	(12)  evaluate and approve requests for payments that
	are consistent with the contract; and
	(13)  develop a process for contract closure and
	performance evaluation of a contractor under a contract.
	(d)  The guide must include model provisions for state agency
	contracts. The guide must:
	(1)  distinguish between essential provisions that a
	state agency must include in a contract to protect the interests of
	this state and recommended provisions that a state agency may
	include in a contract;
	(2)  recognize the unique contracting needs of an
	individual state agency or program and provide procedures for
	documenting agency decisions that do not follow required
	contracting processes and procedures but are [sufficient
	flexibility to accommodate those needs,] consistent with
	protecting the interests of this state; and
	(3)  include maximum contract periods under which a new
	competitive solicitation is not necessary[; and
	[(4)     include the model contract management process
	developed under Section 2262.104 and recommendations on the
	appropriate use of the model].
	SECTION 32.  Section 2262.053(d), Government Code, is
	amended to read as follows:
	(d)  The comptroller shall administer training under this
	section and may assess a fee for the training in an amount
	sufficient to recover the comptroller's costs under this section.
	SECTION 33.  Section 2262.0535, Government Code, is amended
	by adding Subsection (c) to read as follows:
	(c)  The comptroller may assess a fee for the training
	provided under this section in an amount sufficient to recover the
	comptroller's costs under this section.
	SECTION 34.  Chapter 2262, Government Code, is amended by
	adding Subchapters E and F to read as follows:
	SUBCHAPTER E. CONTRACT MANAGEMENT AND OVERSIGHT TEAM
	Sec. 2262.201.  DEFINITIONS. In this subchapter:
	(1)  "High-risk contract" means a state agency contract
	or purchase order that:
	(A)  has a value of at least $10 million;
	(B)  has a value of less than $10 million, but has
	high-risk factors as identified by the team;
	(C)  is entered into with an entity that is
	incorporated outside of the United States;
	(D)  is entered into with an entity that, during
	the five-year period preceding the date of the purchase or award of
	the contract, has had a contract with a state agency or federal
	governmental entity terminated or canceled for:
	(i)  a violation of, or noncompliance with,
	the terms of the contract;
	(ii)  delivery of an ineffective product,
	service, or system;
	(iii)  significant delays or cost overruns;
	(iv)  fraud;
	(v)  misconduct; or
	(vi)  any other event that resulted in the
	termination or cancellation of the contract for cause; or
	(E)  meets other criteria that may be established
	by the team, including that the contract or purchase order:
	(i)  is awarded by an agency with
	significant audit findings related to contracting in the previous
	two fiscal years;
	(ii)  is expected to cost more than 20
	percent of the awarding agency's budget available from all sources;
	(iii)  outsources a program or key function
	of a program of the awarding agency;
	(iv)  has a value of more than $1 million and
	is awarded on an emergency basis or is a sole source contract; or
	(v)  has a value of more than $1 million and
	has change orders that increase the cost of the contract by more
	than 20 percent of the original contract cost, excluding routine
	contract renewals.
	(2)  "Major information resources project" has the
	meaning assigned by Section 2054.003(10).
	(3)  "Quality assurance team" means the quality
	assurance team established under Section 2054.158.
	(4)  "Solicitation" means a solicitation for bids,
	offers, qualifications, proposals, or similar expressions of
	interest for a high-risk contract.
	Sec. 2262.202.  APPLICABILITY OF SUBCHAPTER. (a)  This
	subchapter applies to contracts of the Texas Department of
	Transportation that:
	(1)  do not relate to highway construction or highway
	engineering; or
	(2)  are not subject to Section 201.112, Transportation
	Code.
	(b)  This subchapter does not apply to a contract of the
	Employees Retirement System of Texas or the Teacher Retirement
	System of Texas except for a contract with a nongovernmental entity
	for claims administration of a group health benefit plan under
	Subtitle H, Title 8, Insurance Code.
	Sec. 2262.203.  ESTABLISHMENT; GENERAL DUTIES.  The
	Legislative Budget Board shall establish a Contract Management and
	Oversight Team to:
	(1)  develop criteria for identifying high-risk
	factors in contracts;
	(2)  consult with state agencies on and review
	high-risk contracts as provided by Section 2262.204;
	(3)  provide recommendations and assistance to state
	agency personnel throughout the contract management process;
	(4)  coordinate and consult with the quality assurance
	team on all high-risk contracts relating to a major information
	resources project; and
	(5)  coordinate and consult with the comptroller to:
	(A)  develop criteria for high-risk contracts
	under Section 2262.201(1)(E);
	(B)  identify strategies to mitigate contract
	risks; and
	(C)  monitor contract activity using information
	from the centralized accounting and payroll system or any successor
	system used to implement the enterprise resource planning component
	of the uniform statewide accounting project developed under
	Sections 2101.035 and 2101.036.
	Sec. 2262.204.  NOTICE AND REVIEW; WAIVER.  (a)  Each state
	agency must provide written notice to the team not later than the
	30th day before the date the agency publicly releases solicitation
	documents for a high-risk contract.
	(b)  A state agency must submit to the team information and
	documentation requested by the team that relate to a high-risk
	contract, including information on contract development, vendor
	selection, and ongoing contract oversight.
	(c)  The team shall review information and documentation
	submitted under Subsection (b) and make recommendations to ensure
	that potential risks related to the high-risk contract have been
	identified and mitigated.
	(d)  A state agency shall implement the team's
	recommendations and provide any additional documentation required
	by the team to demonstrate that risks related to the high-risk
	contract have been mitigated.  If a recommendation made by the team
	is not implemented, the agency must provide written notice to the
	team before the 31st day after the date the agency received the
	recommendation.
	(e)  If, after receiving notice provided under Subsection
	(d), the team determines that significant risks related to the
	high-risk contract remain, the team shall provide written notice of
	that fact to the Legislative Budget Board, the governor, and the
	comptroller with a description of the risk and recommendations to
	mitigate the risk, including cancellation of the high-risk
	contract.
	(f)  The team may adopt criteria for waiving the consultation
	and review requirements of this section.
	Sec. 2262.205.  SOLICITATION AND CONTRACT CANCELLATION.
	After review of the written notice provided by the team under
	Section 2262.204(e), the Legislative Budget Board, the governor, or
	the comptroller may recommend that a state agency cancel a
	solicitation or a high-risk contract if:
	(1)  a proposed contract would place the state at an
	unacceptable risk if executed; or
	(2)  an executed contract is experiencing performance
	failure or payment irregularities.
	SUBCHAPTER F. VENDOR RISK MANAGEMENT PROGRAM FOR STATE CONTRACTS
	Sec. 2262.251.  DEFINITION. In this subchapter, "office"
	means the State Office of Risk Management.
	Sec. 2262.2515.  APPLICABILITY.  This subchapter does not
	apply to a contract for goods with a value of $50,000 or less.
	Sec. 2262.252.  COMPLIANCE VERIFICATION. (a) Each state
	agency shall submit to the office ongoing contracts of the agency
	for verification of vendor compliance with contract terms and
	requirements and to correct contract compliance deficiencies as
	provided by rules adopted by the office under Section 2262.253.
	(b)  The office may contract with a third-party
	credentialing organization to provide compliance verification as
	provided by this subchapter.
	(c)  Not later than December 31 of each even-numbered year,
	the office shall provide a report to the legislature on the office's
	findings under this subchapter and recommendations to ensure state
	contract compliance and mitigate risk to the state.
	(d)  Notwithstanding Subsection (a), the office may not
	require a state agency to submit for compliance verification a
	contract related to health and human services if:
	(1)  the value of the contract cannot be determined at
	the time of execution of the contract; and
	(2)  any qualified vendor is eligible for the contract.
	Sec. 2262.253.  RULES RELATING TO COMPLIANCE VERIFICATION.
	(a) The office shall adopt rules to implement this subchapter.
	(b)  At a minimum, rules adopted under Subsection (a) must:
	(1)  provide standards for:
	(A)  selecting and submitting a statistically
	significant sampling of contracts for review under this subchapter;
	(B)  identifying vendor noncompliance or
	deficiency as a result of a contract review under this subchapter;
	and
	(C)  implementing corrective action in relation
	to vendor noncompliance or deficiency;
	(2)  in relation to verification system requirements,
	provide criteria for:
	(A)  monitoring of vendor compliance with
	contract terms and requirements through the life cycle of the
	contract; and
	(B)  implementation of Internet-based software
	that has the capability to exchange information and facilitate
	payments and real-time reporting of collected information;
	(3)  in relation to requirements for contract
	compliance verification:
	(A)  designate verification checklists, including
	requirements for interviews and recordkeeping, exposure analyses,
	equipment and facility forms, and pre-verification and
	post-verification compliance;
	(B)  provide standards for verifying vendor
	certificates of insurance, policy types and limits, policy
	expirations and renewals, and endorsements;
	(C)  provide standards for additional vendor
	screenings, including:
	(i)  financial screening, including
	reviewing profit and loss statements, cash flow statements, balance
	statements, and federal employer identification numbers and other
	taxpayer identification numbers;
	(ii)  license screening, including any
	required certifications and professional licenses;
	(iii)  state and federal debarment and
	exclusion screening;
	(iv)  compliance with legal requirements;
	(v)  compliance with safety standards,
	including workers' compensation and automobile insurance coverage;
	and
	(vi)  review of vendor compliance with
	security standards for information systems; and
	(D)  address any additional issues the office
	determines to be necessary to achieve best practices in the
	verification of contracts for compliance with contract terms and
	requirements and to correct contract compliance deficiencies; and
	(4)  set a reasonable fee to be paid by a vendor who
	enters into a contract with a state agency in an amount that is
	sufficient to recover the office's costs under this subchapter and
	that is less than one percent of the contract, not to exceed $1,000.
	Sec. 2262.254.  REQUIRED CONTRACT PROVISION RELATING TO
	VENDOR RISK MANAGEMENT PROGRAM. Each state agency shall include in
	each of its contracts a clause that provides that the vendor agrees
	that the vendor may be charged a reasonable fee as provided by
	Section 2262.253(b)(4).
	SECTION 35.  Subchapter C, Chapter 2262, Government Code, is
	repealed.
	SECTION 36.  (a)  The Contract Advisory Team is abolished.
	(b)  The validity of an action taken by the Contract Advisory
	Team before the team was abolished by this Act is not affected by
	the abolition.
	(c)  All powers and duties of the Contract Advisory Team are
	transferred to the Contract Management and Oversight Team
	established by this Act.
	(d)  A rule, form, policy, procedure, or decision of the
	Contract Advisory Team continues in effect as a rule, form, policy,
	procedure, or decision of the Contract Management and Oversight
	Team until superseded by an act of the Contract Management and
	Oversight Team.
	(e)  A reference in law to the Contract Advisory Team means
	the Contract Management and Oversight Team.
	(f)  Any action or proceeding involving the Contract
	Advisory Team is transferred without change in status to the
	Contract Management and Oversight Team, and the Contract Management
	and Oversight Team assumes, without a change in status, the
	position of the Contract Advisory Team in a negotiation or
	proceeding to which the Contract Advisory Team is a party.
	SECTION 37.  Except as otherwise provided by this Act, this
	Act applies only in relation to a contract:
	(1)  for which a state agency first advertises or
	otherwise solicits bids, proposals, offers, or qualifications on or
	after the effective date of this Act;
	(2)  that is extended or modified on or after the
	effective date of this Act; or
	(3)  for which a change order is submitted on or after
	the effective date of this Act.
	SECTION 38.  Sections 2166.2551, 2254.006, and
	2254.0301(a), Government Code, as amended by this Act, apply only
	to a state agency contract for which the agency is required to
	provide notice to the Legislative Budget Board that is entered into
	on or after the effective date of this Act.
	SECTION 39.  To the extent of any conflict, this Act prevails
	over another Act of the 84th Legislature, Regular Session, 2015,
	relating to state agency contracting and oversight.
	SECTION 40.  This Act takes effect September 1, 2015.