By: Capriglione H.B. No. 18       A BILL TO BE ENTITLED   AN ACT   relating to contract procurement, management, auditing, oversight,   and evaluation of state agencies.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 441.1855, Government Code, is amended to   read as follows:          Sec. 441.1855.  RETENTION OF CONTRACT AND RELATED DOCUMENTS   BY STATE AGENCIES. Notwithstanding Section 441.185 or 441.187, a   state agency:                (1)  for each contract entered into by the agency,   shall retain in its records:                      (A)  the [each] contract, including any contract   modifications, [entered into by the state agency] and all contract   solicitation documents related to the contract;                      (B)  a copy of all general and internal   correspondence related to the contract;                      (C)  the records or minutes of all internal or   external meetings related to the contract, including sign-in sheets   or agendas;                      (D)  a copy of all contractor invoices provided   under the contract;                      (E)  any information relating to discount   provisions for prompt payment under the contract and any letters   related to contract price deductions or fee adjustments;                      (F)  a copy of all supporting documentation for   contractor payments or progress payments under the contract;                      (G)  a copy of any audits performed involving the   contract; and                      (H)  a copy of all conflict of interest   documentation and forms required by law related to the contract;   and                (2)  may destroy the contract and documents described   by Subdivision (1) only after the seventh anniversary of the date:                      (A)  the contract is completed or expires; or                      (B)  all issues that arise from any litigation,   claim, negotiation, audit, open records request, administrative   review, or other action involving the contract or documents are   resolved.          SECTION 2.  Subchapter C, Chapter 2261, Government Code, is   amended by adding Section 2261.103 to read as follows:          Sec. 2261.103.  REQUIRED CONTRACT PROVISIONS. (a) An   attorney representing a state agency shall assist in the drafting   of a contract to be entered into by the agency in order to include   the provisions listed in Subsection (b) and other provisions   necessary to accomplish the agency's purposes.          (b)  The following are required provisions in each contract   to which the provisions are applicable:                (1)  amendments;                (2)  antitrust;                (3)  applicable law and venue;                (4)  applicable law and conforming amendments;                (5)  assignments;                (6)  confidentiality and public information act;                (7)  equal opportunity;                (8)  federal, state, and local law requirements;                (9)  felony criminal convictions;                (10)  financial interests and gifts;                (11)  immigration;                (12)  no conflicts; and                (13)  right to audit.          SECTION 3.  Subchapter D, Chapter 2261, Government Code, is   amended by adding Section 2261.152 to read as follows:          Sec. 2261.152.  DOCUMENTATION REQUIRED FOR PAYMENT. A state   agency may not make a payment to a vendor without a contract,   invoice, or other documentation that clearly demonstrates the   agency's obligation to make a payment.          SECTION 4.  This Act applies only in relation to a contract   for which a state agency first advertises or otherwise solicits   bids, proposals, offers, or qualifications on or after the   effective date of this Act.          SECTION 5.  Section 2262.005, Government Code, is amended to   read as follows:          Sec. 2262.005.  CONSULTATION WITH INTERESTED PARTIES [STATE   AGENCIES]. The comptroller shall consult with state agencies,   vendors, and other interested parties in developing rules, forms,   contract terms, guides, manuals, and criteria required under this   chapter.          Section 6.  Section 2262.051, Government Code, is amended by   amending Subsections (a), (b), (c), (d), and (g) and adding   Subsections (i) and (j) to read as follows:          (a)  In consultation with the attorney general, the   Department of Information Resources, the [comptroller, and the]   state auditor, and state agencies that award major contracts, the   comptroller [commission] shall develop and [or] periodically   update a contract management guide for use by state agencies.   Participation by the state auditor under this subsection is subject   to approval by the legislative audit committee for inclusion in the   audit plan under Section 321.013(c).          (b)  The comptroller [commission] may adopt rules necessary   to develop or update the guide.          (c)  The guide must provide information regarding the   primary duties of a contract manager, including how to:                (1)  develop and negotiate a contract;                (2)  select a contractor; [and]                (3)  monitor contractor and subcontractor performance   under a contract; and                (4)  encourage competition for goods and services   purchased by this state.          (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 based on the size, nature, and   type of goods or services purchased by the state agency or program   and provide sufficient flexibility to accommodate those needs,   consistent with protecting the interests of this state;                (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.          (g)  The guide must establish procedures under which a state   agency is required to:                (1)  analyze the reasons [solicit explanations from   qualified potential respondents who did not respond to] a   competitive solicitation for a contract received fewer than two   qualified bids; and                (2)  develop and implement improved procurement   practices, including:                      (A)  providing earlier notice to prospective   vendors of the state agency's intent to issue a competitive   solicitation;                      (B)  expanding the time in which a prospective   vendor may respond to a competitive solicitation;                      (C)  improving up-front communication between a   state agency and a prospective vendor about the state agency's   needs and objectives; and                      (D)  improving educational efforts by the state   agency to understand vendor capabilities, skills, and benefits [on   which fewer than two qualified bids were received by the agency].          (i)  The guide must suggest best practices related to   procurement metrics used by a state agency to measure and monitor   the effectiveness of the state agency's procurement methods,   including the:                (1)  number and value of procurements made by the state   agency;                (2)  number of canceled procurements by the state   agency;                (3)  reasons for canceled procurements;                (4)  common exceptions to the state agency's terms and   conditions by a respondent;                (5)  number of responses per competitive solicitation;   and                (6)  average length of time for each phase of the state   agency's procurement processes, including the length of time:                      (A)  between the date the state agency issues the   competitive solicitation and the date the state agency begins   receiving responses to the solicitation;                      (B)  for the evaluation of responses to a   competitive solicitation;                      (C)  of the negotiation between the state agency   and a vendor; and                      (D)  between the date the state agency issues the   competitive solicitation and the date the state agency awards a   contract to a vendor.          (j)  The guide may include references to procurement   maturity models and procurement readiness assessments used by other   large public and private enterprises.          SECTION 7.  Section 2262, Government Code, is amended by   adding Section 2262.155 to read as follows:          Sec. 2262.155.  REQUIRED PROVISION RELATING TO CONTRACT   MANAGEMENT. All major contracts as defined by Sec. 2262.001(4),   Government Code, must have a contract manager as defined by Sec.   2262.001(3), Government Code assigned to manage oversight of the   contract.          SECTION 8.  Section 2251, Government Code, is amended by   adding Section 2251.030 to read as follows:          Sec. 2251.030.  PAYMENTS TO VENDOR. No invoices shall be   paid that do not directly correlate to a corresponding contract.          (a)  All payments shall require the approval and signature of   two state employees.                (1)  If the contract has a contract manager assigned,   the contract manager must be one of the two signatures.          (b)  If it is found that a payment was made without two   signatures, the state can revoke that payment at any time.          SECTION 9.  Section 2155.144, Government Code, is amended by   adding subsection (q) to read as follows:          Sec. 2155.144.  PROCUREMENTS BY HEALTH AND HUMAN SERVICES   AGENCIES.          (q)  An agency to which this section applies must perform a   financial audit as described by Section 321.0131, Government Code,   once every two years. The audit shall be performed by an   independent auditor. The cost of the audit shall be contained   within current appropriations.          SECTION 10.  Section 2102.0091, Government Code, is amended   to read as follows:          Sec. 2102.0091.  REPORTS OF PERIODIC AUDITS. (a) A state   agency shall file with the Sunset Advisory Commission, the   Governor's Office of Budget, Planning, and Policy, the state   auditor, and the Legislative Budget Board a copy of each report,   action plans, and responses submitted to the state agency's   governing board or the administrator of the state agency if the   state agency does not have a governing board by the agency's   internal auditor.          SECTION 11.  Section 2155.077, Government Code, is amended   to read as follows:          Sec. 2155.077.  BARRING VENDOR FROM PARTICIPATION IN STATE   CONTRACTS.          (a-2)  The comptroller shall may bar a vendor from   participating in state contracts that are subject to this subtitle,   including contracts for which purchasing authority is delegated to   a state agency, if more than two contracts between the vendor and   the state have been terminated by the state for unsatisfactory   vendor performance during the preceding three years.          SECTION 12.  Section 2155.088, Government Code, is amended   to read as follows:          Sec. 2155.088.  MATERIAL CHANGES TO CONTRACTS.          (c)  Each material change that results in an increase of $1   million or more to the overall contract shall be reported by the   agency and posted on their website.                (1)  These reports shall be subject to the Public   Information Act.          SECTION 13.  Section 2155.074, Government Code, is amended   by adding section 1 of Subsection C:          Sec. 2155.074.  BEST VALUE STANDARD FOR PURCHASE OF GOODS OR   SERVICES.          (c)  A state agency shall consult with and receive approval   from the commission before considering factors other than price and   meeting specifications when the agency procures through   competitive bidding goods or services with a value that exceeds   $100,000.                (1)  Commission approval shall be made in an open   meeting and a copy of meeting minutes shall be included with the   final executed contract.          SECTION 14.  Section 531.102, Government Code, is amended to   read as follows:          Sec. 531.102.  OFFICE OF INSPECTOR GENERAL. (a) The   commission's office of inspector general is responsible for the   prevention, detection, audit, inspection, review, and   investigation of fraud, waste, and abuse in the provision and   delivery of all health and human services in the state, including   services through any state-administered health or human services   program that is wholly or partly federally funded, and the   enforcement of state law relating to the provision of those   services. The commission may obtain any information or technology   necessary to enable the office to meet its responsibilities under   this subchapter or other law.          (a-7)  The Inspector General shall appoint a Contract   Internal Affairs Specialist to monitor and investigate the   prevention, detection, audit, inspection, review, and   investigation of fraud, waste, and abuse in Commission contracts.   The Contract Internal Affairs Specialist may work with the State   Auditor's Office, Office of the Governor, Quality Assurance Team,   Contract Advisory Team, and Office of the Attorney General. The   Contract Internal Affairs Specialist shall report to the Inspector   General, Attorney General, and Governor on a quarterly basis and   the report shall be posted on the Commission website.          SECTION 15.  Section 554.002, Government Code, is amended to   read as follows:          Sec. 554.002.  RETALIATION PROHIBITED FOR REPORTING   VIOLATION OF LAW. (a) A state or local governmental entity may not   suspend or terminate the employment of, or take other adverse   personnel action against, a public employee who in good faith   reports a violation of law or reporting contracting violations by   the employing governmental entity or another public employee to an   appropriate law enforcement authority.          (b)  In this section, a report is made to an appropriate law   enforcement authority if the authority is a part of a state or local   governmental entity or of the federal government that the employee   in good faith believes is authorized to:                (1)  regulate under or enforce the law alleged to be   violated in the report; or                (2)  investigate or prosecute a violation of criminal   law.          (c)  Any employee or member of the public who reports an   issue on a contract that realizes a savings shall receive 30% of   that savings.          SECTION 16.  Section 2261.151, Government Code, is amended   to read as follows:          Sec. 2261.151.  REEVALUATION OF PAYMENT AND REIMBURSEMENT   RATES. (a) To ensure that its payment and reimbursement methods   and rates are appropriate, each state agency that makes   procurements to which this chapter applies shall reevaluate at   least biennially its payment and reimbursement methods and rates,   which shall not be paid more than once per month, especially methods   and rates based on historical funding levels or on a formula   established by agency rule rather than being based on reasonable   and necessary actual costs incurred.          SECTION 17.  Section 2115.006, Government Code, is amended   to read as follows:          Sec. 2115.006.  OVERPAYMENTS BY AGENCY. In the case of an   overpayment made by the state, the vendor has 90 days to return the   overage. If the overage is not returned in 90 days, the vendor is   subject to a penalty of three times the amount of the overage.          SECTION 18.  Section 531.0057(b), Government Code, is   amended to read as follows:          (b)  Subject to Section 531.024141, the [The] commission may   contract with any public or private transportation provider or with   any regional transportation broker for the provision of public   transportation services.          SECTION 19.  Section 531.02412, Government Code, is amended   by adding Subsection (b) to read as follows:          (b)  As part of the quality review assessment of the Medicaid   medical transportation program under Subsection (a)(3), the   commission shall hire a single independent vendor with appropriate   expertise to conduct surveys of:                (1)  the satisfaction rates of Medicaid recipients who   are receiving medical transportation program services; and                (2)  the unmet transportation needs of Medicaid   recipients who are not receiving medical transportation program   services and who are having difficulty obtaining transportation to   health care appointments.          SECTION 20.  Section 531.02414(d), Government Code, is   amended to read as follows:          (d)  Subject to Sections 531.024141 and [Section] 533.00257,   the commission may contract with a public transportation provider,   as defined by Section 461.002, Transportation Code, a private   transportation provider, or a regional transportation broker for   the provision of public transportation services, as defined by   Section 461.002, Transportation Code, under the medical   transportation program.          SECTION 21.  Subchapter B, Chapter 531, Government Code, is   amended by adding Section 531.024141 to read as follows:          Sec. 531.024141.  DELIVERY OF MEDICAID MEDICAL   TRANSPORTATION PROGRAM SERVICES. (a) In this section:                (1)  "Managed transportation organization" has the   meaning assigned by Section 533.00257.                (2)  "Medical transportation program" has the meaning   assigned by Section 531.02414.          (b)  Notwithstanding any other law, the commission shall use   the most cost-effective delivery model for the provision of medical   transportation program services throughout the state. In   determining the most cost-effective delivery model, the commission   shall, on a regional basis, consider using:                (1)  a managed transportation delivery model in which   managed transportation organizations and providers operate under a   capitated rate system in accordance with Section 533.00257;                (2)  a fee-for-service delivery model; or                (3)  other delivery models deemed appropriate by the   commission.          (c)  Before soliciting bids for the provision of medical   transportation program services in a region through a managed   transportation delivery model or another selected delivery model   deemed appropriate by the commission under Subsection (b)(3), the   commission shall conduct an assessment to determine if the   applicable model is more cost-effective than a fee-for-service   delivery model. If the commission determines that the managed   transportation delivery model or other selected delivery model is   potentially more cost-effective than a fee-for-service delivery   model, the commission shall establish a cost threshold for   accepting bids for the provision of medical transportation program   services in the region through a managed transportation delivery   model or the other selected delivery model.          (d)  A cost threshold established under Subsection (c) must   be:                (1)  expressed as a cost per unit, such as a cost per   recipient or a cost per trip; and                (2)  based on historical data for the provision of   medical transportation program services through a fee-for-service   delivery model in the region.          (e)  If the commission receives bids at or below the cost   threshold established under Subsection (c) from qualified managed   transportation organizations or qualified vendors seeking to   provide services under the other selected delivery model, the   commission shall provide medical transportation program services   in the region through a managed transportation delivery model or   the other selected delivery model, as applicable, and shall award   contracts to managed transportation organizations or vendors based   on the price and quality of the services to be provided by the   organization or vendor.          (f)  If the commission is unable to solicit bids from   qualified managed transportation organizations or vendors at or   below the cost threshold established under Subsection (c), the   commission shall provide medical transportation program services   through a fee-for-service delivery model in the region.          (g)  For purposes of this section, a delivery model's   cost-effectiveness is based on the price and quality of the   services delivered through the model, in addition to any other   requirements established by applicable state and federal   procurement laws.          SECTION 22.  Sections 533.00257(b) and (c), Government Code,   are amended to read as follows:          (b)  If [Subject to Subsection (i),] the commission provides   [shall provide] medical transportation program services [on a   regional basis] through a managed transportation delivery model in   accordance with Section 531.024141, the commission shall use   [using] managed transportation organizations and providers, as   appropriate, that:                (1)  operate under a capitated rate system;                (2)  assume financial responsibility under a full-risk   model;                (3)  operate a call center;                (4)  use fixed routes when available and appropriate;   and                (5)  agree to provide data to the commission if the   commission determines that the data is required to receive federal   matching funds.          (c)  Subject to Section 531.024141, the [The] commission   shall procure managed transportation organizations [under the   medical transportation program] through a competitive bidding   process [for each managed transportation region as determined by   the commission].          SECTION 23.  Sections 533.00257(i) and (j), Government Code,   are repealed.          SECTION 24.  Section 531.024141, Government Code, as added   by this Act, applies to a contract entered into or renewed on or   after the effective date of this Act. A contract entered into or   renewed before that date is governed by the law in effect   immediately before the effective date of this Act, and that law is   continued in effect for that purpose.          SECTION 25.  If before implementing any provision of this   Act a state agency determines that a waiver or authorization from a   federal agency is necessary for implementation of that provision,   the agency affected by the provision shall request the waiver or   authorization and may delay implementing that provision until the   waiver or authorization is granted.          SECTION 26.  Section 2156.0013, Government Code, is amended   to read as follows:          Sec. 2156.0013.  IN-HOUSE FEASIBILITY. Prior to   solicitation of bids, a report must be created evaluating the   feasibility of an in-house solution for contracts from $1-5   million.          (a)  This only applies to procurement for services.          (b)  The agency must submit a written analysis explaining why   an inter-agency solution is not achievable.          (c)  This report must be included in the procurement   analysis.          SECTION 27.  Section 441.1855, Government Code, is amended   to read as follows:          Sec. 441.1855.  RETENTION OF CONTRACT AND RELATED DOCUMENTS   BY STATE AGENCIES. Notwithstanding Section 441.185 or 441.187, a   state agency:                (1)  shall retain in its records each contract entered   into by the state agency, and all contract solicitation documents   related to the contract, appropriations expenditure matching,   related audits, and other materials; and                (2)  Shall keep may destroy the contract and documents   only the greater of:                      (A)  completion of the contract, or                      (B)  the seventh anniversary of the date:                            (1)  the contract is completed or expires;   or                            (2)  all issues that arise from any   litigation, claim, negotiation, audit, open records request,   administrative review, or other action involving the contract or   documents are resolved.          SECTION 28.  Section 322.025, Government Code, is amended to   read as follows:          Sec. 322.025.  REPORT ON CONTRACT SPENDING. At the   completion of each fiscal year, the board shall report how much of   each agency's budget is spent in contracts for that fiscal year.          SECTION 29.  Section 2262, Government Code, is amended by   adding Subchapter E to read as follows:   SUBCHAPTER E. CONTRACT OUTSIDE TACTICAL TEAM          Sec. 2262.200  CREATION; DUTIES (a) The Contract Outside   Tactical Team is created to assist state agencies in improving IT   contract management practices by:                (1)  reviewing and making recommendations on the   solicitation documents, contract documents, scope of work, project   timeline and management, documentation requirements, audit   schedule and audit scope and technical issues for contracts of   state agencies that have a value of at least $100 million;                (2)  The team consists of the following members:                      i.  Outside Legal Counsel                      ii.  Provider of Professional Consulting Services   with expertise in contract subject matter          (b)  A governmental entity may not select a provider of   professional consulting services or a group or association of   providers or award a contract for the services on the basis of   competitive bids submitted for the contract or for the services,   but shall make the selection and award on the basis of demonstrated   competence and qualifications to perform the services; and for a   fair and reasonable price.                (1)  A state agency shall:                      (i)  comply with a recommendation made under   Subsection (a)(1); or                      (ii)  submit a written explanation regarding why   the recommendation is not applicable to the contract under review.          SECTION 30.  This Act takes effect September 1, 2017.