HBA-ALS H.B. 2602 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2602 By: Dukes State Affairs 4/15/1999 Introduced BACKGROUND AND PURPOSE There is a current trend in toward privatization of state operations and services. The purpose of this bill is to provide periodic review of the performance of private commercial contractors who provide services previously provided by state agencies. H.B. 2602 requires the State Council on Competitive Government to conduct and consider the conclusions of a cost-benefit analysis comparing a state agency's performance of a service versus a private contractor performing the service. This bill also sets forth audit requirements and contract conditions in awarding a contract to a private contractor. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 2162.103, Government Code, as follows: Sec. 2162.103. COST COMPARISON AND CONTRACT CONSIDERATIONS. (a) Requires the State Council on Competitive Government (council), in comparing the cost of providing a service, to conduct and consider the conclusions of cost-benefit analyses that compare the costs and benefits of supervising the work of a private contractor; a state agency's performance of the service; and improving the state agency's performance through the implementation of specified recommendations by certain state entities. (b) Authorizes a state agency to submit a proposal to the council describing a reorganized service delivery method to compete directly with the performance of a private commercial contractor. (c) Redesignated from existing Subsection (b). (d) Provides that cost-benefit analyses under Subsection (a) must include a short-term analysis covering a period of not more than six months and a long-term analysis covering a period of at least one and not more than five years. SECTION 2. Amends Subchapter C, Chapter 2162, Government Code, by adding Section 2162.1035, as follows: Sec. 2162.1035. AUDIT REQUIREMENTS AND CONTRACT CONDITIONS. (a) Provides that a contract awarded to a private commercial contractor must include a provision that the continuation of the contract for the entire contract period is contingent on the outcome of audits conducted under this section. (b) Provides that a private commercial contractor to which a contract is awarded must cooperate with a compliance audit conducted by the state auditor. Requires the state auditor to conduct the audit no later than the end of the sixth month after the month the contract was awarded. Specifies the required determinations and assessments to be made by the state auditor in conducting the audit. (c) Authorizes a commercial contractor to continue to perform under the contract after the state auditor has concluded that the contractor has performed satisfactorily, until the completion of a second audit by the state auditor. Requires the state auditor to conduct the second audit not before the end of the sixth month after the completion of the first audit under this section and not later than the 18th month after that audit is completed. (d) Provides that if the state auditor concludes after the initial or second audit conducted under this section that the contractor has not performed satisfactorily, the contract with the private commercial contractor terminates immediately and the state agency that most recently provided the service before the service was performed by a private commercial contractor is required to provide the service. (e) Requires a state agency, if a service obligation is returned to the state agency, to immediately complete a performance evaluation to design a program to improve the delivery of the service and implement the program designed. Prohibits the council, if a service obligation is returned to the state agency, from requiring the service to be submitted to competitive bidding or make a determination regarding the service under Section 2162.102(b) until the end of the sixth month after the month the contract terminated under Subsection (d). SECTION 3.Effective date: September 1, 1999. SECTION 4.Emergency clause.