HBA-TYH S.B. 1528 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1528
By: Carona
State Affairs
5/4/1999
Engrossed



BACKGROUND AND PURPOSE 

Currently, equipment warranties are included in maintenance and repair
costs.  Since 1994, the state's maintenance and repair costs have increased
by 9 percent per year, amounting to a total of $35.5 million for the
period.  An agency typically purchases  a traditional warranty at the time
of purchasing equipment.  However, the warranties are costly, require
up-front payment, and include a high markup.  Although inflation and
equipment upgrades contribute to overall equipment costs, part of the costs
result from traditional service warranty contracts. 

According to a comptroller study, the costs could be curtailed by
converting existing purchasing methods to more cost-effective methods.  If
state agencies converted existing service warranty contracts to
time-and-materials contracts and bid out future purchases of equipment
maintenance insurance or contracts to insurance companies, the state could
save 20 to 50 percent on repair and maintenance costs.  S.B. 1528 requires
a state agency to implement policies for purchasing equipment maintenance
contracts. 

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 Chapter 2158, Government Code, by adding Subchapter F,
as follows: 

SUBCHAPTER F.  EQUIPMENT MAINTENANCE

Sec. 2158.281.  EQUIPMENT MAINTENANCE PROGRAM.  Requires a state agency to
analyze the cost of the agency's service warranty contracts on equipment
for which the agency is responsible.  Requires an agency to seek to lower
its equipment maintenance costs by entering into new contracts for and
converting existing service warranty contracts to more cost-effective
methods of equipment maintenance, including the enumerated methods.
Requires an agency to solicit bids or proposals , as appropriate, from
vendors for maintaining or assisting the agency to maintain equipment by
one or more of the enumerated methods. Requires the agency to accept the
responsible bid or proposal that lowers costs and offers the best value to
the agency.  Provides that the accepted bid or proposal must allow
additional equipment to be added to the program at any time. 

SECTION 2.Effective date: September 1, 1999.

SECTION 3.Emergency clause.