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.