Commission Agenda Item No. 2
Exhibit A

AGENCY CONTRACTING

PROPOSAL PREAMBLE

1. Introduction.

         The Texas Parks and Wildlife Department (the department) proposes an amendment to §51.60, concerning Authority to Contract and new §51.61, concerning Enhanced Contract Monitoring.

         The proposed amendment and new rule implement the requirements of Senate Bill (S.B.) 20 as enacted by the 84th Texas Legislature (2015). Senate Bill 20 amended Government Code, Chapter 2261, by adding new §2261.253(c), which states “each state agency by rule shall establish a procedure to identify each contract that requires enhanced contract or performance monitoring and submit information on the contract to the governing board….” Government Code, §2261.253(c) further requires that the agency’s governing body be immediately notified of any serious issue or risk that is identified with respect to a contract monitored under that section.

         S.B. 20 also added Government Code, §2261.254, which requires a state agency’s governing board to approve contracts with a value in excess of $1 million, and requires the presiding officer of the state agency to sign such contract.  However, the approval and signature of such contracts may be delegated to the state agency’s executive director.  Department regulations (31 TAC §51.60) currently delegate authority to enter contracts to the department’s executive director.

         The proposed amendment to §51.60 would amend the current delegation of contracting authority to ensure compliance with S.B. 20 and to ensure proper review and approval of agency contracts.  Proposed new subsection (a) would clarify that the delegation of authority includes, but is not limited to, contacts for the purchase of goods or services with a value exceeding $1 million.  The Commission is a part-time body that generally holds five meetings each year. Given the number of contracts entered by the department and the part-time nature of the Commission, delegating contracting authority to the executive director will help ensure that contracts are processed more efficiently.

         The proposed amendment to §51.60 also would add new subsection (b) to require the executive director to implement appropriate policies and procedures regarding the solicitation and signature of agency contracts.  Proposed new subsection (b)(1) would require the implementation of policies and procedures to ensure that contracts are awarded in a manner that is fair and equitable and in accordance with applicable law.  Proposed new subsection (b)(2) would ensure proper review and approval of agency contracts, including review by department legal staff.  The department currently has internal policies, procedures and processes for soliciting, awarding, reviewing and approving agency contracts.  The proposed amendment would codify a requirement to maintain such policies and procedures.

         The proposed amendment to §51.60 also would add new subsection (c) to clearly authorize the executive director to delegate authority to sign department contracts with a value of less than $1 million to appropriate department staff, unless otherwise prohibited by statute or regulation.  The delegation of contract signature authority would be subject to the requirements of subsection (b) of the section. In other words, a contract for which signature has been delegated would still be required to go through the appropriate review and approval process.

         Proposed new §51.61 would set forth the criteria to be used by the department in determining whether a contract should be subject to enhanced contract monitoring.  Proposed new subsection (a) would require that the department determine if enhanced contract monitoring is needed based on the criteria set out in subsection (b) of the section.

         Proposed new §51.61(b) lists and describes the criteria to be considered by the department, to the extent applicable, in determining if enhanced contract monitoring is necessary. The criteria to be considered are: Total Contract Price; Total Contract Duration; Funding Source; User Impacts; Criticality of Deliverable Timing; Impact of Contract Failure; Locations Impacted; Availability of Resources for Contract Management; Complexity of Project; Health and Safety Risk; Business Process Impact; Payment Methodology Risks; and, End Users’ Training Needs. In addition, for technology contracts, the department will consider Software Technology Customization; Impact on Existing Technology; and, Interface Connectivity. The department intends to rate proposed contracts using the criteria listed in proposed new subsection (b). Those contracts with a higher rating will receive enhanced monitoring and oversight by the department.

         Proposed new §51.61(c) provides that the department may determine, after considering the factors listed in subsection (b), that certain types or classes of contracts are low-risk and have a low likelihood of serious issues.  As a result, there would be no requirement to individually evaluate whether such contracts require enhanced contract monitoring. For example, certain very low-dollar, short-term contracts may be categorically excluded from the assessment required by proposed new subsection (b).

         Proposed new §51.61(d) would require the department’s director of contracting and procurement to notify the executive director regarding any serious risk or issue identified in connection with a contract subject to enhanced contract monitoring. The executive director will then be required to notify the Commission of any such serious risk or issue identified.

2.  Fiscal Note.

         Dawn Heikkila, Deputy Executive Director for Policy and Administration, has determined that for each of the first five years that the rules as proposed are in effect, there will be no fiscal implications to state and local governments as a result of enforcing or administering the rules as proposed, as the rules are for the purpose of implementing S.B. 20 as enacted by the Texas Legislature and impose no obligations other than those imposed by S.B. 20 or currently being handled by the department. To the extent S.B. 20 or the regulations impose additional duties, those duties will be handled with current department resources.

3. Public Benefit/Cost Note.

         Ms. Heikkila also has determined that for each of the first five years the new rules as proposed are in effect:

         (A) The public benefit anticipated as a result of enforcing or administering the rules as proposed will be ensuring that department contracts are appropriately awarded, reviewed, and monitored.

         (B) There will be no adverse economic impact on persons required to comply with the rules as proposed.

         (C) Under the provisions of Government Code, Chapter 2006, a state agency must prepare an economic impact statement and a regulatory flexibility analysis for a rule that may have an adverse economic effect on small businesses and micro-businesses. As required by Government Code, §2006.002(g), in April 2008, the Office of the Attorney General issued guidelines to assist state agencies in determining a proposed rule’s potential adverse economic impact on small or micro-businesses. These guidelines state that “[g]enerally, there is no need to examine the indirect effects of a proposed rule on entities outside of an agency’s regulatory jurisdiction.” The guidelines state that an agency need only consider a proposed rule’s “direct adverse economic impacts” to small businesses and micro-businesses to determine if any further analysis is required. The guidelines also list examples of the types of costs that may result in a “direct economic impact.” Such costs may include costs associated with additional recordkeeping or reporting requirements; new taxes or fees; lost sales or profits; changes in market competition; or the need to purchase or modify equipment or services. The department has determined that the proposed rules will have no adverse economic impact on any small or micro-business.

         (C) The department has not drafted a local employment impact statement under the Administrative Procedures Act, §2001.022, as the agency has determined that the rules as proposed will not result in direct impacts to local economies.

         (D) The department has determined that there will not be a taking of private real property, as defined by Government Code, Chapter 2007, as a result of the proposed rules.

4. Request for Public Comment.

         Comments on the proposed rules may be submitted to Dawn Heikkila, Texas Parks and Wildlife Department, 4200 Smith School Road, Austin, Texas, 78744; (512) 389-4604 (e-mail: dawn.heikkila@tpwd.texas.gov); or via the department’s website at www.tpwd.texas.gov.

5. Statutory Authority.

         The amendment and new rule are proposed under the authority of Government Code, §2261.253, which requires state agencies to identify each contract that requires enhanced contract or performance monitoring and submit information on the contract to the agency’s governing board and requires that the agency’s governing body be immediately notified of any serious issue or risk that is identified with respect to a contract monitored under that section;  §2261.254, which requires a state agency’s governing board to approve and the presiding officer of the governing body to sign contracts with a value in excess of $1 million, but authorizes the delegation of approval and signature authority for such contracts to the state agency’s executive director; and Parks and Wildlife Code, §11.0171, which requires the commission to adopt by rule policies and procedures consistent with state procurement practices for soliciting and awarding contracts under that section.

         The proposed new rules affect Government Code, Chapter 2261, Subchapter F, and Parks and Wildlife Code, Chapter 11, Subchapter A.

6. Rule Text.

         §51.60. Authority to Contract.

                 (a) The executive director or the executive director’s designee may execute[negotiate and enter into] an agreement on behalf of the department, including but not limited to a contract for the purchase of goods or services that has a value exceeding $1 million, provided[if] the agreement is in the best interests of the department.

         (b) Subject to the provisions of subsection (a) of this section, the executive director shall develop and implement internal policies and procedures to ensure that:

                 (1) contracts are awarded in a manner that is fair and equitable and in compliance with applicable statutes and regulations; and

                 (2) contracts and contract templates are reviewed and approved by appropriate agency staff, including, but not limited to, the general counsel or designated attorney prior to final approval and signature.

         (c) Unless otherwise prohibited by statute or department regulation, the executive director may delegate signature authority for contracts with a total dollar value of less than $1 million, subject to the policies and procedures implemented pursuant to subsection (b) of this section.

         §51.61. Enhanced Contract Monitoring.

                 (a) Except as otherwise provided in this section, before the department enters into a contract, the department will determine if enhanced monitoring of the contract and the contractor’s performance is required.

                 (b) In determining if a contract requires enhanced contract monitoring, the department will consider the following factors, to the extent applicable:

                         (1) Total Contract Price. The department will consider the estimated dollar amount of the contract. Contracts with a higher dollar amount are more likely to require enhanced contract monitoring.

                         (2) Total Contract Duration. The department will consider anticipated overall contract period including renewal options. Longer term contracts are more likely to require enhanced contract monitoring.

                         (3) Funding Source. The department will consider the complexity of and restrictions associated with funding sources for the contract. Contracts funded from multiple types or sources of funding and contracts funded with restricted or time-limited funds are more likely to require enhanced contract monitoring.

                         (4) User Impacts. The department will consider the extent and number of persons impacted by this contract. Contracts with wider impacts are more likely to require enhanced contract monitoring.

                         (5) Criticality of Deliverable Timing. The department will consider the impact to the agency if contract deliverables are delayed. Contracts for which timely completion is critical are more likely to require enhanced contract monitoring.

                         (6) Impact of Contract Failure. The department will consider the impact to the department and the state if the contractor fails to deliver as required in the contract. Contracts for which failure would have statewide impacts, would result in violation of state or federal mandates, or would result in the loss of substantial funds are more likely to require enhanced contract monitoring.

                         (7) Locations Impacted. The department will consider the number of locations impacted by the contract. Contracts that will be implemented in multiple locations around the state are more likely to require enhanced contract monitoring.

                         (8) Availability of Resources for Contract Management. The department will consider the extent of resources readily available to manage the contract. Contracts for which resources are limited or for which consultants or temporary staff are required to manage the contract are more likely to require enhanced contract monitoring.

                         (9) Complexity of Project. The department will consider the complexity of requirements and resources to be managed. Contracts with more complex requirements involving external experts or evaluators are more likely to require enhanced contract monitoring.

                         (10) Health and Safety Risk. The department will consider how the contract would impact the health and safety of department employees and the general public. Contracts that are required to reduce or eliminate health and safety risks are more likely to require enhanced contract monitoring.

                         (11) Business Process Impact. The department will consider the level of impact to the department’s business processes. Contracts that will have department-wide business impacts are more likely to require enhanced contract monitoring.

                         (12) Payment Methodology Risks. The department will consider the complexity of the methodology for calculating and making payments under the contract. Contracts with more complex payment methodology are more likely to require enhanced contract monitoring.

                         (13) End Users’ Training Needs. The department will consider the extent of training required for end-users as a result of the contract. Contracts requiring extensive training by a vendor or external trainers are more likely to require enhanced contract monitoring.

                         (14) Software Technology Customization. With regard to a technology contract, the department will consider the level of software customization required. Technology contracts that involve a fully customized software solution are more likely to require enhanced contract monitoring.

                         (15) Impact on Existing Technology. With regard to a technology contract, the department will consider whether the technology application which is the subject of the contract is an enhancement, replacement or new technology and the impact on existing technology applications or infrastructure. Contracts for a new technology service or product that will impact existing technology applications or infrastructure are more likely to require enhanced contract monitoring.

                         (16) Interface Connectivity. With regard to a technology contract, the department will consider the number of existing technology applications with which any new technology will need to interface. Technology contracts that will interface with multiple department systems are more likely to require enhanced contract monitoring.

                 (c) The department may determine, after considering the factors listed in subsection (b) of this section, that certain types or classes of contracts are low risk and have a low likelihood of serious issues, and are not required to be individually considered for enhanced contract monitoring.

                 (d) The department’s director of contracting and procurement will notify the executive director who will notify the Parks and Wildlife Commission regarding any serious risk or issue identified in connection with a contract subject to enhanced contract monitoring.

         This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency’s authority to adopt.

         Issued in Austin, Texas, on