TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 20. STATEWIDE PROCUREMENT AND SUPPORT SERVICES

SUBCHAPTER B. PUBLIC PROCUREMENT AUTHORITY AND ORGANIZATION

DIVISION 5. CONTRACT ADVISORY TEAM

34 TAC §§20.160 - 20.166

The Comptroller of Public Accounts adopts new §§20.160 concerning definitions, 20.161 concerning scope, 20.162 concerning solicitation review, 20.163 concerning expedited solicitation review, 20.164 concerning enhanced solicitation review, 20.165 concerning contract formation and award, and 20.166 concerning contract management and termination, with changes to the proposed text as published in the June 26, 2020, issue of the Texas Register (45 TexReg 4293). The rules will be republished. These rules will be included in Subchapter B (Public Procurement Authority and Organization), new Division 5 (Contract Advisory Team).

These rules implement Government Code, §2054.158(d) and §2261.258(d), added by Senate Bill 65, 86th Legislature, 2019. This legislation requires the comptroller to provide guidelines for additional and reduced monitoring of certain agencies. In order to accomplish this, these rules describe the Contract Advisory Team monitoring procedure that generally applies to solicitations and contracts subject to CAT monitoring.

Section 20.160 sets out the definitions for Division 5. Paragraph (1) defines "CAT" as the Contract Advisory Team established in Government Code, Chapter 2262, Subchapter C. Paragraph (2) identifies the key terms of a solicitation or contract.

Section 20.161 defines the scope of the division. Subsection (a) clarifies that this division does not apply unless a solicitation or contract is subject to monitoring by the Contract Advisory Team. Subsection (b) implements Government Code, §2054.158(d), by creating a guideline for the monitoring of major information resources projects, which will be governed by rules adopted by the Department of Information Resources.

Section 20.162 describes the requirement for pre-publication review of solicitations by CAT. Subsection (a) requires an agency to obtain solicitation review from CAT before publication, and either comply with each recommendation or explain why it does not apply. Subsection (b) identifies the documents that must be submitted to obtain CAT review. Subsection (c) addresses solicitations that are substantially revised after CAT review and requires them to be resubmitted before publication. The guidelines described in this section generally pre-date Senate Bill 65 and are restated in the rule to provide a baseline for additional or reduced monitoring.

Section 20.163 defines the circumstances under which CAT may conduct an expedited solicitation review. Subsection (a) states that an agency may designate a solicitation as low-risk when submitting it for CAT review. Subsection (b) sets out conditions under which solicitations that follow a template may be designated as low-risk. Subsection (c) sets out conditions under which a solicitation may be designated as low-risk based on an agency risk analysis. Subsection (d) sets out a lesser requirement for agencies subject to reduced monitoring to demonstrate their risk analysis. Subsection (e) states that agencies subject to additional monitoring may not seek review through an expedited procedure.

Section 20.164 requires an enhanced review of solicitations submitted by agencies subject to additional monitoring. It requires those agencies to submit additional documents to facilitate the review.

Section 20.165 provides guidelines for CAT monitoring of contract formation and award. Subsection (a) permits an agency to request recommendations and assistance from CAT. Subsection (b) requires agencies subject to additional monitoring to provide contract documents to CAT upon request, so that CAT can develop recommendations for improving contract formation and award practices.

Section 20.166 provides guidelines for CAT monitoring of contract management and termination. Subsection (a) permits an agency to request recommendations and assistance from CAT. Subsection (b) requires agencies subject to additional monitoring to obtain additional training for their contract managers. Subsection (c) requires agencies subject to additional monitoring to submit documents describing certain contract management procedures to CAT annually. Subsection (d) requires agencies subject to additional monitoring to retain contract closeout documentation and provide it to CAT or auditors upon request.

The comptroller received four suggestions regarding adoption of these rules from The Health and Human Services Commission (HHSC). First, HHSC recommended a clarification that contracts associated with a major information resources project are subject to monitoring by the Quality Assurance Team. The requested clarification is both accurate and consistent with the intent of the rules. The comptroller adopts this suggestion in §20.161(b).

Second, HHSC requested "a definition or other guidance" for the concept of a substantial change to a solicitation in §20.162(c), such as fixing it by rule at a percentage of the anticipated contract value. The comptroller agrees that a bright line boundary would make it easy for agencies to comply. However, the purpose of §20.162(c) is to codify an existing requirement for CAT review. The concept of a substantial change to a solicitation is both implicit in statute and explicit in longstanding comptroller guidance. CAT is required to review solicitations for "contracts of state agencies that have a value of at least $5 million," pursuant to Government Code, §2262.101(a)(1). Put another way, unless a revised solicitation is substantially the same as one CAT has already reviewed, CAT must review it. The comptroller's Procurement and Contract Management Guide states that a solicitation is substantially changed if its estimated value is increased by 25%, or if there are significant revisions to key terms. Because the comptroller has provided the requested guidance, and because the suggested revision would be inconsistent with the purpose of the rule, the comptroller adopts §20.162(c) without revision.

Third, HHSC proposed to delete the documentation requirement for an agency that bypasses CAT review in an emergency. It noted that §20.82(d)(2)(B) already requires agencies to justify emergency purchases that exceed $25,000. However, that section applies only to emergency purchases made under the comptroller's delegated authority. The CAT review requirement may apply to purchases made under other sources of authority, as well. Therefore, not every procurement that would be subject to CAT review would trigger the justification requirement in §20.82(d)(2)(B). The comptroller has revised §20.162(d) to make clear that a justification prepared to satisfy §20.82(d)(2)(b) may also justify bypassing CAT review.

Finally, HHSC requested a definition for "descriptive information" in §20.165(b)(1). That section has been revised to clarify that an agency must provide to CAT the information specified in CAT's request.

These rules are adopted under Government Code §2054.158(d) and §2261.258(d).

These rules implement Government Code §2054.158(d) and §2261.258(d). The comptroller consulted the Contract Advisory Team before proposing these rules.

§20.160.Definitions.

The following words and terms, when used in this division, shall have the following meaning unless the context clearly indicates otherwise.

(1) CAT--The Contract Advisory Team established in Government Code, Chapter 2262, Subchapter C.

(2) Key terms--Deliverables, duration, performance standards, amount of compensation or method of computing compensation to the contractor, specification or limitation of remedies, and any other term identified as a "key term" in the procurement manual and contract management guide developed under §20.131 of this chapter (relating to Procurement Manual and Contract Management Guide).

§20.161.Scope.

(a) This division applies only to solicitations and contracts subject to monitoring by CAT.

(b) Major information resources projects and any associated contracts, as defined in Government Code, Chapter 2054, are subject to monitoring by the Quality Assurance Team under the rules of the Department of Information Resources.

§20.162.Solicitation Review.

(a) An agency may not publish a solicitation on the ESBD or in the Texas Register until it obtains a CAT review of the solicitation and either complies with each recommendation or submits a written explanation regarding why the recommendation is not applicable to the solicitation.

(b) To obtain CAT review of a solicitation, an agency must submit all solicitation documents, including the solicitation, any documents that are incorporated by reference into the solicitation, and essential supporting documents such as the proprietary purchase justification.

(c) After obtaining CAT review of a solicitation, if an agency substantially revises the solicitation, it may not publish the revised solicitation until it meets the prerequisites in subsections (a) and (b) of this section.

(d) If an agency cannot obtain CAT review within the amount of time it has to complete a procurement to prevent a hazard to life, health, safety, welfare, or property in an emergency, the requirement to obtain CAT review in this section does not apply. An agency shall justify its reliance on this subsection in the procurement file for each procurement that would otherwise require CAT review. A justification submitted in accordance with §20.82(d)(2)(B) of this title and maintained in the procurement file may be sufficient if it demonstrates that CAT review is not required.

§20.163.Expedited Solicitation Review.

(a) Low-risk solicitations. If a solicitation qualifies as low-risk according to this section, an agency may designate it as low-risk when submitting it for CAT review. CAT may review a solicitation that has been designated as low-risk using an expedited process that focuses on key terms, or request additional documentation to determine which level of review to perform.

(b) Template solicitations. An agency may request CAT review of a solicitation template, which must include all key terms for a contemplated contract. For one year after a template has been reviewed, the agency may designate a solicitation following that template without substantial revision as low-risk.

(c) Risk analysis procedure. An agency that has developed a risk analysis procedure as described in Government Code, §2261.256(a), may designate a solicitation as low-risk if it submits its analysis and conclusion that the contractor selection process, contract provisions, and payment and reimbursement rates for the types of goods and services to be solicited present a low risk of fraud, abuse, or waste.

(d) Reduced monitoring. An agency that is currently reported by the State Auditor's Office as requiring reduced monitoring during contract solicitation and development may designate a solicitation as low-risk without submitting an analysis to CAT.

(e) Additional monitoring. An agency that is currently reported by the State Auditor's Office as requiring additional monitoring during contract solicitation and development may not designate any solicitation as low-risk, even if the solicitation would otherwise qualify under this section.

§20.164.Enhanced Solicitation Review.

To obtain CAT review of a solicitation, an agency that is currently reported by the State Auditor's Office as requiring additional monitoring during contract solicitation and development must additionally submit the needs assessment, acquisition plan, and risk assessment for the solicitation.

§20.165.Contract Formation and Award.

(a) Recommendations and assistance. An agency may request recommendations and assistance from CAT regarding contract formation and award.

(b) Additional monitoring. An agency that is currently reported by the State Auditor's Office as requiring additional monitoring during contract formation and award shall provide to CAT upon request:

(1) descriptive information specified by CAT on all contracts it has awarded from solicitations that were reviewed by CAT; and

(2) copies of all contract documents requested by CAT for the purpose of providing recommendations and assistance to the agency.

§20.166.Contract Management and Termination.

(a) Recommendations and assistance. An agency may request recommendations and assistance from CAT regarding contract management and termination.

(b) Additional monitoring - training requirement. An agency that is reported by the State Auditor's Office as requiring additional monitoring during contract management and termination shall ensure that each of its contract managers has received additional training specified by and provided by the comptroller before December 31st of the year it is reported, or before another date agreed between the agency and the comptroller.

(c) Additional monitoring - submission of procedures. An agency that is reported by the State Auditor's Office as requiring additional monitoring during contract management and termination shall submit to CAT before November 30th of the year it is reported, or before another date agreed between the agency and the comptroller:

(1) the procedure by which it will identify each contract that requires enhanced contract or performance monitoring; and

(2) its handbook of policies and practices for contract management and termination.

(d) Additional Monitoring - Closeout Report. An agency that is currently reported by the State Auditor's Office as requiring additional monitoring during contract management and termination shall, within 30 days of the closeout of a contract it has identified as one that requires enhanced contract or performance monitoring, place the following information in the contract file, and provide it to the State Auditor, the comptroller, or CAT upon request:

(1) each of its performance expectations for the contract;

(2) the performance indicators it monitored during the contract;

(3) the methods it used to monitor performance indicators;

(4) whether the contractor met its performance expectations;

(5) a summary of corrective action plans and corrective actions taken by the contractor;

(6) any liquidated damages assessed or collected from the contractor; and

(7) a summary of lessons learned during management of the contract that the agency will apply to future procurements.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on August 7, 2020.

TRD-202003208

Don Neal

General Counsel, Operations and Support Legal Services

Comptroller of Public Accounts

Effective date: August 27, 2020

Proposal publication date: June 26, 2020

For further information, please call: (512) 475-2220