Texas Politics

Overhaul of scandal-torn state contracting system wins final approval

Sen. Jane Nelson, R-Flower Mound, introduced the bill on state contracting.
Sen. Jane Nelson, R-Flower Mound, introduced the bill on state contracting. Austin American-Statesman

Legislation by Senate Finance Chairwoman Jane Nelson to overhaul the scandal-plagued state contracting system won final approval by lawmakers Sunday and appears certain to be signed into law by Gov. Greg Abbott.

Abbott embraced Senate Bill 20 almost immediately after Nelson, R-Flower Mound, introduced it at the outset of the 2015 Legislature after disclosures of a questionable multimillion-dollar contract between the Texas Health and Human Services Commission and 21CT, an Austin data analytics firm.

Alleged contract abuses dominated the early weeks of the 140-day session as legislative committees, including Nelson’s, exposed troubling weaknesses in the state’s procurement system. A strike force empaneled by Abbott to look into the 21CT contract found that the deal “skirted the law” and put “HHSC’s credibility at risk.”

The final version of SB20, crafted by a House-Senate conference committee, breezed out of the House on Sunday on a vote of 140-2 as lawmakers cleared the final batch of bills before Monday’s adjournment. It passed the Senate unanimously Saturday.

“We clearly need to have better laws dealing with our contracting in Texas,” Nelson said. “Unfortunately, we had to have missteps to point out the need for more stringent rules on contracting.”

Abbott ordered state agencies to implement contracting oversight provisions in SB20 shortly after it was introduced. As approved by the Legislature, the bill prohibits conflicts of interest between agency heads and vendors, strengthens top-level supervision in the awarding of contracts and increases scrutiny of vendor performance in carrying out the contracts.

Agencies would also be required to post on their websites any noncompetitively bid contract along with the statutory justification for why it was awarded. The bill would require an agency board to approve any contract over $1 million.

“It goes a long way to increasing accountability and transparency in the state contracting process for state agencies,” said Rep. Four Price, R-Amarillo, the House sponsor. Price said the abuses that came to light in the last several months “were a catalyst to get in and … try to address some problems that needed to be corrected. I think SB20 will go a long way to do it.”

The compromise version of the bill softened a “revolving-door” provision between state agencies and vendors. State employees who worked on contracts for a particular company would be prohibited from going to work for that company for two years, but lawmakers dropped a similar two-year restriction on representatives of the vendors going to work for the contracting state agencies.

The compromise bill also dropped a criminal penalty for violating the revolving-door policy, but Price said civil sanctions might be developed under agency rules to implement the law.

Price said some members of the conference committee believed that the criminal penalty – a Class A misdemeanor carrying a penalty of up to a year in jail and a $4,000 fine – “seemed overly harsh.”

“It just didn’t seem right and I think many others expressed concern about that,” Price said. “This is a good step. It moves the needle in the right direction with respect to conflicts of interest. It’ll give us time over the interim to really look at it a little closer and determine if we need to strengthen or put more teeth into it.”