Contract rule changes good, but long overdue

Gov. Greg Abbott is getting down to the business of reforming the state contracting system.

On Wednesday, he issued a letter requiring all Texas agencies to immediately comply with stricter regulations on bidding processes for state contracts.

Abbott’s action is at least in part a response to a no-bid contract scandal that erupted over the award of a Medicaid fraud detection software project to Austin firm 21st Century Technologies last fall. The kerfuffle prompted four officials at the state’s health department to resign and provoked several state investigations.

In the wake of the Health and Human Services Commission embarrassment, Abbott’s actions can’t come too soon.

But it’s also clear that the reforms are long overdue.

A State Auditor’s report also issued this week found a majority of state entities audited between July 2012 and December 2014 did not maintain consistent documentation of procurement procedures or adequately identify conflicts of interest. Oversight of contractor performance and compliance was lacking, too.

To his credit, the governor is taking action to address what is clearly a problem that extends well beyond HHSC.

Much of what Abbott proposed this week comes from a bill filed by Finance Committee Chair Sen. Jane Nelson, R-Flower Mound.

The governor’s letter lauds Nelson’s legislation as “an important first step to restoring trust,” by increasing official oversight and shoring up procedures used when contracts are awarded without a competitive bidding process.

But that bill still has to work its way through the Legislature, and that will take time. Abbott says immediate action is necessary.

Beginning Sunday, all state agencies must:

▪ Publicly disclose all no-bid contracts and justify the use of such a procurement method.

▪ Ensure that employees involved in procurement disclose conflicts of interest.

▪ Prohibit contracts with business entities with which high-level agency staff have a financial interest.

▪ Enact stricter oversight and approval processes by agency procurement officials for contracts exceeding $1 million.

All of these reforms are important and commendable.

But they are also fairly obvious and necessary checks on a system that is naturally vulnerable to abuse. It’s a wonder such oversight procedures were not in place before.

This story was originally published January 29, 2015 at 6:06 PM with the headline "Contract rule changes good, but long overdue."