More oversight expected on state contracts

Officials expect more oversight, less wrongdoing

With reforms in place governing the way the state can solicit and grant contracts, officials expect to see more oversight and competition as well as less wrongdoing.

AUSTIN — Longtime lobbyist Bill Miller has started issuing a new piece of advice to clients seeking contract work for the state of Texas: be prepared to wait.

“What we’ve been saying is that anybody who wants a contract should expect greater scrutiny and a slower time frame,” Miller said. “That’s across the board.”

The powerbroker’s advice reflects a consensus that has begun setting in around the Capitol in the days after Gov. Greg Abbott signed the most significant strengthening of state contracting regulations in more than a decade. Agency officials, business leaders and government watchdogs say they expect the changes to boost competition, oversight, transparency and accountability, making wrongdoing more difficult and attention to ethics more prevalent.

The reforms, which sailed through the Legislature after problems surfaced about a $110 million

contract that the Health and Human Services Commission handed to local technology company 21CT, are far from comprehensive.

Several of the most dramatic ideas proposed in the aftermath of the scandal were not passed or were stripped from the law. One major proposal only got approval to be studied. And little was done to affect the most common and subtle form of favoritism: rigging a competitive bidding process by establishing criteria that help one potential vendor.

Even Miller acknowledged that “if you want to bend the rules, you can always find a way.”

Still, he and others praised the work in the legislative session that ended this month as a step forward.

“Let me put it this way,” said state Sen. Kevin Eltife, R-Tyler. “What we did is going to make things like the 21CT deal less common.”

The most sweeping of the reforms targeted the Cooperative Contracts program, which the health commission used for the 21CT deal. The state purchasing program has grown to more than $2 billion in annual purchases that are pre-approved, allowing agencies to buy them without holding a competitive bidding process.

A Houston Chronicle investigation published in January showed that nearly three-quarters of contractors that apply get the preapproval, creating a wide pool that officials can tap without oversight.

‘Beefs up ethics’

The new rules in Senate Bill 20 limit the program to purchases under $1 million, require agencies to develop statements of work that justify the purchases and mandate that agencies reach out to multiple vendors on the pre-approved contractor list.

Thomas Johnson, a spokesman for the state Department of Information Resources, which runs the program, said via email that the change “beefs up ethics, thresholds, and provides more transparency in contracting for the public and Legislature.”

The department is still analyzing the legislation to figure out how to implement it, said Johnson, who added it may be difficult for officials to review the statements of work since lawmakers did not give them any additional staff to do so.

That shortcoming highlights other issues. The original version of Senate Bill 20, for example, would have limited the program to pre-approving 35 percent of vendors that apply and also prohibited services from being purchased through the program. The provisions were deemed unworkable.

Senate Bill 20, written by that chamber’s budget writer, Republican Jane Nelson of Flower Mound, also requires state agencies to explain no-bid contracts in writing on their websites, justify large contract expansions, retain contract documents for seven years and have their governing boards sign off on major contracts. It also puts an emphasis on vendor performance, mandating that they be graded, and cracks down on the “revolving door” by making state employees wait two years before working for a company that had a contract he or she oversaw.

Watchdogs cautious

Some parts of House Bill 15, a proposal by Republican Rep. John Otto of Dayton that aimed to beef up oversight by giving more power to an oversight board, were inserted into the state budget.

Lawmakers also passed House Bill 2634, by Democratic Sen. Judith Zaffirini of Laredo, which boosted competition requirements in construction projects.

Together, the package represents the most dramatic step since at least 2001, when lawmakers approved the original version of the oversight board known as the Contract Advisory Team.

“I am proud to sign this bill that ensures Texans can trust their state government to issue contracts in a fair, open and responsible manner,” Abbott said in a statement about signing Senate Bill 20.

Watchdogs were more cautious in their praise.

Sara Smith of the consumer advocacy group TexasPIRG said she was “optimistic” about the bills, especially the revolving door provision. But, she said, they “could have gone further.”

Carol Birch, legislative counsel for another group called Public Citizen Texas, criticized the Legislature in particular for ordering a study of centralizing all state contracting into one agency instead of just doing it.

Just one bill?

“I’m not sure why they need yet another study to figure out what they already know. Or should know,” Birch said.

Zaffirini, who said she has been fighting to reform state contracting for two decades, expressed disappointment that lawmakers did not pass her legislation to increase training of state employees and add more auditing and monitoring of contracts. It seemed like the Capitol leadership wanted to pass only one bill, she said.

The one major bill that passed was by Nelson, a favorite of Lt. Gov. Dan Patrick, who got a lot of attention for her contracting efforts.

“It’s such a shame,” said Zaffirini, although she added that she was “delighted” by the passage of Senate Bill 20, which will “make a difference.”

As for the other proposals, Zaffirini and fellow Democrat Armando Walle, a Houston representative, said they plan to keep fighting.

“The Legislature will be scrutinizing more of the state’s dealings with vendors moving forward,” Walle said.