Proposed Amendments and New Rules to the Rules for Administrative Services Chapter 55

Chapter 55. Rules for Administrative Services

Proposal Filed: October 24, 2016 - Published in the Texas Register: November 4, 2016

Deadline for Public Comment: December 5, 2016

Underlined text is new language.

[Strike-thru text] is deleted language.

The Texas Department of Licensing and Regulation (Department) proposes amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 55, Subchapter A, §55.1 and §55.10; and proposes new rules Subchapter F, §55.100 and §55.101 , regarding Rules for Administrative Services.

The Texas Legislature enacted Senate Bill 20 (S.B. 20), 84th Legislature, Regular Session (2015), which made comprehensive changes to state agency contracting, purchasing, and accounting procedures. In addition, Chapter 2261 of the Texas Government Code requires certain state agencies to establish and adopt by rule a policy that clearly defines the contract monitoring roles and responsibilities, if any, of internal staff and other inspection, investigative, or audit staff. The proposed amendments and new rules are necessary to implement S.B. 20 and bring the Department into compliance with Texas Government Code, Chapter 2261.

The proposed amendments to §55.1 add Texas Government Code, Chapters 2156, 2161, 2260, and 2261 as statutory authority for the rule chapter.

The proposed amendments to §55.10 add definitions for the Department's "Financial Services Division" and "Financial Services Division Director."

The proposed new §55.100 will bring the Department into compliance with §2261.202 of the Government Code, which requires state agencies that make procurements under Chapter 2261 to "establish and adopt by rule a policy that clearly defines the contract monitoring roles and responsibilities, if any, of internal audit staff and other inspection, investigative, or audit staff."

The proposed new §55.101 will bring the Department into compliance with §2261.253(c) of the Government Code, which requires state agencies to adopt procedures to identify contracts requiring enhanced monitoring, report information on those contracts to the agency's governing body, and provide a mechanism for reporting of serious risk to the agency's governing body.

Brian E. Francis, Executive Director, has determined that for the first five-year period the proposed amendments and new rules are in effect, there will be no direct cost to state or local government as a result of enforcing or administering the proposed amendments and new rules. There is no estimated increase or decrease in revenue to the state as a result of the proposed amendments and new rules.

Mr. Francis also has determined that for each year of the first five-year period the proposed amendments and new rules are in effect, the public will benefit by having greater oversight and transparency in contract management.

Further, Mr. Francis has found that there will be no anticipated economic effect on small and micro-businesses under the proposed amendments and new rules.

Since the agency has determined that the proposed amendments and new rules will have no adverse economic effect on small or micro-businesses, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, under Texas Government Code §2006.002, is not required.

Comments on the proposal may be submitted by mail to Pauline Easley, Legal Assistant, General Counsel's Office, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711; or by facsimile to (512) 475-3032; or electronically to erule.comments@tdlr.texas.gov . The deadline for comments is 30 days after publication in the Texas Register.

The amendments and new rules are proposed under Texas Occupations Code, Chapter 51, which authorizes the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. In addition, the amendments and new rules are proposed under Texas Government Code, Chapter 2156, which requires state agencies making purchases to adopt the Texas Comptroller of Public Accounts rules related to bid opening and tabulation; Texas Government Code, Chapter 2161, which requires a state agency to adopt the Texas Comptroller of Public Accounts' rules as the agency's own rules for construction projects and purchases of goods and services; Texas Government Code, Chapter 2260, which requires each state agency to develop rules to address contract disputes with vendors and to resolve those disputes through negotiation and/or mediation; and Texas Government Code, Chapter 2261, which sets forth statewide standards for contracting and oversight of agency contracts.

The statutory provisions affected by the proposal are those set forth in Texas Occupations Code, Chapter 51. In addition, the following statutes may be affected: Texas Agriculture Code, Chapters 301 and 302 (Weather Modification and Control); Texas Education Code, Chapter 1001 (Driver Education and Safety); Texas Health and Safety Code, Chapters 754 (Elevators, Escalators, and Related Equipment) and 755 (Boilers); Texas Government Code, Chapter 469 (Elimination of Architectural Barriers); Texas Labor Code, Chapters 91 (Professional Employer Organizations) and 92 (Temporary Common Worker Employers); and Texas Occupations Code Chapters 203 (Midwives); 401 (Speech-Language Pathologists and Audiologists); 402 ( Hearing Instrument Fitters and Dispensers); 403 ( Licensed Dyslexia Practitioners and Therapists); 451 (Athletic Trainers); 605 (Orthotists and Prosthetists); and 701 (Dietitians); 802 (Dog or Cat Breeders); 953 (For-Profit Legal Service Contract Companies); 1151 (Property Tax Professionals); 1152 (Property Tax Consultants); 1202 (Industrialized Housing and Buildings); 1302 (Air Conditioning and Refrigeration Contractors); 1304 (Service Contract Providers and Administrators); 1305 (Electricians); 1601 (Barbers); 1602 (Cosmetologists); 1603 (Regulation of Barbering and Cosmetology); 1703 (Polygraph Examiners); 1802 (Auctioneers); 1901 (Water Well Drillers); 1902 (Water Well Pump Installers); 2052 (Combative Sports); 2303 (Vehicle Storage Facilities); 2306 (Vehicle Protection Product Warrantors); 2308 (Vehicle Towing and Booting); and 2309 (Used Automotive Parts Recyclers). No other statutes, articles, or codes are affected by the proposal.

Subchapter A. General Provisions.

§55.1. Authority.

This chapter is promulgated under the authority of Texas Occupations Code, Chapter 51 and Texas Government Code, Chapters 2156, 2161, 2260, and 2261. This chapter applies except in the event of a conflict with other statutory provisions related to specific programs regulated by the Commission and the Department.

§55.10. Definitions.

The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise.

(1) - (9) (No change.)

(10) Financial Services Division--The division of the department tasked with performing the functions of accounting, budgeting, purchasing, contract management, and financial reporting.

(11) Financial Services Division Director--The person who directs and oversees the functions of the Financial Services Division.

(12) [(10)] General Counsel--The attorney designated by the Texas Department of Licensing and Regulation, who provides legal representation to the Commission and the Department.

(13) [(11)] Interested parties--All persons who have timely submitted bids or proposals to provide goods or services pursuant to a contract with the Department or who have requested in writing to the Department to be notified of a vendor protest.

(14) [(12)] Mediation--A confidential, informal dispute resolution process in which an impartial person, the mediator, facilitates communication between or among the parties to promote reconciliation, settlement, or understanding among them.

(15) [(13)] Mediator--The person who presides over a mediation proceeding. The mediator shall encourage and assist the parties in reaching a settlement but may not compel or coerce the parties to enter into a settlement agreement. The mediator may be a Department employee, an employee from another Texas state agency, or a person in the mediation profession who is not a Texas state employee ("private mediator").

(16) [(14)] Parties--The contractor and the Department, having entered into a contract in connection with which a claim of breach of contract has been filed under Subchapter D.

(17) [(15)] Person--Any individual, partnership, corporation, or other legal entity, including a state agency or governmental subdivision.

(18) [(16)] Protesting Party--Any actual or prospective bidder, offeror, proposer, or contractor who submits a protest to the Department under Subchapter C.

(19) [(17)] Purchasing Officer--A Departmental employee who has received certification as a Texas Public Purchaser and who is responsible for assisting with Departmental purchases, and who has been designated the Purchasing Officer for the purchase in question.

Subchapter F. Contract Monitoring.

§55.100. Contract Monitoring Responsibilities.

(a) This section implements Government Code, §2261.202.

(b) Contract monitoring shall be conducted by staff of the financial services division, subject to the oversight of the financial services division director.

(c) Subject to the oversight of the financial services division director, internal auditors and staff of the financial services division shall perform any additional contract monitoring specifically directed by the audit committee of the commission, or warranted by the results of the Department's annual risk assessment.

§55.101. Enhanced Contract Monitoring.

(a) This section implements Government Code, §2261.253(c).

(b) For each contract entered into by the department, the financial services division director, or his or her designee, will determine if enhanced monitoring of the contract or the contractor's performance is required.

(c) In determining whether a contract requires enhanced monitoring, the following factors may be considered, to the extent applicable:

(1) The estimated dollar amount of the contract;

(2) The total contract period, including renewal options;

(3) The extent and number of persons impacted by the contract;

(4) The impact to the department and the state if contract deliverables are delayed, or if the contractor fails to deliver as required in the contract;

(5) The complexity of funding sources for the contract;

(6) The complexity of requirements and resources to be managed pursuant to the contract;

(7) The extent of department resources readily available to manage the contract;

(8) The impact of the contract on the health and safety of the general public;

(9) The impact on the department's business processes;

(10) The complexity of the methodology for calculating and making payments under the contract;

(11) The extent of training required for end users as a result of the contract;

(12) The vendor's experience delivering the contracted goods or services, and, if applicable, the vendor's performance under previous department contracts; and

(13) With regard to a technology contract, the level of software customization required and the impact on existing technology applications or infrastructure.

(d) The financial services division director, or his or her designee, shall maintain a record of all contracts requiring enhanced monitoring. Contracts identified for enhanced monitoring shall be reported to the commission at least quarterly.

(e) The financial services division director shall notify the commission immediately of any serious issue or risk that is identified with respect to a contract requiring enhanced monitoring.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on October 24, 2016.

Brian E. Francis
Executive Director
Texas Department of Licensing and Regulation