Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

State Government & Tribal Affairs Committee

HB 2452

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Description: Centralizing the authority and responsibility for the development, process, and oversight of state procurement of goods and services.

Sponsors: Representatives Wylie, Alexander, Kenney, Haigh, Hunt, Hudgins, Harris, McCoy, Ryu, Hasegawa, Springer, Billig, Maxwell, Upthegrove and Ormsby; by request of Department of Enterprise Services.

Brief Summary of Bill

  • Combines procurement statutes into a new chapter in Title 39.

  • Charges the Department of Enterprise Services with oversight of state procurement of goods and services.

Hearing Date: 1/19/12

Staff: Marsha Reilly (786-7135).

Background:

In 2011, laws were enacted consolidating procurement functions from the General Administration, the Department of Information Services, and the Office of Financial Management into the newly created Department of Enterprise Services (DES). The DES was tasked with effecting the reform and consolidation of state procurement practices and providing a report to the Governor with procurement reform recommendations by December 31, 2011. In doing so, the DES was directed to review national best practices and procedures used in other states and by the federal government.

Summary of Bill:

Laws relating to the procurement of goods and services are reorganized and recodified into a new chapter in Title 39 RCW. The processes for procurement of personal services contracts, or services, are combined with the processes for procurement of goods.

Definitions.

In addition to those in current use, definitions are clarified, and new definitions are added, as follows:

Director's Authority.

The Director of the DES is responsible for the development and oversight of policy for the procurement of goods and services by all state agencies including standards for the use of credit cards; purchase of goods and services from Washington small businesses; food procurement and food contracts; criteria for vehicle purchases; and implementation of an enterprise system for electronic procurement. The Director has the sole authority to enter into master contracts on behalf of the state. The Director also has the authority to delegate authorization to purchases goods and services to agencies. Such authorization must specify restrictions as to dollar amount or specific types of goods and services, based on a risk assessment process and does not exempt the agency from conformance to the policies established by the Director.

Training.

The DES must provide expertise and training on best practices for state procurement. Training or certification programs, or both, must be established and state agency employees responsible for procurement must complete the training or certification programs beginning July 1, 2013, and by July 1, 2015, no agency employee may execute or manage contracts unless the training and certification requirements have been met.

Competitive Solicitation.

All contracts for purchases of goods and services must continue to be based on a competitive solicitation process, which may include electronic or web-based solicitations, bids, and signatures. Exemptions from competitive solicitation, such as emergency contracts, sole source contracts, and direct buy purchases, are continued and new exemptions are allowed, including purchases from master contracts; contracts determined by the director as not appropriate or cost-effective for competitive solicitation; intergovernmental agreements awarded to any governmental entity; and contracts for services necessary to the conduct of collaborative research if it is a condition of granting funds.

Protests and Complaints.

Agencies with procurement authority must develop clear and transparent complaint and protest processes. A complaint process allows for the complaint to be submitted and a response provided before the deadline for bid submissions. A protest process must include a protest period after the apparent successful bidder is announced but before the contract is signed. The Director may grant authority for an agency to sign a contract before the protest process is completed under exigent circumstances.

Procurement Management.

The DES must adopt uniform policies and procedures for the effective and efficient management of contracts by all state agencies. At a minimum, the policies and procedures must include:

Agencies may not enter into a contract under which the contractor could charge additional costs for access to data generated under the contractor. A contractor must provide access to data generated under the contract to the agency. "Data" includes all information that supports the findings, conclusions, and recommendations of the contractor's reports, including computer models and the methodology for those models.

Performance-Based Contracts.

Agencies, to the extent practicable, should enter into performance-based contracts that identify expected deliverables and performance measures or outcomes. Performance based contracts may include, but are not limited to, either consequences or incentives or both to ensure that agreed upon value to the state is received. Payment for goods and services under performance-based contracts should be contingent on the customer achieving performance outcomes.

Bonds

Once a bid has been accepted, an agency may require the successful bidder to submit a bond to the agency in an amount and with surety or sureties determined by the agency. Bidders who regularly do business with the state shall be permitted to file an annual bid bond in an amount established by the agency. An annual bid bond shall be acceptable as surety in lieu of furnishing surety with individual bids. Agencies may also require performance bonds, protest bonds, or other bonds deemed necessary.

Debarment.

The Director of the DES has the authority to debar any contractor based on a finding of one or more of the following causes:

A decision to debar must be issued by the Director in writing and must state the reasons for the action taken and must inform the debarred contracts of his or her rights to judicial or administrative review.

Ethics.

The ethics laws that apply to all state officers and employees relating to limitations on gifts also applies to contractors who provide goods and services for, or on behalf of, the state. Any person or entity who seeks or may seek a contract with a state agency may not give, loan, transfer, or deliver to any person something of economic value that would cause a state officer or employee to be in violation of ethics laws pertaining to assisting in transactions, compensation for official duties or nonperformance, compensation for outside duties, gifts, or limitation on gifts.

Transparency.

Agencies must provide on an annual basis a list of all contracts that the agency has entered into or renewed. The DES must maintain a list of all contracts entered into by agencies.

Appropriation: None.

Fiscal Note: Requested on January 13, 2012.

Effective Date: The bill takes January 1, 2013.