HS HB 1728 -- STATE PURCHASING (Backer)

This substitute makes various changes to the state purchasing
law.  The substitute:

(1)  Requires the State Auditor to annually audit cost-plus
contracts to determine if the state is receiving the best price;

(2)  Requires the Commissioner of Administration to adopt rules
on distributing potential bids to businesses;

(3)  Expands the ability of the commissioner to participate in
cooperative purchasing agreements and purchase supplies from the
federal governmental services administration;

(4)  Expands the purchase preference the commissioner must give
to include products assembled in the state;

(5)  Requires out-of-state contractors or bidders to comply with
the same requirements as Missouri bidders and contractors;

(6)  Requires the Office of Administration to annually audit
minority business participation reports and also conduct an
annual public conference to discuss the state minority business
enterprise program;

(7)  Allows vendors to assess a late payment penalty against the
state for supplies and services which the state has not made
payment on.  After 30 days following the later of the date of
delivery of the supplies and services or the date upon which the
invoice is approved and processed, a penalty of 2% of the amount
due the vendor must be paid for every 30-day period thereafter
in which the vendor is not paid.  The penalty may not exceed 18%
in one year; and

(8)  Requires state agencies to purchase supplies manufactured
by the Missouri Bureau of the Blind.  The Division of Family
Services must make a list of products available to state
agencies and school districts.  The substitute requires the
commissioner to determine the fair market prices of products
manufactured and offered for sale by the bureau.  All products
offered for sale to state agencies or school districts must meet
agency or school district specified standards.  School districts
are not required to purchase services offered by the blind or
other handicapped persons.  A purchase waiver may be issued to a
state agency if the bureau is unable to supply the products or
services needed by the state agency.  The substitute repeals
current law requiring state agencies to give a 5-point bidding
preference to products produced by the blind.

The substitute makes knowingly submitting a false report to the
state the crime of making a false declaration and increases the
penalty for the crime from a class B to a class A misdemeanor.
The Attorney General is given the authority to prosecute the
crime of making a false declaration.

The substitute also makes the following closed records:
financial records, business and marketing plans, and other
proprietary information submitted as part of a sealed bid,
sealed proposal, or application for certification as a minority
or woman-owned business.

FISCAL NOTE:  Estimated Net Cost to General Revenue Fund of
$126,177 in FY 2001, $143,365 in FY 2002, and $146,738 in FY
2003.

HB 1728, HCA 1 -- STATE PURCHASING

CO-SPONSORS:  Backer, Boykins, Days

COMMITTEE ACTION:  Voted "do pass" by the Committee on
Governmental Organization and Review by a vote of 8 to 2 with 1
present.

This bill makes various changes to the state purchasing law.
The bill:

(1)  Requires purchasers for the state to enter into, renew, or
extend state contracts to Missouri-based businesses.  If
products or services are not available through a Missouri-based
business, a purchaser may purchase from another source.  The
Commissioner of Administration must adopt rules for distributing
potential bids to Missouri-based businesses;

(2)  Requires the State Auditor to annually audit cost-plus
contracts to determine if the state is receiving the best price;

(3)  Allows an open contract which is considered to be any
contract that is let, renewed, or extended which is based on
cost plus a fixed guaranteed profit to be supplied by any
willing provider who meets the technical requirements for the
product, except in the event of a state disaster emergency;

(4)  Expands the ability of the Commissioner of Administration
to participate in cooperative purchasing agreements and purchase
supplies from the federal governmental services administration;

(5)  Expands the purchase preference the commissioner must give
to include products assembled in the state;

(6)  Requires the state to give a 10% or 10 point preference,
whichever is greater, to Missouri-based firms when awarding
contracts; and

(7)  Requires the Office of Administration to annually audit
minority business participation reports.

The bill also makes submitting a false report to the state the
crime of making a false declaration and increases the penalty
for the crime from a class B to a class A misdemeanor.  The
Attorney General is given authority to prosecute the crime of
making a false declaration.

HCA 1 -- Removes the requirement that the state give a 10% or 10
point preference, whichever is greater, to Missouri-based firms
when awarding contracts and instead requires the state to award
at least 30% of all contracts to Missouri-based businesses.

FISCAL NOTE:  Estimated Net Cost to General Revenue Fund of
$46,116 in FY 2001, $52,160 in FY 2002, and $53,488 in FY 2003.
Cost to various state funds of Unknown in FY 2001, FY 2002, and
FY 2003.

PROPONENTS:  Supporters say that the current prime vendor system
of purchasing equipment does not always work with technical
equipment.  Many state businesses are also being left out of the
process.  The state could often buy equipment cheaper from local
suppliers.  The price of equipment often falls after vendor
contract prices are set.  The state currently has no flexibility
in purchasing from the cheapest supplier.  There is a need to
give incentives for technical equipment suppliers to locate in
Missouri.

Testifying for the bill were Representative Backer; World Wide
Technology; Computers Plus; and Office of the Attorney General.

OPPONENTS:  Those who oppose the bill say that the prime vendor
system does work if implemented correctly.  The bill will not
only affect computers but all supplies and services.  The bill
could also force the purchase of substandard products just
because they were produced by a Missouri firm.  The 10% Missouri
bidder preference could hurt contracts with other states.

Testifying against the bill was Office of Administration.

Steve Bauer, Legislative Analyst

HB 1728 -- State Purchasing

Co-Sponsors:  Backer, Boykins, Days

This bill makes various changes to the state purchasing law.
The bill:

(1)  Requires purchasers for the state to enter into, renew, or
extend state contracts to Missouri based businesses.  If
products or services are not available through a Missouri based
business, a purchaser may purchase from another source.  The
Commissioner of Administration must adopt rules for distributing
potential bids to Missouri based businesses;

(2)  Requires the State Auditor to annually audit cost-plus
contracts to determine if the state is receiving the best price;

(3)  Allows an open contract which is considered to be any
contract that is let, renewed, or extended which is based on
cost plus a fixed guaranteed profit to be supplied by any
willing provider who meets the technical requirements for the
product, except in the event of a state disaster emergency;

(4)  Expands the ability of the Commissioner of Administration
to participate in cooperative purchasing agreements and purchase
supplies from the federal governmental services administration;

(5)  Expands the purchase preference the commissioner must give
to include products assembled in the state;

(6)  Requires the state to give a 10% or 10 point preference,
whichever is greater, to Missouri based firms when awarding
contracts; and

(7)  Requires the Office of Administration to annually audit
minority business participation reports.

The bill also makes submitting a false report to the state the
crime of making a false declaration and increases the penalty
for the crime from a class B to a class A misdemeanor.  The
Attorney General is given authority to prosecute the crime of
making a false declaration.