Texas IT Reorganization Bill Passes Legislature, Sent to Governor

Update: This bill has now been signed by the governor.

House Bill 1516 passed the Texas Legislature on May 27th and was sent to the governor on June 2. If the governor signs it, it will produce some significant changes in how Texas does IT, with major restructuring of the Department of Information Resources' (DIR) role in state government. As written the effective date would be Sept. 1, 2005.

Following are excerpts from estimates of the effects of 1516, if it is signed into law, from the Texas Legislature and DIR.

SUMMARY

The bill places in statute aspects of the Texas Project Delivery Framework by amending the Government Code and sets forth the requirements for the development of guidelines and forms by the department in consultation with the LBB, SAO, and state agencies.

The bill requires state agencies that propose major information resources projects to prepare a business case providing the justification for the project, including the anticipated return on investment, and a statewide impact analysis of the project's effect on aspects of information resources common throughout state government. The bill also requires that state agencies develop a project plan for each major information resources project.

The bill allows DIR to operate statewide technology centers for two or more agencies to provide services related to information resources and information resource technologies and the development and use of statewide applications. Requires DIR to manage statewide technology centers that provide data center or disaster recovery services for two or more agencies. DIR must prioritize the transfer of services to the statewide technology center, with priority given to the largest 25 state agency centers. At least three agency centers per fiscal year must transfer to the statewide center based on cost effectiveness.

Amends existing law to add "hardware" and "technology services," other than telecommunications services, to "software" in the definition of commodity items. Includes seat management in the term "technology services" and defines that term. Specifies that a reasonable demand must exist in multiple agencies for DIR to consider the item as a commodity item. Requires DIR to negotiate favorable prices for commodity items based on aggregate demand, and agencies are required to buy through those contracts unless granted an exemption by DIR's executive director.

By December 31, 2005, two reports are due from DIR to the state's leadership. The first is a statewide assessment of IT security resources and the practices of state agencies. The second is on how the current automated information systems of state agencies can be combined to improve planning, budgeting and reporting of technology expenditures and projects.

DATA CENTERS/STATEWIDE TECHNOLOGY CENTERS

The state Data Center System will be re-bid in 2007 and the current process has proven inadequate to complete the data center consolidation that has been in statute for several sessions.

DIR may establish statewide technology centers, with the approval of the Governor and LBB, to consolidate operations or services shared by several agencies, if such a center would improve efficiency and effectiveness and provide value for the state. State agencies must transfer their data center and disaster recovery services to the consolidated data center, and must set a timeline for that transfer through an interagency agreement with DIR.

The benefit of State Data Center Consolidation will be to improve the efficiency of data center operations for agencies, increase the security of agencies' information, reduce costs to agencies for those services, and allow agencies to focus on their core missions. The legislation also creates the most favorable scenario possible for leveraging the state's purchasing power in the rebid of the system in 2007.

STATUTORY CHANGES
DIR Oversight, Rules, Guidelines and Procedures
Data Center/Disaster Recovery Services

• Each agency must enter into an

• interagency contract that establishes a timeline for the transfer of resources related to data center operations by March 31, 2006
• A state agency may not spend appropriated money to contract or issue purchase orders for data center services or disaster recovery services, including maintenance of these services, without approval of the state CTO
• DIR may establish thresholds and procedures for approval of agencies' expenditures on data center and disaster recovery services
• DIR fully utilize the existing capacity of the State Data Center in San Angelo in any consolidation plan
• DIR must prioritize agency migration of the top 25 data center environments
• Agencies may not move services away from a statewide technology center once they have been consolidated (Governor's approval also required)
• After DIR notification of an agency that it is not in compliance with its interagency contract, the agency may only spend money for selected services with the approval of the state CTO
• DIR may use the Lone Star Education and Research Network fiber grid during an emergency or telecommunications system failure, and to transfer data files to and from a statewide technology centers

Future Statewide Technology Centers

• DIR may establish future statewide technology centers and their services to service two or more agencies in information technology needs
• DIR must do a cost and requirements analysis for agencies whose services are to be transferred to a future statewide technology center
• DIR must establish transition schedules for agency movement to future technology centers
• DIR must do an analysis of expected savings from a proposed agency's transfer to a statewide technology center and report these savings to state leadership, LBB and SAO
• DIR (with Governor's approval) may require agencies under an interagency contract to transfer resources to a statewide technology center
• The LBB can grant prior approval (exemption) for agencies to operate outside of statewide technology center, however, the LBB may not consider requests for prior approval of data center operations
• DIR must maximize interoperability through a statewide technology centers
• DIR may establish rules & Guidelines regarding State Technology Centers and services.

DIR Contracts and Fees
Statewide Technology Centers

• DIR may charge fees for the costs of operating statewide technology centers
• DIR may contract with another party to operate statewide technology centers
• Agencies selected for a statewide technology center must enter into an interagency contract with DIR for services the agency is required to obtain through a technology center

DIR Compliance Monitoring
Statewide Technology Centers

• DIR must ensure statewide technology center compliance with agency service levels and requirements established through interagency contracts
• DIR must ensure the migration of at least three agency operating environments to a statewide technology center each fiscal year, subject to a determination of cost effectiveness by the state CTO. Agencies must comply with DIR's request to migrate under this section.

DIR Notification
Statewide Technology Centers

• DIR must notify (in writing) and establish transition schedules for state agencies selected for inclusion in a statewide technology center
• DIR must notify state leadership and the LBB, SAO of expected savings for transitioning an agency to a statewide technology center
• DIR must notify Comptroller of Public Accounts, LBB, State Auditor's Office, and the affected agency of any noncompliance with its interagency contract

Approval by Another Agency/Entity
Statewide Technology Centers

• DIR may not establish or expand higher education statewide technology centers without approval of the Information Technology Council of Higher Education
• Governor/LBB approval needed for DIR to establish additional technology centers

• Agencies selected for statewide technology centers may not spend money for these services/operations without prior LBB approval. If the LBB approves, the agency is not required to enter into an interagency contract for these services
DIR Collaboration
Statewide Technology Centers
DIR must work with state agencies on federal funding issues related to their transition to a statewide technology center and, with Governor's approval, exclude resources where federal funding issues cannot be reconciled

Vendors/HUBS
Statewide Technology Centers
DIR must follow all Historically Underutilized Business program rules, maximize vendor competition and allow qualified businesses to compete.

COMMODITIES PROCUREMENT
Today the state purchasing power on commodity technology items is fragmented across each agency purchase, resulting in limited application of state purchasing power through negotiations.

Under H.B. 1516, agencies are required to purchase other commodity items through unified contracts. These items include computer hardware and technology services, such as seat management, but not including telecommunications services.

Because of the volume of annual purchases by state agencies in these areas, DIR will be able to negotiate prices with vendors that will provide significant savings to individual agencies and state government overall.

STATUTORY CHANGES
DIR Products
• DIR List of Commodity Items available for purchase (listed on the Internet)
• DIR Commodity Hardware Configurations
DIR Oversight, Rules, Guidelines and Procedures
• Definition of "commodity items" is expanded to include hardware, technology services (other than telecom) and seat management
• Previous statute established that with rules revision, these items must be purchased with a contract developed by DIR
• DIR must specify state commodity hardware configurations in its instructions for state agency strategic plans
• Agencies must utilize the state configurations as a part of their planning
• In selecting goods and services, agencies must consider DIR standards (in DIR rules).
DIR Analysis/Review
• DIR must review agency procurement schedules for use in vendor solicitations of commodity items
• DIR may determine when a statewide vendor solicitation for a commodity item will reduce purchase prices for a state agency.
DIR Contracts/Fees
• DIR Procurement Contracts (use of DIR procurement contracts by governmental entities in Texas and other states)
• DIR may charge administrative fees to state agencies, other political subdivisions of Texas or other states (commodity purchases).
Agency Submissions to DIR
• Agency Planned Procurement Schedules (must be submitted to DIR before agency operating plans are approved)
• Agencies must notify DIR, LBB, & SAO of substantial changes to their procurement schedules.
DIR Approval
DIR Approval of agency commodity purchases not on DIR schedule

DIR Compliance/Monitoring
State agencies must use DIR commodity hardware configurations in their planning

DIR Exemptions/Waivers
Agencies must receive an exemption from DIR (prior to approval from LBB) on exceptions to commodity purchase requirements.

DIR Collaboration
DIR must collaborate with state agencies on commodities item classifications.

Vendors/HUBS
DIR must make good faith efforts to increase awards to HUBs (commodity purchases)

TEXAS PROJECT DELIVERY FRAMEWORK

The lack of consistent IT project and contract management prevents application of best practices at the statewide level.

Proposed major projects must follow a consistent process to ensure a need exists for the project and to include the needs of other agencies relevant to the project. Required aspects include preparation of a business case, statewide impact analysis, project plan and post-implementation review.

These project steps, supplemented by guidance

• • from DIR, will ensure that projects are cost-effective, provide for similar controls, and produce results consistent with the initial project goals.
    
    STATUTORY CHANGES
    DIR PRODUCTS
    Texas Project Delivery Framework Forms
    
    Agency Products
    Agency business case, statewide impact analysis and project plan required for major IR projects
    
    DIR Oversight, Rules, Guidelines and Procedures
    • DIR must establish products listed above for use by state agencies requesting major information technology projects
    • DIR may establish guidelines related to the Texas Project Delivery Framework.
    DIR Analysis/Review
    DIR must analyze agency business cases and statewide impact analyses, submitted as part of their LARs, for redundancy with existing IR projects.
    
    Agency Submissions to DIR
    • Agencies must submit their business cases and statewide impact analyses (major IR projects) to DIR, SAO & LBB, simultaneously with their LARs
    • Agencies must file their project plan (major IR projects) with the QAT (DIR, LBB, SAO) and TBPC. If project plan has not been filed, an agency or the TBPC may not post a vendor solicitation
    • Agencies must provide their post-implementation review (major IR projects) to their agency ED, DIR and SAO
    Agency Procedures
    • Agency executive director, IRM, project manager and security manager must approve and sign framework documents.
    • Agency executive director must approve contract changes if monetary value changes more than 10% or there is a significant change in the completion date.
    DIR Collaboration
    • DIR must consult with state agencies, LBB, and SAO on Texas Project Delivery Framework guidelines and forms
    • DIR, together with LBB, TBPC, and CPA, must analyze current automated information systems of state agencies to determine how the systems may be combined to more effectively synchronize strategic planning, budgeting, and reporting of technology expenditures, assets, and projects (due 12/31/2005).