COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3707-01
Bill No.: Perfected SB 1028
Subject: Administration, Office of
Type: Original
Date: February 10, 2004
FISCAL SUMMARY
| FUND AFFECTED | FY 2004 | FY 2005 | FY 2006 |
| General Revenue Fund | $0 | Unknown | Unknown |
| Total Estimated
Net Effect on General Revenue Fund |
$0 | Unknown | Unknown |
| FUND AFFECTED | FY 2004 | FY 2005 | FY 2006 |
| Various state funds | $0 | Unknown | Unknown |
| Total Estimated
Net Effect on Other State Funds |
$0 | Unknown | Unknown |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 8 pages.
| FUND AFFECTED | FY 2004 | FY 2005 | FY 2006 |
| Various federal funds | $0 | Unknown | Unknown |
| Total Estimated
Net Effect on All Federal Funds |
$0 | Unknown | Unknown |
| FUND AFFECTED | FY 2004 | FY 2005 | FY 2006 |
| Local Government | $0 | $0 | $0 |
ASSUMPTION
Officials from the Department of Public Safety, Office of the Director, Division of Fire Safety, Missouri Veterans Commission, Capitol Police, State Highway Patrol, State Emergency Management Agency, the Department of Elementary and Secondary Education, the Department of Social Services, the Department of Economic Development, Public Service Commission, the Department of Health and Senior Services, the Department of Insurance, the Department of Labor and Industrial Relations, the Department of Revenue, the Department of Natural Resources, the Department of Agriculture, the Department of Mental Health, and the Department of Higher Education assume this proposal would have no financial impact on their organizations.
Officials from the Missouri Department of Conservation assume this proposal could result in some undetermined savings to the state and to the Conservation Commission Fund depending on how the reverse auctions are conducted.
ASSUMPTION (continued)
Officials from the Office of Administration, Division of Purchasing and Materials Management, (DPMM) assume this proposal would authorize DPMM to utilize a reverse auction procurement process when it is in the best interest of the state. DPMM assumes it would help to expedite the bid award process and provide an opportunity to obtain costs savings on behalf of the state. DPMM assumes that additional software and staff training would be necessary to operate the reverse auction system. However, DPMM does not view this as a significant effort. Long -range implications for the reverse auction process would include cost savings and expediting the bid award process.
The change in the competitive bid threshold will not have a direct impact on DPMM since the authority to procure items less than twenty-five thousand dollars has been delegated to the state agencies.
Long-range implications for the change in the competitive bid threshold is an expedited small purchases process for state agencies since they will not have to solicit bids for purchases under $ 5 thousand.
This legislation would have a fiscal impact to the DPMM. The usual cost methodology of reverse auction can be calculated in two ways. The first method is a flat fee based on the purchase order amount. The second method is to apply a predetermined percentage charge based on the purchase order amount. Neither option would be used unless there is a significant cost savings to the agency.
Oversight assumes that the proposal could result in long-term savings to the state through expedited purchasing procedures and use of a reverse auction process where it results in lower net cost to the state. Oversight assumes that DPMM would use this authority when it would be advantageous to the state, and that significant savings might be achieved over the long term. Oversight also assumes there would be some transaction cost involved in the reverse auction process. Oversight has shown unknown savings net of transaction costs beginning in FY 2006 in this fiscal note.
In response to a similar proposal in the prior session, officials from the Office of the Secretary of State assume this bill would require the Division of Purchasing and Materials Management to promulgate rules to enact this legislation. Based on experience with other divisions, the rules, regulations, and forms issued by the Division of Purchasing and Materials Management could require as many as 8 pages in the Code of State Regulations and half again as many pages in the Missouri Register because cost statements, fiscal notes and the like are not repeated in Code. These costs are estimated. The estimated cost of a page in the Register is $23 and the estimated cost of a page in the Code is $27. The actual cost could be more or less than the numbers given. The impact of the legislation in future years is unknown and depends upon the frequency and length of rules filed, amended, rescinded or withdrawn. ((8x$27)+(12x$23)=$492)
ASSUMPTION (continued)
Oversight assumes the SOS could absorb the costs of printing and distributing regulations related to this proposal. If multiple bills pass which require the printing and distribution of regulations at substantial costs, the SOS could request funding through the appropriation process. Any decisions to raise fees to defray costs would likely be made in subsequent fiscal years.
Officials from the Department of Corrections did not respond to our request for information on this proposal.
| FISCAL IMPACT - State Government | FY 2004
(10 Mo.) |
FY 2005 | FY 2006 |
| GENERAL REVENUE FUND | |||
| Revenue - DPMM | |||
| Reverse auction charges to agencies | $0 | Unknown | Unknown |
| Cost Reduction - DPMM | |||
| Administrative cost | $0 | Unknown | Unknown |
| Cost Reduction - state agencies | |||
| Administrative cost | $0 | Unknown | Unknown |
| Cost reduction - state agencies | |||
| Service and Commodity cost | $0 | Unknown | Unknown |
| Cost - agencies | |||
| Reverse auction charges | $0 | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON GENERAL REVENUE FUND |
$0 |
Unknown | Unknown |
| FISCAL IMPACT - State Government | FY 2004
(10 Mo.) |
FY 2005 | FY 2006 |
| OTHER STATE FUNDS | |||
| Revenue - DPMM | |||
| Reverse auction charges to agencies | $0 | Unknown | Unknown |
| Cost Reduction - DPMM | |||
| Administrative cost | $0 | Unknown | Unknown |
| Cost Reduction - state agencies | |||
| Administrative cost | $0 | Unknown | Unknown |
| Cost reduction - state agencies | |||
| Service and Commodity cost | $0 | Unknown | Unknown |
| Cost - agencies | |||
| Reverse auction charges | $0 | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON OTHER STATE FUNDS |
$0 |
Unknown | Unknown |
| FISCAL IMPACT - State Government | FY 2004
(10 Mo.) |
FY 2005 | FY 2006 |
| FEDERAL FUNDS | |||
| Revenue - DPMM | |||
| Reverse auction charges to agencies | $0 | Unknown | Unknown |
| Cost Reduction - DPMM | |||
| Administrative cost | $0 | Unknown | Unknown |
| Cost Reduction - state agencies | |||
| Administrative cost | $0 | Unknown | Unknown |
| Cost reduction - state agencies | |||
| Service and Commodity cost | $0 | Unknown | Unknown |
| Cost - agencies | |||
| Reverse auction charges | $0 | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON FEDERAL FUNDS |
$0 |
Unknown | Unknown |
| FISCAL IMPACT - Local Government | FY 2004
(10 Mo.) |
FY 2005 | FY 2006 |
| $0 | $0 | $0 |
FISCAL IMPACT - Small Business
This proposal could affect small businesses by expanding their bidding opportunities and by encouraging more and wider competition for state purchases.
DESCRIPTION
This proposal would modify state procurement laws. Upon passage of the proposal, the commissioner of administration could authorize the use of the reverse auction procurement method to procure goods or nonprofessional services if the commissioner believes that practice would result in savings to the state. The office of administration would promulgate rules regarding the handling of the reverse auction process. The proposal would also eliminate certain restrictions on recycled content and bidding practices.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Agriculture
Department of Conservation
Department of Economic Development
Public Service Commission
Department of Elementary and Secondary Education
Department of Health and Senior Services
Department of Higher Education
Department of Insurance
Department of Labor and Industrial Relations
Department of Mental Health
Department of Natural Resources
Department of Public Safety
Office of the Director
Division of Fire Safety
State Highway Patrol
Missouri Veterans Commission
Capitol Police
State Emergency Management Agency
State Highway Patrol
Department of Revenue
Department of Social Services
NOT RESPONDING
Department of Corrections
Mickey Wilson, CPA
Director
February 10, 2004