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F I S C A L I M P A C T R E P O R T

SPONSOR Sandoval

DATE TYPED 2/24/05

HB 369/aHBIC

SHORT TITLE Electronic Procurement Bid Submission

SB

ANALYST Geisler

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

Duplicates: SB 351

SOURCES OF INFORMATION

LFC Files

General Services Department (GSD)

Attorney General (AG)

Department of Finance and Administration (DFA)

Human Services Department (HSD)

SUMMARY

Synopsis of HBIC Amendments

The House Business and Industry Committee amendments to House Bill 369 clarify that elec-

tronic submission of bids and proposals shall be made to an email account or other secure elec-

tronic location.

Synopsis of Original Bill

House Bill 369 authorizes electronic submission of bids and proposals, and provides for a re-

verse auction bidding process in the Procurement Code. The bill specifically prohibits the use of

reverse auctions for the procurement of construction, construction services, construction mainte-

nance, or construction based on unit price as well as related construction materials.

This bill contains an emergency clause.

Significant Issues

Allowing electronic submission of bids and proposals would modernize the Procurement Code,

and save time and costs for government entities and for vendors. Reverse auction is a purchasing

strategy where bids are entered and visible electronically during a prescribed period. Bidders

can see their competitors’ bids, anonymously, in real time over the Internet. This is a purchasing

House Bill 369/aHBIC -- Page 2

option used in spend management, which is part of a major initiative during the past two years to

enhance competition and save money for government entities.

PERFORMANCE IMPLICATIONS

The State Purchasing Division is currently participating with a spend management contractor to

establish procedures that leverage the state’s purchasing power.

FISCAL IMPLICATIONS

Allowing electronic receipt of bids and proposals, where appropriate, would save money for

vendors and government entities (paper products and postage). Reverse auction is an increas-

ingly popular method to increase competition and get better prices for goods and non-

professional services.

ADMINISTRATIVE IMPLICATIONS

A GSD rule change and training for agencies and vendors will be required. There would be no

significant increase in workload for GSD or other entities under the Procurement Code.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB 351 and HB 369 are duplicate bills

TECHNICAL ISSUES

HSD suggests that HB 369 should be amended to provide a definition of reverse auction.

OTHER SUBSTANTIVE ISSUES

Concern over Emergency Clause

HSD notes that Section 13-1-95.1 requires the state purchasing agent to develop guidelines for

central purchasing offices to use electronic media including acceptance of sealed bids and com-

petitive sealed proposals. These guidelines are to provide for appropriate security to prevent

unauthorized access to electronically submitted bids and proposals prior to the date and time set

for opening of bids or receipt or proposals and to allow conversion of electronic forms into a me-

dium that permits inspection and copying. Since these “guidelines” will affect any state agency

that procures by invitations for bids and requests for proposals, these procedures should be set in

regulations. Regulations are required when any rule, regulation, order, standard or statement of

policy affects persons not members or employees of the issuing agency. (See NMSA 1978, Sec-

tion 14-4-2 and 1.24.1.7 NMAC.) The procedures must prevent unauthorized access to bids and

proposals prior to the time set for opening of bids or receipt of proposals.

The bill states that “it is necessary for the public peace, health and safety that this act take effect

immediately.” Since the “guidelines” for implementation of the electronic submission procedure

require the promulgation of regulations, the act should not take effect immediately, but take into

account the time required to promulgate the necessary regulations.

House Bill 369/aHBIC -- Page 3

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

Electronic submission of bids or proposals, and the reverse auction methodology could not be

used under the Procurement Code.

GGG/yr