Senate Bill No. 363
(By Senators Kessler (Mr. President) and M. Hall,
By Request of the Executive)
[Introduced February 25, 2013; referred to the Committee
Government Organization; and then to the Committee on Finance .]
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto three
new sections, designated §5A-3-10d,
§5A-3-10e and §5A-3-60
; and to amend and reenact
relating generally to purchasing; authorizing
reverse auction pilot program for purchasing commodities;
defining "reverse auction"; permitting third-party vendors to
administer reverse auctions; affording the Director of the
Purchasing Division rule-making authority to implement reverse
auction pilot program; providing that reverse auction pilot
program expires on July 1, 2017; authorizing prequalification
agreements and the secondary bid process for the direct
procurement of commodities; defining "state",
"prequalification agreement", "prequalified vendor" and the "secondary bid process"; requiring approval of the Director of
the Purchasing Division for prequalification agreement and
secondary bid process procurements anticipated to cost in
excess of $50,000; affording the Director of the Purchasing
Division rule-making authority to establish procedures
regarding prequalification agreements, prequalification, the
secondary bid process and related matters; requiring certain
executive department officials to attend annual training on
purchasing procedures; and repealing the Department of Health
and Human Resources' Medicaid purchasing exemption.
Be it enacted by the Legislature of West Virginia:
the Code of West Virginia, 1931, as amended, be amended
by adding thereto three new sections, designated §5A-3-10d,
§5A-3-10e and §5A-3-60; and that §9-2-9b of said code be amended
and reenacted, all to read as follows:
CHAPTER 5A. DEPARTMENT OF ADMINISTRATION.
ARTICLE 3. PURCHASING DIVISION.
§5A-3-10d. Reverse auction pilot program.
(a) Notwithstanding any other provision of this code, the
director is hereby authorized to initiate a reverse auction pilot
program to procure commodities. The program may be utilized if the
director determines the use of a reverse auction would be fair, economical and in the best interests of the state: Provided, That
the director determines that the commodity to be procured:
(1) Is subject to low price volatility;
(2) Has specifications that are common and not complex;
(3) Varies little between suppliers;
(4) Is sourced primarily on price, with limited ancillary
(5) Requires little collaboration from suppliers; and
(6) Is sold by a large, competitive supply base.
(b) For purposes of this section, "reverse auction" means a
process by which bidders compete to provide commodities in an open
and interactive market, including, but not limited to, the
Internet. Reverse auction bids are opened and made public upon
receipt by the director, and then bidders are given the opportunity
to submit revised bids until the bidding process is complete. The
contract is awarded to the lowest responsible bidder.
(c) The director may contract with qualified,
industry-recognized third-party vendors to conduct reverse auctions
on behalf of the director.
(d) The director shall propose rules for legislative approval
in accordance with the provisions of article three, chapter
twenty-nine-a of this code to establish the procedures for conducting reverse auctions under the pilot program authorized by
this section. The rules shall include procedures for contracting
with qualified, industry-recognized third-party vendors.
(e) This section shall expire and be of no further force and
effect on and after July 1, 2017.
§5A-3-10e. Prequalification agreements; secondary bid process.
Notwithstanding any other provision of this code, the director
may permit the state and its spending units to procure commodities
directly and on a recurrent basis pursuant to a prequalification
agreement and a secondary bid process if the director determines
the process is fair, economical and in the best interests of the
(a) For purposes of this section, the term "state" includes
the State of West Virginia and its spending units.
(b) For purposes of this section, a "prequalification
agreement" is an agreement between the state and at least two
prequalified vendors authorizing the state to purchase a commodity
or commodities on a direct and recurrent basis through the
secondary bid process. All prequalification agreements shall be of
a specified duration and shall set forth the special requirements,
technical or otherwise, for the commodity or commodities the state
may wish to procure. Further, all prequalification agreements shall be approved by the director of the Purchasing Division.
(c) For purposes of this section, a "prequalified vendor" is
a "vendor," as that term is defined in section one, article one,
chapter five-a of this code, that enters into a prequalification
agreement after demonstrating it is responsible and qualified to
provide the commodity or commodities identified or to be identified
in the prequalification agreement.
(d) For purposes of this section, the "secondary bid process"
is the competitive bidding process whereby the prequalified vendors
that are parties to a prequalification agreement may submit sealed
bids to provide the commodity or commodities identified therein.
The state shall commence the secondary bid process by issuing an
order for the commodity or commodities identified in the
prequalification agreement, stating in the order the quantity of
the commodity or commodities to be procured in that particular
instance. The prequalified vendor that submits the lowest
secondary bid in response to the order shall be awarded the
procurement in that particular instance.
(e) For purposes of this section, all orders anticipated to
cost $50,000 or less may be issued by the state directly to the
prequalified vendors. However, orders anticipated to cost in
excess of $50,000 require advance approval from the director of the Purchasing Division. The state is not permitted to issue a
series of orders anticipated to cost $50,000 or less to circumvent
the requirements stated in this subsection.
(f) The director of the Purchasing Division shall propose
rules for legislative approval in accordance with the provisions of
article three, chapter twenty-nine-a of this code, to establish,
among other things, procedures by which prequalification agreements
are solicited and entered into; procedures by which interested
vendors may be prequalified; and procedures by which the secondary
bid processis conducted. The rules shall also address the
procedures the state and the Purchasing Division shall follow in
the event an order is anticipated to cost in excess of $50,000.
§5A-3-60. Annual purchasing training.
(a) All executive department secretaries, commissioners,
deputy commissioners, assistant commissioners, directors, deputy
directors, assistant directors, department heads, deputy department
heads, and assistant department heads are hereby required to take
one hour of training on purchasing procedures annually.
(b) The director of the Purchasing Division shall offer the
one-hour training contemplated by this section at least two times
per year and shall develop its substance in accordance with the
requirements of this article. The training shall be recorded by audio and visual means and shall be made available to the
individuals listed in subsection (a) of this section in the event
they are unable to attend the training in person.
(c) All individuals listed in subsection (a) shall certify, in
writing and on a form developed by the director of the Purchasing
Division, the date, time, location and manner in which they took
the training. Completed forms shall be returned to the director
and maintained in his or her office.
CHAPTER 9. HUMAN SERVICES.
ARTICLE 2. COMMISSIONER OF HUMAN SERVICES; POWERS; DUTIES AND
§9-2-9b. Contract procedure for the Medicaid program.
(a) The secretary is authorized to execute a contract to
implement professional health care, managed care, actuarial and
health care-related monitoring, quality review/utilization, claims
processing and independent professional consultant contracts for
the Medicaid program.
(b) The provisions of article three, chapter five-a of this
code do not apply to contracts set out in subsection (a) of this
section: Provided, That the secretary shall comply with the
requirements set forth in this section.
(c) The secretary shall develop procedures and requirements for competitive bidding and the awarding of contracts set out in
subsection (a) of this section, which procedures and requirements
shall include, but are not limited to, the following:
(1) Submitting public notice bids;
(2) The general terms and conditions for the contract;
(3) Awarding contracts;
(4) The description of the commodities and services required
for the contract, stated with sufficient clarity to assure that
there is a comprehensive understanding of the contract's scope and
(5) Contract management procedures which will ensure the
assessment of contractor performance and compliance with contract
requirements on a regular basis as appropriate for the specific
contract and no less frequently than on an annual basis for any
contract awarded pursuant to the provisions of this section.
(d) The awarding of the contract may be based on:
(1) Best value;
(2) Low bid;
(3) Sole source; or
(4) Any other basis the secretary chooses to award or reject
the bid: Provided, That the secretary shall document the basis of
any decision made pursuant to the provisions of this subsection.
(e) The secretary may employ the services of independent
professional consultants to assist in preparing solicitations or
for the evaluation of any responses to such solicitations:
Provided, That the independent professional consultant, or member
of his or her immediate family, or business with which he or she is
associated may not have any interest in the profits or benefits of
the contract for which he or she may participate in the preparation
of the solicitation or in the evaluation of the response.
(f) The secretary may terminate any contract with thirty days'
prior written notice.
(g) The provisions of subsections (b), (c), (d), (e) and (f)
of this section expire on and are of no further force and effect
after June 30, 2013: Provided, That the secretary may continue
with any procurement pursuant to the provisions of this section for
the competitive bidding and awarding of a contract in which a
public notice bid issued pursuant to this section occurred on or
before January 1, 2013: Provided, however, That the secretary
retains authority to review, approve and issue changes to contracts
issued under this section, and is responsible for challenges,
disputes, protests, and legal actions related to contracts issued
under this section.
NOTE: The purpose of this bill is to implement purchasing
reforms. Specifically, the bill provides the Purchasing Division
with alternative methods to purchase commodities, including the
reverse auction and prequalification agreement/secondary bid
processes; requires certain executive department officials to
attend annual training on purchasing procedures; and repeals the
Department of Health and Human Resources' Medicaid program
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
§5A-3-10d, §5A-3-10e and §5A-3-60 are new; therefore,
strike-throughs and underscoring have been omitted.