State procurement changes advanced

Lawmakers gave first-round approval Jan. 22 to a bill that would make a number of changes to the process the state uses to obtain goods and services.

Sen. John Arch of La Vista, sponsor of LB461, said the bill resulted from a study of the state Department of Administrative Services’ procurement processes that was required under a bill passed by the Legislature in 2022. The study was authorized in the wake of the state’s failed contract for child welfare services with St. Francis Ministries.

That contract, which was terminated early by the state after the agency proved unable to deliver on the contracted services, was underbid by 40%, Arch said.

“Had there been the ability to subjectively analyze this bid based on realism, the extremely low bid would have been a huge red flag,” he said.

In addition, Arch said, two other recent high-profile state contracts resulted in large expenditures for software that was never delivered. LB461 could help avoid these types of “flawed” contracts that have cost the state millions in taxpayer dollars, he said, by fully implementing the study’s suggestions for improving the state’s procurement process.

“Annually, the state oversees hundreds of contracts worth billions of dollars to carry out our government functions to serve Nebraska,” Arch said. “It’s been over 20 years since we’ve updated our procurement procedures.”

Among other changes, the bill would:
• detail the form of bid solicitations;
• revise the factors to be considered when evaluating bids;
• provide guidance for evaluating what are “realistic” and “reasonable” prices;
• prohibit certain provisions in procurement contracts;
• redefine which contracts are subject to DAS administration;
• modify when proof of need analysis would be required; and
• require that the requesting agency provide a detailed requisition for services or personal property to be contracted.

Senators voted 41-0 to adopt a Government, Military and Veterans Affairs Committee amendment that would remove a resident bidder preference and make other technical changes to the bill.

Sen. Lynne Walz of Fremont called the proposal the “single most important piece of legislation” that lawmakers would consider this year. Speaking in support of LB461, she said the St. Francis situation was something that senators need to make sure never happens again.

“This was a terrible … lesson learned about how we as a state would allow the cost of services to come before the care of our children,” Walz said.

North Platte Sen. Mike Jacobson also spoke in support of the bill and the amendment. LB461 would put the state’s focus on how tax dollars are spent, he said, and would direct DAS to find entities that can provide services most efficiently.

“It’s not always about the lowest bidder,” Jacobson said. “It’s about who can deliver the job, who can do the job and do we need the job done?”

Following adoption of the committee amendment, LB461 advanced to select file on a 45-0 vote.