CHAPTER 114 SENATE BILL No. 223 An  Act concerning state agency purchasing procedures; relating to the reverse auctioning
electronic procurement process; repealing the Kansas performance review act; amending
K.S.A. 75-3711a, 75-3711b, 75-3738, 75-3740 and 76-721 and K.S.A. 2002 Supp. 75-
3739 and 75-3739a and repealing the existing sections; also repealing K.S.A. 75-3711d,
75-7101, 75-7102, 75-7103, 75-7104, 75-7105 and 75-7107.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 75-3711a is hereby amended to read as follows: 75-
3711a. (a) Any state agency not otherwise specifically authorized by law
may, with the approval of the state finance council, receive grants of
money and funds appropriated under any federal act or from any other
source.

      (b) Subject to the provisions of K.S.A. 75-3711b and 75-3711d, and
amendments thereto, any state agency not otherwise specifically author-
ized by law may contract with and (1) receive or spend or transfer or (2)
receive and spend or transfer moneys from other state or federal agencies,
with the approval of the state finance council.

      (c) In addition to the findings required by subsection (c) of K.S.A.
75-3711c, and amendments thereto, functions under subsections (a) and
(b) of this section shall be exercised only after a finding by the governor
and a majority vote of the legislative members of the state finance council
that the program proposed will benefit the health or welfare of the people
of this state.

      (d) No authorization under this section shall undertake to give any
vested commitment that a future legislative enactment will provide any
additional state funds to the purpose of the proposed program.

      Sec.  2. K.S.A. 75-3711b is hereby amended to read as follows: 75-
3711b. (a) Nothing in K.S.A. 75-3711a, and amendments thereto, shall be
construed to require approval of the state finance council to allow any
state agency specifically authorized by any other statute to do so, to re-
ceive grants of money and funds appropriated under any federal act or
from any other source, or to contract with and (1) receive or spend or
transfer or (2) receive and spend or transfer moneys from any other state
or federal agencies.

      (b) Nothing in K.S.A. 75-3711a or in 75-3711d, and amendments
thereto, shall require approval of the state finance council for any contract
requiring expenditures or transfers of an amount equal to two hundred
fifty thousand dollars ($250,000) $250,000 or less between any state ed-
ucational institution, as defined in subsection (a) of K.S.A. 76-711, and
amendments thereto, and any other state agency, including another state
educational institution. Within thirty (30) 30 days after entering into each
such contract, the state agency required to expend or transfer funds under
the contract shall file a copy of the contract with the legislative research
department.

      Sec.  3. K.S.A. 75-3738 is hereby amended to read as follows: 75-
3738. The director of purchases shall:

      (a) Purchase, rent or otherwise provide for the furnishing of supplies,
materials, equipment or contractual services for all state agencies.

      (b) Have power to authorize any state agency to purchase directly
certain specified supplies, materials, equipment or contractual services
under prescribed conditions and procedures.

      (c) Prescribe the manner in which supplies, materials and equipment
shall be purchased, delivered and distributed.

      (d) Prescribe the time, manner and authentication of making requi-
sitions for supplies, materials, equipment and contractual services.

      (e) Establish standards of quality and quantity and develop standard
specifications in consultation with the several state agencies.

      (f) Prescribe the manner of making chemical and physical tests of
samples submitted with bids and samples of deliveries to determine com-
pliance with specifications and the manner in which state agencies shall
inspect all deliveries of supplies, materials and equipment.

      (g) Prescribe the amounts and form of, accounting for and disposition
of any deposit or bond required to be submitted with a bid or a contract
and the amount of any such deposit or bond to be given for the faithful
performance of a contract.

      (h) Require reports by state agencies of stocks of supplies, materials
and equipment on hand and prescribe the form of such reports and de-
liver copies of such reports to the director of purchases and the director
of accounts and reports.

      Sec.  4. K.S.A. 75-3740 is hereby amended to read as follows: 75-
3740. (a) Except as provided by K.S.A. 75-3740b, all contracts and pur-
chases made by or under the supervision of the director of purchases or
any state agency for which competitive bids are required shall be awarded
to the lowest responsible bidder, taking into consideration conformity
with the specifications, terms of delivery, and other conditions imposed
in the call for bids.

      (b) The director of purchases shall have power to decide as to the
lowest responsible bidder for all purchases, but if:

      (1) The dollar amount of the bid received from the lowest responsible
bidder from within the state is identical to the dollar amount of the bid
received from the lowest responsible bidder from without the state, the
contract shall be awarded to the bidder from within the state; and

      (2) in the case of bids for paper products specified in K.S.A. 75-
3740b, the dollar amounts of the bids received from two or more lowest
responsible bidders are identical, the contract shall be awarded to the
bidder whose bid is for those paper products containing the highest per-
centage of recyclable materials; and

      (3) in the case of bids for paper products specified in K.S.A. 75-
3740b, the dollar amounts of the bids received from two or more lowest
responsible bidders are identical, the contract shall be awarded to the
bidder whose bid is for those paper products containing the highest per-
centage of recycled materials.

      (c) Any or all bids may be rejected, and a bid shall be rejected if it
contains any material alteration or erasure made after the bid is opened.
The director of purchases may reject the bid of any bidder who is in
arrears on taxes due the state, who is not properly registered to collect
and remit taxes due the state or who has failed to perform satisfactorily
on a previous contract with the state. The secretary of revenue is hereby
authorized to exchange such information with the director of purchases
as is necessary to effectuate the preceding sentence notwithstanding any
other provision of law prohibiting disclosure of the contents of taxpayer
records or information. Prior to determining the lowest responsible bid-
der on contracts for construction of buildings or for major repairs or
improvements to buildings for state agencies, the director of purchases
shall consider: (1) The criteria and information developed by the secretary
of administration, with the advice of the state building advisory commis-
sion to rate contractors on the basis of their performance under similar
contracts with the state, local governmental entities and private entities,
in addition to other criteria and information available, and (2) the rec-
ommendations of the project architect, or, if there is no project architect,
the recommendations of the secretary of administration or the agency
architect for the project as provided in K.S.A. 75-1254, and amendments
thereto. In any case where competitive bids are required and where all
bids are rejected, new bids shall be called for as in the first instance,
unless otherwise expressly provided by law or the state agency elects not
to proceed with the procurement.

      (d) Before the awarding of any contract for construction of a building
or the making of repairs or improvements upon any building for a state
agency, the director of purchases shall receive written approval from the
state agency for which the building construction project has been ap-
proved, that the bids generally conform with the plans and specifications
prepared by the project architect, by the secretary of administration or
by the agency architect for the project, as the case may be, so as to avoid
error and mistake on the part of the contractors. In all cases where ma-
terial described in a contract can be obtained from any state institution,
the director of purchases shall exclude the same from the contract.

      (e) All bids with the names of the bidders and the amounts thereof,
together with all documents pertaining to the award of a contract, shall
be made a part of a file or record and retained by the director of purchases
for five years, unless reproduced as provided in K.S.A. 75-3737, and
amendments thereto, and shall be open to public inspection at all rea-
sonable times.

      (f) As used in this section and in K.S.A. 75-3741, and amendments
thereto, ``project architect'' shall have the meaning ascribed thereto in
K.S.A. 75-1251, and amendments thereto.

      Sec.  5. K.S.A. 76-721 is hereby amended to read as follows: 76-721.
The board of regents, or any state educational institution with the ap-
proval of the board of regents, may enter into contracts with any party or
parties including any agency of the United States or any state or any
subdivision of any state or with any person, partnership or corporation if
the purpose of such contract is related to the operation or function of
such board or institution. If such contract is with a corporation whose
operations are substantially controlled by the board or any state educa-
tional institution, such contract shall provide that the books and records
of such corporation shall be public records and shall require an annual
audit by an independent certified public accountant to be furnished to
the board of regents and filed with the state agency in charge of post
auditing state expenditures. All contracts of state educational institutions
shall be subject to the provisions of K.S.A. 75-3711b and 75-3711d, and
amendments thereto.

      Sec.  6. K.S.A. 2002 Supp. 75-3739 is hereby amended to read as
follows: 75-3739. In the manner as provided in this act and rules and
regulations established thereunder:

      (a) All contracts for construction and repairs, and all purchases of and
contracts for supplies, materials, equipment and contractual services to
be acquired for state agencies shall be based on competitive bids, except
that competitive bids need not be required in the following instances:

      (1) For contractual services, supplies, materials, or equipment when,
in the judgment of the director of purchases, no competition exists;

      (2) when, in the judgment of the director of purchases, chemicals
and other material or equipment for use in laboratories or experimental
studies by state agencies are best purchased without competition, or
where rates are fixed by law or ordinance;

      (3) when, in the judgment of the director of purchases, an agency
emergency requires immediate delivery of supplies, materials or equip-
ment, or immediate performance of services;

      (4) when any statute authorizes another procedure or provides an
exemption from the provisions of this section;

      (5) when compatibility with existing contractual services, supplies,
materials or equipment is the overriding consideration;

      (6) when a used item becomes available and is subject to immediate
sale; or

      (7) when, in the judgment of the director of purchases and the head
of the acquiring state agency, not seeking competitive bids is in the best
interest of the state.

      When the director of purchases approves a purchase of or contract for
supplies, materials, equipment, or contractual services in any instance
specified in this subsection, the director may delegate authority to make
the purchase or enter the contract under conditions and procedures pre-
scribed by the director. Except for purchases or contracts entered into
without a competitive bid under subsection (a)(3), (a)(4), (a)(6) or sub-
section (h), no purchase or contract entered into without a competitive
bid for an amount in excess of $100,000 shall be entered into by the head
of any state agency or approved by the director of purchases unless the
director of purchases first posts an on-line notice of the proposed purchase
or contract at least seven days before the purchase or contract is awarded.
The director of purchases shall provide notice thereof to members of the
legislature at the beginning of each calendar year that such information
will be posted and the director of the division of purchases shall provide
the uniform resource locator (URL) and the number of times such infor-
mation shall be available. In the event a written protest of the awarding
of such a contract occurs during the seven-day notice period, the director
of purchases shall request from the protestor the contact information,
including name and mailing address, of the person or entity that has
expressed an interest in supplying the goods or services and provide a
copy of the specification to the person or entity that has expressed an
interest in supplying the goods or services and verify that such person or
entity is interested and capable of supplying such goods or services.

      Upon satisfaction of the director of purchases regarding the validity of
the protest and the existence of competition, the director of purchases
shall proceed with a competitive procurement. A competitive procurement
shall not be required when, in the judgment of the director of purchases,
the validity of the protest cannot be determined or competition for such
goods or services cannot be verified by the director of purchases.

      The director of purchases shall prepare a detailed report at least once
in each calendar quarter of all contracts over $5,000 entered into without
competitive bids under subsection (a)(1), (2), (3), (5), (6) or (7). The
director shall submit the report to the legislative coordinating council, the
chairperson of the committee on ways and means of the senate, and the
chairperson of the committee on appropriations of the house of repre-
sentatives and the chairperson of the Kansas performance review board.

      (b)  (1) If the amount of the purchase is estimated to exceed $50,000,
sealed bids shall be solicited by notice published once in the Kansas reg-
ister not less than 10 days before the date stated in the notice for the
opening of the bids. The director of purchases may waive this publication
of notice requirement when the director determines that a more timely
procurement is in the best interest of the state. The director of purchases
also may designate a trade journal for the publication. The director of
purchases also shall solicit such bids by sending notices by mail to pro-
spective bidders and by posting the notice on a public bulletin board for
at least 10 business days before the date stated in the notice for the
opening of the bids unless otherwise provided by law. All bids shall be
sealed when received and shall be opened in public at the hour stated in
the notice.

      (2) The director of purchases shall prepare a detailed report at least
once in each calendar quarter of all instances in which the director waived
publication of the notice of bid solicitations in the Kansas register as
provided in this subsection. The director shall submit the report to the
legislative coordinating council, the chairperson of the committee on ways
and means of the senate, and the chairperson of the committee on ap-
propriations of the house of representatives and the chairperson of the
Kansas performance review board.

      (c) All purchases estimated to exceed approximately $25,000 but not
more than $50,000, shall be made after receipt of sealed bids following
at least three days' notice posted on a public bulletin board.

      (d) All purchases estimated to be more than $5,000, but less than
$25,000, may be made after the receipt of three or more bid solicitations
by telephone, telephone facsimile or sealed bid, following at least three
days' notice posted on a public bulletin board. Such bids shall be recorded
as provided in subsection (e) of K.S.A. 75-3740 and amendments thereto.
Any purchase that is estimated to be less than $5,000 may be purchased
under conditions and procedures prescribed by the director of purchases.
Purchases made in compliance with such conditions and procedures shall
be exempt from other provisions of this section.

      (e) With the approval of the secretary of administration, the director
of purchases may delegate authority to any state agency to make pur-
chases of less than $25,000 under certain prescribed conditions and pro-
cedures. The director of purchases shall prepare a report at least once in
each calendar quarter of all current and existing delegations of authority
to state agencies as provided in this subsection. The director shall submit
the report to the legislative coordinating council, the chairperson of the
committee on ways and means of the senate, and the chairperson of the
committee on appropriations of the house of representatives and the
chairperson of the Kansas performance review board.

      (f) Subject to the provisions of subsection (e), contracts and purchases
shall be based on specifications approved by the director of purchases.
When deemed applicable and feasible by the director of purchases, such
specifications shall include either energy efficiency standards or appro-
priate life cycle cost formulas, or both, for all supplies, materials, equip-
ment and contractual services to be purchased by the state. The director
of purchases may reject a contract or purchase on the basis that a product
is manufactured or assembled outside the United States. No such speci-
fications shall be fixed in a manner to effectively exclude any responsible
bidder offering comparable supplies, materials, equipment or contractual
services.

      (g) Notwithstanding anything herein to the contrary, all contracts
with independent construction concerns for the construction, improve-
ment, reconstruction and maintenance of the state highway system and
the acquisition of rights-of-way for state highway purposes shall be ad-
vertised and let as now or hereafter provided by law.

      (h) The director of purchases may authorize state agencies to contract
for services and materials with other state agencies, or with federal agen-
cies, political subdivisions of Kansas, agencies of other states or subdivi-
sions thereof, or private nonprofit educational institutions, without com-
petitive bids.

      (i) The director of purchases may participate in, sponsor, conduct, or
administer a cooperative purchasing agreement or consortium for pur-
chases of supplies, materials, equipment, and contractual services with
federal agencies or agencies of other states or local units of government.
Cooperative purchasing agreements entered into under this subsection
shall not be subject to K.S.A. 75-3739 through 75-3740a, and amend-
ments thereto. Nothing in this subsection shall allow federal grant moneys
to be handled differently from any other moneys of the state unless the
requirements of the applicable federal grant specifically require such fed-
eral moneys to be handled differently.

      (j) The director of purchases may delegate authority to any state
agency to make purchases under certain prescribed conditions and pro-
cedures when the acquisition is funded, in whole or in part, from a grant.
Except as otherwise provided in subsection (k) of this section, purchases
made in compliance with such conditions and procedures shall be exempt
from other provisions of this section. As used in this subsection the term
``grant'' means a disbursement made from federal or private funds, or a
combination of these sources, to a state agency. Nothing in this subsection
shall allow federal grant moneys to be handled differently from any other
moneys of the state unless the requirements of the applicable federal grant
specifically require such federal moneys to be handled differently.

      (k) The director of purchases shall prepare a detailed report at least
once each calendar quarter of all contracts over $5,000 for services, sup-
plies, materials or equipment entered into pursuant to subsection (h), (i)
or (j) and submit it to the legislative coordinating council, the chairperson
of the committee on ways and means of the senate, and the chairperson
of the committee on appropriations of the house of representatives and
the chairperson of the Kansas performance review board.

      (l) Except as otherwise specifically provided by law, no state agency
shall enter into any lease of real property without the prior approval of
the secretary of administration. A state agency shall submit to the sec-
retary of administration such information relating to any proposed lease
of real property as the secretary may require. The secretary of adminis-
tration shall either approve, modify and approve or reject any such pro-
posed lease.

      (m) The director of purchases shall require all bidders on state con-
tracts to disclose all substantial interests held by the bidder in the state.

      (n) As used in article 37 of chapter 75 of the Kansas Statutes Anno-
tated, and amendments thereto, and other statutory provisions concerning
state procurement, ``sealed bids,'' ``bulletin boards'' and ``mail'' shall in-
clude electronic bids, electronic bulletin boards and electronic mail when
such items are utilized in accordance with procedures prescribed by the
director of purchases.

      Sec.  7. K.S.A. 2002 Supp. 75-3739a is hereby amended to read as
follows: 75-3739a. (a) Subject to the provisions of K.S.A. 75-3317 through
75-3322, and amendments thereto the director of purchases shall conduct
a pilot study utilizing have power to utilize the reverse auctioning elec-
tronic procurement process for the purchase of selected goods or mate-
rials for one or more state agencies in accordance with this section. The
director of purchases shall adopt policies and procedures for such pilot
project reverse auctioning electronic procurements process in accordance
with and subject to the provisions of this section.

      (b) The provisions of K.S.A. 75-430, and amendments thereto, relat-
ing to advertisements in the Kansas register and the provisions of K.S.A.
75-3739 et seq., and amendments thereto, regarding procedures for
sealed bidding and the opening of bids shall not apply to bids or purchases
conducted under the pilot project utilizing the reverse auctioning elec-
tronic procurement process in accordance with this section. All bids sub-
mitted under the pilot project utilizing the reverse auctioning electronic
procurement process in accordance with this section shall be subject to
the open records act.

      (c) Reverse auctioning shall not be used for the acquisition of any
services for construction projects or for the acquisition of any other serv-
ices.

      (d) On or before January 15, 2003, and on or before January 15, 2004,
the director of purchases shall submit a written report to the secretary of
the standing committee on commerce of the senate and the standing
committee on e-government of the house of representatives on the activ-
ities and results of the pilot project utilizing the reverse auctioning elec-
tronic procurement process under this section and make recommenda-
tions whether or not the authority to use such procurement process
should be continued beyond June 30, 2004. The director of purchases
also shall notify each remaining member of the legislature of the availa-
bility of copies of such report. The report shall be made by the director
by publishing such report on the internet and by notifying each member
that the report is available and providing, as part of such notice, the
uniform resource locator (URL) at which such report is available.

      (e) As used in this section, ``reverse auctioning'' means a procurement
process following procedures approved by the director of purchases
where bidders are invited to bid on specific goods through real-time elec-
tronic bidding, with the award being made to the lowest responsible and
responsive bidder; during the bidding process, bidders' prices are re-
vealed and bidders shall have the opportunity to modify their bid prices
for the duration of the time period established for the bid opening.

      (f) The provisions of this section shall expire June 30, 2004.

 Sec.  8. K.S.A. 75-3711a, 75-3711b, 75-3711d, 75-3738, 75-3740, 75-
7101, 75-7102, 75-7103, 75-7104, 75-7105, 75-7107 and 76-721 and
K.S.A. 2002 Supp. 75-3739 and 75-3739a are hereby repealed.

 Sec.  9. This act shall take effect and be in force from and after its
publication in the statute book.

Approved April 21, 2003.
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