Relating to the review and audit of certain state agency operations.

Contracts

• State Vendors: If you provide services to the state, your contract is now subject to Section 6(b)(3) efficiency reviews regarding "outsourcing and consolidation." Be prepared to defend your pricing and utility against potential consolidation attempts.
• Private MSAs: Review Force Majeure and delay clauses in downstream contracts. If an agency undergoes restructuring following an audit, permit processing delays are likely. Ensure your contracts classify "administrative regulatory restructuring" as an excusable delay.

Hiring/Training

• Compliance Officers: Update job descriptions to include "Regulatory Monitoring." Staff must actively track the State Auditor’s schedule and the Sunset Commission’s mid-cycle review dates (6 years post-Sunset).
• Conflict of Interest: Section 5 mandates a review of agency conflict of interest enforcement. Review your internal policies regarding the employment of former agency staff or board members to ensure they exceed state standards, as scrutiny will tighten.

Reporting & Record-Keeping

• The "Friction Log": Implement a mandatory internal log to document every instance where a state rule causes delay, redundancy, or unnecessary cost. You will need this specific data to participate in the mandated "Solicitation of Input." General complaints will be ignored; documented inefficiencies will drive rule repeals.
• Redundancy Tracking: If you report identical data to multiple agencies (e.g., TCEQ and RRC), document these overlaps now to submit as evidence for consolidation during the Efficiency Audit.

Fees & Costs

• Budget Impact: Section 327.002(d) requires agencies to pay for these audits, yet no new funds were appropriated. Business logic dictates a licensing fee increase in the upcoming fiscal cycles to achieve cost recovery.
• Action: Budget for a potential 5-10% increase in licensing and certification renewal fees starting FY2026.