Indiana House OKs bill to increase scrutiny around state agency contracts

Yahoo

09-04-2025

Rep. Matt Lehman, R-Berne (Monroe Bush for Indiana Capital Chronicle)
'Financial responsibility,' 'accountability' and 'transparency' for state government are at the heart of a Republican priority bill that inched closer to the governor's desk Tuesday.
Sen. Scott Baldwin's Senate Bill 5 advanced from the House in a bipartisan 91-1 vote. Only Rep. Ryan Dvorak, D-South Bend, was opposed.
Baked in the 21-page measure are new rules for contacts awarded by state agencies — including a ban on non-public, no-bid deals — and steeper expectations for vendors paid with taxpayer dollars.It also mandates 'unfilled' government positions be eliminated, and requires state offices to more closely monitor and publicly report on spending, as well as in-flow and out-flow of federal funds.
The measure will need a final signoff from the Senate before it can be sent to Gov. Mike Braun.
'I think this is a good first step (for lawmakers) to sit at the table, and for us to review those things that we're looking for when it comes to … fiscal responsibility, accountability and transparency,' said Rep. Matt Lehman, R-Berne, who sponsored the bill in the House.
The bill is part of a Senate GOP priority bundle and has been coined a 'government efficiency' measure by the majority caucus.
The House-passed plan is 'paired down' from the Senate's draft, Lehman said. Amendments on the chamber floor and in the Ways and Means Committee removed several earlier provisions in an effort to 'refine and streamline' the overall bill, and to avoid unnecessary requirements or 'inhibitions' on vendor negotiations.
But at its core, the latest draft of the proposal is the same: increase accountability around state contracts.
Except agreements 'solely entered into for licensed legal counsel' by executive branch offices, state agencies would no longer be allowed to a grant contracts without a request for proposals (RFP) that is posted on the department's website for at least 30 days prior to the deal.
The Indiana Capital Chronicle revealed late last year, for example, that multiple no-bid contracts have been awarded by the Secretary of State's Office.
Secretary of state spending includes millions in no-bid contracts
Reporting showed roughly $4 million in IT-related contract dollars were awarded by the office without RFPs. The agreements do not appear on the Indiana Transparency Portal ​​where such records are typically housed and made public, but a list of contracts has since been published on the secretary of state's website.
Under the bill, however, all Indiana agencies, statewide offices, local governments, nonprofit organizations and state educational institutions would be required to input contracts into the state's transparency portal within 30 days of signature. Quarterly reports must additionally be turned in to the state budget committee detailing all of the agency's active contracts.
State agencies would further be required to undergo budget panel review when making 'significant' contract amendments and before applying for new federal funds that require an Indiana match. To better track federal dollars awarded to the state, separate quarterly progress reports to budget regulators would be mandated, too.
State contracts of $500,000 or more would have to include 'clearly defined scopes and success metrics' for vendors, along with penalties if expectations and deadlines are not met. Only contracts entered into by the Indiana Department of Transportation for work on highways, roads and bridges would be exempt.
Another provision lets state agencies use artificial intelligence software to prepare required disclosure and projections that must be submitted to state budget regulators.
I think this is a good first step (for lawmakers) to sit at the table, and for us to review those things that we're looking for when it comes to … fiscal responsibility, accountability and transparency.
– Rep. Matt Lehman, R-Berne
As far as office staffing, the bill requires that permanent, full-time positions that have been vacant for 90 days or more must be 'reauthorized' — meaning changes are made to the authority, duties or responsibilities in the job listing — or eliminated altogether.
And although Baldwin, the bill author from Noblesville, earlier said his goal was to create a 'no-bid list' of companies that are temporarily disqualified from bidding on any more state contracts, such language has since been deleted.
In committee discussions, Lehman maintained 'that there are already methodologies' in place for agencies to 'sanction or disqualify bad contractors.'
'So, we're not going to do something statutorily that they can currently do administratively,' he explained.
The bill breezed through the House chamber without any floor discussion on Tuesday.
But Dvorak — the only representative to ultimately vote unfavorably — expressed concerns the day prior about exemptions for legal counsel contracts.
'When it comes to legal services, that has been a growing percentage of many departments' budgets over the last several years — to the extent that there's often millions of dollars spent on outside legal contracts,' Dvorak said. 'I'm sure much of that is for very legitimate purposes. The fact remains, though, that we as legislators need to be aware of what those contracts are, why our state agencies are engaging outside counsel, what that counsel is actually doing, and how much they're charging. Taxpayers deserve that information, as well.'
Dvorak said he was especially worried that executive offices could use the carveout to hide critical agreement details and taxpayer dollars spent on attorney contracts.
'I think there's a way you can exempt the information that might be confidential or covered as work product or attorney-client privilege in the transparency portal, while still having the guts of the contract be public. And that's the important part,' he continued. 'There's potential for insider dealings here — backdoor deals. I just think you're creating the opportunity for bad dealings to happen when you make these things exempt from public transparency.'
Lehman clarified, though, that while specifics within counsel agreements 'would not necessarily be disclosed, the contract itself would be.' He held that only parts of the contract 'that go into the details of the agreement between the attorney and their clients' would be shielded.
'I think the concern here is, can I hide an amount in a contract? The answer is no. … That's not the intent of this. The intent of this is to make sure we're protecting client-council privileges,' Lehman said. 'Once that contract is adjudicated, I think the amount that you spent — because we have to pay the bill — the amount that was spent will be disclosed.'
Democrats raised other questions about which provisions, if any, would apply to quasi-government agencies like the Commission for Higher Education, Indiana Economic Development Corp. and Indiana Finance Authority.
Some would qualify, Lehman said, but because 'a lot' of quasi-agencies contracts require non-disclosure agreements or similar requirements in their contracts, 'I think those would be out because of that.'
'The issue we get into … with some of the quasi-governmentals is, where do you stop?' Lehman added. 'I think on this bill, overall, we're trying to go down a path for just (more) integrity and transparency, and we don't know what we don't know. And I think we're going to have the next 10 months to look at how this works, and I think we'll probably be back next year with some other things that may need to be addressed.'
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