(a) Before July 1 of each year, the state auditor shall assign one of the following ratings to each of the 25 largest state agencies in that state fiscal year as determined by the Legislative Budget Board:
(1) additional monitoring warranted;
(2) no additional monitoring warranted; or
(3) reduced monitoring warranted.
(b) In assigning a rating to a state agency as required under Subsection (a), the state auditor shall consider the following information, as applicable:
(1) results of an audit of:
(A) the agency conducted by the state auditor under Chapter 321; or
(B) the agency’s contracts and contract processes and controls conducted by the agency’s internal auditors or by the state auditor;
(2) results of a purchase audit conducted by the comptroller under § 2155.325;
(3) information reported by the quality assurance team established under § 2054.158 relating to the agency’s major information resources projects;
(4) information from the Contract Advisory Team established under Subchapter C, Chapter 2262, relating to reviews of the agency’s contracts and contract solicitation documents;
(5) information relating to agency findings from a review of the agency conducted by:
(A) the Legislative Budget Board; and
(B) the Sunset Advisory Commission under Chapter 325 (Texas Sunset Act);
(6) the agency’s self-reported improvements to the agency’s contracting processes; and
(7) any additional internal analysis provided by the agency.

(c) On or before September 1 of each year, the state auditor shall submit to the comptroller and the Department of Information Resources a report that:
(1) lists each state agency that was assigned a rating under Subsection (a); and
(2) for a state agency that was assigned a rating under Subsection (a)(1) or (3), specifies that additional or reduced monitoring, as applicable, is required during one or more of the following periods:
(A) contract solicitation development;
(B) contract formation and award; or
(C) contract management and termination.
(d) In consultation with the Contract Advisory Team established under Subchapter C, Chapter 2262, the comptroller by rule shall develop guidelines for the additional or reduced monitoring of a state agency during the periods described by Subsections (c)(2)(A), (B), and (C) for a contract that falls under the monetary thresholds for review or monitoring by the Contract Advisory Team.
(e) In consultation with the quality assurance team established under § 2054.158, the Department of Information Resources by rule shall develop guidelines for the additional or reduced monitoring of a state agency during the periods described by Subsections (c)(2)(A), (B), and (C) for a contract that falls under the monetary thresholds for review or monitoring by the quality assurance team.
(f) The state auditor may request any information necessary from a state agency, the Contract Advisory Team, or the quality assurance team to comply with the requirements of this section, and the agency or team, as applicable, shall provide the requested information.
(g) The state auditor, comptroller, and Department of Information Resources shall share information as necessary to fulfill their respective duties under this section.
(h) The state auditor’s duties under this section must be included in the audit plan and approved by the legislative audit committee under § 321.013.