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HB 5663

State management: purchasing; information technology projects; establish maximum time period and cost limit for. Amends secs. 261e & 451a of 1984 PA 431 (MCL 18.1261e & 18.1451a).

2025-2026 Regular Session Introduced by Steve Frisbie and 2 co-sponsors

Imposes caps on state IT projects: max 36 months duration and $10 million cost, plus required cost-tracking, oversight, and reporting for IT expenditures.

placed on third reading
#statemanagement:purchasing
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Bill Summary · HB 5663

Summary of Bill HB 5663 (2025-2026) – Michigan

Jurisdiction: Michigan | Topic: State management; purchasing; information technology projects; establish maximum time period and cost limit

Introduced by: Reps. Maddock, Frisbie, and Kuhn | Committee: Appropriations
Date Introduced: March 3, 2026

1) Purpose and Intent

  • The bill amends the Management and Budget Act (1984 PA 431) to impose formal caps on state information technology (IT) projects.
  • Specifically, it sets a maximum duration and a maximum budget for IT projects, with the aim of improving cost accountability, oversight, and alignment with industry best practices.

2) Key Provisions

A. Information Technology Projects – Time and Cost Limits

  • For an IT project exceeding $250,000, DTMB (Department of Technology, Management, and Budget) must:
    • Establish and document a cost accounting and monitoring process aligned with industry best practices.
    • Include:
    • Identification and monitoring of cost overruns.
    • Tracking change orders and projects that span more than one fiscal year.
    • Clear communication of process and roles to involved parties.
    • Accurate tracking of all IT project spending within the IT Fund (including contractors, state employees, hardware, software, and maintenance).
    • Requirement for each state agency to report spending outside the IT Fund to ensure accurate tracking.
    • Reporting on system-related contracts or projects with specific appropriations to ensure funds are used only for the development/maintenance of the designated system.
  • Caps:
    • Maximum project duration: 36 months.
    • Maximum project cost: $10,000,000.

B. Work Projects – Appropriation Continuance and Lapse

  • Except as otherwise provided, a work project appropriation remains available until completion or 48 months after the last day of the fiscal year in which the appropriation was made, whichever comes first. Any remaining balance lapses to the originating state fund.
  • Definitions and criteria for “work project” (as amended by the bill):
    • For a work project to be designated, it must be for a specific purpose, include a specific plan to accomplish the objective, have an estimated completion cost, and have an estimated completion date.
  • Director's authority and oversight:
    • The director may issue directives to lapse existing work project accounts and must notify the Senate and House Appropriations Committees and fiscal agencies. Disapproval within 30 days negates the directive.
    • Not later than 45 days after the fiscal year’s conclusion, the director must notify committees of proposed work project designations, with a 30-day window for disapproval.
    • Not later than 120 days after fiscal year-end, the director must deliver a comprehensive report summarizing current work project accounts, including:
    • List of all work project accounts
    • Balances in each account
    • Amounts that lapsed from previously designated work projects
    • Details of where lapses occurred

3) Who/What Is Affected

  • State IT projects (and the DTMB) are directly affected by the new cost and duration caps and required governance processes.
  • State agencies that execute IT projects or incur IT-related expenditures must report spending outside the IT Fund and participate in the enhanced cost-tracking regime.
  • The legislature (Senate and House Appropriations Committees) and fiscal agencies receive new reporting, oversight, and potential lapsing notifications.

4) Procedural and Timeline Aspects

  • Effective timing: The bill as introduced sets process requirements “Not later than October 1, 2021” for establishing IT project processes. As introduced in 2026, this date appears prior to the introduction; the final effective date may depend on enactment and any amendments.
  • Oversight and disapproval: The bill provides explicit 30-day windows for disapproving director directives or proposed designations.
  • Reporting cadence:
    • Annual-like reporting after fiscal year-end (within 120 days) detailing current work project accounts and lapses.

5) Fiscal Impact

  • The fiscal impact is indeterminate in the analysis published by the House Fiscal Agency.
  • Expected effects:
    • Large-scale IT projects would likely be decomposed into smaller, modular contracts to stay within the $10 million and 36-month caps.
    • Could limit scope or timeliness of certain IT efforts and potentially increase procurement complexity.
    • May increase competition by opening opportunities to smaller vendors, while also raising contracting challenges and costs for complex projects.

6) Supporting/Analytical Points

  • The bill references the DTMB Project Management Methodology (PMBOK-based) as a framework for project management best practices, though a formal definition of “information technology project” is not included in the text of HB 5663.
  • The bill’s sponsors emphasize tighter accountability and visibility over state IT spending.

Compiled from official sources — confirm details with the bill’s official record.

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