Bill Text - SB214 (2018)

Relative to privatization of state services.

Revision: Jan. 31, 2017, 11:12 a.m.










AN ACT relative to privatization of state services.


SPONSORS: Sen. Soucy, Dist 18; Rep. P. Long, Hills. 10; Rep. Goley, Hills. 8


COMMITTEE: Executive Departments and Administration






This bill regulates the use of private contractors for public services.  The bill requires the commissioner of administrative services to approve privatization contracts based on information provided by the contracting agency.


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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.






In the Year of Our Lord Two Thousand Seventeen


AN ACT relative to privatization of state services.


Be it Enacted by the Senate and House of Representatives in General Court convened:


1  Statement of Intent.  The general court hereby finds and declares that using private contractors to provide public services formerly provided by state employees does not always promote the public interest.  To ensure that citizens of the state of New Hampshire receive high quality public services at low cost, with due regard for the taxpayers of the state and the needs of public and private workers, the general court finds it necessary to regulate such privatization contracts in accordance with this act.

2  New Subdivision; Privatization Contracts.  Amend RSA 21-I by inserting after section 95 the following new subdivision:

Privatization Contracts

21-I:96  Definitions.  In this subdivision:

I.  "Agency" means an executive office, department, division, board, commission, or other office or officer in the executive branch of the government of the state.

II.  "Commissioner" means the commissioner of the department of administrative services.

III.  "Privatization contract" means an agreement or combination or series of agreements by which a nongovernmental person or entity agrees with an agency to provide services, valued at $500,000 or more, which are substantially similar to, and in lieu of, services previously provided, in whole or in part, by regular employees of an agency.  Any subsequent agreement, including any agreement resulting from a rebidding of previously privatized service, or any agreement renewing or extending a privatization contract, shall not be considered a privatization contract.  A contract for information technology services shall not be considered a privatization contract if the commissioner of the department of information technology, in consultation with the commissioner of the department of administrative services, agrees to the terms of the contract in writing.  An agreement solely to provide legal, management consulting, planning, engineering, or design services shall not be considered a privatization contract.

21-I:97  Statement of Services; Wage Rates; Health Insurance; Hiring of Former Agency Employees; Cost Estimate; Bids; Certification to Commissioner.  No agency shall make any privatization contract and no such contract shall be valid unless the agency first complies with each of the following requirements:

I.  The agency shall prepare a specific written statement of the services proposed to be the subject of the privatization contract, including the specific quantity and standard of quality of the subject services.  The agency shall solicit competitive sealed bids for the privatization contracts based upon this statement.  The day designated by the agency upon which it will accept these sealed bids shall be the same for all parties.  This statement shall be a public record, retained by the agency, and transmitted to the commissioner for review pursuant to RSA 21-I:98.  The term of any privatization contract shall not exceed 5 years.  No amendment to a privatization contract shall be valid if it has the purpose or effect of avoiding any requirement of this section.

II.  For each position in which a bidder will employ any person pursuant to the privatization contract and for which the duties are substantially similar to the duties performed by a regular agency employee or employees, the statement required by paragraph I shall include a statement of the minimum wage rate to be paid for said position, which rate shall be the lesser of step one of the grade or classification under which the comparable regular agency employee is paid, or the average private sector wage rate for said position.  Every bid for a privatization contract and every privatization contract shall include provisions specifically establishing the wage rate for each such position, which shall not be less than said minimum wage rate.  Every such bid and contract shall also include provisions for the contractor to pay not less than a percentage, comparable to the percentage paid by the state for state employees, of the costs of health insurance plans for every employee employed for not less than 20 hours per week pursuant to such contract.  Each contractor shall submit quarterly payroll records to the agency, listing the name, address, social security number, hours worked, and hourly wage paid for each employee in the previous quarter.

III.  Every privatization contract shall contain provisions requiring the contractor to offer available employee positions pursuant to the contract to qualified regular employees of the agency whose state employment is terminated because of the privatization contract and who satisfy the hiring criteria of the contractor.  Every such contract shall also contain provisions requiring the contractor to comply with a policy of nondiscrimination and equal opportunity for all persons protected by RSA 354-A, and to take affirmative steps to provide such equal opportunity for all such persons.

IV.  The agency shall prepare a comprehensive written estimate of the costs of regular agency employees' providing the subject services in the most cost-efficient manner.  The estimate shall include all direct and indirect costs of regular agency employees' providing the subject services, including but not limited to, pension, insurance, and other employee benefit costs.  For the purpose of this estimate, any employee organization may, at any time before the final day for the agency to receive sealed bids pursuant to paragraph I, propose amendments to any relevant collective bargaining agreement to which it is a party.  Any such amendments shall take effect only if necessary to reduce the cost estimate pursuant to this paragraph below the contract cost pursuant to paragraph VI.  Such estimate shall remain confidential until after the final day for the agency to receive sealed bids for the privatization contract pursuant to paragraph I, at which time the estimate shall become a public record, shall be filed in the agency and in the department of administrative services, and shall be transmitted to the commissioner for review pursuant to RSA 21-I:98.

V.  After consulting any relevant employee organization, the agency shall provide adequate resources for the purpose of encouraging and assisting present agency employees to organize and submit a bid to provide the subject services.  In determining what resources are adequate for this purpose, the agency shall refer to an existing collective bargaining agreement of a similar employee organization whose members perform the subject services, if available, which agreement provides similar resources in the same or other agencies; provided, however, that if no such collective bargaining agreement exists, the agency shall refer to any existing collective bargaining agreements providing such resources, and shall provide such resources at the minimum level of assistance provided in said agreements.  The agency shall consider any such employee bid on the same basis as all other bids.  An employee bid may be made as a joint venture with other persons.

VI.  After soliciting and receiving bids, the agency shall publicly designate the bidder to which it proposes to award the contract.  The agency shall prepare a comprehensive written analysis of the contract cost based upon the designated bid, specifically including the costs of transition from public to private operation, of additional unemployment and retirement benefits, if any, and of monitoring and otherwise administering contract performance.

VII.(a)  The head of the agency shall certify in writing to the commissioner that:

(1)  The agency head has complied with all provisions of this section and of all other applicable laws.

(2)  The quality of the services to be provided by the designated bidder is likely to satisfy the quality requirements of the statement prepared pursuant to paragraph I, and to equal or exceed the quality of services which could be provided by regular agency employees pursuant to paragraph IV.

(3)  The contract cost pursuant to paragraph VI will be less than the estimated cost pursuant to paragraph IV, taking into account all comparable types of costs.

(4)  The designated bidder and its supervisory employees, while in the employ of the designated bidder, have no adjudicated record of substantial or repeated willful noncompliance with any relevant federal or state regulatory statute including, but not limited to, statutes concerning labor relations, occupational safety and health, nondiscrimination and affirmative action, environmental protection, and conflicts of interest.

(5)  The proposed privatization contract is in the public interest, in that it meets the applicable quality and fiscal standards set forth in this subdivision.

(b)  A copy of the proposed privatization contract shall accompany the certificate transmitted to the commissioner.

21-I:98  Objection by Commissioner.

I.  An agency shall not make any privatization contract and no such contract shall be valid if, within 30 business days after receiving the certificate required by RSA 21-I:97, VII, the commissioner notifies the agency of his or her objection.  Such objection shall be in writing and shall state specifically the commissioner's finding that the agency has failed to comply with one or more requirements of RSA 21-I:97, including that the commissioner finds incorrect, based on independent review of all the relevant facts, any of the findings required by RSA 21-I:97, VII.  The commissioner may extend the time for such objection for an additional period of 30 business days beyond the original 30 business days by written notice to the submitting agency stating the reason for such extension.

II.  For the purpose of reviewing the agency's compliance and certificate pursuant to RSA 21-I:98, the commissioner or the commissioner's designee may require by summons the attendance and testimony under oath of witnesses and the production of books, papers, and other records relating to such review.  All provisions of law relative to summonses in civil cases, including the manner of service, the scope and relevance to such review, and the compensation of witnesses who are not state employees, shall apply to such summonses.

III.  The objection of the commissioner pursuant to paragraph I shall be final and binding on the agency, unless the commissioner thereafter in writing withdraws the objection, stating the specific reasons, based upon a revised certificate by the agency and upon the commissioner's review thereof.

3  Effective Date.  This act shall take effect 60 days after its passage.







as introduced


AN ACT relative to privatization of state services.


FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None




Estimated Increase / (Decrease)


FY 2018

FY 2019

FY 2020

FY 2021












Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Funding Source:

  [ X ] General            [ X ] Education            [ X ] Highway           [ X ] Other



This bill creates a new category of State service procurement contract for privatization of services to the State worth at least $500,000, for services that were previously provided by State employees, excluding certain categories such as information technology, legal, engineering and design services.  The Department of Administrative Services (DAS) cannot determine the actual number of privatization contracts to be implemented annually.  The complexity and resource requirements for any future privatization contracts are indeterminable and staffing needs will depend on the number and scope of such contracts.   DAS states that additional staffing, training and other resources may be needed to assist agencies with bidding and review of such contracts and for DAS to handle new service contracts for services related to privatization, such as snowplowing, janitorial, landscaping, etc.  DAS reports there are 224 existing multi-agency service contracts handled by 10 procurement staff and if the number of privatization service contracts totaled 5% or 11 contracts per year, the agency estimates it would need to add 1.5 new purchasing agents at labor grade 24, step 1.  The Commissioner’s office will need assistance for drafting new policies and procedures, conducting hearings, soliciting witnesses, evaluating testimony, reviewing independent analyses, and related contract review and duties, and anticipates the need for one administrator IV, labor grade 33, step 1.  


Estimated Additional Staffing Needed by DAS

(based on 5% of service contracts or 11 contracts privatized per year)


FY 2018

FY 2019

FY 2020

FY 2021

Purchasing Agent

LG 24, Step 1

(1.5 positions in FY 2019-FY 2021)



$81,000 x 1.5 = $121,500

$82,000 x 1.5 = $123,000

$86,000 x 1.5 = $129,000

Administrator IV

LG 33, Step 1











The personnel and risk management divisions may also require additional technology and staff to provide the data needed for the specifications, but the impact on these areas is indeterminable at this time.  DAS assumes other state agencies’ staffing requirements will increase due to new responsibilities (in-depth analyses of each project, including effects on existing personnel, drafting bid documents, reviewing bids, preparation of contracts) but the impact is unknown.



Department of Administrative Services