Bill Details - SB288 (2019)

SB 288-FN - AS INTRODUCED

 

 

2019 SESSION

19-1031

05/03

 

SENATE BILL 288-FN

 

AN ACT relative to privatization contracts by state agencies.

 

SPONSORS: Sen. Cavanaugh, Dist 16; Sen. Kahn, Dist 10

 

COMMITTEE: Executive Departments and Administration

 

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ANALYSIS

 

This bill regulates privatization contracts entered into by state agencies.

 

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

19-1031

05/03

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Nineteen

 

AN ACT relative to privatization contracts by state agencies.

 

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 submit any privatization contract to the governor and council unless the commissioner has certified that the agency has first complied 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 bids for the privatization contracts based upon this statement.  The day designated by the agency upon which it will accept these 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.  The quarterly payroll records shall be exempt from disclosure under RSA 91-A pursuant to RSA 91-A:5, IV.

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 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 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 shall 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 wilful 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 submit any privatization contract to the governor and council 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.  When an existing contract for services comes due for renewal or rebidding, the contracting agency shall undergo a review to determine the efficacy of whether to continue to utilize a nongovernmental person or entity, or whether to utilize regular agency employees.  The contracting agency shall submit documentation of this review to the commissioner of administrative services prior to submission to the governor and council.  For any existing privatization contract being renewed after being maintained 5 years or more, the contracting agency shall submit to the commissioner a statement similar to the one outlined in RSA 21-I:97.  

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

 

LBAO

19-1031

Revised 2/12/19

 

SB 288-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to privatization contracts by state agencies.

 

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

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

   Appropriation

$0

$0

$0

$0

   Revenue

Indeterminable

Indeterminable

Indeterminable

Indeterminable

   Expenditures

Indeterminable

Indeterminable

Indeterminable

Indeterminable

Funding Source:

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

 

 

 

 

 

COUNTY:

 

 

 

 

   Revenue

Indeterminable

Indeterminable

Indeterminable

Indeterminable

   Expenditures

Indeterminable

Indeterminable

Indeterminable

Indeterminable

 

 

 

 

 

LOCAL:

 

 

 

 

   Revenue

Indeterminable

Indeterminable

Indeterminable

Indeterminable

   Expenditures

Indeterminable

Indeterminable

Indeterminable

Indeterminable

 

The Department of Justice was originally contacted on January 18, 2019, with follow up on January 24, 2019 for a fiscal note worksheet, which they have not provided as of February 12, 2019.

 

METHODOLOGY:

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) states since it is not known how often privatization contracts may be pursued, the magnitude of the additional responsibilities which may be imposed upon existing agency staff cannot be determined.  Since it is unknown what amount of existing employee time would be needed in assessing each aspect of the new requirements, it is unknown whether or not the bill might necessitate additional State expenditures for overtime or additional staff within an agency.  DAS states the bill imposes unique responsibilities to conduct detailed independent reviews of all contracts by other agencies, including taking testimony and summonsing of documents.   DAS indicates it does not currently have employees whose duties include performing the functions outlined in the bill. The agency cannot estimate whether there might be a cost or benefit to county or local governments that deal with the State and as a result of any impact to services being considered for privatization.

 

The Department of Transportation indicates the added responsibilities outlined in this bill (i.e. collecting and protecting personally identifiable information such as social security numbers of vendor employees) would add to the cost of preparing and managing future service contracts.  This may result in limiting the financial benefit of such contracts to the State.  The $500,000 threshold would allow the Department to continue to benefit from smaller contracts.  The Department cannot estimate the actual cost of the bill's requirements.

 

AGENCIES CONTACTED:

Departments of Administrative Services, Justice, and Transportation

 

Docket

Date Status
Jan. 3, 2019 Introduced 01/03/2019 and Referred to Executive Departments and Administration; SJ 4
Feb. 6, 2019 Hearing: 02/06/2019, Room 101, LOB, 10:45 am; SC 9
Feb. 21, 2019 Committee Report: Rereferred to Committee, 02/21/2019; Vote 5-0; CC; SC 11
Feb. 21, 2019 Rereferred to Committee, MA, VV; 02/21/2019; SJ 6

Action Dates

Date Body Type
Feb. 6, 2019 Senate Hearing

Bill Text Revisions

SB288 Revision: 5283 Date: Feb. 12, 2019, 11:08 a.m.