§ 343. Privatization contracts; procedure
(a) An agency shall not enter into a privatization contract, unless all of the following are satisfied:
(1) Thirty-five days prior to the beginning of any open bidding process, the agency provides written notice to the collective bargaining representative of the intent to seek to enter a privatization contract. During those 35 days, the collective bargaining representative shall have the opportunity to discuss alternatives to contracting. Such alternatives may include amendments to the contract if mutually agreed upon by the parties. Notices regarding the bid opportunity may not be issued during the 35-day discussion period. The continuation of discussions beyond the end of the 35-day period shall not delay the issuance of notices.
(2) The proposed contract is projected to result in overall cost savings to the State of at least 10 percent above the projected cost of having the services provided by classified State employees.
(3) When comparing the cost of having a service provided by classified State employees to the cost of having the service provided by a contractor:
(A) The expected costs of having services provided by classified State employees and obtaining the service through a contractor should be compared over the life of the contract. One-time costs associated with having services provided by a contractor rather than classified State employees, such as the expected cost of leave pay-outs for separating employees, unemployment compensation, and the cost of meeting the State's obligation, if any, to continue health insurance benefits, shall be spread over the expected life of the contract.
(B) The basic cost of services by a contractor includes:
(i) the bid price or maximum acceptable bid identified by the contracting authority; and
(ii) any additional costs to be incurred by the agency for inspection, facilities, reimbursable expenses, supervision, training, and materials, but only to the extent that these costs exceed the costs the agency could expect to incur for inspection, facilities, reimbursable expenses, and materials if the services were provided by classified State employees.
(C) The basic cost for services provided by a classified State employee includes:
(i) wages, benefits, and training;
(ii) the cost of supervision and facilities, but only to the extent that these costs exceed the costs the agency could expect to incur for supervision or facilities if the services were provided by a contractor; and
(iii) the estimated cost of obtaining goods when the comparison is with the cost of a contract that includes both goods and services.
(D) Possible reductions in the cost of obtaining services from classified State employees that require concessions shall not be considered unless proposed in writing by the certified collective bargaining agent and mutually agreed to by the State and collective bargaining agent.
(b)(1) A privatization contract shall contain specific performance measures regarding quantity, quality, and results and guarantees regarding the services performed.
(2) The agency shall provide information in the State's Workforce Report on the contractor's compliance with the specific performance measures set out in the contract.
(3) The agency may not renew the contract if the contractor fails to comply with the specific performance measures set out in the contract as required by subdivision (1) of this subsection.
(c)(1) Before an agency may renew a privatization contract for the first time, the Auditor of Accounts shall review the privatization contract analyzing whether it is achieving:
(A) the 10 percent cost-savings requirement set forth in subdivision (a)(2) of this section;
(B) the performance measures incorporated into the contract as required under subdivision (b)(1) of this section.
(2) If the Auditor of Accounts finds that a privatization contract has not achieved the cost savings required under subdivision (a)(2) of this section or complied with performance measures required under subdivision (b)(1) of this section, the Auditor of Accounts shall file a report with the agency and the House and Senate Committees on Government Operations, and the agency shall review whether to renew the privatization contract or perform the work with State employees. (Added 1999, No. 75 (Adj. Sess.), § 2; amended 2017, No. 174 (Adj. Sess.), § 1, eff. May 25, 2018.)