To enact sections 107.35 and 121.80 to 121.88 of the Revised Code to authorize a state agency to contract out its provision of a good or service to a private contractor under specific contractual provisions; to require the state agency to prepare a business case before executing such a contract; to create the Council on Efficient Government to review business cases, issue advisory reports, and undertake other duties regarding contracting out the provision of a good or service; to require the Council to prepare an annual report; and to require the Governor to select goods or services that could be provided by a private contractor and submit the selections for Council review.

Section 1.  That sections 107.35, 121.80, 121.81, 121.82, 121.83, 121.84, 121.85, 121.86, 121.87, and 121.88 of the Revised Code be enacted to read as follows:

Sec. 107.35.  (A) As used in this section, "state agency" has the same meaning as in section 121.80 of the Revised Code.

(B) Beginning July 1, 2012, the governor, at least once every two fiscal years, shall select at least three goods or services that are being provided by a state agency, the provision of which the governor believes could be contracted out to a private contractor. The governor shall submit the selections to the council on efficient government for its review and evaluation under section 121.86 of the Revised Code.

Sec. 121.80.  As used in sections 121.81 to 121.88 of the Revised Code, "state agency" means every department, board, bureau, commission, council, office, institution of higher education, or other organized body established by the constitution or laws of this state for the exercise of any function of state government. "State agency" does not include the office of the governor, attorney general, auditor of state, secretary of state, treasurer of state, the general assembly or any legislative agency, or a court or any judicial agency. In the case of the department of transportation, "state agency" does not include contracts in support of the planning, development, implementation, operation, or maintenance of the department's road, bridge, and public transportation construction program.

Sec. 121.81.  (A) A state agency, in accordance with this section and with sections 121.82 to 121.84 of the Revised Code, may contract out to a private contractor the state agency's duty to provide a good or service. The state agency shall select the private contractor by issuing a request for proposals. The request for proposals shall state the relative importance of price and other evaluation criteria selected by the state agency. The state agency shall develop a process to be used in issuing the request for proposals, receiving responses to the request, and evaluating the responses on a competitive basis. The award of a contract under this section may be made to the private contractor whose proposal is determined to be the most advantageous to the state, taking into consideration factors such as price, the evaluation criteria set forth in the request for proposals, and the advisory report of the council on efficient government issued under division (A) of section 121.83 of the Revised Code.

(B) To ensure fair and impartial evaluation, proposals and related documents submitted in response to a request for proposals are not available for public inspection and copying under section 149.43 of the Revised Code until after the award of the contract.

Sec. 121.82.  (A) A state agency proposing to contract out the provision of a good or service shall prepare a written business case that justifies the proposal to contract out and shall submit the business case to the council on efficient government on or before the time required by section 121.83 of the Revised Code. The business case shall include all of the following:

(1) A detailed description of the good or service proposed to be contracted out;

(2) An analysis of the state agency's current performance and costs incurred in providing the good or service, if the state agency currently is providing the good or service;

(3) Identification of statutory amendments or enactments, if any, needed to authorize the contracting out of the provision of the good or service;

(4) The goals desired to be achieved by contracting out the provision of the proposed good or service and the rationale for the goals;

(5) A description of available options for achieving those goals, including at least one option where the state agency provides the good or service, if the state agency is currently providing the good or service;

(6) An analysis of the advantages and disadvantages of each option described under division (A)(5) of this section, including, at a minimum, the potential performance improvements resulting from, and the risks of, contracting out the provision of a good or service;

(7)(a) A cost-benefit analysis that specifies all of the following:

(i) The direct and indirect estimated savings, baseline costs, and qualitative and quantitative benefits that would be involved in or would be the result of implementing each option described under division (A)(5) of this section;

(ii) The time schedule that must be adhered to in order to achieve the estimated savings;

(iii) The costs of the option, supported by records and reports.

(b) The head of the state agency proposing to contract out the provision of a good or service shall attest that, based on the data and information underlying the business case and to the best of the state agency head's knowledge, all estimated savings, costs, and benefits specified under division (A)(7)(a) of this section are valid and achievable.

(c) As used in divisions (A)(7)(a) and (b) of this section:

(i) "Costs" means reasonable, relevant, and verifiable costs, including cost elements such as personnel, materials and supplies, services, equipment, capital depreciation, rent, maintenance and repairs, utilities, insurance, personnel travel, overhead, and interim and final payments. The appropriate cost elements included in "costs" shall depend on the nature of the specific good or service proposed to be contracted out.

(ii) "Savings" means the difference between the direct and indirect actual annual baseline costs of an option compared to the projected annual costs for providing a good or service in any succeeding state fiscal year during the term of the contract to contract out the provision of the good or service.

(8) A description of the current market for the goods or services the provision of which is proposed to be contracted out;

(9) A description of the specific performance standards a private contractor, at a minimum, must meet to ensure adequate performance under a contract to contract out;

(10) The projected time frame for key events, from the beginning of the proposed contracting out through the expiration of the contract to contract out;

(11) A plan to ensure a private contractor's compliance with section 149.43 of the Revised Code and with any other public records law that applies to the state agency contracting out the provision of a good or service;

(12) A specific and feasible contingency plan addressing private contractor nonperformance, and a description of the tasks involved in and costs required for the plan's implementation;

(13) The state agency's transition plan for addressing changes in the number of agency personnel, affected business processes, employee transition issues, and communication with affected stakeholders, such as agency clients and the public. The transition plan must contain a re-employment and retraining assistance plan for employees who are not retained by the state agency or are not employed by the private contractor.

(14) A plan for ensuring access to the private contractor's place of business by persons with disabilities, in compliance with applicable state and federal laws; and

(15) A description of legislative budgetary actions, if any, necessary to accomplish contracting out the provision of the good or service.

(B) A business case prepared under this section shall not be subject to challenge or protest by any person.

Sec. 121.83.  (A)(1) At least sixty days before a state agency issues a request for proposals to contract out the provision of a good or service having a projected cost of more than ten million dollars in any fiscal year, the state agency shall submit its business case to the council on efficient government for its review under section 121.86 of the Revised Code. The council shall evaluate the business case and issue an advisory report to the state agency not later than thirty days after receiving the business case.

(2) The state agency shall submit a final business case to the council at least thirty days before execution of a contract to contract out. The final business case shall reflect any changes to the business case submitted under division (A)(1) of this section as the result of contract negotiations.

(B)(1) At least thirty days before a state agency issues a request for proposals to contract out the provision of a good or service having a projected cost of at least one million dollars but not more than ten million dollars in any fiscal year, the state agency shall submit its business case to the council for its review under section 121.86 of the Revised Code.

(2) The state agency shall submit a final business case to the council at least thirty days before execution of a contract to contract out. The final business case shall reflect any changes to the business case submitted under division (B)(1) of this section as the result of contract negotiations.

(C) After the conclusion of contract negotiations regarding contracting out the provision of a good or service having a projected cost of less than one million dollars in any fiscal year, but at least thirty days before the execution of a contract to contract out, the state agency shall submit a final business case to the council for its review under section 121.86 of the Revised Code. The final business case is the business case prepared under section 121.82 of the Revised Code, as amended to reflect any changes to it as the result of contract negotiations.

Sec. 121.84.  Each contract to contract out the provision of a good or service under section 121.81 of the Revised Code shall, at a minimum, include all of the following articles:

(A) A scope-of-work article that clearly specifies and describes each quantifiable, measurable, and verifiable good or service to be provided by the private contractor. This article shall include a clause stating that if a particular good or service is inadvertently omitted or not clearly specified, but is determined to be operationally necessary and is verified to have been performed by the state agency within the twelve-month period before execution of the contract, the good or service will be provided by the contractor by amending the contract through the amendment process under division (B) of this section.

(B) A quality level article that describes all goods or services to be provided by the private contractor under the terms of the contract; the quality level of the goods or services and the service requirements to be met by the contractor; the specific responsibilities of the state agency and the contractor; and the process for amending any portion of the article. The article shall contain an exclusivity clause that allows the state agency to retain the right to provide the good or service directly, or to contract with another contractor, if quality levels or service requirements are not being met or specific responsibilities are not performed.

(C) An article that identifies all required performance standards to be met by the private contractor, which shall include, at a minimum, all of the following:

(1) Detailed and measurable acceptance criteria for each good and service to be provided to the state agency under the terms of the contract;

(2) A method for monitoring and reporting progress in achieving the performance standards;

(3) The sanctions or disincentives that will be imposed for the private contractor's and state agency's nonperformance.

(D) An article that identifies all associated costs, specific payment terms, and payment schedules, including financial incentives and disincentives and other criteria governing payments;

(E) An article that identifies a clear and specific transition plan that shall be implemented in order to complete all required activities needed to transfer the provision of a good or service, or an activity, from the state agency to the private contractor, and to make such transfer successful;

(F) An article that describes a contingency plan for continuing the operation of providing a good or service, including transferring the provision of the good or service back to the state agency or a successor contractor, if the private contractor fails to perform and comply with the contract's performance standards and the contract is terminated;

(G) An article that requires the private contractor and its subcontractors to maintain adequate accounting records that comply with all applicable federal and state laws and generally accepted accounting principles;

(H) An article that authorizes the state agency to have access to and review all records related to the contract or to any subcontract, or related to any responsibilities or functions under the contract or any subcontract, for purposes of legislative oversight;

(I) An article that requires audits of the private contractor or subcontractor by the auditor of state;

(J) An article that requires the private contractor to interview and consider for employment with the private contractor each state employee who is interested in such employment and who was or will be displaced because the provision of a good or service was or will be contracted out;

(K) An article that requires the private contractor and its subcontractors to comply with section 149.43 of the Revised Code and any other public records laws that apply to the state agency that contracted out the provision of the good or service, specifically to:

(1) Keep and maintain the public records that ordinarily and necessarily would be required by the state agency regarding a good or service contracted out;

(2) Provide the public with access to the public records on the same terms and conditions that the state agency would have provided the records;

(3) Ensure that confidential or exempt records are not disclosed, except as authorized by law;

(4) Meet all requirements for retaining records;

(5) Require the transfer to the state agency, at no cost, of all public records in the private contractor's or a subcontractor's possession on termination of the contract and to require the destruction of any duplicate public records that are exempt or confidential. The article shall include a clause that requires all records stored electronically to be provided to the state agency in a format that is compatible with the state agency's information technology systems.

(L) An article that addresses ownership of intellectual property. This division does not provide the specific authority needed by a state agency to obtain a copyright or trademark.

(M) If applicable, an article that allows the state agency to purchase from the private contractor, at its depreciated value, assets used by the contractor in the performance of the contract. If assets have not depreciated, the state agency shall retain the right to negotiate to purchase them at an agreed-to cost.

Sec. 121.85.  (A) The council on efficient government is established. The council shall consist of the following seven members:

(1) The chief executive or head administrative officer of a state agency, appointed by the governor;

(2) Two members who are engaged in private enterprise, appointed by the governor;

(3) Two members who are engaged in private enterprise, appointed by the president of the senate;

(4) Two members who are engaged in private enterprise, appointed by the speaker of the house of representatives.

(B) Initial appointments to the council shall be made on or before January 1, 2011. Of the initial appointments made to the council, the term of office of one member engaged in private enterprise appointed by the governor, by the president of the senate, and by the speaker of the house of representatives shall be for a term ending December 31, 2011. The remaining initial appointments shall be for terms ending December 31, 2012. Thereafter, terms of office shall be for two years, with each term ending on the thirty-first day of December. The member appointed under division (A)(1) of this section shall be a member only so long as the member is the chief executive or head administrative officer of a state agency. Each member shall hold office from the date of appointment until the end of the term for which the member was appointed. Members may be reappointed one time. Vacancies shall be filled in the same manner provided for original appointments. Any member appointed to fill a vacancy occurring prior to the expiration of the term for which the member's predecessor was appointed shall hold office for the remainder of that term. A member shall continue in office subsequent to the expiration date of the member's term until the member's successor takes office, or until a period of sixty days has elapsed, whichever occurs first.

(C) The council shall meet not less than four times per calendar year. The council shall elect a chairperson from among its members. Four members of the council constitute a quorum. No action of the council is valid without the concurrence of four members.

(D) Members of the council shall serve without compensation, but members who are engaged in private enterprise shall be reimbursed for their actual and necessary expenses incurred in the performance of council duties.

(E) A council member may not participate in review of a business case under section 121.86 of the Revised Code if the member is the chief executive or head administrative officer of the state agency that submitted the business case, or, in the case of a council member engaged in private enterprise, if the member has a business relationship with a private contractor that is involved or potentially could be involved in the proposed contracting out.

(F) A member of the council who is engaged in private enterprise may not delegate the membership to a designee.

(G) The auditor of state shall employ an adequate number of staff who collectively possess significant expertise and experience to assist the council in carrying out its duties under sections 121.86 to 121.88 of the Revised Code.

(H) The council may appoint advisory groups to conduct studies, research, or analyses, to prepare reports, and to make recommendations with respect to a matter within the council's jurisdiction. At least one member of the council shall serve on each advisory group. Members of an advisory group shall serve without compensation and shall not be reimbursed for their expenses.

Sec. 121.86. The council on efficient government shall do all of the following:

(A) Review business cases submitted by state agencies to the council under section 121.83 of the Revised Code and if required by division (A) of that section, provide to the state agency an advisory report. The advisory report shall contain a copy of the business case, an evaluation of the business case, any relevant council recommendations, and sufficient information to assist the state agency proposing to contract out the provision of a good or service in determining whether the business case should be included with the state agency's legislative budget request.

(B) Implement a standard process for council review of business cases submitted under section 121.83 of the Revised Code, including templates for use by state agencies in submitting business cases to the council;

(C) Recommend standards, procedures, and guidelines for use by state agencies in developing business cases;

(D) Review, evaluate, and make written recommendations in the annual report prepared under section 121.88 of the Revised Code regarding whether to contract out the provision of a good or service selected by the governor under section 107.35 of the Revised Code;

(E) Review contracting out the provision of a good or service at the request of a state agency or a private contractor;

(F) Evaluate whether a good or service provided by a state agency could be provided by a private contractor at the same quality and service levels as provided by the state agency, and whether contracting out the provision of the good or service would result in cost savings to the state. The council may hold public hearings as part of this evaluation process.

(G) Recommend to a state agency contracting out the provision of a good or service if the council determines that contracting out the provision is a more cost-efficient or a more effective manner of providing a good or service;

(H) Review issues concerning state agency competition with one or more private contractors to determine ways to eliminate any unfair competition with them;

(I) Incorporate any lessons learned from contracting out the provision of goods and services into council standards, procedures, and guidelines, as appropriate, and identify and disseminate to state agencies information regarding best practices in efforts to contract out;

(J) Develop guidelines for assisting state employees whose jobs are eliminated as a result of the contracting out;

(K) Receive complaints of violations of sections 121.81 to 121.84 of the Revised Code and transmit a copy of the complaint to the state agency alleged to be in violation. Within thirty days after receiving the complaint, the state agency shall file a response to the complaint with the council.

(L) Hold public hearings on the complaints, determine whether the state agency violated sections 121.81 to 121.84 of the Revised Code, and issue a written report of its findings to the complainant within ninety days after receiving the state agency's response; and

(M) Solicit from private contractors petitions of interest regarding contracting out the provision of a good or service, as the council considers appropriate. The council may evaluate the petitions and may hold public hearings as part of the evaluation process. The council may refer petitions to the governor's office for further consideration. A private contractor shall not have a cause of action based on the council's failure to evaluate a petition of interest or to refer a petition to the governor's office.

Sec. 121.87.  The council on efficient government shall adopt rules that establish an accounting method to be used by state agencies in preparing, and by the council in reviewing, business cases under section 121.86 of the Revised Code that:

(A) Is similar to generally accepted governmental accounting standards;

(B) Allows a state agency to identify the total actual cost of engaging in a commercial activity in a manner similar to how a private contractor identifies the total actual cost of engaging in the same commercial activity, including identifying the following:

(1) Labor expenses, such as compensation and benefits; costs of training, of paying overtime, and of supervising labor; and other personnel expenses;

(2) Operating costs, such as vehicle maintenance and repair, marketing, advertising and other sales expenses, and office expenses; costs of accounting operations, such as billing, insurance expenses, real estate, or equipment costs; debt service costs; and overhead or capital expenses, such as vehicle depreciation and depreciation of other fixed assets;

(3) Contract management costs;

(4) Other costs particular to the provision of a good or service.

(C) Provides a process to estimate the federal, state, and local taxes a state agency would pay related to engaging in a commercial activity if the state agency were required to pay such taxes to the same extent as a private contractor engaging in the commercial activity.

Sec. 121.88.  (A) The council on efficient government shall prepare an annual report that contains all of the following:

(1) Recommendations on innovative methods of delivering goods or services provided by state agencies that would improve the efficiency, effectiveness, or competition in the delivery of those goods or services;

(2) A summary for the previous calendar year of each state agency's efforts to contract out the provision of a good or service, including the number of business cases submitted to the council under section 121.83 of the Revised Code; the number of requests for proposals issued by state agencies under section 121.81 of the Revised Code; the number and dollar value of contracts to contract out executed; descriptions of contract performance results, as applicable; any contract violations or slippages; and the status of extensions and renewals of, and amendments to, contracts to contract out;

(3) Information about the council's activities;

(4) Copies of the business cases submitted to the council under section 121.83 of the Revised Code;

(5) The minutes of each council meeting;

(6) Copies of advisory reports issued by the council under section 121.83 of the Revised Code;

(7) The council's written recommendations regarding whether to contract out the provision of a good or service selected by the governor under section 107.35 of the Revised Code.

(B) The council shall submit a copy of the annual report to the governor, the president and minority leader of the senate, and the speaker and minority leader of the house of representatives on or before the fifteenth day of January immediately following the calendar year for which the report was made. The council shall provide each year to the house of representatives and senate committees that primarily deal with finances an oral report that summarizes the annual report.

(C) Each state agency shall submit to the council all information, documents, and other materials requested by the council for preparation of the annual report.