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H. B. No. 436 As IntroducedAs Introduced
128th General Assembly | Regular Session | 2009-2010 |
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Representatives Balderson, Boose
Cosponsors:
Representatives Adams, J., Adams, R., Bacon, Baker, Blessing, Combs, Evans, Grossman, Huffman, Jordan, Morgan, Stebelton, Wagner, Zehringer
A BILL
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.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
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.
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