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Regular Session, 2013
HOUSE BILL NO. 240
BY REPRESENTATIVES HAVARD, BERTHELOT, CHAMPAGNE, GEYMANN,
JAMES, POPE, SCHRODER, SMITH, AND THIERRY
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
PRIVATIZATION: Establishes the Privatization Review Act
AN ACT1
To amend and reenact R.S. 44:4.1(B)(34) and to enact Chapter 6 of Title 49 of the Louisiana2
Revised Statutes of 1950, to be comprised of R.S. 49:351 through 357, relative to3
privatization contracts; to create and provide for the Privatization Review Act; to4
provide for certain requirements and procedures for certain privatization contracts;5
to provide for duties of executive branch agencies and agency heads relative to6
privatization contracts; to provide for the duties of the legislative auditor relative to7
certain privatization contracts; to provide procedures for legislative review and8
approval of privatization contracts; to provide for definitions; to provide for certain9
prohibitions; to provide for the voidability of privatization contracts; to provide10
relative to the records related to privatization contracts; and to provide for related11
matters.12
Be it enacted by the Legislature of Louisiana:13
Section 1. Chapter 6 of Title 49 of the Louisiana Revised Statutes of 1950, comprised14
of R.S. 49:351 through 357, is hereby enacted to read as follows: 15
CHAPTER 6. PRIVATIZATION REVIEW ACT16
§351. Legislative findings17
The legislature hereby finds and declares that using private contractors to18
provide public services formerly provided by state employees needs to be19
extensively reviewed to ensure that it promotes best practices, ensures that citizens20 HLS 13RS-555 ENGROSSED
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of the state receive high-quality public services at low cost, and is in the overall best1
interest of the state and its citizens.2
§352. Definitions3
For purposes of this Chapter only, the following words and phrases shall have4
the following meanings:5
(1) "Agency" shall mean an office, department, division, board, commission,6
officer, system, or other organizational unit of the executive branch of state7
government.8
(2) "Appropriate standing committees of the legislature" shall mean the9
standing committees of the legislature to which an agency is required to submit a10
report pursuant to R.S. 49:968(B).11
(3) "Nongovernmental entity" shall mean a legal entity other than an agency.12
(4) "Nongovernmental person" shall mean an individual other than an13
employee of an agency.14
(5) "Privatization contract" shall mean an agreement or combination or series15
of agreements by which a nongovernmental person or entity agrees with an agency16
to provide services that are valued at five million dollars or more per year and that17
are substantially similar to and in lieu of services previously provided in whole or18
in part by state employees of an agency. An agreement solely to provide engineering19
or design services shall not be considered a privatization contract.20
§353. Requirements21
A. No agency shall enter into a privatization contract and no such contract22
shall be valid unless the agency, in consultation with the division of administration,23
first complies with each of the following requirements:24
(1)(a) The agency shall prepare a specific written statement of the services25
proposed to be the subject of the privatization contract, including the specific26
quantity and standard of quality of the subject services.27
(b) For each position in which a nongovernmental person or entity will28
employ any person pursuant to the privatization contract and for which the duties are29 HLS 13RS-555 ENGROSSED
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substantially similar to the duties performed by a state employee or employees, the1
statement shall include a statement of the minimum wage rate to be paid for said2
position.3
(c) The agency shall solicit competitive bids or proposals for the4
privatization contracts based upon this statement.5
(d) The statement shall be a public record, shall be filed in the agency and6
in the division of administration, and shall be transmitted to the legislative auditor7
and the appropriate standing committees of the legislature upon its completion.8
(2) Every privatization contract shall contain provisions requiring the9
contractor to offer available employee positions pursuant to the contract to qualified10
classified state employees of the agency at which state employm ent is terminated11
because of the privatization contract and who satisfy the hiring criteria of the12
contractor.13
(3)(a) The agency shall prepare a comprehensive written estimate of the14
costs of state employees providing the subject services in the most cost-efficient15
manner. The estimate shall include all direct and indirect costs of state employees16
providing the subject services, including but not limited to retirement, insurance, and17
other employee benefit costs.18
(b) Such estimate shall remain confidential until after the final day for the19
agency to receive bids or proposals for the privatization contract pursuant to20
Paragraph (1) of this Subsection, at which time the estimate shall become a public21
record, shall be filed in the agency and in the division of administration, and shall be22
transmitted to the legislative auditor and the appropriate standing committees of the23
legislature for review pursuant to R.S. 49:354.24
(4) After soliciting and receiving bids or proposals, the agency shall publicly25
designate the nongovernmental person or entity to which it proposes to award the26
contract. The agency shall prepare a comprehensive written analysis of the contract27
cost based upon the designated bid or proposal, specifically including the costs of28
transition from public to private operation, of additional unemployment and29 HLS 13RS-555 ENGROSSED
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retirement benefits, if any, of additional retirement costs, if any, and of monitoring1
and otherwise administering contract performance. If the designated2
nongovernmental person or entity proposes to perform any or all of the contract3
outside the boundaries of the state or if the designated nongovernmental person or4
entity is domiciled outside the boundaries of the state, said analysis of the contract5
cost shall indicate the amount of income tax revenue, if any, which will be lost to the6
state by the corresponding elimination of state employees and any additional loss of7
revenue to the state due to the domicile of the nongovernmental person or entity, as8
determined by the Department of Revenue to the extent practicable.9
(5) The head of the agency shall certify in writing to the legislative auditor10
and the appropriate standing committees of the legislature that:11
(a) He has complied with all provisions of this Section and of all other12
applicable laws.13
(b) The quality of the services to be provided by the designated14
nongovernmental person or entity is likely to satisfy the quality requirements of the15
statement prepared pursuant to Paragraph (1) of this Subsection, and to equal or16
exceed the quality of services which could be provided by state employees pursuant17
to Paragraph (3) of this Subsection.18
(c) The contract cost, according to the analysis required by Paragraph (4) of19
this Subsection, will be less than the estimated cost estimated pursuant to Paragraph20
(3) of this Subsection, taking into account all comparable types of cost and analysis21
of lost tax income, if any.22
(d) The designated nongovernmental person or entity and its supervisory23
employees, while in the employ of said designated nongovernmental person or24
entity, have no adjudicated record of substantial or repeated noncompliance with any25
relevant federal or state regulatory provision, including but not limited to provisions26
concerning occupational safety and health, nondiscrimination, environmental27
protection, and Code of Governmental Ethics and other conflicts of interest28 HLS 13RS-555 ENGROSSED
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provisions and have no record of substantial or repeated failure to meet performance1
measures or goals in any prior or current contract with the state.2
(e) The proposed privatization contract is in the public interest in that it meets3
the applicable quality and fiscal standards set forth in this Section.4
B.(1) A copy of the proposed privatization contract shall accompany the5
certificate transmitted to the legislative auditor and appropriate standing committees6
of the legislature for review pursuant to R.S. 49:354.7
(2) The agency head shall send each member of the legislature a copy of the8
proposed privatization contract and the certificate via electronic mail on the same9
day he transmits those documents to the legislative auditor and appropriate standing10
committees of the legislature.11
§354. Legislative review12
A.(1) The legislative auditor shall review each contract and certificate no13
later than thirty days after receipt. After completion of the review, the legislative14
auditor shall submit his findings to the appropriate legislative standing committees.15
Such findings shall be in writing and shall state the legislative auditor's findings16
regarding the agency's compliance with the requirements of R.S. 49:353 and shall17
specifically include the legislative auditor's independent review of all relevant facts18
regarding any of the agency's findings required by R.S. 49:353(A)(5).19
(2) The legislative auditor shall send each member of the legislature a copy20
of his findings via electronic mail on the same day he transmits his findings to the21
appropriate standing committees of the legislature.22
(3) Each agency shall cooperate and assist the legislative auditor in his23
review and, notwithstanding any law or privilege to the contrary, shall provide all24
documents and other records to the legislative auditor that he deems necessary to25
complete his review.26
B. The appropriate standing committees of the legislature shall review the27
proposed certificate and contract and comment as necessary on any such contract28
within a reasonable time not to exceed forty-five days after receipt of the findings29 HLS 13RS-555 ENGROSSED
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of the legislative auditor. If either standing committee disapproves the contract, the1
agency shall not enter into the contract. If either standing committee does not2
disapprove of a contract within the forty-five-day time period or if both committees3
vote to approve the contract, the agency may enter into the contract.4
§355. Prohibitions; voidability5
A. No amendment to a privatization contract shall be valid if it has the6
purpose or effect of avoiding any requirement of this Chapter.7
B. No agency shall transfer or grant to another person or entity the authority8
to negotiate any privatization agreement in any manner to subvert the provisions of9
this Chapter or the Public Records Law.10
C. Any contract entered into by the state or any of its agencies in violation11
of this Chapter shall be void ab initio.12
§356. Post-privatization review13
After each complete year of a privatization contract, the agency shall report14
to the appropriate standing committees of the legislature the following information:15
(1) The number of privatization contractor employees and consultants,16
reflected as full-time equivalent positions, and the amount of compensation received17
by each privatization contractor employee and consultant during the previous year,18
and their hourly wage rates for the current and previous fiscal year.19
(2) An analysis of the nongovernmental person or entity performance under20
the privatization contract, specifically including performance measures.21
(3) All complaints received and the agency's and contractor's response to22
each complaint.23
§357. Records24
Notwithstanding any other provision to the contrary and except as otherwise25
specifically provided by this Chapter, all records related to a privatization contract26
shall be available for examination, inspection, reproduction, and copying in the same27
manner as provided by the Public Records Law regardless of the agency, official,28
person, or legal entity in possession of the record.29 HLS 13RS-555 ENGROSSED
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Section 2. R.S. 44:4.1(B)(34) is hereby amended and reenacted to read as follows:1
§4.1. Exceptions2
* * *3
B. The legislature further recognizes that there exist exceptions, exemptions,4
and limitations to the laws pertaining to public records throughout the revised5
statutes and codes of this state. Therefore, the following exceptions, exemptions, and6
limitations are hereby continued in effect by incorporation into this Chapter by7
citation:8
* * *9
(34) R.S. 49:220.25, 353(A)(3)(b), 956, 997, 105510
* * *11
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Havard HB No. 240
Abstract: Establishes the Privatization Review Act to provide certain requirements for
specified privatization contracts and for legislative oversight and approval of such
privatization contracts.
Proposed law defines for its purposes (1) "appropriate standing committees of the
legislature" as the standing committees of the legislature to which an agency is required to
submit a report pursuant to present law (Administrative Procedure Act–APA); (2) "agency"
as an office, department, division, board, commission, officer, system, or other
organizational unit of the executive branch of state government; (3) "nongovernmental
entity" as a legal entity other than an agency; (4) "nongovernmental person" as an individual
other than an employee of an agency; and (5) "privatization contract" as an agreement or
combination or series of agreements by which a nongovernmental person or entity agrees
with an agency to provide services valued at $5 million or more per year and which are
substantially similar to and in lieu of services previously provided in whole or in part by
state employees of an agency and specifies that an agreement solely to provide engineering
or design services shall not be considered a privatization contract.
Proposed law creates and provides for the Privatization Review Act by prohibiting an agency
from entering into a privatization contract, unless the agency (or agency head) complies with
each of the following:
(1)(a) Prepare a specific statement of services proposed to be privatized, including the
quantity and standard of quality of such services; (b) solicit competitive bids or
proposals based upon the statement; (c) include in the statement for each position in
which a nongovernmental person or entity will employ any person pursuant to the
privatization contract and for which the duties are substantially similar to the duties
performed by a state employee or employees, a statement of the minimum wage rate HLS 13RS-555 ENGROSSED
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to be paid for said position; and (d) transmit the statement to the legislative auditor
and appropriate legislative standing committees.
(2)Require every privatization contract to contain provisions requiring the contractor
to offer available employee positions pursuant to the contract to qualified classified
state employees of the agency at which state employment is terminated because of
the privatization contract and who satisfy the hiring criteria of the contractor.
(3)Prepare a comprehensive written estimate of the costs of state employees providing
the subject services in the most cost-efficient manner, including all direct and
indirect costs of state employees providing the subject services, including but not
limited to retirement, insurance, and other employee benefit costs. Provides that such
estimate remains confidential until after the final day for the agency to receive bids
or proposals for the privatization contract at which time the estimate shall become
a public record, shall be filed in the agency and in the division of administration, and
shall be transmitted to the legislative auditor and the appropriate standing
committees of the legislature.
(4)After solicitation of the competitive bids or proposals, publicly designate the
nongovernmental person or entity to which it proposes to award the contract and
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, of additional
retirement costs, if any, and of monitoring and otherwise administering contract
performance and if the designated nongovernmental person or entity proposes to
perform any or all of the contract outside the boundaries of the state or if the
designated nongovernmental person or entity is domiciled outside the boundaries of
the state, include in the analysis the amount of income tax revenue, if any, which will
be lost to the state by the corresponding elimination of state employees and any
additional loss of revenue to the state due to the domicile of the nongovernmental
person or entity, as determined by the Dept. of Revenue to the extent practicable.
(5) Certify to the legislative auditor and appropriate legislative standing committees that
(a) he has complied with all provisions of proposed law and of all other applicable
laws; (b) the quality of the services to be provided by the contractor is likely to
satisfy the quality requirements of the statement and to equal or exceed the quality
of services which could be provided by state employees; (c) the contract cost will be
less than the estimated cost, taking into account all comparable types of cost and
analysis of lost tax income, if any; (d) the designated contractor and its supervisory
employees , while in the employ of the contractor, have no adjudicated record of
substantial or repeated noncompliance with any relevant federal or state regulatory
provision, including but not limited to provisions concerning occupational safety and
health, nondiscrimination, environmental protection, and Code of Governmental
Ethics and other conflicts of interest provisions and have no record of substantial or
repeated failure to meet performance measures or goals in any prior or current
contract with the state; and (e) the proposed privatization contract is in the public
interest in that it meets the applicable quality and fiscal standards set forth in
proposed law.
Proposed law provides for legislative review as follows:
(1)Requires a copy of the proposed privatization contract to accompany the certificate
transmitted to the legislative auditor and appropriate standing committees of the
legislature.
(2)Requires the agency head to further send each legislator a copy of the proposed
privatization contract and the certificate via e-mail on the same day he transmits HLS 13RS-555 ENGROSSED
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those documents to the legislative auditor and appropriate standing committees of
the legislature.
(3)Requires the legislative auditor to review each contract and certificate no later than
30 days after receipt and to submit his findings to the appropriate legislative standing
committees and to each legislator via e-mail. Requires the findings to be in writing
and to include findings regarding the agency's compliance with the requirements of
proposed law and to include the legislative auditor's independent review of all
relevant facts regarding any of the agency's and division of administration's findings.
Requires each agency to cooperate and assist the legislative auditor in his review
and notwithstanding any law or privilege to the contrary, to provide all documents
and other records to the legislative auditor that he deems necessary to complete his
review.
(4)Requires the appropriate legislative standing committees to review the proposed
certificate and contract and comment as necessary on any such contract within a
reasonable time not to exceed 45 days after receipt of the findings of the legislative
auditor. Prohibits the agency from entering into the contract if either standing
committee disapproves the contract. Provides that if either standing committee does
not disapprove of a contract within the 45-day time period or if both committees
approve the contract, the agency may enter into the contract.
Proposed law further provides that (1) no amendment to a privatization contract shall be
valid if it has the purpose or effect of avoiding any requirement of proposed law and (2) no
agency shall transfer or grant to another person or entity the authority to negotiate any
privatization agreement in any manner to subvert the provisions of proposed law or the
Public Records Law. Proposed law specifies that any contract entered into by the state or
any of its agencies in violation of proposed law shall be void ab initio.
Proposed law provides that after each complete year of a privatization contract, the agency
shall report to the appropriate legislative standing committees (1) the number of privatization
contractor employees and consultants, reflected as full-time equivalent positions, and the
amount of compensation received by each privatization contractor employee and consultant
during the previous year, and their hourly wage rates for the current and previous fiscal year;
(2) an analysis of the performance on the privatization contract, specifically including
performance measures; and (3) all complaints received and the agency's and contractor's
response to each complaint.
Proposed law specifies that notwithstanding any other provision to the contrary and except
as otherwise specifically provided by proposed law, all records related to a privatization
contract shall be available for examination, inspection, reproduction, and copying in the
same manner as provided by the Public Records Law regardless of the agency, official,
person, or legal entity in possession of the record.
(Amends R.S. 44:4.1(B)(34); Adds R.S. 49:351-357)