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 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 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)