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Regular Session, 2014
HOUSE BILL NO. 128
BY REPRESENTATIVES HAVARD, BERTHELOT, AND GEYMANN
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 14RS-96 REENGROSSED
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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)(a)(i) "Privatization contract" shall mean an agreement or combination or15
series of agreements by which a nongovernmental person or entity agrees with an16
agency to provide services that are valued at five million dollars or more per year17
and that are substantially similar to and in lieu of services previously provided in18
whole or in part by state employees of an agency.19
(ii) An agreement solely to provide engineering or design services shall not20
be considered a privatization contract, and an agreement to provide for the21
construction or repair of any street, road, highway, or bridge shall not be considered22
a privatization contract.23
(b) "Privatization contract" shall also mean any agreement or combination24
or series of agreements by which a nongovernmental person or entity agrees to lease25
or rent any state building or facility for five hundred thousand dollars or more.26
§353. Requirements27
A. No agency shall enter into a privatization contract as defined in R.S.28
49:352(5)(a) and no such contract shall be valid unless the agency, in consultation29 HLS 14RS-96 REENGROSSED
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with the division of administration, first complies with each of the following1
requirements:2
(1)(a) The agency shall prepare a specific written statement of the services3
proposed to be the subject of the privatization contract, including the specific4
quantity and standard of quality of the subject services.5
(b) The agency shall solicit competitive bids or proposals for the6
privatization contract based upon this statement.7
(c) The statement shall be a public record, shall be filed with the agency and8
with the division of administration, and shall be transmitted to the legislative auditor9
and the appropriate standing committees of the legislature upon its completion.10
(2) Every privatization contract as defined in R.S. 49:352(5)(a) shall contain11
provisions requiring the contractor to offer available employee positions pursuant to12
the contract to qualified classified state employees of the agency whose state13
employment is terminated because of the privatization contract, and who satisfy the14
hiring criteria of the contractor.15
(3)(a) The agency shall prepare a comprehensive written estimate of the16
costs of state employees providing the subject services in the most cost-efficient17
manner. The estimate shall include all direct and indirect costs of state employees18
providing the subject services, including but not limited to retirement, insurance, and19
other employee benefit costs.20
(b) Such estimate shall remain confidential until after the final day for the21
agency to receive bids or proposals for the privatization contract pursuant to22
Paragraph (1) of this Subsection, at which time the estimate shall become a public23
record, shall be filed with the agency and with the division of administration, and24
shall be transmitted to the legislative auditor and the appropriate standing25
committees of the legislature for review pursuant to R.S. 49:354.26
(4) After soliciting and receiving bids or proposals, the agency shall publicly27
designate the nongovernmental person or entity to which it proposes to award the28
contract. The agency shall prepare a comprehensive written analysis of the contract29 HLS 14RS-96 REENGROSSED
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cost based upon the designated bid or proposal, specifically including the costs of1
transition from public to private operation, of additional unemployment and2
retirement benefits, if any, of additional retirement costs, if any, and of monitoring3
and otherwise administering contract performance. If the designated4
nongovernmental person or entity proposes to perform any or all of the contract5
outside the boundaries of the state or if the designated nongovernmental person or6
entity is domiciled outside the boundaries of the state, the analysis of the contract7
cost shall indicate the amount of income tax revenue, if any, which will be lost to the8
state by the corresponding elimination of state employees and any additional loss of9
revenue to the state due to the domicile of the nongovernmental person or entity, as10
determined by the Department of Revenue to the extent practicable.11
(5) The head of the agency shall certify in writing to the legislative auditor12
and the appropriate standing committees of the legislature that:13
(a) He has complied with all provisions of this Section and of all other14
applicable laws.15
(b) The quality of the services to be provided by the designated16
nongovernmental person or entity is likely to satisfy the quality requirements of the17
statement prepared pursuant to Paragraph (1) of this Subsection, and to equal or18
exceed the quality of services which could be provided by state employees.19
(c) The contract cost, according to the analysis required by Paragraph (4) of20
this Subsection, will be less than the cost estimated pursuant to Paragraph (3) of this21
Subsection, taking into account all comparable types of cost and analysis of lost tax22
income, if any.23
(d) The designated nongovernmental person or entity and its supervisory24
employees, while in the employ of said designated nongovernmental person or25
entity, have no adjudicated record of substantial or repeated noncompliance with any26
relevant federal or state regulatory provision, including but not limited to provisions27
concerning occupational safety and health, nondiscrimination, environmental28
protection, and the Code of Governmental Ethics and other conflicts of interest29 HLS 14RS-96 REENGROSSED
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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 it3
meets the applicable quality and fiscal standards set forth in this Section.4
B.(1) A copy of the proposed privatization contract shall accompany the5
certification transmitted to the legislative auditor and appropriate standing6
committees 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 certification via electronic mail on the same9
day he transmits those documents to the legislative auditor and appropriate standing10
committees of the legislature.11
§353.1. Lease and rental agreements12
A. No agency shall enter into a privatization contract as defined in R.S.13
49:352(5)(b) and no such contract shall be valid unless the agency, in consultation14
with the division of administration, first complies with each of the following15
requirements:16
(1) The agency shall prepare a specific written statement of the fair market17
rental or lease value of the state building or facility based upon documented18
comparables.19
(2) The statement shall be a public record, shall be filed in the agency and20
in the division of administration, and shall be transmitted to the legislative auditor21
and the appropriate standing committees of the legislature upon its completion.22
(3) The agency shall publicly announce the availability of the building or23
facility for lease or rent. If more than one nongovernmental entity or person24
expresses documented interest in the lease or rental, the agency shall engage in a25
competitive process to designate the nongovernmental entity or person with whom26
it intends to negotiate.27
B. The head of the agency shall certify in writing to the legislative auditor28
and the appropriate standing committees of the legislature that:29 HLS 14RS-96 REENGROSSED
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(1) He has complied with all provisions of this Section and of all other1
applicable laws.2
(2) The designated nongovernmental person or entity and its supervisory3
employees, while in the employ of said designated nongovernmental person or4
entity, have no adjudicated record of substantial or repeated noncompliance with any5
relevant federal or state regulatory provision, including but not limited to provisions6
concerning occupational safety and health, nondiscrimination, environmental7
protection, and the Code of Governmental Ethics and other conflicts of interest8
provisions.9
(3) The proposed privatization contract is in the public interest and the10
reasons therefore.11
C.(1) A copy of the proposed privatization contract as defined in R.S.12
49:352(5)(b) shall accompany the certification transmitted to the legislative auditor13
and appropriate standing committees of the legislature for review pursuant to R.S.14
49:354.15
(2) The agency head shall send each member of the legislature a copy of the16
proposed privatization contract and the certification via electronic mail on the same17
day he transmits those documents to the legislative auditor and appropriate standing18
committees of the legislature.19
§354. Legislative review20
A.(1) The legislative auditor shall review each contract and certification no21
later than thirty days after receipt. After completion of the review, the legislative22
auditor shall submit his findings to the appropriate legislative standing committees.23
Such findings shall be in writing and shall state the legislative auditor's findings24
regarding the agency's compliance with the requirements of R.S. 49:353 or 353.1, as25
the case may be, and shall specifically include the legislative auditor's independent26
review of all relevant facts regarding any of the agency's findings required by R.S.27
49:353(A)(5) or 353.1, as the case may be.28 HLS 14RS-96 REENGROSSED
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(2) The legislative auditor shall send each member of the legislature a copy1
of his findings via electronic mail on the same day he transmits his findings to the2
appropriate standing committees of the legislature.3
(3) Each agency shall cooperate and assist the legislative auditor in his4
review and, notwithstanding any law or privilege to the contrary, shall provide all5
documents and other records to the legislative auditor that he deems necessary to6
complete his review.7
B. The appropriate standing committees of the legislature shall review the8
certification and proposed contract and may disapprove any such contract within a9
reasonable time, not to exceed forty-five days after receipt of the findings of the10
legislative auditor. If either standing committee disapproves the contract, the agency11
shall not enter into the contract. If either standing committee does not disapprove12
of a contract within the forty-five-day time period or if both committees vote to13
approve the contract, the agency may enter into the contract.14
§355. Prohibitions; voidability15
A. No amendment to a privatization contract shall be valid if it has the16
purpose or effect of avoiding any requirement of this Chapter.17
B. No agency shall transfer or grant to another person or entity the authority18
to negotiate any privatization agreement in any manner to subvert the provisions of19
this Chapter or the Public Records Law.20
C. Any contract entered into by the state or any of its agencies in violation21
of this Chapter shall be void ab initio.22
§356. Post-privatization review23
A. After each complete year of a privatization contract as defined in R.S.24
49:352(5)(a), the agency shall report to the appropriate standing committees of the25
legislature the following information:26
(1) The number of privatization contractor employees and consultants,27
reflected as full-time equivalent positions, and the amount of compensation received28 HLS 14RS-96 REENGROSSED
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by each privatization contractor employee and consultant during the previous year,1
and their hourly wage rates for the current and previous fiscal year.2
(2) An analysis of the nongovernmental person or entity performance under3
the privatization contract, specifically including performance measures.4
(3) All complaints received and the agency's and contractor's response to5
each complaint.6
B. After each complete year of a privatization contract as defined in R.S.7
49:352(5)(b), the agency shall report to the appropriate standing committees of the8
legislature the following information:9
(1) An analysis of the nongovernmental person's or entity's compliance with10
the terms of the privatization contract.11
(2) All complaints received and the agency's and contractor's response to12
each complaint.13
(3) A current analysis of the fair market rental or lease value of the state14
building or facility based upon documented comparables.15
§357. Records16
Notwithstanding any other provision to the contrary and except as otherwise17
specifically provided by this Chapter, all records related to a privatization contract18
shall be available for examination, inspection, reproduction, and copying in the same19
manner as provided by the Public Records Law regardless of the agency, official,20
person, or legal entity in possession of the record.21
Section 2. R.S. 44:4.1(B)(34) is hereby amended and reenacted to read as follows:22
§4.1. Exceptions23
* * *24
B. The legislature further recognizes that there exist exceptions, exemptions,25
and limitations to the laws pertaining to public records throughout the revised26
statutes and codes of this state. Therefore, the following exceptions, exemptions, and27
limitations are hereby continued in effect by incorporation into this Chapter by28
citation:29
* * *30 HLS 14RS-96 REENGROSSED
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(34) R.S. 49:220.25, 353(A)(3)(b), 956, 997, 10551
* * *2
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. 128
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 either (a) 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 (specifically excludes an agreement solely to provide
engineering or design services and an agreement to provide for the repair or construction of
a street, road, highway, or bridge) or (b) any agreement or combination or series of
agreements by which a nongovernmental person or entity agrees to lease or rent any state
building or facility for $500,000 or more.
Proposed law creates and provides for the Privatization Review Act by prohibiting an agency
from entering into a privatization contract for services, 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; and (c) 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 whose 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. 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 HLS 14RS-96 REENGROSSED
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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. 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, the analysis shall include 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 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 further provides for the Privatization Review Act by prohibiting an agency
from entering into a privatization contract for lease or rental of state buildings or facilities,
unless the agency (or agency head) complies with each of the following:
(1)Prepare a specific written statement of the fair market rental of lease value of the
state building or facility based upon documented comparables. Specifies that the
statement is a public record and requires it to be filed in the agency and in the
division of administration, and transmitted to the legislative auditor and the
appropriate legislative committees upon completion.
(2)Publicly announce the availability of the building or facility for lease or rent and if
more than one nongovernmental entity or person expresses documented interest in
the lease or rental, engage in a competitive process to designate the nongovernmental
entity or person with whom it intends to negotiate.
(3)Certify in writing to the legislative auditor and the appropriate standing committees
of the legislature that: (a) he has complied with all provisions of proposed law and
of all other applicable laws; (b) the designated nongovernmental person or entity and
its supervisory employees, while in the employ of said designated nongovernmental
person or entity, have no adjudicated record of substantial or repeated
noncompliance with any relevant federal or state regulatory provision; and (c) the
proposed privatization contract is in the public interest and the reasons therefore. HLS 14RS-96 REENGROSSED
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Proposed law provides for legislative review as follows:
(1)Requires a copy of the proposed privatization contract to accompany the certification
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 certification 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 certification 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 certification
and proposed contract and provides that the committees may disapprove the 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 for services,
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 provides that after each complete year of a privatization contract for rental or
lease of state buildings or facilities, the agency shall report to the appropriate legislative
standing committees: (1) an analysis of the nongovernmental person's or entity's compliance
with the terms of the privatization contract; (2) all complaints received and the agency's and
contractor's response to each complaint; and (3) a current analysis of the fair market rental
of lease value of the state building or facility based upon documented comparables.
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. HLS 14RS-96 REENGROSSED
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(Amends R.S. 44:4.1(B)(34); Adds R.S. 49:351-357)
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on House and Governmental
Affairs to the engrossed bill.
1. Removes reference to estimated costs in a provision regarding the comparison
of the quality of services, changes "certificate" to "certification", and makes
other technical changes.