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 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. 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.
(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.