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H.359 1
Introduced by Representative Hooper of Burlington 2
Referred to Committee on 3
Date: 4
Subject: Executive; contracts; privatization contracts 5
Statement of purpose of bill as introduced: This bill proposes to amend the 6
requirements for the Executive Branch to enter into privatization contracts. 7
An act relating to privatization contracts 8
It is hereby enacted by the General Assembly of the State of Vermont: 9
Sec. 1. 3 V.S.A. § 341 is amended to read: 10
§ 341. DEFINITIONS 11
As used in this chapter: 12
* * * 13
(3) “Privatization contract” means a contract for services valued at 14
$25,000.00 or more per year, which: 15
(A) is the same or substantially similar to and in lieu of services 16
previously currently provided, in whole or in part, by permanent, classified 17
State employees, and which results in a reduction in force of at least one 18
permanent, classified employee, or the elimination of a vacant position of an 19
employee covered by a collective bargaining agreement; or 20 BILL AS INTRODUCED H.359
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(B) will substantially replace the duties of a vacant position in State 1
government. 2
* * * 3
Sec. 2. 3 V.S.A. § 342 is amended to read: 4
§ 342. CONTRACTING STANDARDS; CONTRACTS FOR SERVICES 5
Each contract for services valued at $25,000.00 or more per year shall 6
require certification by the Office of the Attorney General to the Secretary of 7
Administration that such contract for services is not contrary to the spirit and 8
intent of the classification plan and merit system and standards of this title. A 9
contract for services is contrary to the spirit and intent of the classification plan 10
and merit system and standards of this title, and shall not be certified by the 11
Office of the Attorney General as provided in this section, unless the 12
provisions of subdivisions (1), (2), and (3) of this section are met, or one or 13
more of the exceptions described in subdivision (4) of this section apply. 14
* * * 15
Sec. 3. 3 V.S.A. § 343 is amended to read: 16
§ 343. PRIVATIZATION CONTRACTS; PROCEDURE 17
(a) An agency shall not enter into a privatization contract, unless all of the 18
following are satisfied: 19
(1)(A) Thirty-five days prior to the beginning of any open bidding 20
process, the agency provides written notice to the collective bargaining 21 BILL AS INTRODUCED H.359
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representative of the intent to seek to enter a privatization contract. During 1
those 35 days, the collective bargaining representative shall have the 2
opportunity to discuss alternatives to contracting. Such alternatives may 3
include amendments to the contract if mutually agreed upon by the parties. 4
Notices regarding the bid opportunity may not be issued during the 35-day 5
discussion period. The continuation of discussions beyond the end of the 35-6
day period shall not delay the issuance of notices. 7
(B) During the 35-day period, the agency shall prepare a specific written 8
statement of the services proposed to be the subject of privatization contract, 9
including the specific quantity and standard or quality of the subject services. 10
For each position in which a bidder will employ any person pursuant to a 11
privatization contract and for which the duties are substantially similar to the 12
duties performed by a permanent, classified State employee, the statement 13
shall also include the prevailing wage rate to be paid for each position, which 14
shall not be less than the average step of the grade under which the comparable 15
State employee position is paid. This statement shall be provided to the 16
collective bargaining representative, the Agency of Administration, and be 17
posted to where it is viewable to the public. This statement shall be subject to 18
1 V.S.A. chapter 5, subchapter 3 (Public Records Act). 19
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(4) Every bid for a privatization contract shall include: 1
(A) the wage rate for each position, which shall not be less than the 2
prevailing wage rate contained in the statement described in subdivision (1)(B) 3
of this subsection (a); and 4
(B) whether health, dental, and vision insurance coverage is provided 5
to employees and, if applicable, the cost to employees for such coverage. 6
(5) The Agency and the Secretary of Administration shall each certify in 7
writing that: 8
(A) they have complied with all provisions of this section and with 9
all other applicable laws; 10
(B) the quality of the services to be provided by the designated bidder 11
is likely to satisfy the quality requirements of the statement prepared pursuant 12
to subdivision (1) of this subsection (a); 13
(C) the designated bidder and its supervisory employees, while in the 14
employ of the designated bidder, have no record of substantial or repeated 15
willful noncompliance with any relevant federal or State regulatory statute, 16
including statutes concerning labor relations, occupational safety and health, 17
nondiscrimination and affirmative action, environmental protection, and 18
conflicts of interest; and 19
(D) the proposed privatization contract is in the public interest in that 20
it meets the applicable quality and fiscal standards set forth in this section. 21 BILL AS INTRODUCED H.359
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(b) Each privatization contract shall include: 1
(1) the wage rate for each position, which shall not be less than the 2
prevailing wage rate contained in the statement described in subdivision (a)(1) 3
of this section; 4
(2) a provision that the cost and coverage of the health, dental, and 5
vision insurance provided to employees is substantially similar to the cost and 6
coverage of the health, dental, and vision insurance provided to State 7
employees; 8
(3) a provision that the contractor shall submit quarterly payroll records 9
to the agency that list the hours worked and the hourly wage paid for each 10
employee in the previous quarter; 11
(4) a provision that the agency shall not amend any privatization 12
contract if the amendment has the purpose or effect of voiding any requirement 13
of this section; 14
(5) a provision requiring the contractor to comply with a policy of 15
nondiscrimination and equal opportunity for all persons and to take affirmative 16
steps to provide such equal opportunity for all persons; 17
(6) a provision granting all employees employed under the contract just 18
cause employment protection; and 19 BILL AS INTRODUCED H.359
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(7) a provision requiring the contractor to comply with a policy of 1
whistleblower protection equal to those defined in sections 971–978 of this 2
title. 3
(c)(1) A privatization contract shall contain specific performance measures 4
regarding quantity, quality, and results and guarantees regarding the services 5
performed. 6
(2) The agency shall provide information in the State’s Workforce 7
Report on the contractor’s compliance with the specific performance measures 8
set out in the contract. 9
(3) The agency may not renew the contract if the contractor fails to 10
comply with the specific performance measures set out in the contract as 11
required by subdivision (1) of this subsection. 12
(c)(d)(1) Before an agency may renew a privatization contract for the first 13
time, the Auditor of Accounts shall review the privatization contract, along 14
with employer payroll and benefits records, analyzing whether it is achieving: 15
(A) the 10 percent cost-savings requirement set forth in subdivision 16
(a)(2) of this section; and 17
(B) the performance measures incorporated into the contract as 18
required under subdivision (b)(c)(1) of this section. 19
(2) If the Auditor of Accounts finds that a privatization contract has not 20
achieved the cost savings required under subdivision (a)(2) of this section or 21 BILL AS INTRODUCED H.359
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complied with performance measures required under subdivision (b) 1
subdivisions (c)(1) and (d)(1) of this section, the Auditor of Accounts shall file 2
a report with the agency and the House Committee on Government Operations 3
and Military Affairs and Senate Committees Committee on Government 4
Operations, and the agency review whether to renew the privatization contract 5
or perform the work with State employees shall not renew the privatization 6
contract. 7
Sec. 4. FISCAL AND OPERATIONAL IMPACT OF PRIVATIZATION 8
CONTRACT CHANGES 9
(a) The Agency of Administration, in consultation with the Joint Fiscal 10
Office, the State Auditor, the Vermont State Employees’ Association, and the 11
Office of the Attorney General, shall assess the fiscal and operational impacts 12
of: 13
(1) modifying the definition of “privatization contract” as set forth in 14
3 V.S.A. § 341 to include grants; 15
(2) increasing the required cost savings of a privatization contract from 16
10 percent to 20 percent; and 17
(3) removing exceptions set forth in 3 V.S.A. § 342(4) that, after review, 18
are used excessively or arbitrarily to certify contracts by the Office of the 19
Attorney General. 20 BILL AS INTRODUCED H.359
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(b) The Agency shall submit a written report to the House Committees on 1
Appropriations and on Government Operations and Military Affairs and the 2
Senate Committees on Appropriations and on Government Operations with its 3
analysis conducted pursuant to this section on or before February 1, 2026. 4
Sec. 5. LEGISLATIVE INTENT; PRIVATIZATION CONTRACTS 5
It is the intent of the General Assembly that a privatization contract shall 6
not be required for a contract for services when there is no permanent, 7
classified State employee position to perform the equivalent of such proposed 8
contracted services, which includes health services and capital construction. 9
Sec. 6. EFFECTIVE DATES 10
This act shall take effect on passage, except that Sec. 1 shall take effect on 11
July 1, 2026. 12