2013 -- S 0674

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LC00789

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TOWNS AND CITIES -- PRIVATIZATION OF MUNICIPAL SERVICES

     Introduced By: Senators Doyle, Jabour, and Gallo

     Date Introduced: March 06, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 45 of the General Laws entitled "TOWNS AND CITIES" is hereby

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amended by adding thereto the following chapter:

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     CHAPTER 66

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PRIVATIZATION OF MUNICIPAL SERVICES

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     45-66-1. Statement of intent. -- If it is determined that privatization of certain municipal

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governmental functions may be appropriate, the privatization inquiry process should be well

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defined with appropriate non-partisan, institutional oversight. The principles that guide a

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privatization inquiry shall include the following:

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     (1) To ensure the potential savings are realized and maximized -- build cost controls and

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containment incentives into contracts to eliminate excessive and unreasonable overhead costs and

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profits at the expense of citizens of the municipality;

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     (2) To preserve and promote competition -- permit in-house program managers and

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public employees to bid for the contract on a level playing field;

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     (3) To ensure quality and responsiveness -- develop reliable measures of service quality,

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strengthen in-house monitoring capacity and expertise, and write contracts with periodic

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performance reporting;

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     (4) To ensure accountability, control, and avoidance of conflicts of interest with

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departmental managers -- write detailed contract specifications, and require record-keeping and

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periodic reports;

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     (5) To address legal and political barriers -- involve affected groups in the decision

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making process; and

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     (6) To recognize the impact on service recipients, employees, and their families -- enable

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public employees to have an opportunity to bid for their work.

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     45-66-2. Definitions. -- When used in this chapter:

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     (1) "In-house costs" means a detailed budget breakdown of the current costs of providing

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the service or program proposed for privatization.

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     (2) "Statement of work and performance standards" means a clear statement of the nature

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and extent of the work to be performed with measurable performance standards as set forth in

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subdivision 45-66-3(b)(2) of this chapter.

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     (3) "In-house bid" shall mean the cost of the proposal proffered by in-house state

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programs and employees and their representatives pursuant to subdivision 45-66-3(b)(3) of this

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chapter.

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     (4) "Cost comparison" means an analysis of the comparative costs of providing the

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service in-house or by privatization.

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     (5) "Conversion differential" means transition costs and costs associated with starting up

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or closing down during conversion to purchased services or in the event of the need to bring

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services back in-house.

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     (6) "Transition costs" means the cost of contracting including monitoring vendors for

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accountability, costs associated with unemployment compensation, payment of accrued leave

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credits, bumping, and retention factors for those with statutory status. Transition costs shall not

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include department overhead or other costs that would continue even if the services were

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privatized.

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     (7) "Privatization or privatization contract" means an agreement or combination or series

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of agreements by which a non-governmental person or entity agrees with an agency to provide

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services expected to result in a fiscal year expenditure of at least one hundred fifty thousand

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dollars ($150,000). (As of July 1 of each year, the amount shall increase to reflect increases in the

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consumer price index calculated by the United States Bureau of Labor Statistics for all urban

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consumers nationally during the most recent twelve (12) month period for which data are

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available or more), which would contract services which are substantially similar to and in

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replacement of work normally performed by an employee of a municipality as of June 30, 2013.

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     "Privatization" or "privatization contract" excludes:

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     (i) Contracts resulting from an emergency procurement;

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     (ii) Contracts with a term of one hundred eighty (180) days or less on a non-recurring

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basis;

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     (iii) Contracts to provide highly specialized or technical services not normally provided

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by municipal employees;

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     (iv) Any subsequent contract which: (A) Renews or rebids a prior privatization contract

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which existed before June 30, 2013; or (B) Renews or rebids a privatization contract that was

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subject to the provisions of this statute after its enactment; and

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     (v) An agreement to provide legal services or management consulting services.

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     45-66-3. Preclosure analysis. -- (a) Prior to the closure, consolidation or privatization of

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any municipal facility, function or program, the chief administrative officer of the municipality or

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his or her designee, shall conduct a thorough cost comparison analysis and evaluate quality

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performance concerns before deciding to purchase services from private vendors rather than

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provide services directly.

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     (b) The chief administrative officer shall notify the bargaining representatives of

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municipal employees who will be directly impacted by a potential privatization in writing at least

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six (6) months in advance of its consideration of privatizing a municipal service and complete the

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following process:

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     (1) Document the current in-house costs of providing the services with a detailed budget

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breakdown. The in-house cost shall include any department overhead and other costs that would

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continue even if the service was contracted out.

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     (2) Prepare a statement of work and performance standards which shall form the basis for

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the requests for proposals and which shall include the following:

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     (i) A clear statement of work with measurable performance standards including

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qualitative as well as quantitative standards that bidders must meet or exceed;

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     (ii) Requirements that contractors meet affirmative action, disability and other

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nondiscriminatory and service standards currently required of municipal agencies.

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     (iii) A clear format that will enable comparison of competitive bids and in-house bids.

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The format must require detailed budget breakdowns.

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     (c) Prior to the issuance of the RFP current public employees must be notified of the

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intent to solicit bid proposals and of the decision timeline. Additionally, at least sixty (60)

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calendar days prior to the issuing of a request for proposals, the cost analysis and statement of

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work shall be sent to the bargaining representatives of municipal employees who will be directly

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impacted by a potential privatization.

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     (d) Prior to, or up until the time when a prospective offeror is required to submit to the

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municipality a proposal for a privatization contract, directly impacted municipal employees and

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their bargaining representatives shall be afforded an opportunity to present a new cost estimate,

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reflecting any innovations that they could incorporate into the work performance standards. This

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new cost estimate shall be deemed an in-house bid, which shall form the basis for the eventual

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cost comparison. The chief administrative officer shall provide technical and informational

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assistance to the in-house municipal work group in its preparation of an in-house bid.

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      (e) Prior to or at any time before or after the normal procurement process, the chief

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administrative officer may elect to accept the in-house bid or proceed with the normal

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procurement process which must:

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     (1) Incorporate the statement of work and performance standards, and

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     (2) Require bidders to meet the same statement of work performance standards as would

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be expected by an in-house cost estimate; and

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     (3) Include bid forms requiring a sufficiently detailed breakdown of cost categories to

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allow accurate and meaningful comparisons, if applicable.

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     (f) The in-house bid developed pursuant to subsection (d) of this section shall be kept

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confidential from bidders.

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     45-66-4. Cost comparison. -- The chief administrative officer shall analyze all vendor

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bids as compared to current delivery of service costs or an in-house bid, whichever is lower,

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according to the following:

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     (1) Any cost comparison must include an analysis of:

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     (i) Comparative benefits for employees to meet the requirements of the statement of work

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and performance standards;

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     (ii) All transition costs as defined in subdivision 45-66-2(6) of this chapter;

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     (iii) Any conversion costs as defined in subdivision 45-66-2(5) of this chapter; and

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     (iv) Areas where the bidder's costs appear artificially low, thereby putting the

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municipality at risk for further cost overruns.

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     (2) In the event that the municipality will incur new program costs related to the

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statement of work and performance standards, such costs shall be included in the cost

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comparison.

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     (3) All cost comparisons must include an analysis of whether the cost savings will result

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in meeting the performance and qualitative measures set out in the statement of work and

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performance standards.

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     45-66-5. Award of contract. -- After conducting a cost comparison pursuant to section

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45-66-4, the chief administrative officer may award the bid to an outside vendor only if the

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savings to the municipality is substantial and the quality of performance of service required and

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specified in statement of work and performance standards will be met or exceeded by the outside

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vendor.

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     45-66-6. Appeal. -- Before any award is final, municipal employees or their bargaining

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representatives shall have a right to protest the award decision within thirty (30) days to the chief

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administrative officer. The chief administrative officer shall have no more than fifteen (15) days

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to render a decision. Any municipal employees or their bargaining representative that files a

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protest shall have thirty (30) days from the director's decision to file an appeal to the superior

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court. The superior court shall determine within thirty (30) days of filing whether to stay the

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award or allow the procurement to proceed. Until such time as the superior court makes this

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determination, no final award by the municipality may be made.

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     45-66-7. Applicability. -- (a) The process set forth in this chapter shall apply to

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privatization contracts as defined in subdivision 45-66-2(7).

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      (b) Notwithstanding any general law or special law to the contrary, no award shall be

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made or privatization contract entered into by any municipal government in the state of Rhode

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Island unless and until the processes and procedures outlined in section 45-66-3, 45-66-4 and 45-

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66-5 have been fully complied with in their entirety. All of the aforementioned sections shall

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apply to all pending awards and pending privatization contracts.

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     45-66-8. Severability. -- If any provision of this chapter, or the application of this

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chapter to any person or circumstances is held invalid by a court of competent jurisdiction, the

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remainder of the chapter and the application of that provision to other persons or circumstances

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shall not be affected.

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     SECTION 2. This act shall take effect upon passage.

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LC00789

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TOWNS AND CITIES -- PRIVATIZATION OF MUNICIPAL SERVICES

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     This act would establish a process governing the privatization of municipal services

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analogous to present chapter 42-148 governing the privatization of state services.

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     This act would take effect upon passage.

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LC00789

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