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Introduced Version House Bill 2571 History

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Key: Green = existing Code. Red = new code to be enacted
H. B. 2571


(By Delegate Guthrie)

[Introduced January 13, 2010; referred to the

Committee on Government Organization then the Judiciary.]





A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §4-13-1, §4-13-2, §4-13-3, §4-13-4, §4-13-5 and §4-13-6, all relating to privatization contracts; definitions; statement of services proposed to be the subject of privatization; requirements for bidding entities; cost estimate; certification to State Auditor; objection by State Auditor; review; budget data on privatization; state contracts with business entities to procure services; prohibition where business entity has solicited or made political contributions; business entities which have contracted with state for rendition of services; and prohibition of solicitation of or making political contributions.

Be it enacted by the Legislature of West Virginia:

That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §4-13-1, §4-13-2, §4-13-3, §4-13-4, §4-13-5 and §4-13-6, all to read as follows:
ARTICLE 13. PRIVATIZATION CONTRACTS.

§4-13-1. Definitions.

As used in this article, unless the context clearly indicates a different meaning:

(1) "Agency" or "state agency" means a state governmental entity, including any bureau, department, division, commission, agency, committee, office, board, authority, subdivision, program, council, advisory body, cabinet, panel, system, task force, fund, compact, institution, survey, position, coalition or other entity in the State of West Virginia;

(2) "Business entity" means any natural or legal person, business corporation, professional services corporation, limited liability company, partnership, limited partnership, business trust, association or any other legal commercial entity organized under the laws of this state or any other state or foreign jurisdiction. The definition of a business entity includes: (i) All principals who own or control more than ten percent of the profits or assets of a business entity or ten percent of the stock in the case of a business entity that is a corporation for profit, as appropriate; and (ii) any subsidiaries directly or indirectly controlled by the business entity; and

(3) "Privatize" means a contract to procure the services of a
private vendor or business entity to provide a service that is similar to, or in lieu of, a service provided by a state agency.
§4-13-2. Statement of services; wage rates; health insurance; hiring of former agency employees; cost estimate; certification to State Auditor.
An agency may not make any privatization contract and any such contract is not valid unless the agency first complies with each of the following requirements:
(1) The agency shall prepare a specific written statement of the services proposed to be the subject of the privatization contract, including the specific quantity and standard quality of the subject services. The agency shall solicit competitive sealed bids for the privatization contracts based upon this statement. The day designated by the agency upon which it will accept these sealed bids shall be the same for any and all parties. This statement shall be a public record, shall be filed in the agency and shall be transmitted to the State Auditor for review pursuant to section three of this article. The term of any privatization contract may not exceed five years. An amendment to a privatization contract is not valid if it has the purpose or effect of avoiding any requirement of this section.
(2) For each position in which a bidder will employ any person pursuant to the privatization contract and for which the duties are substantially similar to the duties performed by a regular agency employee or employees, the statement required by subdivision (1) shall include a statement of the minimum wage rate to be paid for the position. Every bid for a privatization contract and every privatization contract shall include provisions specifically establishing the wage rate for each such position, which may not be less than said minimum wage rate. Every such bid and contract shall also include provisions for the contractor to pay not less than a percentage, comparable to the percentage paid by the state for state employees, of the costs of health insurance plans for every employee employed for not less than twenty hours per-week pursuant to such contract. Each contractor shall submit quarterly payroll records to the agency, listing the name, address, social security number, hours worked and the hourly wage paid for each employee in the previous quarter.
(3) Every privatization contract shall contain provisions requiring the contractor to offer available employee positions pursuant to the contract to qualified regular employees of the agency whose state employment is terminated because of the privatization contract and who satisfy the hiring criteria of the contractor.
(4) The agency shall prepare a comprehensive written estimate of the costs of regular agency employees providing the subject services in the most cost-efficient manner. The estimate shall include all direct and indirect costs of regular agency employees providing the subject services, including, but not limited to, pension, insurance and other employee benefit costs. For the purpose of this estimate, any employee organization may, at any time before the final day for the agency to receive sealed bids pursuant to subdivision (1), propose amendments to any relevant collective bargaining agreement to which it is a party. Any such amendments may take effect only if necessary to reduce the cost estimate pursuant to this paragraph below the contract cost pursuant to subdivision (5). The estimate shall remain confidential until after the final day for the agency to receive sealed bids for the privatization contract pursuant to subdivision (1), at which time the estimate shall become a public record, shall be filed in the agency and shall be transmitted to the State Auditor for review.
(5) After soliciting and receiving bids, the agency shall publicly designate the bidder to which it proposes to award the contract. The agency shall 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, and of monitoring and otherwise administering contract performance. If the designated bidder proposes to perform any or all of the contract outside the boundaries of the state, the contract cost shall be increased by the amount of income tax revenue, if any, which will be lost to the state by the corresponding elimination of agency employees, as determined by the Department of Revenue to the extent that it is able to do so.
(6) The head of the agency shall certify in writing, along with a copy of the proposed privatization contract, to the State Auditor that:
(A) He or she has complied with all provisions of this section and of all other applicable laws;
(B) The quality of services provided by the designated bidder is likely to satisfy the quality requirements of the statement prepared pursuant to subdivision (1), and to equal or exceed the quality of services which could be provided by regular agency employees pursuant to subdivision (4);
(C) The contract cost pursuant to subdivision (5) will be less than the estimated cost pursuant to subdivision (4), taking into account all comparable types of costs;
(D) The designated bidder and its supervisory employees, while in the employ of the designated bidder, have no adjudicated record of substantial or repeated willful noncompliance with any relevant federal or state regulatory statute including, but not limited to, statutes concerning labor relations, occupational safety and health, nondiscrimination and affirmative action, environmental protection and conflicts of interest; and
(E) The proposed privatization contract is in the public interest, in that it meets the applicable quality and fiscal standards set forth herein.
§4-13-3. Objection by State Auditor; review.
(a) An agency may not make any privatization contract and any such contract made is not valid if, within thirty business days after receiving the certificate required by section two of this article, the State Auditor notifies the agency of his or her objection. The objection shall be in writing and shall state specifically the State Auditor's finding that the agency has failed to comply with one or more requirements of section two of this article, including that the State Auditor finds incorrect, based on independent review of all the relevant facts, any of the findings required by subdivision (6) of section two of this article. The State Auditor may extend the time for objection for an additional period of thirty business days beyond the original thirty business days by written notice to the submitting agency stating the reason for the extension.
(b) For the purpose of reviewing the agency's compliance and certificate pursuant to section two of this article, the State Auditor or his or her designee may require by summons the attendance and testimony under oath of witnesses and the production of books, papers and other records relating to the review. All provisions of law relative to summonses in civil cases, including the manner of service, the scope and relevance of such review, and the compensation of witnesses who are not state employees, shall apply to the summonses.
(c) The State Auditor may propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code and prescribe forms to carry out the provisions of this section and section two.
(d) The objection of the State Auditor pursuant to subsection (a) shall be final and binding on the agency, unless the State Auditor thereafter in writing withdraws the objection, stating the specific reasons, based upon a revised certificate by the agency and upon the State Auditor's review thereof.
§4-13-4. Budget data on privatization.
(a) Notwithstanding the provisions set forth in article one-a, chapter five of this code, the state budget shall include an itemized listing of the percentage of each agency's appropriation that is utilized for all privatization contracts.
(b) The percentage of each agency's appropriation shall be provided for public inspection on the agency's website, if one exists, and made available online in a "user-friendly" summary format using plain language.
§4-13-5. State contracts with business entities to procure services; prohibition where business entity has solicited or made political contributions; time limitations.
The state or any of its purchasing agents or agencies or those of its independent authorities, as the case may be, may not enter into an agreement or otherwise contract to procure from any business entity services, if that business entity has solicited or made any contribution of money, or pledge of contribution, including in-kind contributions to a candidate committee or election fund of any candidate or holder of the public office of Governor, or to any state or county political party committee: (i) Within the eighteen months immediately preceding the commencement of negotiations for the contract or agreement; (ii) during the term of office of a Governor, if contributions are made to a candidate committee or election fund of the holder of that office, or to any state or county political party committee of a political party nominating the Governor in the last gubernatorial election preceding the commencement of the term; or (iii) within the eighteen months immediately preceding the last day of the term of office of Governor, in which case the prohibition shall continue through the end of the next immediately following term of the office of Governor, if contributions are made to a candidate committee or election fund of the holder of that office, or to any state or county political party committee of a political party nominating the Governor in the last gubernatorial election preceding the commencement of the latter term.
§4-13-6. Business entities which have contracted with state for rendition of services or supplies or for acquisition, sale, or lease of any lands or buildings; prohibition of solicitation of or making political contributions; time limitations.
Any business entity which agrees to any contract or agreement with the state or any department or agency thereof or its independent authorities for the rendition of services may not knowingly solicit or make any contribution of money, or pledge of a contribution, including in-kind contributions, to a candidate committee or election fund of any candidate or holder of the public office of Governor or to any state or county political party committee prior to the completion of the contract or agreement.




NOTE: The purpose of this bill is to prohibit privatization of government services unless private companies prove that they can perform those services more efficiently than government employees; to provide for State Auditor review of proposed privatization contracts; to list the percentage of each agency's appropriation that is being spent on private contracts in the state budget and disclose this information on the Internet; and to bar business entities bidding on contracts from making campaign contributions to government officials.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.
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