HB 1227

1	A bill to be entitled
2	An act relating to procurement of personal property and
3	services; creating s. 287.019, F.S.; defining
4	"privatization"; requiring the head of a state agency,
5	prior to the purchase, lease, or acquisition of
6	commodities or contractual services by privatization, to
7	conduct a business case evaluation of the proposed
8	privatization; providing elements and components of the
9	evaluation; requiring the head of a state agency,
10	subsequent to the purchase, lease, or acquisition of
11	commodities or contractual services by privatization, to
12	conduct an evaluation of the privatization; providing
13	evaluation criteria; requiring state agencies to establish
14	a system for monitoring the performance of a privatization
15	contractor and for monitoring the contractor's compliance
16	with the terms and conditions of the privatization
17	contract; requiring state agencies to conduct annual
18	evaluations of the performance of privatization
19	contractors and report their findings to the Legislature,
20	the Office of Program Policy Analysis and Government
21	Accountability, and the Auditor General; requiring the
22	Office of Program Policy Analysis and Government
23	Accountability and the Auditor General to periodically
24	examine any privatization in order to assist the
25	Legislature in evaluating whether expected savings and
26	outcomes have been achieved through privatization;
27	creating s. 14.204, F.S.; creating the Center for
28	Efficient Government; providing purposes of the center;
29	providing for an oversight advisory board to oversee the
30	activities of the center; providing for membership of the
31	board; creating s. 110.1095, F.S.; requiring executive
32	agencies to address the transition of employees affected
33	by outsourcing initiatives; requiring agencies to develop
34	job placement policies for such employees; requiring
35	agencies to develop a reemployment and retraining
36	assistance plan for employees; authorizing agencies to
37	provide job skills retraining to any impacted employee who
38	is not offered comparable employment within 1 year of
39	separating from state employment; requiring agencies to
40	coordinate the impact and transition of affected employees
41	with the Agency for Workforce Innovation; requiring the
42	coordination of services for state employees with
43	Workforce Florida, Inc., and regional workforce boards
44	throughout the state; requiring agencies to offer critical
45	employee retention salary increases; authorizing agencies
46	to use a percentage of the savings realized from an
47	implemented outsourcing initiative as an employee
48	recognition allocation to reward the employee or group of
49	employees who proposed the initiative; requiring agencies
50	to consider incorporating severance compensation
51	provisions into outsourcing contracts; providing an
52	effective date.
53
54	Be It Enacted by the Legislature of the State of Florida:
55
56	Section 1.  Section 287.019, Florida Statutes, is created
57	to read:
58	287.019  Privatization evaluation and assessment.--
59	(1)  For the purposes of this section, "privatization"
60	means entering into a contract with one or more private entities
61	for the purchase, lease, or acquisition of any commodity or
62	contractual service required by an agency of the state under
63	this chapter when:
64	(a)  It is maintained by the department that such commodity
65	or contractual service can be provided in a more efficient
66	manner by a private entity; and
67	(b)  The expenditure by the contracting agency for the
68	purchase, lease, or acquisition of commodities or contractual
69	services exceeds $10 million annually.
70	(2)  Prior to the purchase, lease, or acquisition of any
71	commodity or contractual service required by an agency of the
72	state under this chapter which meets the definition provided in
73	subsection (1), the head of the state agency shall conduct a
74	business case evaluation of the proposed privatization which
75	shall specifically address the potential for the privatization
76	to result in a verifiable cost savings. A business case
77	evaluation for a privatization proposal shall contain the
78	following elements:
79	(a)  Description and rationale.--The description and
80	rationale element shall contain the following components:
81	1.  A description of the program or service to be
82	privatized.
83	2.  An analysis of the agency's current performance and
84	associated needs or problems with respect to the program or
85	service that is the subject of the privatization proposal and
86	proposed solutions.
87	3.  The benefits, such as cost savings or program
88	improvements, that are expected to result from privatization.
89	(b)  Cost-benefit analysis.--The cost-benefit analysis
90	element shall contain the following components:
91	1.  An accounting of the current direct and indirect
92	expenditures for the program or services for which privatization
93	is proposed. Indirect costs, as determined by the agency,
94	include, but are not limited to, providing executive direction,
95	legal services, and administrative support services such as
96	personnel, finance, and budgeting; program direction,
97	monitoring, and other activities that are essential to operating
98	a program but are not directly associated with providing a
99	service; and the salaries, benefits, and expenses of the
100	individuals overseeing the contractor for the privatization.
101	Direct costs, as determined by the agency, include, but are not
102	limited to, salaries and benefits of employees formerly
103	providing the program or service.
104	2.  An analysis demonstrating the potential savings or
105	increased costs that are expected to occur as a result of
106	privatization. The analysis shall include the identification of
107	crucial factors that could affect the potential savings
108	realized, the effect of changes in these factors on costs and
109	benefits of the proposal, and a list of state assets that would
110	be transferred to the contractor if the privatization plan is
111	implemented.
112	3.  If the proposed privatization will occur under a share-
113	in-savings contract, a description of the methodology that will
114	be used to calculate savings and payments to a contractor under
115	such contract. For purposes of this section, a "share-in-savings
116	contract" is an agreement in which an agency pays a contractor
117	based on the financial benefits derived from the contractor's
118	performance and which contains quantifiable baseline data that
119	will be used to establish the basis upon which the percentage of
120	savings paid to a contractor will be determined.
121	(c)  Contract monitoring and contingency plans.--The
122	contract monitoring and contingency plans element shall contain
123	the following components:
124	1.  The process the agency plans to use to monitor the
125	performance of the privatization contractor and the estimated
126	monitoring costs the agency will incur for this oversight
127	function.
128	2.  A contingency plan specifying actions that will be
129	taken to address potential problems such as vendor prices
130	exceeding anticipated levels, unexpected delays by the
131	contractor in performing services by required deadlines, failure
132	to meet performance expectations, or inability to meet
133	obligations or abandonment of the contract.
134	(d)  Public records access.--The public records access
135	element shall contain the following components:
136	1.  A list of public records issues pertinent to the
137	proposed privatization, including whether any confidential or
138	exempt records would be maintained by the contractor and the
139	procedures that would be used to ensure that the contractor
140	maintains security and privacy of confidential or exempt
141	records.
142	2.  Agency plans to require the contractor to make
143	available for inspection and review any program-related records
144	that it produces or collects to the same extent and in the same
145	manner as such records would be available from a state agency.
146	(3)  If the business case evaluation conducted pursuant to
147	subsection (2) indicates that the proposed privatization will
148	result in a verifiable cost savings, the evaluation must
149	ascertain whether the cost savings will be directly attributable
150	to any of the following:
151	(a)  Lower labor costs than that of the state agency.
152	(b)  Reduced regulatory requirements.
153	(c)  Reduced overhead.
154	(d)  Increased flexibility with respect to the motivation,
155	reward, and termination of employees.
156	(e)  Access to better equipment than that available to the
157	state agency.
158	(f)  The ability to react more quickly to changing
159	conditions than the state agency. If so, was this ability
160	attributable to:
161	1.  An ability to shift funds to pay unexpected expenses
162	without the encumbrance of budget transfer authority under which
163	the state agency must operate.
164	2.  An ability to expand operations more quickly than the
165	state agency.
166	(g)  Staffing flexibility, including the ability to obtain
167	specialized expertise by contract or through the hiring of a
168	consultant for one-time occasional projects.
169	(h)  The avoidance of political factors, which may include
170	the use of private-sector experts not aligned or associated with
171	partisan political groups.
172	(i)  The avoidance of prohibitive or excessive start-up
173	costs needed to provide appropriate up-front funding for service
174	infrastructure.
175	(4)  One year after entering into a contract for the
176	purchase, lease, or acquisition of any commodity or contractual
177	service required by an agency of the state under this chapter,
178	which meets the definition provided in subsection (1), the
179	Center for Efficient Government shall conduct an evaluation of
180	the results of the privatization to determine whether the
181	privatization yielded or failed to yield the projected cost
182	savings based on the evaluation conducted pursuant to
183	subsections (2) and (3) prior to entering into the contract and
184	an evaluation of the results of the privatization during its
185	first year which shall specifically address whether the
186	privatization resulted in a verifiable cost increase. If it is
187	determined that the privatization resulted in a verifiable cost
188	increase, the evaluation must ascertain whether the cost
189	increase was directly attributable to any of the following:
190	(a)  Reduced public accountability. If so, did the lack of
191	public accountability or reduced public accountability manifest
192	itself in increased costs resulting from:
193	1.  Lack of public access to service and financial records
194	maintained by the provider.
195	2.  Variations in the quality of services being provided to
196	citizens.
197	3.  Entering into a contract the term of which was too
198	lengthy, thus precluding the ability to adjust to a changing
199	condition or circumstance.
200	4.  A resultant inability to gauge or monitor poor
201	performance. In an instance where such poor performance resulted
202	in termination of a contract, was increased cost and/or hardship
203	incurred because:
204	a.  The contractor was a sole-source provider of a service;
205	or
206	b.  The contractor was providing a service in which no
207	service disruptions could be tolerated.
208	(b)  Service quality problems which include, but are not
209	limited to:
210	1.  Providing service to only those who do not have many
211	needs, commonly known as "creaming."
212	2.  Identifiable cost-cutting measures that result in cost
213	increases including, but not limited to, frequent replacement of
214	poorly maintained equipment.
215	3.  Service quality problems that arise from contract
216	deficiencies which include, but are not limited to:
217	a.  Poorly defined responsibilities of the contractor.
218	b.  Lack of service quality performance measures.
219	c.  The absence of penalties for nonperformance.
220	d.  The absence of contingency plans.
221	(c)  Higher long-term costs. If so, did the higher long-
222	term costs result from:
223	1.  The submission by the contractor of a low initial bid
224	in order to obtain the contract followed by substantially
225	increasing costs in subsequent years when the agency previously
226	providing the service no longer has the staff or authority to
227	perform the service.
228	2.  The acceptance of a contract bid that appears low but
229	is in actuality higher than the in-house costs of the agency due
230	to the agency's inability to determine the actual cost of
231	providing services in-house because of agency accounting systems
232	which do not allocate all direct and indirect costs to services.
233	3.  Failure in the request for proposals that solicited the
234	bid for the service to mandate that the contractor achieve a
235	specified level of savings.
236	4.  Failure of the contract to limit future price
237	increases.
238	(d)  Workforce issues including, but not limited to:
239	1.  Employee layoffs resulting in morale problems.
240	2.  Union challenges to privatization.
241	3.  Disruptions resulting from bumping rights when affected
242	employees assume jobs in other areas.
243	4.  Failure of an agency's ability to meet Equal Employment
244	Opportunity goals and subsequent discrimination challenges
245	resulting from inordinate numbers of minority groups being
246	removed from state payrolls.
247	5.  Failure in a contract to require the contractor to
248	guarantee jobs and wages for a limited time period.
249	Section 2.  (1)  No later than January 1, 2006, each state
250	agency shall establish a system for monitoring the performance
251	of a contractor with whom the state has entered into a contract
252	for the purchase, lease, or acquisition of commodities or
253	contractual services by privatization as defined in s.
254	287.019(1), Florida Statutes, and for monitoring the
255	contractor's compliance with the terms and conditions of the
256	privatization contract.
257	(2)  Beginning January 1, 2006, each state agency, in
258	coordination with the Center for Efficient Government, shall
259	conduct an annual evaluation of the performance of any
260	contractor with whom the state has entered into a contract for
261	the purchase, lease, or acquisition of commodities or
262	contractual services by privatization exceeding $10 million and
263	report its findings to the Legislature, the Office of Program
264	Policy Analysis and Government Accountability, and the Auditor
265	General.
266	(3)  Beginning January 1, 2006, the Office of Program
267	Policy Analysis and Government Accountability and the Auditor
268	General shall be required to periodically examine any
269	privatization exceeding $10 million in order to assist the
270	Legislature in evaluating whether expected savings and outcomes
271	have been achieved through privatization.
272	Section 3.  Section 14.204, Florida Statutes, is created to
273	read:
274	14.204  Center For Efficient Government; creation; purpose;
275	oversight advisory board.--
276	(1)  The Center for Efficient Government is created and
277	administratively housed in the Department of Management
278	Services.
279	(2)  The purpose of the center is to improve the way state
280	agencies deliver services to Florida's citizens. In furtherance
281	of this purpose, the center shall:
282	(a)  Review past outsourcing projects for best business
283	practices.
284	(b)  Review existing outsourcing plans within the state
285	agencies to ensure compliance with center standards and business
286	case criteria, execution of effective contracts with vendors,
287	and implementation of successful change management.
288	(c)  Provide to the President of the Senate, the Speaker of
289	the House of Representatives, and the Governor, by July 1,
290	annually, a written report containing a list of outsourcing
291	projects and initiatives that can be developed over the next 3-
292	year period.
293	(d)  Maintain a database that contains information about
294	initiatives which are being performed by contractors to include,
295	but not be limited to, the lead agency name and description of
296	program or service being outsourced, names of contractors and
297	subcontractors on contract, projected and actual completion
298	dates by project phase, a description of performance measures
299	contained in the contract, and actual performance measures and
300	projected costs and revenues associated with the contract.
301	(e)  Develop and implement a program to transition impacted
302	employees. This program should recognize their contributions to
303	the state and the state's commitment to minimize the personal
304	impact on such employees while implementing beneficial programs
305	that reduce the cost of government for all citizens of the
306	state. The center shall provide recommendations for this program
307	to the Governor on an ongoing basis.
308	(3)(a)  The Center for Efficient Government Oversight
309	Advisory Board is established for the purpose of reviewing and
310	evaluating the performance of the center in carrying out its
311	duties under this section and investigating and evaluating any
312	issues relevant to the center's review of past outsourcing
313	projects and existing outsourcing plans or any other activities
314	of the center the board deems appropriate. The center shall make
315	reports as it deems necessary to the Governor, the President of
316	the Senate, the Speaker of the House of Representatives, and the
317	Legislative Budget Commission concerning its findings and
318	recommendations. The board is composed of the following members:
319	1.  The Chief Financial Officer, who shall serve as chair
320	of the board.
321	2.  A member of the Senate appointed by the President of
322	the Senate, who shall be a member of the majority party.
323	3.  A member of the Senate appointed by the President of
324	the Senate, who shall be a member of the minority party.
325	4.  A member of the House of Representatives appointed by
326	the Speaker of the House of Representatives, who shall be a
327	member of the majority party.
328	5.  A member of the House of Representatives appointed by
329	the Speaker of the House of Representatives, who shall be a
330	member of the minority party.
331	6.  The Secretary of the Department of Management Services.
332	7.  The Secretary of Health.
333	8.  The Executive Director of the Agency for Workforce
334	Innovation.
335	9.  The Executive Director of the Department of Revenue.
336	(b)  Board members are entitled to receive per diem and
337	travel expenses as provided in s. 112.061, Florida Statutes,
338	while carrying out official business of the board and shall be
339	reimbursed by their respective agencies in accordance with
340	chapter 112.
341	(4)  All agencies are directed to render assistance,
342	resources, and cooperation to the center.
343	Section 4.  Section 110.1095, Florida Statutes, is created
344	to read:
345	110.1095  Transition of employees affected by outsourcing
346	initiatives.--
347	(1)  Executive agencies shall address the transition of all
348	affected employees in the business case for any outsourcing
349	proposal submitted to the Center for Efficient Government under
350	s. 14.204 and through the procurement of such outsourced
351	services.
352	(2)  Each agency shall develop job placement policies for
353	employees affected by an outsourcing initiative. Policies shall
354	include, but not be limited to, requiring that each impacted
355	state employee be interviewed by the contractor and considered
356	for job placement within the company.
357	(3)  Each agency shall develop a reemployment and
358	retraining assistance plan for employees who are not retained by
359	the agency or employed by the contractor. Agencies may provide
360	job skills retraining to any impacted employee who is not
361	offered comparable employment within one year of separating from
362	state employment. Agencies shall coordinate the impact and
363	transition of affected employees with the Agency for Workforce
364	Innovation. The agency shall also coordinate services for state
365	employees with Workforce Florida, Inc., and regional workforce
366	boards throughout the state.
367	(4)  In accordance with existing statutory authority,
368	agencies shall, within their approval budgets, offer critical
369	employee retention salary increases in order to retain those
370	individuals identified as critical to successful transition of
371	the outsourced service to the contractor.
372	(5)  In accordance with existing statutory authority,
373	agencies may use a percentage of the savings realized from an
374	implemented outsourcing initiative as an employee recognition
375	allocation to reward the employee or group of employees who
376	proposed the initiative.
377	(6)  Agencies shall consider incorporating severance
378	compensation provisions into outsourcing contracts requiring the
379	vendor to create an employee severance pay pool as part of the
380	contract. Employees who are not offered employment with the
381	state, the vendor, or another entity would be provided severance
382	pay.
383	(7)  The Department of Management Services, Division of
384	Human Resource Management, and the Center for Efficient
385	Government shall provide technical assistance to the agencies,
386	as requested, to facilitate development of the measures set
387	forth herein.
388	(8)  Agencies are directed to implement the policies and
389	programs set forth in this section.
390	Section 5.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.