PRINTER'S NO. 1972

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 1611 Session of 1997


        INTRODUCED BY DERMODY, ITKIN, ROBINSON, READSHAW, VAN HORNE,
           TRELLO, OLASZ, DeLUCA, LEVDANSKY, MARKOSEK, BELARDI, HALUSKA,
           TIGUE, MELIO, COY, McCALL, BELFANTI, JOSEPHS, C. WILLIAMS,
           MUNDY, ROONEY, SCRIMENTI, CASORIO AND LLOYD, JUNE 9, 1997

        REFERRED TO COMMITTEE ON STATE GOVERNMENT, JUNE 9, 1997

                                     AN ACT

     1  Amending the act of April 9, 1929 (P.L.177, No.175), entitled
     2     "An act providing for and reorganizing the conduct of the
     3     executive and administrative work of the Commonwealth by the
     4     Executive Department thereof and the administrative
     5     departments, boards, commissions, and officers thereof,
     6     including the boards of trustees of State Normal Schools, or
     7     Teachers Colleges; abolishing, creating, reorganizing or
     8     authorizing the reorganization of certain administrative
     9     departments, boards, and commissions; defining the powers and
    10     duties of the Governor and other executive and administrative
    11     officers, and of the several administrative departments,
    12     boards, commissions, and officers; fixing the salaries of the
    13     Governor, Lieutenant Governor, and certain other executive
    14     and administrative officers; providing for the appointment of
    15     certain administrative officers, and of all deputies and
    16     other assistants and employes in certain departments, boards,
    17     and commissions; and prescribing the manner in which the
    18     number and compensation of the deputies and all other
    19     assistants and employes of certain departments, boards and
    20     commissions shall be determined," providing requirements for
    21     privatization contracts; establishing the Privatization
    22     Review Board in the Treasury Department and providing for its
    23     powers and duties; and providing for the Commission on
    24     Privatization and for former State employees.

    25     The General Assembly of the Commonwealth of Pennsylvania
    26  hereby enacts as follows:
    27     Section 1.  The act of April 9, 1929 (P.L.177, No.175), known
    28  as The Administrative Code of 1929, is amended by adding an

     1  article to read:
     2                            ARTICLE XI-A
     3                     PRIVATIZATION REVIEW BOARD
     4     Section 1101-A.  Definitions.--As used in this article:
     5     "Agency" means any administrative department, departmental or
     6  independent administrative board, commission, agency,
     7  instrumentality, authority or institution of the Commonwealth.
     8     "Dependent" means the spouse and children of an employe, if
     9  such persons qualify for dependent status under the Internal
    10  Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.)
    11  or for whom a support order has been or could be granted under
    12  the laws of this Commonwealth.
    13     "Privatization contract" means an agreement or combination or
    14  series of agreements by which a nongovernmental person or entity
    15  agrees with an agency to provide services, valued at one hundred
    16  thousand dollars ($100,000) or more, which are substantially
    17  similar to or in lieu of, services provided, in whole or in
    18  part, by regular employes of the agency. Any subsequent
    19  agreement, including any agreement from a rebidding of
    20  previously privatized service, or any agreement renewing or
    21  extending a privatization contract, shall not be considered a
    22  privatization contract. An agreement solely to provide legal,
    23  management, consulting, planning, engineering or design services
    24  shall not be considered a privatization contract.
    25     Section 1102-A.  Validity of Privatization Contracts.--No
    26  agency shall enter into a privatization contract and no such
    27  contract shall be valid unless the agency complies with this
    28  article.
    29     Section 1103-A.  Method of Awarding Privatization
    30  Contracts.--(a)  An agency shall prepare a written statement of
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     1  the services proposed to be the subject of a privatization
     2  contract, including the specific quantity and standard of
     3  quality of the services to be procured. The agency shall solicit
     4  competitive sealed bids for a privatization contract based on
     5  the services proposed in the statement.
     6     (b)  The day designated by the agency upon which it will
     7  accept the sealed bids shall be the same for all parties.
     8     (c)  The statement shall be a public record, shall be filed
     9  in the agency, Office of Administration, and copies of the
    10  statement shall be filed with the Office of the Budget and the
    11  Treasury Department.
    12     (d)  For each position in which a bidder intends to employ a
    13  person pursuant to the privatization contract and for which the
    14  duties of the person are substantially similar to the duties
    15  performed by a regular employe of the agency, the statement
    16  required by subsection (a) shall include a statement of the
    17  minimum wage rate to be paid for the position, which rate shall
    18  be lesser of step one of the grade or classification under which
    19  the comparable regular employe of the agency is paid, or the
    20  average private sector wage rate for said position as determined
    21  by the Department of Labor and Industry.
    22     Section 1104-A.  Mandatory Provisions of Privatization
    23  Contracts.--A privatization contract shall contain the
    24  following:
    25     (1)  The term shall not exceed five (5) years, and no
    26  amendment shall be valid if the purpose or effect of the
    27  amendment is to avoid this section.
    28     (2)  The specific wage rate for each person to be employed
    29  under the privatization contract. The wage rate shall not be
    30  less than the minimum wage rate defined in section 1103-A(d).
    19970H1611B1972                  - 3 -

     1     (3)  A provision that the contractor shall pay not less than
     2  a percentum, comparable to the percentum paid by the
     3  Commonwealth for State employes, of the cost of health insurance
     4  plans for every employe employed not less than twenty (20) hours
     5  per week pursuant to such contract. The contractor shall also
     6  agree that an insurance plan shall provide coverage to the
     7  employe and the employe's spouse and dependent children during
     8  the term of the privatization contract.
     9     (4)  A provision requiring the contractor to offer available
    10  employe positions pursuant to the privitization contract to
    11  qualified regular employes of the agency whose State employment
    12  is terminated because of the privatization contract and who
    13  satisfy the hiring criteria of the contractor.
    14     (5)  Provisions requiring the contractor to comply with a
    15  policy of nondiscrimination and equal opportunity for all
    16  persons under the laws of this Commonwealth and the United
    17  States, and to take affirmative steps to provide such equal
    18  opportunity for all such persons.
    19     (6)  Such other terms and conditions deemed by the agency to
    20  be necessary or in the best interests of the Commonwealth.
    21     Section 1105-A.  Duty to Report Payroll Records and
    22  Enforcement.--(a)  A contractor shall submit quarterly payroll
    23  records to the agency, listing the name, address, Social
    24  Security number, hours worked and the hourly wage paid for each
    25  employe in the previous quarter.
    26     (b)  The Attorney General may bring a civil action for
    27  equitable relief in the Commonwealth Court to enforce this
    28  section or to prevent or remedy the dismissal, demotion or other
    29  action prejudicing any employe as a result of a report of a
    30  violation of this section.
    19970H1611B1972                  - 4 -

     1     Section 1106-A.  Cost Estimates.--(a)  The agency shall
     2  prepare a comprehensive written estimate of the cost of regular
     3  agency employes providing the subject services in the most cost-
     4  efficient manner. The estimate shall include all direct and
     5  indirect costs of regular agency employes providing the subject
     6  services, including, but not limited to, pension, insurance and
     7  other employe benefit costs.
     8     (b)  For the purpose of the estimate in subsection (a), any
     9  employe organization may, at any time before the final day for
    10  the agency to receive sealed bids pursuant to section 1103-A,
    11  propose amendments to any relevant collective bargaining
    12  agreement to which it is a party. Any such amendments shall take
    13  effect only if necessary to reduce the cost estimate under this
    14  section below the contract cost pursuant to section 1108-A.
    15     (c)  The estimate shall remain confidential until after the
    16  final day for the agency to receive sealed bids for the
    17  privatization contract pursuant to section 1103-A, at which time
    18  the estimate shall become a public record and shall be filed in
    19  the agency, with the Office of Administration, the Office of the
    20  Budget and the Treasury Department for review pursuant to
    21  section 1110-A.
    22     Section 1107-A.  Bids by Employe Organizations.--(a)  After
    23  consulting any relevant employe organization, the agency shall
    24  provide adequate resources for the purpose of encouraging and
    25  assisting present agency employes to organize and submit a bid
    26  to provide the subject services. In determining what resources
    27  are adequate for this purpose, the agency shall refer to an
    28  existing collective bargaining agreement of a similar employe
    29  organization whose members perform the subject services, if
    30  available, which agreement provides similar resources in the
    19970H1611B1972                  - 5 -

     1  same or other agencies.
     2     (b)  If, however, no such collective bargaining agreement
     3  exists, the agency shall refer to any existing collective
     4  bargaining agreements providing such resources and shall provide
     5  such resources at the minimum level of assistance provided in
     6  said agreements.
     7     (c)  The agency shall consider any such employe bid on the
     8  same basis as all other bids.
     9     (d)  An employe bid may be made as a joint venture with other
    10  persons.
    11     Section 1108-A.  Public Designation of Award and Cost
    12  Analysis.--(a)  After soliciting and receiving bids, the agency
    13  shall publicly designate the bidder to which it proposes to
    14  award the contract.
    15     (b)  The agency shall prepare a comprehensive written
    16  analysis of the contract cost based upon the designated bid,
    17  specifically including the costs of transition from public to
    18  private operation, of additional unemployment and retirement
    19  benefits, if any, and of monitoring and otherwise administering
    20  contract performance.
    21     (c)  If the designated bidder proposes to perform any or all
    22  of the privatization contract outside the boundaries of this
    23  Commonwealth, the contract cost shall be increased by the amount
    24  of income tax revenue which will be lost to the Commonwealth by
    25  the corresponding elimination of agency employes, as determined
    26  by the Department of Revenue to the extent it is able to do so.
    27     Section 1109-A.  Certification to Treasury Department.--(a)
    28  The head of the agency and the Secretary of Administration shall
    29  each certify, in writing, to the Treasury Department the
    30  following findings:
    19970H1611B1972                  - 6 -

     1     (1)  That the agency and the Secretary of Administration have
     2  complied with this article and all other applicable laws.
     3     (2)  That the quality of the services to be provided by the
     4  designated bidder is likely to satisfy the quality requirements
     5  of the statement prepared under section 1103-A, and to equal or
     6  exceed the quality of services which could be provided by
     7  regular agency employes under section 1106-A.
     8     (3)  That the contract cost under section 1108-A will be less
     9  than the estimated cost under section 1106-A, taking into
    10  account all comparable types of costs.
    11     (4)  That the designated bidder and its supervisory employes,
    12  while in the employ of said designated bidder, have no
    13  adjudicated record of substantial or repeated wilful
    14  noncompliance with any Federal or State regulatory statute,
    15  including, but not limited to, statutes concerning labor
    16  relations, occupational safety and health, nondiscrimination and
    17  affirmative action, environmental protection and conflicts of
    18  interest.
    19     (5)  That the proposed privatization contract is in the
    20  public interest, in that it meets the applicable quality and
    21  fiscal standards set forth in this article.
    22     (b)  The head of the agency shall provide a copy of the
    23  proposed privatization contract with the certificate transmitted
    24  to the Treasury Department.
    25     Section 1110-A.  Privatization Review Board.--(a)  There
    26  shall be in the Treasury Department a privatization review board
    27  consisting of the State Treasurer or a designee, who shall chair
    28  the board, the State Inspector General or a designee and three
    29  (3) residents of this Commonwealth appointed by the State
    30  Treasurer, one (1) of whom shall be a certified public
    19970H1611B1972                  - 7 -

     1  accountant.
     2     (b)  The board shall consider, study and review the
     3  certifications and proposed privatization contracts submitted to
     4  the Treasury Department under this article, and shall issue
     5  findings regarding compliance with this article.
     6     (c)  The board may adopt rules and regulations and may
     7  prescribe forms to carry out this article.
     8     (d)  The Treasury Department shall have the power and duty to
     9  provide the board with facilities, experts, stenographers and
    10  assistants as necessary to carry out the work of the board. The
    11  board may enlist voluntary assistance as available from
    12  citizens, research organizations and other agencies.
    13     Section 1111-A.  Effect of Board Review.--(a)  No agency
    14  shall make any privatization contract and no privatization
    15  contract shall be valid if, within thirty (30) days after
    16  receiving the certificate required by section 1109-A, the board
    17  notifies the agency of its objection. Such objection shall be in
    18  writing and shall state specifically the findings of the board
    19  that the agency has failed to comply with one or more
    20  requirements of this article, including that the board finds
    21  incorrect, based on an independent review of all the facts, any
    22  of the findings required by section 1109-A.
    23     (b)  The objection of the board shall be final and binding on
    24  the agency, unless the board, in writing, withdraws the
    25  objection under subsection (c) and states specific reasons for
    26  the withdrawal.
    27     (c)  After receipt of a board objection, the agency or the
    28  Secretary of Administration may file a revised certification.
    29  The board shall review the revised certification, and if the
    30  board finds that the findings are correct, it shall withdraw the
    19970H1611B1972                  - 8 -

     1  objection.
     2     (d)  The provisions of this article are in addition to any
     3  other provisions of this or any other act which would otherwise
     4  apply to privatization contracts and this article is not
     5  intended to preempt or repeal such provisions.
     6     Section 1112-A.  Summons.--For the purpose of reviewing
     7  compliance with this article and the certificates provided under
     8  section 1109-A, the board may require by summons the attendance
     9  and testimony under oath of witnesses and the production of
    10  books, papers and other records relating to such review. All
    11  provisions of the law relative to summonses in civil cases,
    12  including the manner of service and the compensation of
    13  witnesses who are not State employes shall apply to such
    14  summonses. Such summonses shall be enforced under the applicable
    15  laws of this Commonwealth.
    16     Section 1113-A.  Commission on Privatization.--(a)  A
    17  commission on privatization is established and shall consist of
    18  fifteen (15) members, three (3) of whom shall be appointed by
    19  the Governor, three (3) of whom shall be appointed by the
    20  President pro tempore of the Senate, three (3) of whom shall be
    21  appointed by the Speaker of the House of Representatives, three
    22  (3) of whom shall be appointed by the Minority Leader of the
    23  Senate and three (3) of whom shall be appointed by the Minority
    24  Leader of the House of Representatives.
    25     (b)  The commission shall investigate and study the successes
    26  and failures of privatization efforts in this Commonwealth and
    27  in other states, and the implementation and operation of this
    28  article and any laws enacted in other states on this and related
    29  subjects.
    30     (c)  The commission may recommend appropriate legislation or
    19970H1611B1972                  - 9 -

     1  changes in the procedures of the executive branch. The
     2  commission shall report the results of its investigation and
     3  study by filing the same with the Chief Clerk of the Senate and
     4  the Chief Clerk of the House of Representatives not later than
     5  November 30, 1998.
     6     Section 1114-A.  Former State Employes.--A former State
     7  employe whose salary is not less than forty-five thousand
     8  dollars ($45,000) annually is prohibited, for a period of one
     9  (1) year after termination of his State employment, from
    10  becoming an officer of or an employe of a business or
    11  organization which is or was a party to any privatization
    12  contract under this article in which contract the employe
    13  participated as such State employe unless before the termination
    14  of State employment the Governor determines, in writing and
    15  files with the State Ethics Commission, that such participation
    16  did not significantly affect the terms or implementation of the
    17  privatization contract.
    18     Section 1115-A.  Applicability.--This article shall apply to
    19  all privatization contracts executed on or after the effective
    20  date of this article.
    21     Section 2.  This act shall take effect immediately.






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