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                                                      PRINTER'S NO. 1898



No. 1503 Session of 2007

           JUNE 13, 2007


                                     AN ACT

     1  Providing for public oversight and accountability of
     2     privatization contracts; and imposing penalties.

     3     The General Assembly of the Commonwealth of Pennsylvania
     4  hereby enacts as follows:
     5  Section 1.  Short title.
     6     This act shall be known and may be cited as the Public
     7  Services Accountability Act.
     8  Section 2.  Declaration of policy.
     9     The General Assembly finds and declares that using private
    10  contractors to provide public services formerly provided by
    11  public employees does not always promote the public interest. To
    12  ensure that residents of this Commonwealth receive high-quality
    13  public services at low cost, with due regard for the taxpayers
    14  of this Commonwealth, the service recipients and the needs of
    15  public and private workers, the General Assembly finds it

     1  necessary to regulate privatization contracts and to protect
     2  those workers who report conditions and practices which impact
     3  the efficiency and quality of public services provided by
     4  private contractors. The General Assembly further finds it
     5  necessary to ensure that access to public information guaranteed
     6  by the act of June 21, 1957 (P.L.390, No.212), referred to as
     7  the Right-to-Know Law, is not in any way hindered by public
     8  services being provided by private contractors.
     9  Section 3.  Definitions.
    10     The following words and phrases when used in this act shall
    11  have the meanings given to them in this section unless the
    12  context clearly indicates otherwise:
    13     "Agency."  Includes an executive office, department,
    14  division, board, commission or other office or officer in the
    15  executive branch of the government.
    16     "Discrimination or retaliation."  Includes a threat,
    17  intimidation or any adverse change in an employee's wages,
    18  benefits or terms or conditions of employment. In the case of a
    19  person who is not an employee of the private contractor, the
    20  term includes any adverse action taken against the person or the
    21  person's employer, including the cancellation of or refusal to
    22  renew a contract with the person or the person's employer.
    23     "Employee of a private contractor."  Includes a worker
    24  directly employed by a private contractor as well as an employee
    25  of a subcontractor or an independent contractor that provides
    26  supplies or services to a private contractor. The term includes
    27  former employees of a private contractor or subcontractor and
    28  former independent contractors.
    29     "Person."  Includes an individual, institution, Federal,
    30  State or local governmental entity or any other public or
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     1  private entity.
     2     "Private contractor."  Any entity which enters into a
     3  privatization contract.
     4     "Privatization contract."  An agreement or combination or
     5  series of agreements by which a nongovernmental person or entity
     6  agrees with an agency to provide services, valued at $100,000 or
     7  more, which are substantially similar to and in lieu of services
     8  previously provided or that could have been provided in whole or
     9  in part by regular employees of an agency.
    10     "Public record."  A public record as defined in section 1 of
    11  the act of June 21, 1957 (P.L.390, No.212), referred to as the
    12  Right-to-Know Law. The term includes any document relating to
    13  the privatization contract or performance under the contract,
    14  prepared, received or retained by a contractor or subcontractor
    15  whether the document is handwritten, typed, tape-recorded,
    16  printed, photocopied, photographed or recorded by any other
    17  method.
    18     "Services."  Includes, with respect to a private contractor,
    19  all aspects of the provision of services provided by a private
    20  contractor pursuant to a privatization contract or any services
    21  provided by a subcontractor of a private contractor.
    22     "Subcontractor."  A subcontractor of a private contractor for
    23  work under a privatization contract or an amendment to a
    24  privatization contract.
    25  Section 4.  Privatization contracts and requirements.
    26     (a)  General rule.--No agency shall make any privatization
    27  contract and no privatization contract shall be valid unless the
    28  agency and the contractor comply with each of the requirements
    29  in this section and sections 5 through 8 and include the
    30  specified provisions in the privatization contract.
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     1     (b)  Statement of services and analysis of bids for
     2  privatization contract.--The agency shall prepare a specific
     3  written statement of the services proposed to be the subject of
     4  the privatization contract, including the specific quality and
     5  standard of quality of the subject services. The agency shall
     6  solicit competitive sealed bids for the privatization contracts
     7  based upon this statement. The day designated by the agency upon
     8  which it will accept these sealed bids shall be the same for any
     9  and all parties. This statement shall be a public record, shall
    10  be filed in the agency and shall be published in the
    11  Pennsylvania Bulletin not later than 30 business days prior to
    12  the date on which bids are due.
    13     (c)  Disclosure.--Every bid shall detail:
    14         (1)  The length of continuous employment of current
    15     employees with the contractor by job classification without
    16     identifying employee names. In addition, the contractor may
    17     submit information detailing the relevant prior experience of
    18     employees within each job classification. If the positions
    19     identified by the bidder shall be newly created, the bid
    20     shall identify the minimum requirements for prospective
    21     applicants for each position.
    22         (2)  The annual rate of current staff turnover.
    23         (3)  The number of hours of training planned for each
    24     employee in subject matters directly related to providing
    25     services to residents of this Commonwealth and clients.
    26         (4)  Any legal complaints issued by an enforcement agency
    27     for alleged violations of applicable Federal, State or local
    28     rules, regulations or laws, including laws governing employee
    29     safety and health, labor relations and other employment
    30     requirements, and any citations, court findings or
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     1     administrative findings for violations of Federal, State or
     2     local rules, regulations or laws. The information must
     3     include the date, enforcement agency, the rule, law or
     4     regulation involved and any additional information the
     5     contractor may wish to submit.
     6         (5)  Any collective bargaining agreements or personnel
     7     policies covering the employees to provide services to the
     8     Commonwealth.
     9         (6)  Political contributions made by the bidder or any
    10     employee in a management position with the bidding company to
    11     any elected officer of the State or member of the General
    12     Assembly during the four years prior to the due date of the
    13     bid.
    14     (d)  Maintenance of wage standards.--For each position in
    15  which a contractor employs any person pursuant to the
    16  privatization contract, the minimum compensation to be paid for
    17  the position shall be the greater of the wage rate paid at step
    18  one of the grade or classification under which an agency
    19  employee whose duties are most similar is paid, plus the cash
    20  value of health and other benefits provided to those State
    21  employees, or the average private sector compensation rate,
    22  including the value of health and other benefits, for the
    23  position as determined by the Department of Labor and Industry.
    24     (e)  Term.--The term of any privatization contract shall not
    25  exceed two years. No amendment to a privatization contract shall
    26  be valid if it has the purpose or effect of avoiding any
    27  requirement of this act.
    28     (f)  Contract provisions.--A privatization contract shall
    29  contain provisions requiring the contractor to offer available
    30  employee positions pursuant to the contract to qualified regular
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     1  employees of the agency whose State employment is terminated
     2  because of the privatization contract. A privatization contract
     3  shall also contain provisions requiring the contractor to comply
     4  with a policy of nondiscrimination and equal opportunity for all
     5  persons and to take affirmative steps to provide equal
     6  opportunity for all persons.
     7     (g)  Union neutrality.--State funds shall not be used to
     8  support or oppose unionization, including, but not limited to,
     9  preparation and distribution of materials which advocate for or
    10  against unionization; hiring or consulting legal counsel or
    11  other consultants to advise the contractor about how to assist,
    12  promote or deter union organizing or how to impede a union which
    13  represents the contractor's employees from fulfilling its
    14  representational responsibilities; holding meetings to influence
    15  employees about unionization; planning or conducting activities
    16  by supervisors to assist, promote or deter union activities; or
    17  defending against unfair labor practice charges brought by
    18  Federal or State enforcement agencies.
    19  Section 5.  Review of contract costs.
    20     (a)  Estimate of costs.--Any agency considering whether to
    21  enter into a privatization contract shall prepare a
    22  comprehensive written estimate of the costs of regular agency
    23  employees providing the subject services in the most cost-
    24  efficient manner. The estimate shall include all direct and
    25  indirect costs of regular agency employees providing the subject
    26  services, including, but not limited to, pension, insurance and
    27  other employee benefit costs. For the purpose of this estimate,
    28  any employee organization may, at any time before the final day
    29  for the agency to receive sealed bids pursuant to section 4(b),
    30  propose amendments to any relevant collective bargaining
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     1  agreement to which it is a party. Any amendments shall take
     2  effect only if necessary to reduce the cost estimate pursuant to
     3  this subsection below the contract cost. The estimate shall
     4  remain confidential until after the final day for the agency to
     5  receive sealed bids for the privatization contract at which time
     6  the estimate shall become a public record, shall be filed in the
     7  agency and shall be published in the Pennsylvania Bulletin.
     8     (b)  Evaluation of contractor performance and costs.--After
     9  soliciting and receiving bids, the agency shall publicly
    10  designate the bidder to which it proposes to award the
    11  privatization contract. In selecting a contractor, the agency
    12  shall consider the contractor's past performance and its record
    13  of compliance with Federal, State and local laws, including the
    14  disclosures as required in section 4(c). The agency shall
    15  prepare a comprehensive written analysis of the contract cost
    16  based upon the designated bid, specifically including the costs
    17  of transition from public to private operation, of additional
    18  unemployment and retirement benefits, if any, and of monitoring
    19  and otherwise administering contract performance. If the
    20  designated bidder proposes to perform any or all of the contract
    21  outside the boundaries of this Commonwealth, the contract shall
    22  be increased by the amount of income tax revenue, if any, which
    23  will be lost to the Commonwealth by the corresponding
    24  elimination of agency employees, as determined by the Department
    25  of Revenue to the extent that it is able to do so.
    26     (c)  Agency certification.--The head of the agency shall
    27  certify in writing that:
    28         (1)  The agency has complied with all provisions of this
    29     section and of all other applicable laws.
    30         (2)  The quality of the services to be provided by the
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     1     designated bidder is likely to satisfy the quality
     2     requirements of the statement prepared pursuant to section
     3     4(b) and to equal or exceed the quality of services which
     4     could be provided by regular agency employees.
     5         (3)  The contract cost will be at least 10% less than the
     6     estimated cost pursuant to subsection (a), taking into
     7     account all comparable types of costs and all the additional
     8     costs of the contract as specified in subsection (b).
     9         (4)  The proposed privatization contract is in the public
    10     interest in that it meets the applicable quality and fiscal
    11     standards set forth in this act.
    12  Any privatization contract entered into by an agency and the
    13  agency certification described in this subsection shall be
    14  public records subject to disclosure pursuant to the act of June
    15  21, 1957 (P.L.390, No.212), referred to as the Right-to-Know
    16  Law.
    17  Section 6.  Monitoring and enforcement of privatization
    18                 contracts.
    19     (a)  Subcontracts and amendments to privatization
    20  contracts.--
    21         (1)  No contractor shall award a subcontract for work
    22     under a contract or for work under an amendment to a contract
    23     without the agency's approval of:
    24             (i)  The selection of the subcontractor.
    25             (ii)  The provisions of the subcontract.
    26         (2)  Each contractor shall file a copy of each executed
    27     subcontract or amendment to the subcontract with the agency,
    28     which shall maintain the subcontract or amendment as a public
    29     record, as defined under the act of June 21, 1957 (P.L.390,
    30     No.212), referred to as the Right-to-Know Law.
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     1     (b)  Submission of audits.--Any private contractor awarded a
     2  privatization contract, and any subcontractor to a private
     3  contractor subject to these provisions, shall file with the
     4  agency copies of financial audits of the private contractor
     5  prepared at least annually during the course of the contract
     6  term.
     7     (c)  Access.--All privatization contracts shall include a
     8  contract provision specifying that in order to determine
     9  compliance with these principles as well as the contract, the
    10  private contractor shall be required to provide the Commonwealth
    11  or its agents, except where prohibited by Federal or State laws,
    12  regulations or rules, reasonable access through representatives
    13  of the private contractor to facilities, records and employees
    14  that are used in conjunction with the provision of contract
    15  services.
    16     (d)  Performance standards.--The private contractor shall
    17  submit a report, not less than annually during the term of the
    18  privatization contract, detailing the extent to which the
    19  contractor has achieved the specific quantity and standard of
    20  quality of the subject services as specified by the agency
    21  pursuant to section 4(b) and its compliance with all Federal,
    22  State and local laws, including any complaints, citations or
    23  findings issued by administrative agencies or courts.
    24     (e)  Enforcement.--The agency may seek contractual remedies
    25  for any violation of a privatization contract. In addition, if a
    26  contractor fails to comply with section 4(d), (f) or (g), any
    27  person or entity aggrieved by the violation may bring a claim
    28  for equitable and other relief, including back pay. In such a
    29  suit, an aggrieved person or entity shall be entitled to costs
    30  and attorney fees.
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     1  Section 7.  Public record ownership and access.
     2     (a)  Ownership of public records.--
     3         (1)  No contractor or subcontractor, or employee or agent
     4     of a contractor or subcontractor, shall have any ownership
     5     rights or interest in any public records which the
     6     contractor, subcontractor, employee or agent possesses,
     7     modifies or creates pursuant to a contract, subcontract or
     8     amendment to a contract or subcontract.
     9         (2)  No contractor or subcontractor or employee or agent
    10     of a contractor or subcontractor shall impair the integrity
    11     of any public records which the contractor, subcontractor,
    12     employee or agent possesses or creates.
    13         (3)  Public records which a contractor, subcontractor or
    14     employee or agent of a contractor or subcontractor possesses,
    15     modifies or creates pursuant to a contract or subcontract
    16     shall at all times and for all purposes remain the property
    17     of the Commonwealth.
    18     (b)  Public access to information.--
    19         (1)  Any public record which an agency provides to a
    20     contractor or subcontractor or which a contractor or
    21     subcontractor creates shall be and remain a public record for
    22     the purposes of the act of June 21, 1957 (P.L.390, No.212),
    23     referred to as the Right-to-Know Law, and the enforcement
    24     provisions of that law shall apply to any failure to disclose
    25     records under this section.
    26         (2)  With regard to any public record, the agency and the
    27     contractor or subcontractor shall have a joint and several
    28     obligation to comply with the obligations of the agency under
    29     the Right-to-Know Law, provided the determination of whether
    30     to disclose a particular record or type of record shall be
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     1     made solely by the agency.
     2         (3)  No contractor or subcontractor or employee or agent
     3     of a contractor or subcontractor shall disclose to the public
     4     any public records:
     5             (i)  Which it possesses, modifies or creates pursuant
     6         to a contract, subcontract or amendment to a contract or
     7         subcontract.
     8             (ii)  Which the agency:
     9                 (A)  is prohibited from disclosing pursuant to
    10             Federal or State law in all cases;
    11                 (B)  may disclose pursuant to Federal or State
    12             law only to certain entities or individuals or under
    13             certain conditions; or
    14                 (C)  may withhold from disclosure pursuant to
    15             Federal or State law.
    16         (4)  No provision of this subsection shall be construed
    17     to prohibit any contractor from disclosing public records to
    18     any of its subcontractors to carry out the purposes of its
    19     subcontract.
    20         (5)  No contractor or subcontractor or employee or agent
    21     of a contractor or subcontractor shall sell, market or
    22     otherwise profit from the disclosure or use of any public
    23     records which are in its possession pursuant to a contract,
    24     subcontract or amendment to a contract or subcontract, except
    25     as authorized in the contract, subcontract or amendment.
    26         (6)  Any contractor or subcontractor or employee or agent
    27     of a contractor or subcontractor which learns of any
    28     violation of this section shall, no later than seven calendar
    29     days after learning of the violation, notify the agency and
    30     the Attorney General of the violation.
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     1     (c)  Penalties.--In addition to any remedies provided under
     2  the Right-to-Know Law:
     3         (1)  If any person violates subsection (a) or (b), the
     4     Attorney General may bring an action against the person
     5     seeking:
     6             (i)  damages on behalf of the State for the
     7         violation;
     8             (ii)  restitution for damages suffered by any person
     9         as a result of the violation; or
    10             (iii)  imposition and recovery of a civil penalty of
    11         not more than $50,000 for the violation.
    12         (2)  In addition to the remedies under paragraph (1), any
    13     person aggrieved by a violation of subsection (a) or (b) may
    14     bring an action to recover any damages suffered as a result
    15     of the violation.
    16         (3)  In any action brought under paragraph (1) or (2),
    17     the court may:
    18             (i)  order disgorgement of any profits or other
    19         benefits derived as a result of a violation of subsection
    20         (a) or (b);
    21             (ii)  award punitive damages, costs and reasonable
    22         attorney fees; and
    23             (iii)  order injunctive or other equitable relief.
    24         (4)  Proof of public interest or public injury shall not
    25     be required in any action brought under paragraph (1) or (2).
    26     No action may be brought under paragraph (1) or (2) more than
    27     three years after the occurrence of the violation.
    28         (5)  Any person who knowingly and willfully violates
    29     subsection (a) or (b) shall, for each violation, be fined not
    30     more than $5,000 or imprisoned for not less than one year nor
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     1     more than five years, or both.
     2  Section 8.  Prohibition against discrimination or retaliation
     3                 for disclosure of information.
     4     (a)  General rule.--No person shall retaliate or discriminate
     5  in any manner against any public employee or employee of a
     6  private contractor because that employee, or any person acting
     7  on behalf of the employee, in good faith:
     8         (1)  Engaged in any disclosure of information relating to
     9     the services provided by a private contractor pursuant to a
    10     privatization contract.
    11         (2)  Advocated on behalf of service recipients with
    12     respect to the care or services provided by the private
    13     contractor.
    14         (3)  Initiated, cooperated or otherwise participated in
    15     any investigation or proceeding of any governmental entity
    16     relating to the services provided pursuant to a privatization
    17     contract.
    18     (b)  Attempts.--No person shall retaliate or discriminate in
    19  any manner against any public employee or employee of a private
    20  contractor because the employee attempted or had an intention to
    21  engage in an action described in subsection (a).
    22     (c)  Restrictions on reporting prohibited.--No person shall
    23  by contract, policy or procedure prohibit or restrict any
    24  employee of a private contractor from engaging in any action for
    25  which a protection against discrimination or retaliation is
    26  provided under subsection (a).
    27     (d)  Confidential information.--This section does not protect
    28  disclosures that would violate Federal or State law or diminish
    29  or impair the rights of any person to the continued protection
    30  of confidentiality of communications provided by Federal or
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     1  State law.
     2     (e)  Good faith action.--With respect to the conduct
     3  described in subsection (a)(1), an employee of a private
     4  contractor shall be considered to be acting in good faith if the
     5  employee reasonably believes that:
     6         (1)  the information is true; and
     7         (2)  the information disclosed by the employee:
     8             (i)  evidences a violation of any law, rule or
     9         regulation or of a generally recognized professional or
    10         clinical standard; or
    11             (ii)  relates to the care, services or conditions
    12         which potentially endanger one or more recipients of
    13         service or employees employed pursuant to a privatization
    14         contract.
    15     (f)  Confidentiality of complaints to government agencies.--
    16  The identity of an employee of a private contractor who
    17  complains in good faith to a government agency or department or
    18  any member or employee of the General Assembly about the quality
    19  of services provided by a private contractor shall remain
    20  confidential and shall not be disclosed by any person except
    21  upon the knowing written consent of the employee of the private
    22  contractor and except in the case in which there is imminent
    23  danger to health or public safety or an imminent violation of
    24  criminal law.
    25     (g)  Enforcement.--
    26         (1)  (i)  Any current or former public employee or
    27         employee of a private contractor who believes that the
    28         employee has been retaliated or discriminated against in
    29         violation of subsection (a), (b) or (c) may file a civil
    30         action in a court of competent jurisdiction against the
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     1         person believed to have violated subsection (a), (b) or
     2         (c).
     3             (ii)  If the court determines that a violation of
     4         subsection (a), (b) or (c) has occurred, the court shall
     5         award damages which result from the unlawful act or acts,
     6         including compensatory damages, reinstatement,
     7         reimbursement of any wages, salary, employment benefits
     8         or other compensation denied or lost to the employee by
     9         reason of the violation, as well as punitive damages,
    10         attorney fees and costs, including expert witness fees.
    11         The court shall award interest on the amount of damages
    12         awarded at the prevailing rate.
    13             (iii)  The court may issue temporary, preliminary and
    14         permanent injunctive relief restraining violations of
    15         this act, including the restraint of any withholding of
    16         the payment of wages, salary, employment benefits or
    17         other compensation, plus interest, found by the court to
    18         be due and the restraint of any other change in the terms
    19         and conditions of employment and may award other
    20         equitable relief as may be appropriate, including
    21         employment, reinstatement and promotion.
    22             (iv)  An action may be brought under this subsection
    23         not later than two years after the date of the last event
    24         constituting the alleged violation for which the action
    25         is brought.
    26         (2)  Any person who violates subsection (a), (b) or (c)
    27     shall be subject to a civil penalty not to exceed $10,000 for
    28     each violation. In determining the amount of any penalty
    29     under this subsection, the appropriateness of the penalty to
    30     the size of the business of the person charged and the
    20070H1503B1898                 - 15 -     

     1     gravity of the violation shall be considered. The amount of
     2     any penalty under this subsection, when finally determined,
     3     may be:
     4             (i)  deducted from any sums owing by the Commonwealth
     5         to the person charged; or
     6             (ii)  ordered by the court, in an action brought for
     7         a violation of subsection (a), (b) or (c) brought by the
     8         employee or employees who suffered retaliation or
     9         discrimination.
    10     (h)  Burden of proof.--
    11         (1)  In any civil action brought under this act, the
    12     complainant shall have the initial burden of making a prima
    13     facie showing that any behavior described in subsections (a),
    14     (b) and (c) was a contributing factor in the adverse action
    15     or inaction alleged in the complaint. A prima facie case
    16     shall be established if the complainant can show that:
    17             (i)  the respondent knew of the complainant's
    18         protected activities at the time that the alleged
    19         unfavorable action or inaction was taken; and
    20             (ii)  the discriminatory action occurred within a
    21         period of time such that a reasonable person could
    22         conclude that an activity protected by subsection (a) or
    23         (b) was a contributing factor in the discriminatory
    24         treatment.
    25         (2)  Once the complainant establishes a prima facie case,
    26     the burden shifts to the respondent to demonstrate, by clear
    27     and convincing evidence, that it would have taken the same
    28     action or inaction in the absence of the behavior.
    29     (i)  Notice.--
    30         (1)  Each private contractor shall post and keep posted
    20070H1503B1898                 - 16 -     

     1     in conspicuous places on its premises where notices to
     2     employees and applicants for employment are customarily
     3     posted, a notice setting forth excerpts from or summaries of
     4     the pertinent provisions of this act and information
     5     pertaining to the filing of a charge under this section.
     6         (2)  Any employer that willfully violates this section
     7     may be assessed a civil penalty not to exceed $100 for each
     8     separate offense.
     9  Section 9.  Nonpreemption.
    10     Nothing in this act preempts any other law and nothing in
    11  this act shall be construed or interpreted to impair or diminish
    12  in any way the authority of any locality, municipality or
    13  subdivision to enact and enforce any law which provides
    14  equivalent or greater protection for its employees.
    15  Section 10.  Applicability.
    16     This act shall apply as follows:
    17         (1)  Section 8 shall apply to acts of retaliation or
    18     discrimination occurring on or after the first day of the
    19     first month that begins after the effective date of this act.
    20         (2)  The remaining provisions of this act shall apply to
    21     any privatization contract entered into after the effective
    22     date of this act.
    23  Section 11.  Effective date.
    24     This act shall take effect in 60 days.

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