AN ACT SETTING PROCEDURES, PERFORMANCE STANDARDS AND WORKPLACE QUALITY STANDARDS FOR PRIVATIZATION OF STATE PROGRAMS AND SERVICES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective October 1, 2005) As used in sections 1 to 13, inclusive, of this act:

(1) "Agency" means an executive office, department, division, board, commission or other office or officer in the executive branch of state government.

(2) "Privatization contract" means an agreement or combination or series of agreements between an agency and a nongovernmental person or entity, in which such person or entity agrees to provide services valued at seven hundred fifty thousand dollars or more that are substantially similar to and in lieu of services provided, in whole or in part, by regular employees of an agency. The term "privatization contract" does not include an agreement to provide legal services or management consulting only.

Sec. 2. (NEW) (Effective October 1, 2005) (a) On and after October 1, 2005, prior to executing a privatization contract, an agency shall consult with the Department of Administrative Services and comply with the provisions of subsection (b) of this section.

(b) The agency shall prepare an analysis of the costs and benefits to the agency of (1) privatizing services, and (2) continuing to provide such services through regular employees of the agency. Such analysis shall include, but not be limited to, an examination of the cost and quality of service under each such option. The executive head of the agency shall transmit such analysis to the Auditors of Public Accounts.

(c) If the agency determines in such analysis that it is cost-effective to privatize such services, the agency shall prepare a specific written statement of the services, including the specific quantity and standard of quality of the services. The agency shall solicit competitive sealed bids for the privatization contracts based upon such statement. The day designated by the agency upon which it shall accept sealed bids shall be the same for all bidders. Such statement shall be a public record, filed in the agency and with the Department of Administrative Services and transmitted to the State Comptroller. The term of any privatization contract shall not exceed five years. No amendment to a privatization contract shall be valid if it has the purpose or effect of avoiding any requirement of this section.

Sec. 3. (NEW) (Effective October 1, 2005) (a) If an agency plans to solicit bids for a privatization contract, the agency shall prepare a comprehensive written estimate of the costs of regular employees of the agency providing the subject services in the most cost-efficient manner and the quality of such services provided by such agency employees. The estimate shall include all direct costs of regular agency employees providing the subject services, including, but not limited to, pensions, insurance and other employee benefit costs. Any costs allocable to unemployment compensation and retirement benefits shall be reported separately from the value of any contract costs. The value of any state-owned property or assets shall be reported separately.

(b) At least sixty days prior to soliciting bids for a privatization contract, an agency shall notify each collective bargaining organization representing employees of the agency of such planned solicitation. After consulting the potentially affected bargaining units, if any, the agency shall provide adequate resources for the purpose of encouraging and assisting present agency employees to organize and submit a bid to provide the subject services. In determining what resources are adequate for this purpose, the agency shall refer to an existing collective bargaining agreement of a similar employee organization whose members perform the subject services, if available, which agreement provides similar resources in the same or other agencies. If no such collective bargaining agreement exists, the agency shall refer to any existing collective bargaining agreements providing such resources, and shall provide such resources at the minimum level of assistance provided in such agreements. The agency shall consider any such employee bid on the same basis as all other bids. An employee bid may be made as a joint venture with other persons.

Sec. 4. (NEW) (Effective October 1, 2005) (a) Each bid for a privatization contract and each privatization contract shall include provisions specifically establishing the wage rate for each employee covered by the contract. Each contractor shall submit quarterly payroll records to the agency, listing the name, address, Social Security number, hours worked and hourly wage paid for each employee in the previous quarter. The Attorney General may bring a civil action for equitable relief in Superior Court to enforce the provisions of this section and to prevent or remedy the dismissal, demotion or other action prejudicing any employee as a result of a violation of this section.

(b) Each bid for a privatization contract and each 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. Each such contract shall also contain provisions prohibiting the contractor from engaging in discriminatory employment practices, as defined in section 46a-51 of the general statutes, and requiring the contractor to take affirmative steps to provide such equal opportunity for all such persons.

Sec. 5. (NEW) (Effective October 1, 2005) (a) No contractor, subcontractor or employee or agent of a contractor or subcontractor shall have any ownership rights or interest in any public record that the contractor, subcontractor, employee or agent possesses, modifies or creates pursuant to a privatization contract, subcontract or amendment to a privatization contract or subcontract.

(b) No contractor, subcontractor or employee or agent of a contractor or subcontractor, shall impair the integrity of any public record that the contractor, subcontractor, employee or agent possesses, modifies or creates.

(c) Any public record that a contractor, subcontractor or employee or agent of a contractor or subcontractor possesses, modifies or creates pursuant to a privatization contract or subcontract shall, at all times and for all purposes, remain the property of the state.

Sec. 6. (NEW) (Effective October 1, 2005) (a) Any public record (1) provided to a contractor or subcontractor by an agency, or (2) created by a contractor or subcontractor pursuant to a privatization contract shall be and remain a public record for purposes of the Freedom of Information Act and the enforcement provisions of said act apply to any improper failure to disclose such records.

(b) Both the agency and the contractor or subcontractor that execute a privatization contract shall have a joint and several liability with respect to any obligations imposed on the agency by the Freedom of Information Act with respect to any public record related to the privatization contract, provided the final determination as to whether or not to disclose a particular record or type of record shall be made solely by the agency.

(c) No contractor, subcontractor or employee or agent of a contractor or subcontractor shall disclose to the public any public record that (1) the contractor, subcontractor or employee or agent possesses, modifies or creates pursuant to a privatization contract, subcontract, or amendment to a privatization contract or subcontract, and (2) the state agency (A) is prohibited from disclosing pursuant to state or federal law, (B) may only disclose to certain entities or individuals or under certain conditions pursuant to state or federal law, or (C) may withhold from disclosure pursuant to state or federal law. No provision of this subsection shall be construed to prohibit any such contractor from disclosing such public record to any of its subcontractors to carry out the purposes of the privatization contract.

(d) No contractor, subcontractor or employee or agent of a contractor or subcontractor shall sell, market or otherwise profit from the disclosure or use of any public record in its possession pursuant to a privatization contract, subcontract, or amendment to a privatization contract or subcontract, except as authorized in the privatization contract, subcontract or amendment.

(e) Any contractor, subcontractor or employee or agent of a contractor or subcontractor that learns of any violation of the provisions of section 5 of this act or this section shall, not later than seven calendar days after learning of such violation, notify the agency head and the Attorney General of such violation.

Sec. 7. (NEW) (Effective October 1, 2005) (a) In addition to any of the remedies provided under the Freedom of Information Act, if any person violates any provision of section 5 or 6 of this act, the Attorney General may bring an action against such person in Superior Court seeking (1) damages on behalf of the state for such violation, (2) restitution for damages suffered by any person as a result of the violation, or (3) imposition and recovery of a civil penalty of not more than fifty thousand dollars for the violation.

(b) In addition to any of the remedies provided under the Freedom of Information Act, any person aggrieved by a violation of any provision of section 5 or 6 of this act may bring an action in Superior Court to recover any damages suffered as a result of such violation.

(c) In any action brought under subsection (a) or (b) of this section, the court may (1) order disgorgement of any profits or other benefits derived as a result of a violation of any provision of section 5 or 6 of this act, (2) award punitive damages, costs or reasonable attorney's fees, or (3) order injunctive or other equitable relief. Proof of public interest or public injury shall not be required in any action brought under subsection (a) or (b) of this section. No action may be brought under subsection (a) or (b) of this section more than three years after the occurrence of such violation.

(d) Any person who knowingly and wilfully violates any provision of section 5 or 6 of this act shall, for each such violation, be fined not more than five thousand dollars or imprisoned not less than one year nor more than five years, or be both fined and imprisoned.

Sec. 8. (NEW) (Effective October 1, 2005) (a) The executive head of an agency soliciting bids for a privatization contract and the Commissioner of Administrative Services shall each certify, in writing, to the Auditors of Public Accounts that:

(1) They have complied with all provisions of sections 1 to 4, inclusive, of this act, and all other applicable laws;

(2) A cost-benefit analysis of the proposed privatization has been conducted pursuant to subsection (b) of section 2 of this act and the agency has determined in such analysis that it is cost-effective to privatize services;

(3) The quality of the services to be provided by the designated bidder is likely to satisfy the quality requirements of the statement prepared pursuant to subsection (c) of section 2 of this act and to equal or exceed the quality of services that are provided by regular agency employees pursuant to subsection (a) of section 3 of this act;

(4) The designated bidder and its supervisory employees, while in the employ of the designated bidder, have no adjudicated record of substantial or repeated wilful noncompliance with any relevant federal or state regulatory law including, but not limited to, laws concerning labor relations, occupational safety and health, nondiscrimination and affirmative action, environmental protection and conflicts of interest;

(5) The proposed privatization contract is otherwise in the public interest;

(6) The projected cost savings of the proposed privatization contract will exceed ten per cent of the cost of delivering the services with state employees; and

(7) Each bid details:

(A) The length of continuous employment of current employees of the contractor by job classification, without personally identifying employees by name. In addition, the contractor may submit information detailing the relevant prior experience of current employees within each job classification. If the positions identified by the bidder are newly created positions, the bid shall identify the minimum requirements for prospective applicants for each such position.

(B) The annual rate of employee turnover.

(C) The number of hours of training planned for each employee in areas directly related to the provision of services to state residents and clients.

(D) Any legal complaints issued by an enforcement agency for alleged violations of applicable federal, state or local rules, regulations or laws, including laws governing employee safety and health, labor relations and other employment requirements, and any citations, court findings or administrative findings for violations of such federal, state or local rules, regulations or laws. Such information shall specify the date of the complaint, citation, court finding or administrative finding, the enforcement agency, rule, law or regulation involved and any additional information the contractor elects to submit.

(E) Any collective bargaining agreements or personnel policies covering the employees that will provide services to the state.

(F) Any political contributions made by the bidder or any employee who holds a management position with the bidding company, to any elected officer of the state or member of the General Assembly during the four years prior to the due date of the bid.

(b) A copy of the proposed privatization contract shall accompany the certificate transmitted to the Auditors of Public Accounts.

Sec. 9. (NEW) (Effective October 1, 2005) (a) The Auditors of Public Accounts shall review the certificate and proposed privatization contract and notify the agency of the auditors' approval or objection not less than thirty days after receiving the certification required by section 8 of this act. No privatization contract shall be valid if the auditors notify the agency of the auditors' objection. Such objection shall be in writing and shall state specifically the requirements under sections 2 to 4, inclusive, of this act that the agency has failed to comply with, including any facts that the auditors find incorrect, based on an independent review of all relevant facts.

(b) For the purpose of reviewing the agency's compliance and certification pursuant to section 8 of this act, the Auditors of Public Accounts, or a designee, may issue a summons to any person to appear and testify under oath and to produce books, papers and other records relating to such review. All provisions of the general statutes relative to summonses in civil cases, including the manner of service, the scope and relevance to such review and the compensation of witnesses who are not state employees shall apply to such summonses.

(c) The objection of the Auditors of Public Accounts pursuant to subsection (a) of this section shall be final and binding on the agency, unless the auditors thereafter, in writing, withdraw the objection, stating the specific reasons, based upon a revised certificate by the agency and the Commissioner of Administrative Services.

Sec. 10. (NEW) (Effective October 1, 2005) (a) The Commissioner of Administrative Services shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, governing contracts between governmental units and social services program providers that shall include, but not be limited to, a provision:

(1) Requiring that all transactions between said providers and related parties shall be disclosed, in writing, in advance to the Department of Administrative Services and to the agency affected by the privatization contract, either of which may prohibit the transaction by written notice to the provider;

(2) Requiring that any reductions by said providers in a rate of reimbursement, or other payment method or total expenditure, shall be applied, first against expenditures on managerial personnel, including, but not limited to, management fees, salaries, benefits and other compensation paid to managers and shall be applied in the last instance against expenditures on direct service workers;

(3) Requiring that any contract for funds expended by the state, that does not require the state to be reimbursed or compensated by the provider who amortizes the mortgages for the ownership of property, whether owned directly or indirectly by said provider, shall contain provisions for the recoupment of said reimbursement or compensation by the state in the event said property is sold and may, if necessary, allow for the execution of liens to ensure such recoupment;

(4) Requiring a complete inventory of equipment purchased by said providers on behalf of the state and the return of such equipment to the proper governmental unit upon the completion or termination of the contract;

(5) Requiring that the uniform financial report include a subsidiary schedule for each component cost and a related party disclosure statement from each officer, director and trustee of said providers;

(6) Prohibiting any subcontract or consultant contract for services from a parent organization or parent agency at the national, state or local level;

(7) Prohibiting the refusal to service any case or type of case, or place any restrictions or limitation on services, the provisions of which were mutually agreed upon in the conditions specified in the contract, subsequent to the finalization of such contract either primary or secondary; and

(8) Prohibiting the use of state funding for investment counseling, fund-raising, management consultants and other services that are not directly related to the servicing of clients, patients and other persons served by the provider agency.

(b) If, after a hearing, the Department of Administrative Services finds any violation of any regulations adopted pursuant to subsection (a) of this section, the Department of Administrative Services may order that the contract be terminated, or the Attorney General may assess a civil penalty of not more than two thousand dollars or ten per cent of the amount payable under the contract, whichever is greater, that the agency shall withhold from payments otherwise due under the contract. Notwithstanding any provision of the general statutes, any provider aggrieved under this section may exercise any legal remedy or cause of action available to such provider under the provisions of the general statutes. If, after a hearing, the Commissioner of Administrative Services determines that a provider has committed any wilful violation of subsection (a) of this section, said commissioner may disqualify the provider from bidding on further state contracts.

Sec. 11. (NEW) (Effective October 1, 2005) (a) No later than five days after Auditors of Public Accounts, pursuant to section 9 of this act, notify an agency of their approval of a proposed privatization contract between such agency and a nongovernmental person or entity, that has a value of five million dollars or more, the agency shall file such contract with the clerks of the House of Representatives and the Senate.

(b) No later than five days after the clerks receive such contract, the speaker of the House of Representatives and the president pro tempore of the Senate shall submit the contract to the joint standing committees of the General Assembly having cognizance of matters relating to government administration and appropriations and the budgets of state agencies.

(c) No later than twenty-five days after the speaker of the House of Representatives and the president pro tempore of the Senate receive such contract, said committees shall hold a public hearing on the contract and shall report their recommendations to the members of the House of Representatives and the Senate concerning the approval or rejection of the contract.

(d) The General Assembly may approve the contract, in whole, by a majority vote of each house or may reject the contract, in whole, by a majority vote of either house. If rejected, the contract shall not be valid and shall not be implemented. The contract shall be deemed rejected if the General Assembly fails to vote to approve or reject the contract (1) prior to the adjournment of the regular session of the General Assembly during which the contract is filed, provided the contract is not filed less than thirty days before the end of such regular session, (2) prior to the adjournment of the next regular session of the General Assembly following the date on which the contract is filed if the General Assembly is not in regular session on such date, or (3) prior to the adjournment of a special session convened before the next regular session of the General Assembly for the purpose of considering the contract if the General Assembly is not in regular session on the date on which the contract is filed. If the contract is filed less than thirty days before the end of a regular session, the General Assembly may vote to approve or reject the contract (A) no later than thirty days after the first day of a special session convened before the next regular session of the General Assembly for the purpose of considering the contract, or (B) no later than thirty days after the first day of the next regular session of the General Assembly.

Sec. 12. (NEW) (Effective October 1, 2005) State funds shall not be used to support or oppose union activity by the employees of any contractor that executes a privatization contract, including, but not limited to, preparation and distribution of materials that advocate for or against unionization, hiring or consulting legal counsel or other consultants to advise the contractor how to assist, promote or deter union organizing or how to impede a union that represents the contractor's employees from fulfilling its representational responsibilities.

Sec. 13. (NEW) (Effective October 1, 2005) (a) No person shall retaliate or discriminate in any manner against any public employee or any employee of a private contractor because the employee, or any person acting on behalf of the employee, acting in good faith (1) engaged in any disclosure of information related to the services provided by the contractor pursuant to a privatization contract, (2) advocated on behalf of service recipients with respect to the care or services provided by the contractor, or (3) initiated, cooperated or otherwise participated in any investigation or proceeding of any governmental entity related to the services provided pursuant to a privatization contract.

(b) No person shall retaliate or discriminate in any manner against any public employee or any employee of a private contractor because the employee attempted or intends to engage in any action described in subsection (a) of this section.

(c) No person shall, by contract, policy or procedure, prohibit or restrict any employee of a private contractor from engaging in any action for which a protection against discrimination or retaliation is provided under subsection (a) or (b) of this section.

(d) Nothing in subsection (a) or (b) of this section shall be construed to protect disclosures that would otherwise violate federal or state law or diminish or impair the rights of any person to the continued protection of confidentiality of communications provided by state or federal law.

(e) For purposes of this section, an employee is "acting in good faith" if (1) the employee reasonably believes the information disclosed by the employee is true, and (2) the information disclosed by the employee (A) evidences a violation of any law, rule or regulation, or a generally recognized professional or clinical standard, or (B) relates to care, services or conditions that potentially endanger one or more recipients of services or employees working pursuant to a privatization contract.

(f) All privatization contracts shall include a contract provision specifying that in order to determine compliance with the provisions of this section as well as the privatization contract, the private contractor is required to provide the state or its agents, except where prohibited by federal or state laws, regulations or rules, reasonable access, through representatives of the private contractor, to facilities, records and employees that are used in conjunction with the provision of services specified in the privatization contract.

Sec. 14. Subdivision (2) of section 32-700 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2005):

(2) "State assistance" means any grant, loan, loan guarantee or issuance of tax benefit not of general applicability for the purpose of economic development that is (A) made to a business entity operated for profit, and (B) in an amount greater than one million dollars or that, if added to any other such state assistance made to the same business entity during the preceding two years, would total greater than [one million] five hundred thousand dollars.

Sec. 15. Section 32-701 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2005):

(a) The terms and conditions of any agreement for state assistance under any program of the general statutes to a business entity operated for profit administered by the Department of Economic and Community Development, Connecticut Development Authority and Connecticut Innovations, Incorporated, shall include provisions for (1) specific goals for the creation and retention of full-time and part-time jobs and for periodic reports by the recipient on progress in achieving such goals if the primary purpose of the state assistance is job creation or retention, and (2) a requirement that an applicant for any type of state assistance, except grants and loans of a term of less than one year, provide the agency with appropriate security for such financial assistance, including, but not limited to, a letter of credit, a lien on real property or a security interest in goods, equipment, inventory or other property of any kind and that the recipient of such state assistance will remain in substantial material compliance with state and federal law.

(b) If a recipient fails to create or retain the number of jobs in this state stipulated in an agreement for state assistance, [and such failure is due to circumstances within the control of such recipient,] the recipient shall repay an amount that is in proportion to the number of jobs that it failed to create or retain. [unless the awarding authority deems it is in the best interests of the state or the community in which the recipient is located to revise such job creation goals. In such event, the parties shall enter into a revised agreement subject to the approvals required by subsection (c) of this section. Upon request of the awarding authority, a recipient shall provide information necessary to determine compliance with this section, including information showing the compensation paid to employees on jobs created as a result of the state assistance.]

(c) [The] No awarding authority [, in its discretion, may] shall modify the terms and conditions of any state assistance, including, but not limited to, forgiveness of repayment of a loan, revision of job creation and retention goals or changes to interest rates [, provided such awarding authority notifies] unless such modification has been approved by the State Bond Commission. [or the appropriate board of directors, if any, of the modification.]

Sec. 16. Section 32-702 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2005):

If an awarding authority finds that a recipient of state assistance is not in substantial material compliance with any other provision of the agreement, [and such noncompliance is within the recipient's control,] the awarding authority shall provide written notice, by registered mail, to the recipient and shall order the recipient to come into compliance with such agreement not less than one hundred eighty days following receipt of such notice. Failure to comply with reporting requirements set forth in such agreement shall constitute a default. If the recipient fails to come into compliance with such agreement within the one-hundred-eighty-day period, the awarding authority may (1) rescind the agreement and require that the state be made whole by the repayment by the recipient of (A) the amount of any grant made, (B) the amount of any loan outstanding, including any interest necessary to make the state whole, or (C) the amount of any tax benefit received, or (2) impose a penalty on such recipient, for the period of failure to comply, at the rate of one per cent per month or any part thereof of the amount of the grant, tax benefit or loan outstanding. The awarding authority may foreclose on any collateral or bond related to such grant, tax benefit or loan for the purpose of payment of such penalty and any costs incurred by the awarding authority in connection with collection of such penalty.

Sec. 17. Section 32-703 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2005):

If the terms and conditions of an agreement for state assistance, except an agreement for grants only, provide for security, the awarding authority providing such state assistance shall have a lien on such security in an amount equal to the amount that is due on such state assistance. [or other appropriate security for such financial assistance.] Any such lien shall have priority over all other subsequent liens except state tax liens. [, except if the awarding authority determines it is not in the best interests of the state to have such priority. The awarding authority shall notify the State Bond Commission or the appropriate board of directors, if any, of such determination.]

Sec. 18. (Effective from passage) The Labor Commissioner shall, within available appropriations, conduct a study of the effectiveness of the Labor Department's Rapid Response System and Dislocated Worker Program. Not later than January 1, 2006, the commissioner shall report, in accordance with the provisions of section 11-4a of the general statutes, the findings and recommendations of the study, including recommendations for policies and procedures to implement any proposed changes to the Rapid Response System or Dislocated Worker Program, to the joint standing committee of the General Assembly having cognizance of matters relating to labor.

Statement of Purpose:

To establish procedures and standards for the contracting of state programs and services to nongovernmental entities and to direct the Labor Commissioner to conduct a study of the effectiveness of the Rapid Response System and Dislocated Worker Program.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]