AN ACT CONCERNING CLEAN CONTRACTING STANDARDS.

This bill establishes a State Contracting Standards Board (SCSB) as an independent Executive Branch state agency. The new board has various responsibilities associated with the state contracting processes, including reviewing, monitoring, and auditing state contracting agencies' procurement processes. “State contracting agencies” are state Executive Branch agencies, boards, commissions, departments, offices, institutions, or council. They do not include the Judicial Branch, the Legislative Branch, or the offices of the Secretary of the State, the State Treasurer, the State Comptroller or the Attorney General with respect to their constitutional functions, or any state agency with respect to contracts specific to the responsibilities of the Office of the State Treasurer.

The bill allows the SCSB to disqualify contactors and state agencies to suspend them. It requires all state contracts that take effect on or after the bill's passage to contain provisions to ensure accountability, transparency, and results-based outcomes, as the SCSB prescribe (§ 14). “Contract” or “state contract” means an agreement or a combination or series of agreements between a state contracting agency or quasi-public agency and a business for:

1. a project for the construction, reconstruction, alteration, remodeling, repair or demolition of any public building, public work, mass transit, rail station, parking garage, rail track or airport;

2. services, including, but not limited to, consultant and professional services;

3. the acquisition or disposition of personal property;

4. the provision of goods and services, including, but not limited to, the use of purchase of services contracts and personal service agreements;

5. the provision of information technology, state agency information system or telecommunication system facilities, equipment or services;

6. a lease or a licensing agreement;

7. “Contract” or “state contract” does not include a contract between a state agency or a quasi-public agency and a political subdivision of the state.

The bill requires the Judicial and Legislative branches to prepare their own procurement codes by February 1, 2011 and state constitutional officers to each adopt one by June 1, 2011.

It establishes a procedure for privatizing state contracts. The procedure includes a requirement for cost-benefit analyses and business cases.

The bill requires the Department of Administrative Services (DAS) to maintain a single electronic portal for posting most contracting opportunities in the state.

The bill specifies that the SCSB's establishment and general duties as outlined in the bill and the bill's provision on privatization (§§ 1-14 and 16) do not affect the requirements in PA 06-129. That act requires the commissioner of the Department of Administrative Services (DAS) to establish a four-year pilot program to create and expand janitorial jobs for people with disabilities (except blindness) or a disadvantage who meet specific criteria (§ 15).

The bill establishes the 14-member SCSB as a separate, independent, Executive Branch agency. The governor appoints eight board members, the Senate president pro tempore and House speaker each appoint two, and the Senate and House majority leaders each appoint one. If the governor is of the same political party as the majority in both chambers of the General Assembly, the legislative appointments are made by the top six legislative leaders. Each appoints one member.

Each member serves at the pleasure of the appointing authority up to a maximum term coterminous with that of his or her appointing authority. Each appointing authority fills any vacancy in his or her appointment. Eight members of the board, including at least one member appointed by a legislative leader, constitute a quorum, which is required to transact business. The governor appoints the board's chairperson. Board members must be paid a $ 200 per diem.

The bill requires the board's budget, upon approval of its members, to pay its reasonable expenses. It requires board members to be paid a $ 200 per diem.

Board members must have education, training, or experience received in five consecutive years of the 10 years immediately preceding their appointment, in one or more of the following areas:

1. procurement;

2. contract negotiation, selection, and drafting;

3. contract risk assessment;

4. competitive bidding and proposal procedures;

5. real estate transactions, including real estate and building purchases, sales, and leases;

6. business insurance and bonding;

7. building construction and architecture;

8. ethics in public contracting;

9. federal and state laws, procurement policies, and regulations;

10. outsourcing and privatization analysis;

11. small and minority business enterprise development;

12. engineering and information technology;

13. human services; or

14. personnel and labor relations.

“Contract risk assessment” means (1) the identification and evaluation of loss exposures and risks, including business and legal risks associated with contracting, and (2) the identification, evaluation, and implementation of measures available to minimize potential loss exposures and risks.

The bill requires the governor to appoint and the legislature to confirm an executive director who serves as an ex-officio, nonvoting board member. The board must annually evaluate the executive director's performance and may remove him or her for cause. The executive director must report to the board's chairperson. The board must appoint a chief procurement officer (CPO) for a term not to exceed six years, unless reappointed. The CPO reports to the board, is annually evaluated by the board, and serves at the board's pleasure. For administrative purposes only, the executive director supervises the CPO.

In consultation with the chief procurement officer, the executive director must:

The executive director may contract as necessary to carry out his or her duties.

The CPO is responsible for carrying out the board's policies relating to procurement, including oversight, investigation, auditing, agency procurement certification, procurement and project management training, and enforcement. He or she also ensures that state contracting agencies apply the policies when they screen and evaluate current and prospective contractors. The CPO may contract as necessary for the discharge of his or her duties, including recommending best practices and assisting state agencies that the board determines are violating the bill.

1. oversee state contracting agencies' compliance with statutes and regulations concerning procurement;

2. monitor and assess each agency's procurement officer's performance of his or her duties;

3. administer the certification system (see below) and monitor compliance with procurement statutes and regulations, including the education and training, performance, and qualifications of agency procurement officers;

4. review and monitor the procurement processes of each state contracting agency, quasi-public agency, and institution of higher education; and

5. serve as chairperson of the Contracting Standards Advisory Council and an ex-officio member of the Vendor and Citizen Advisory Panel (see below).

The bill authorizes the board to (1) employ any other staff it considers necessary and (2) contract with consultants and professionals on a temporary or project basis.

The bill prohibits anyone from working for the board if the person (1) has a state or municipal position or (2) serving in a non-clerical position, or his or her spouse, child, stepchild, parent, or sibling is associated with any business that does business with the state. An associated business is one owned by an official, employee, or immediate family member, or where any one of them (1) serves as an officer, director, or compensated agent or (2) owns at least 5% of the stock in any class.

It requires board members and employees to file with the board and the Office of State Ethics annual statement of financial interest required by the State Ethics Code, by May 1. The financial statement is a public record and subject to disclosure under the Freedom of Information Act (FOIA).

Any board employee or member who violates the employment prohibition or fails to file the statement violates the State Ethics Code and may be subject to the code's penalties, including a fine of up to $ 10,000.

The bill requires the board to adopt any rules it deems necessary to conduct its internal affairs, including appellate rules of procedure and reviews of appeals by bidders.

The bill permits the board to exercise the rights, powers, duties, and authority related to the state's procurement policies, now vested in, or exercised by, any state contracting agency. Unless the board's actions show otherwise, its authority does not limit or restrict the rights, powers, or authority of the contracting agency. These consist of the right, power, duty, or authority:

“Consultant Services” are professional services rendered by architects; professional engineers; landscape architects; land surveyors; accountants; interior designers; environmental professionals; planners; and people who perform professional work in areas, including educational services, medical services, information technology and real estate appraisals.

Upon the board's request, each state contracting agency must give the board procurement information in a timely manner. The bill gives the board access to all information, files, and records related to any state contracting agency. The bill specifies that it does not require the board to publicly disclose records exempt under disclosure from FOIA.

1. recommending the repeal of repetitive, conflicting, or obsolete state procurement laws;

2. making recommendations regarding information systems for state procurement including data element and design and the state contracting portal;

3. develop a guide to state statutes and regulations concerning procurement for use by all state contracting agencies;

4. helping state contracting agencies to comply with state laws and regulations by providing guidance, models, advice, and practical assistance to their staff related to (a) buying the best service at the best price; (b) properly selecting contractors; and (c) drafting contracts that achieve state goals of accountability, transparency, and results- based outcomes and protect taxpayers' interests; and

5. adopting regulations and policies to carry out state procurement laws in order to facilitate consistent application and require the implementation of best procurement practices.

Review Procurement Legislation, Regulations, and Policies. The board must review and make recommendations concerning proposed legislation and regulations on procuring, managing, controlling, and disposing of supplies, services, and construction, including:

1. prequalification, suspension, debarment, and reinstatement of prospective bidders and contractors;

2. small purchase procedures;

3. conditions and procedures for delegating procurement authority, procuring perishables and items for resale, using source selection methods authorized by statute or regulation, emergency procurements, and selecting contractors by processes or methods that restrict full and open competition;

4. opening or rejecting bids and offers and waiving errors in bids and offers;

5. confidentiality of technical data and trade secrets submitted by actual or prospective bidders;

6. partial, progressive, and multiple awards;

7. supervision of storerooms and inventories, including determining appropriate stock levels and the management, transfer, sale, or other disposal of publicly owned supplies;

8. definitions and classes of contractual services and procedures for acquiring them;

9. regulations for conducting cost and price analysis;

10. use of payment and performance bonds;

11. guidelines for using cost principles in negotiations, adjustments, and settlements; and

12. identifying procurement best practices.

The board must give the governor and the Government Administration and Elections Committee recommendations concerning procurement statutes and regulations

Board to Coordinate Procurement and Contracting Officers. The board must train and oversee the procurement and contracting officers in each state contracting agency.

The bill requires the head of each state contracting agency to appoint an agency procurement officer to act as a liaison between the agency and the chief procurement officer on the agency's procurement activities. The activities include (1) implementing and complying with statutes and regulations on procurement and any policies or regulations the board adopts and (2) coordinating the training and education of agency procurement employees.

The agency procurement officer must assure that contractors are properly screened before a contract is awarded, evaluate their performances during and at the end of a contract, submit written evaluations to a central data repository that the board designates, and create a project management plan that includes annual reports to the board on the agency's procurement projects.

Beginning January 1, 2009, the bill requires the board to review and certify that a state contracting agency's procurement processes comply with procurement statutes and regulations. It must accomplish this by

The Office of State Ethics or any person, firm, or corporation may develop and provide the training, but the board must approve the course.

Employees must maintain the certification in good standing at all times while performing procurement functions.

The board must recertify each state contracting agency's procurement processes at least every three years, notify them of any certification deficiency, and exercise its enforcement authority if it finds noncompliance.

The bill requires the board to “define the contract data reporting requirements to the board for state agencies. ” It is unclear what this means. However, it may mean that the board must inform state agencies of their duties to report data on:

1. the number and type of state contracts of each state contracting agency currently in effect statewide;

2. the contracts' terms and dollar values;

3. their client agencies;

4. services purchased under such contracts;

5. contractor names;

6. their evaluations of contractors' performances, including records on suspensions or disqualifications and assurances that the information is available on the state contracting portal; and

7. all contracts and contractors awarded without full and open competition, including the reasons for the decisions and the names of the authorities that approved them.

The SCSB, with the advice and assistance of the administrative services commissioner, must develop a standardized state procurement and project management education and training program. The board must adopt implementing regulations.

The program must develop education, training, and professional development opportunities for state contracting agencies' employees with procurement responsibilities. It must educate the employees on general business acumen and on proper purchasing procedures as established in procurement statutes and regulations. The program must emphasize ethics, fairness, consistency, and project management.

1. training and education in federal, state, and municipal procurement processes, including the state procurement statutes and regulations and principles of project management;

2. training and education courses developed in cooperation with the Office of State Ethics, Freedom of Information Commission, State Elections Enforcement Commission, Commission on Human Rights and Opportunities, Attorney General's Office, and any other state agency the board determines is necessary;

3. technical assistance to help state contracting agencies, quasi-public agencies, constituent units of higher education, and municipalities implement procurement statutes and regulations and regulations, policies, and standards the board develops;

4. training to current and prospective contractors, vendors, and others seeking to do business with the state; and

5. training and education for state employees in best procurement practices in state purchasing with the goal of achieving the level of acumen necessary to achieve the objectives of state statutes and regulations.

The bill requires state contracting agencies' employees responsible for buying, purchasing, renting, leasing, or otherwise acquiring any supplies, service, or construction to participate in the program. The board must give employees who complete the program a document acknowledging their participation. It must give the governor and legislature an annual status report on the training and education program.

The bill requires the board to audit state contracting agencies at least once every three years and report on their compliance with procurement statutes and regulations. During the audit, the bill gives the board access to all of the agencies' contracting and procurement records and authority to interview people responsible for awarding and negotiating contracts or procurement. The board can contract with the state auditors to conduct the audit.

The board must identify in the compliance report any process or procedure that is inconsistent with procurement laws and regulations and corrective measures to achieve compliance. It must deliver the report, which is a public record, to the contracting agency within 30 days after the audit is completed.

The board may review, terminate, or recommend to a state contracting agency terminating a contract or procurement agreement for cause after consulting with the attorney general and giving the agency and contractor 15 days notice. “For cause” means (1) engaging in activities prohibited under the State Ethics Code as determined by the Citizen's Ethics Advisory Board; (2) wanton or reckless disregard of any state contracting and procurement process by anyone substantially involved in the contract or with the state contracting agency; or (3) notification from the attorney general to the state contracting agency that a whistleblower investigation indicates that the contract process was compromised by fraud, collusion, or any other criminal violation.

The decision to terminate a contract must be preceded by the board's consultation with the contracting agency to determine the impact of an immediate termination and a joint decision by the board and the agency that immediate termination will not cause imminent peril to public health, safety, or welfare. The board's decision to terminate must be approved by a two-thirds vote of its members present and voting, including at least one board member appointee by a legislative leader. The board must notify the state contracting agency and the contractor of the opportunity for a hearing under the UAPA.

The board may (1) restrict or terminate a state contracting agency's contracting or procurement authority or (2) recommend that a state contracting agency restrict or terminate an employee's or agent's authority to enter a contract or procurement agreement upon a two-thirds vote, including at least on board member appointee by a legislative leader, after 15 days notice and a hearing, if it finds the agency or employee failed to comply with statutory contracting and procurement requirements and showed a reckless disregard for applicable policies and procedures. Any restriction or termination stays in effect until the agency implements corrective measures and complies with procurement laws and regulations. Any agency restriction or termination must be in the state's best interest. The board must arrange for the exercise of the agency's contracting power during the restriction or termination.

The bill establishes a Contracting Standards Advisory Council consisting of representatives from the Office of Policy and Management; the departments of transportation, administrative services, public works, and information technology; three other contracting agencies that the governor designates, including one human services-related state agency; and the chief procurement officer who serves as chairperson.

The council must meet at least four times a year to discuss state procurement issues and recommend improvements to the procurement process to the SCSB. It may conduct studies, research, and analyses, and make reports and recommendations with respect to matters within SCSB's jurisdiction.

The bill establishes a 15-member Vendor and Citizen Advisory Panel. The governor appoints three members and the six top legislative leaders each appoint two. No more than six members can be vendors experienced in state procurement. The remaining nine must be citizen members with education, training, or experience, received in five consecutive years of the 10 years immediately preceding their appointment, in one or more of the following areas:

1. government procurement;

2. contract negotiation, drafting, and management;

3. contract risk assessment;

4. preparing requests for proposals, invitations to bid, and other procurement solicitations;

5. evaluating proposals, bids, and quotations;

6. real property transactions;

7. business insurance and bonding;

8. the State Code of Ethics;

9. federal and state laws, policies, and regulations;

10. outsourcing and privatization proposal analysis;

11. government taxation and finance;

12. small and minority business enterprise development; and

13. collective bargaining; and

14. human services.

The chief procurement officer chairs the panel and serves as an ex-officio member. The panel makes recommendations to the board on best practices in state procurement processes and project management and other issues pertaining to system stakeholders.

§ 10 — SCSB LEGISLATION ON APPLICATION OF PROCUREMENT LAWS AND REGULATIONS

On or before July 1, 2010, the board must submit to the governor and legislature necessary legislation to permit state contracting agencies, other than quasi-publics, institutions of higher education, and municipal procurement processes using state funds to comply with procurement laws and regulations.

Within the next year, the board must submit legislation necessary to have (1) procurement statutes apply to constituent units of higher education and (2) privatization and procurement statutes and regulations apply to quasi-public agencies.

By July 1, 2012, the board must submit legislation to governor and legislature necessary to have procurement statutes and regulations apply to municipalities when state funds are involved.

The board must help the secretary of the state, comptroller, treasurer, and attorney general develop the best procurement practices specific to their constitutional and statutory functions and consistent with procurement statutes and regulations. Each of the constitutional officers must adopt a procurement code on or before June 1, 2011.

By February 1, 2011, the bill requires the Judicial and Legislative branches to prepare their procurement codes for their use when contracting for, buying, renting, leasing, or otherwise acquiring or disposing of supplies, equipment, or services, including consultant, personal, and construction services.

By the same date, the Judicial Branch must submit its code to the Judiciary Committee for review and approval.

1. establish uniform contracting standards and practices;

2. ensure the fair and equitable treatment of all businesses and people involved in the procurement system;

3. include a process for maximizing the use of small contractors and minority business enterprises;

4. provide increased economy in procurement activities and maximize purchasing value to the fullest extent possible;

5. ensure that they procure supplies, materials, equipment, services, real property, and construction in a cost-effective and responsive manner;

6. include a process to ensure accountability between contractors and the Judicial and Legislative branches;

7. simplify and clarify contracting standards and procurement policies and practices, including procedures for competitive sealed bids or proposals, small purchases, and sole source, special, and emergency procurements; and

8. provide a process for competitive sealed bids and proposals, small purchases, sole source, emergency, and special procurements, best-value selection, and qualification-based selection, and the conditions for their use.

“Best-value selection” means a process to award contracts based on quality, timeliness, and costs. “Qualification-based selection” means a process to award contracts based primarily on contractor qualifications and a fair and reasonable price. “Emergency procurements” are those necessary because of a sudden, unexpected occurrence that poses a clear and imminent danger to public safety or that requires immediate action to prevent or reduce loss or impairment of life, health, property, or essential public services, or needed in response to a court order, settlement agreement, or other similar legal judgment.

The bill requires DAS to work with the SCSB to establish and maintain on its website a single electronic portal of all contracting opportunities with Executive Branch state agencies, the constituent units of higher education, and quasi-public agencies. The portal must be call the “State Contracting Portal. ”

All Executive Branch agencies, constituent units of higher education, and quasi-public agencies must (1) post all bids, requests for proposals, and all resulting contracts and agreements on the portal and (2) develop written policies and procedures to ensure that information posted on the portal is timely, complete, and accurate as determined by the highest legal and ethical standards of state government. They must, with the assistance of DAS and the Department of Information Technology as needed, develop the infrastructure and capability to communicate electronically with the portal.

DAS must give the governor and the SCSB periodic progress reports on (1) the agencies' and units' development of the capacity, infrastructure, policies, and procedures necessary to communicate electronically with the portal and (2) DAS' progress in establishing and maintaining the portal.

Beginning June 1, 2010, the bill requires all Legislative Branch, Judicial Branch, and state contracting agency contracts that take effect on or after that date to contain provisions to ensure accountability, transparency, and results-based outcomes, as prescribed by the SCSB.

Before privatizing any state service that is not currently privatized, a state contracting agency must develop a cost-benefit analysis and a business case. For the purpose of this section, a “state contracting agency” is an Executive Branch agency and constituent unit of the state system of higher education. Any affected party may petition the SCSB to review the contract. The requirement does not apply (1) to a privatization contract for a service currently provided at least in part by a non-state entity or (2) if the state contracting agency determines the contract is required because of an imminent peril to public health, safety, or welfare, (3) the agency states, in writing, its reasons for such finding, and (4) the governor approves the finding in writing.

This section does not apply to procurements that involve the expenditure of federal assistance or contract funds if federal law provides procurement procedures that are inconsistent with state procurement statutes or regulations.

The cost-benefit analysis must document the direct and indirect costs, savings, and qualitative and quantitative benefits of the privatization contract. The analysis must (1) specify the minimum schedule required to achieve any estimated savings and (2) clearly identify any cost factor. Cost factors must be supported by all applicable records and reports. The state contracting agency's head must certify that, based on the data and information, all projected costs, savings and benefits are valid and achievable. “Costs” means all reasonable, relevant and verifiable expenses, including salary, materials, supplies, services, equipment, capital depreciation, rent, maintenance, repairs, utilities, insurance, travel, overhead, interim and final payments and the normal cost of fringe benefits, as calculated by the comptroller. “Savings” means the difference between the current annual direct and indirect costs of providing the service and the projected, annual direct and indirect costs of contracting to provide them in any succeeding state fiscal year during the term of such proposed privatization contract.

If such cost-benefit analysis identifies a cost savings of less than 10%, the contract will not diminish the quality of services, and there is a significant public policy reason to privatize, the state contracting agency may develop a business case to evaluate the feasibility of entering the contract and to identify its potential results, effectiveness, and efficiency.

If the contract would result in at least 100 layoffs, transfers, or reassignments, after consulting with unions, the contracting agency must notify the affected employees after the cost-benefit analysis is completed, give them the opportunity to reduce the costs of providing the services to be privatized, and give them resources to encourage and help them organize and bid on the contract. The state contracting agency retains sole discretion in determining whether to proceed with the privatization contract if the SCSB approves the business case.

1. the cost-benefit analysis;

2. a detailed description of the service or activity that is the subject of such business case;

3. a description and analysis of the state contracting agency's current performance of such service or activity;

4. the goals to be achieved through the proposed privatization contract and the rationale for such goals;

5. a description of available options for achieving such goals;

6. an analysis of the advantages and disadvantages of each option, including potential performance improvements and risks attendant to terminating or rescinding the contract;

7. a description of the current market for the services or activities that are the subject of the business case;

8. an analysis of the quality of services as determined by standardized measures and key performance requirements, including compensation, turnover, and staffing ratios;

9. a description of the specific results-based performance standards that must be met to ensure adequate performance by any party performing the service or activity;

10. the projected time frame for key events from the beginning of the procurement process through the expiration of a contract, if applicable;

11. a specific and feasible contingency plan that addresses contractor nonperformance and a description of the tasks involved in and costs required for implementing the plan; and

12. a transition plan, if appropriate, for addressing changes in the number of agency personnel, affected business processes, employee transition issues, and communications with affected stakeholders, such as agency clients and members of the public, if applicable.

The transition plan must contain a reemployment and retraining assistance plan for employees who are not retained by the state or employed by the contractor.

If the primary purpose of the proposed privatization contract is to provide a core governmental function, the business case must also include information sufficient to rebut the presumption that the core governmental function should not be privatized. The presumption cannot be construed to prohibit a state contracting agency from contracting for specialized technical expertise not available within the agency; however, the agency must retain responsibility for the core governmental function. “Core governmental function” means a function for which the primary purpose is (A) to inspect for adherence to health and safety standards because public health or safety may be jeopardized if the inspection is not done or is not done in a timely or proper manner; (B) to establish statutory, regulatory, or contractual standards for a regulated person, entity, or state contractor; (C) to enforce public health or safety statutory, regulatory, or contractual requirements; or (D) criminal or civil law enforcement. If any part of the business case is based upon evidence that the state contracting agency is not sufficiently staffed to provide the core governmental function required by the privatization contract, the state contracting agency must also include within the business case a plan to remediate the understaffing to allow the services to be provided directly by the state contracting agency in the future.

Once the business case is completed, the state contracting agency must submit it to the SCSB. If the privatization contract is projected to cost in excess of $ 150 million annually or $ 600 million over the life of such contract, the state contracting agency must also submit the business case to the governor, the Senate president pro tempore, the House speaker, and any collective bargaining unit affected by the proposed privatization contract. Each state contracting agency that submits a business case for review must give the board all information, documents, or other material required by the privatization contract committee to complete its review and evaluation of such business case. The SCSB cannot engage in any ex parte communications with a lobbyist, contractor, or union representative during the review.

Upon receipt of any such business case from a state contracting agency, the SCSB must immediately refer it to a five-member privatization contract committee, which must employ a standard process for reviewing, evaluating, and approving business cases. The process must include due consideration of: (A) the state contracting agency's cost-benefit analysis; (B) the agency's business case, including any facts, documents, or other materials that are relevant to the business case; (C) any adverse effect that the privatization contract may have on minority, small, and women-owned businesses that do, or are attempting to do business with the state; and (D) the value of having services performed in the state and within the United States.

The committee consists of five SCSB members appointed by the chairperson of the board. The members must represent both gubernatorial and legislative appointments and not more than three members may represent any one political party. At least one member must be an expert in the area that is the subject of the proposed contract. The chairperson of the board or his designee must serve as the committee's chairperson.

The privatization committee must evaluate the business case and submit its evaluation to the SCSB for review and approval. During the review or consideration, no board member can engage in any ex parte communication with any lobbyist, contractor, or union representative.

Within 60 days after receiving a business case, the SCSB must transmit a report detailing its review, evaluation, and disposition to the state contracting agency that submitted it and, in the case of a privatization contract with a projected cost of at least $ 150 million dollars annually or $ 600 million dollars over the life of the contract, also send the report to the governor, the Senate president pro tempore, the House speaker, and any collective bargaining unit affected by the proposed privatization contract. The 60 days may be extended for an additional 30 days upon a majority vote of the board or the privatization contract committee and for good cause shown. A business is deemed approved if the SCSB does not act on it within the 60 days, except that no business case may be approved because the board fails to meet.

The board's report must include the business case, the privatization contract committee's evaluation of the business case, the reasons for approval or disapproval, any recommendations of the board, and sufficient information to help the state contracting agency determine if additional steps are necessary to move forward with a privatization contract.

Generally, a majority vote of the board is required to approve a business case. However, a two-thirds vote, including the vote of at least one board member appointed by a legislative leader, is required to approve a business case to privatize a core governmental function. Before approval, the state contracting agency must provide sufficient evidence to rebut the presumption that the core governmental function should not be privatized and there is a significant policy reason to approve the business case. In no case can a state contracting agency's staffing level constitute a significant policy reason to approve a business case for privatizing a core governmental function.

Any state contracting agency may request an expedited review if there is a compelling public interest for doing do. If the board approves the agency's request, the review must be completed not later than 30 days after receipt. If the board fails to complete an expedited review within the 30 days, the business case is deemed approved.

Each state contracting agency must submit to SCSB, in writing, any proposed amendment to a board-approved business case so that the board may review and approve it. The board may approve or disapprove the proposed amendment within 30 days after receipt by the same vote that was required to approve the original business case. If the board fails to complete its review within 30 days, the amendment is deemed approved.

A state contracting agency may publish notice soliciting bids for a privatization contract only after the board approves the business case. A contract that is estimated to cost in excess of $ 150 million dollars annually or $ 600 million or more over its life must also be pre-approved by the legislature. The legislature, by a majority vote in either chamber, must either reject or approve the contract in its entirety. If the legislature is in session, it must approve or reject the contract within 30 days after it is filed. If the legislature is not in session when the contract is filed, the contract must be submitted not later than 10 days after the first day of the next regular session or special session called for that purpose.

A contract is deemed approved if the legislature fails to vote to approve or reject it within the 30 days, which period cannot begin or expire unless the legislature is in regular session. Any contract filed with the clerks within 30 days before the start of a regular session is deemed to be filed on the first day of such session.

Not later than 30 days after the board decides to approve a business case, any collective bargaining agent of any employee adversely affected by the proposed privatization contract may file a motion for an order to show cause in the Hartford Superior Court on the grounds that the contract fails to comply with the bill's substantive or procedural requirements regarding privatization. The court may: (1) deny the motion; (2) grant the motion if it finds that the proposed contract would substantively violate the bill's privatization provisions; or (3) stay the effective date of the contract until any substantive or procedural defect has been corrected.

The SCSB may review existing privatization contracts and must review at least one contracting area each year that is currently privatized. During the review, no board member can engage in any ex parte communication with any lobbyist, contractor, or union representative. For each privatization contract that the board selects for review, the appropriate state contracting agency must develop a cost-benefit analysis. Any affected party may petition the board to review the business case of any existing privatization contract. The SCSB cannot engage in any ex parte communications with a lobbyist, contractor, or union representative during the review.

If the cost-benefit analysis identifies cost savings of at least 10% and the contract does not diminish the quality of the service provided, the state contracting agency must develop a business case to renew the contract. The board must review the contract just as it does proposed privatization contracts and may approve the renewal by the applicable vote of the board, provided any renewal that is estimated to cost in excess of $ 150 million annually or $ 600 million dollars or more over the life of the contract must also be pre-approved by the General Assembly. If the renewal is approved by the board and the General Assembly, if applicable, the bill's provision on proposed amendments applies.

If the cost-benefit analysis identifies a cost savings of less than 10%, the state contracting agency must prepare and begin to implement a plan to have the service provided by state employees. However, (1) after the plan is prepared but before it is implemented the state contracting agency may develop a business case for the privatization contract that achieves at least a 10% cost savings and must submit the plan to the SCSB for review and approval; (2) the privatization contract cannot be renewed with the vendor currently providing the service unless there is a significant public interest in doing so and the renewal is approved by a two-thirds vote of the board, including the vote of at least one member appointed by a legislative leader; (3) until the state contracting agency implements the plan, it may contract for the services for up to one year; and (4) funds may be transferred from the General Fund to allocate necessary resources to carry out this provision upon the governor's recommendation and after approval of the Finance Advisory Committee.

Renewal of a privatization contract with a nonprofit organization cannot be denied if the cost of increasing compensation to employees performing the privatized service is the only reason for the contract not achieving a 10% cost savings.

The Office of Policy and Management, in consultation with the SCSB, must: (1) develop policies and procedures, including templates for state contracting agencies to use when developing a cost-benefit analysis and (2) review with each state contracting agency the budgetary impact of any privatization contract and the need to request budget adjustments in connection it.

The SCSB, in consultation with the DAS, must: (1) recommend and implement standards and procedures for state contracting agencies to develop business cases in connection with privatization contracts, including templates for them to use when submitting business cases to the board, and policies and procedures to help state contracting agencies complete the cases, and (2) develop guidelines and procedures for helping state employees whose jobs are affected by a privatization contract.

The bill, other than the provisions establishing and outlining the general duties of the SCSB (§§ 1-15), applies to all contracts state contracting agencies solicit or enter after the January 1, 2008. Those sections (1– 15) do not affect the four-year pilot program that creates jobs for people with disabilities established under PA 06-129.

Unless otherwise stated, the bill's privatization and procurement procedures (§§ 16-47) apply to every expenditure of public funds by any state contracting agency, irrespective of their source, involving any state contracting and procurement processes, including leasing and property transfers; purchasing or leasing of supplies, materials, or equipment; consultant or consultant services; personal service and purchase of service agreements; privatization contracts; and contracts for the construction, reconstruction, alteration, remodeling, repair, or demolition of any public building, bridge, or road.

The bill's privatization and procurement procedures cannot be construed to apply to the expenditure of federal assistance or contract funds if federal law provides procurement procedures that are inconsistent with state procurement statutes or regulations.

EFFECTIVE DATE: June 1, 2010, except the provision on the pilot program, which is effective June 1, 2009.

The bill requires the DAS commissioner to establish a requisition system for use by state contracting agencies to initiate and authorize the procurement process when obtaining supplies, materials, equipment, or contractual services, except infrastructure facilities. The SCSB must approve the system.

The bill requires all state contracting agencies purchases of, and contracts for, supplies, materials, equipment, and contractual services, except purchases and contracts made outside of the competitive bidding process, must be awarded by one of the following methods unless otherwise authorized by law:

Each contract of a state contracting agency must provide that a state contracting agency may at reasonable times, inspect the part of the plant or place of business of a contractor or any subcontractor that is related to the performance of any contract awarded, or to be awarded by the state, to ensure compliance with the contract.

A state contracting agency may audit the books and records of a contractor or any subcontractor under any negotiated contract or subcontract to the extent that the books and records relate to the performance of such contract or subcontract. The contractor must maintain the books and records for three years from the date of final payment under the prime contract and the subcontractor for a period of three years from the expiration of the subcontract.

When an affected party suspects collusion or other anticompetitive practices among any bidders or proposers for a state contract, the party must give the attorney general notice of the relevant facts. Affected parties include the state contracting agency or a bidder or proposer. A proposer is a business submitting a proposal in response to a request for proposals or other competitive sealed proposal by a state contracting agency.

Under the bill, each state contracting agencies must retain and dispose of all procurement records in accordance with the public records administrator's records retention guidelines and schedules.

The bill requires the agency procurement officer to maintain a record listing all contracts made under the uniform procurement code for a minimum of five years. The record must contain:

The bill requires all procurement records to be retained and disposed of in accordance with records retention guidelines and schedules approved by the public records administrator.

EFFECTIVE DATE: January 1, 2009, except that the provision on the agency procurement officer is effective on June 1, 2010.

The bill allows the SCSB to disqualify any contractor, bidder, or proposer from bidding on, applying for, or participating as contractor or subcontractor under state contracts. The disqualification can run for up to five years.

In order to disqualify a contractor, bidder, or proposer, the board must (1) consult with the relevant contracting agency and the attorney general; (2) provide reasonable notice and hold a hearing; and (3) act through a subcommittee of three members, including at least one legislative appointee, appointed by the board's chairperson. In determining whether to disqualify a contractor, bidder or proposer, the board must consider the seriousness of the affected party's acts or omissions and any mitigating factors.

The subcommittee must issue a written recommendation within 60 days after the end of the hearing. The recommendation must state the reasons for the subcommittee's action and the length of any disqualification. A disqualification requires the vote of two subcommittee members present and voting. The subcommittee must submit the recommendation to the board for action and mail it to the contractor by certified mail, return receipt requested. Once the board receives the subcommittee's recommendations, but no later than 30 days after receiving any comments from the targeted contractor, it must issue a written decision adopting, rejecting, or modifying them. The board must mail the decision to the contractor by certified mail, return receipt requested. The decision is a final decision that can be appealed to the courts.

1. conviction of, or entry of a plea of guilty or nolo contendere (no contest) or admission to (a) the commission of a criminal offense in connection with obtaining or attempting to obtain a public or private contract or subcontract, or in the performance of such contract or subcontract; (b) the violation of any state or federal law for embezzlement, theft, forgery, bribery, falsification or destruction of records, receiving stolen property or other offenses indicating a lack of business integrity or honesty that affects responsibility as a contractor; or (c) a violation of any state or federal antitrust, collusion or conspiracy law arising from the submission of bids or proposals on a public or private contract or subcontract;

2. accumulation of two or more suspensions under the uniform procurement code within a 24-month period;

3. a willful, negligent or reckless failure to meet the terms of one or more state contracts or subcontracts, agreements, or transactions;

4. a history of failure to perform or of unsatisfactory performance on one or more state contracts, agreements, or transactions;

5. a willful violation of a statutory or regulatory provision or requirement applicable to a state contract, agreement of transaction;

6. a willful or egregious violation of State Ethics Code provisions on prohibited activities and prohibited activities by consultants and independent contractors as determined by the Citizen's Ethics Advisory Board; or

7. any other cause or conduct the board determines to be so serious and compelling as to affect responsibility as a state contractor.

The last category includes: (1) disqualification by another state for cause; (2) the existence of an informal or formal business relationship with a contractor who has been disqualified from bidding or proposing on state contracts of any state contracting agency; and (3) the fraudulent or criminal conduct of any officer, director, shareholder, partner, employee or other individual associated with a contractor, bidder or proposer, if the conduct was connected with the individual's performance of duties for, or on behalf of, the contractor, bidder or proposer and the contractor, bidder or proposer knew or had reason to know of the conduct.

The bill allows the board to reduce the period or the extent of a disqualification at the written request of a contractor, bidder, or proposer. It may do so if the affected party provides supporting documentation of:

The bill allows the department head of any state contracting agency, after reasonable notice and a hearing, to suspend any contractor, bidder or proposer for up to six months from bidding on, applying for or performing work as a contractor or subcontractor under state contracts. The department head must issue a written decision within 90 days after the hearing ends, which must state the reasons for the action taken and the length of any suspension. In determining whether to suspend a contractor, bidder or proposer, the department head must consider the seriousness of the acts or omissions of the contractor, bidder or proposer and any mitigating factors. The department head shall send such decision to the contractor and the SCSB by certified mail, return receipt requested. Such decision is a final decision that can be appealed to the courts.

1. failure without good cause to perform in accordance with specifications or within the time limits provided in the contract;

2. a record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contracts, other than those caused by acts beyond the control of the contractor, bidder or proposer;

3. any cause the contracting agency determines to be so serious and compelling as to affect the responsibility of a state contractor, bidder or proposer including suspension by another contracting agency for cause; or

4. a violation of the ethical standards set forth in the State Ethics Code as determined by the Citizen's Ethics Advisory Board.

The bill allows the board to grant an exception permitting a suspended contractor to participate in a particular contract or subcontract upon a written determination by the board that there is good cause for such exception and that such exception is in the best interest of the state.

Each state department head must review contractors and file reports pertaining to any of the reasons under the bill that may be the basis for “disqualification” (the bill refers to disqualification but this section deals with suspensions).

The bill establishes a process for bidders or proposers on state contracts to contest the way the contracts were solicited or awarded or to contest an unauthorized or unwarranted, noncompetitive selection process. A bidder may contest to a SCSB subcommittee consisting of three members, including at least one legislative appointee, appointed by the chairperson. The contest must be in writing and submitted within 14 days after the bidder knew or should have known about the facts forming the basis for the contest. The contest must be limited to the solicitation or awarding procedures or claims of unauthorized or unwarranted noncompetitive selection.

The bill authorizes the subcommittee to resolve or settle the contest. If the complaint is not resolved, the bill requires the subcommittee to issue a written decision within 30 days after receiving the contest and provide a copy to the complaining bidder. The decision must:

The bill permits contractors, bidders, or proposers to appeal a subcommittee's suspension decision to the SCSB within 14 days after receiving it. Each bidder or proposer must state the facts supporting his claim in enough detail for the SCSB to determine whether procedural elements of the solicitation or award failed to comply with the code or whether an unauthorized or unwarranted, noncompetitive selection process was utilized (see COMMENT). The appeal does not automatically prohibit the award or execution of the contested contract.

The bill requires the SCSB to create a subcommittee of three of its members, including one legislative appointee, to review these appeals and vote on whether a bidder's allegation has been demonstrated. The appeals committee may not include any SCSB member who originally heard the case. A unanimous vote is dispositive. If the vote is split, the full membership must review the appeal and dispose of it by a vote of two-thirds of its members present and voting, including at least one vote by a legislative appointee. (The bill does not specify what happens if the vote of the full board is less than two-thirds. ) And any three board members may request that the full board review an agency's deliberative or awards process.

The subcommittee, or the full board in the event of a split vote, must issue a written decision, or take other appropriate action, on each appeal and provide a copy of any decision to the bidder. The subcommittee must act within 90 days after receiving the appeal. The full committee must act within 90 days after receiving the appeal from the subcommittee. If the subcommittee or full board decides in the bidder's favor, the board must direct the state contracting agency to take corrective action within 30 days after the decision date. A decision by the full board or the appeals review committee is final and not subject to appeal.

The board must provide a copy of the decision to all parties, the head of the state contracting agency, and the chief procurement officer. The bill does not specify if this is a final decision that can be appealed to superior court.

If, prior to an award, the SCSB determines that a solicitation or proposed award of a contract by a state contracting agency violates the law, the solicitation or proposed award must be cancelled or revised to comply with the law.

If the board makes the determination after the contract is awarded and the contract recipient did not act in bad faith, the contract may be (1) ratified and affirmed by the state contracting agency if the board determines doing so is in the best interests of the state or (2) terminated and the recipient compensated for the actual expenses reasonably incurred under the contract, plus a reasonable profit.

If the person awarded the contract acted in bad faith, the contract may (1) be declared null and void or (2) ratified and affirmed if doing so is in the best interests of the state, as determined by the SCSB. The determination must be in writing and without prejudice to the state's right to any appropriate damages.

The bill requires the SCSB to adopt regulations, in accordance with the Uniform Administrative Procedure Act, establishing state procurement policies and procedures. Generally, the deadline for adopting the regulations is June 1, 2010. For those concerning contracting procedures for constituent units of higher education, it is January 1, 2011.

1. (a) defining competitive sealed bidding, competitive sealed proposals, small purchase procedure, sole source procurement, emergency procurements, and waiver of bid or proposal requirement extraordinary conditions; (b) establishing the circumstances under which state contracting agencies use these methods; and (c) establishing the processes and criteria for awarding purchases and contracts in accordance with each method; (§ 19)

2. specifying the procedure for issuing invitations for bids, including (a) the required elements, (b) the process for opening bids, and (c) evaluation criteria for awarding bids; (§ 20)

3. specifying when contracts and purchase orders exceeding $ 50,000 do not have to go through the competitive sealed- bidding procedure; (§ 20)

4. in consultation with DAS, establishing small purchase procedures for procurements of $ 50,000 or less (see Below); (§ 21)

5. in consultation with the DAS commissioner, specifying when a contract for a supply, service, or construction item does not have to go through a competitive bidding procedure (see Below); (§ 22)

6. establishing procedures for waiving competitive bidding or proposal requirements; (§ 23)

7. in consultation with the DAS commissioner and any other appropriate award authority, permitting emergency procurements when a threat to the public's health, welfare, or safety exists (see Below); (§ 24)

8. in consultation with the DAS commissioner, establishing standards for preparing and maintaining the content of specifications for state supplies, services, and construction; (§ 26)

9. in consultation with the attorney general, specifying the types of contracts that may be used by state contracting agencies (see Below); (§ 27)

10. requiring proposed contractors to, prior to the award of a contract, submit documentation to the contracting agency confirming that their accounting system will permit timely processing of necessary cost data in the required format; (§ 28)

11. specifying (a) the process for procuring (1) architectural and engineering services in design-bid-build procurements, (2) construction in design-bid-build procurements, and (3) construction management at-risk, and (b) project delivery methods; (§ 41)

12. requiring bid security for all competitive sealed bidding for construction contracts in design-bid-build procurement when the contracting agency estimates the price will exceed $ 500,000; (§ 42)

13. establishing the process for procuring consultant services (see Below); (§ 44)

14. in consultation with state contracting agencies and the attorney general, requiring state contracts with state contracting agencies concerning infrastructure facilities to include clauses for (a) price adjustments, (b) time performance, (c) remedies, (d) termination, or (e) other contract provisions necessary to protect the state's interests; (§ 45)

15. concerning the procedures and circumstances under which state construction contracts of more than $ 50,000 may undergo (1) contract modifications, (2) change orders, or (3) contract price adjustments (see Below); and (§ 46)

16. applying the bill's procurement procedures to each constituent unit of higher education, taking into consideration circumstances and factors unique to them (§ 47).

In addition, the State Insurance and Risk Management Board must adopt regulations, in consultation with the SCSB, specifying when a state contracting agency must require proposers to provide errors and omissions insurance to cover architectural and engineering services under the project delivery methods described above. Under the bill, a “proposer” is a person, firm, or corporation that submits a bid in response to a RFP, or other sealed proposal. (§ 43)

The regulations establishing small purchase procedures for procurements of $ 50,000 or less must include a prohibition on dividing a procurement to make use of the procedures. The bill specifies that the SCSB, in consultation with the DAS commissioner, determines if a contracting agency has artificially divided a procurement. Upon making such a determination, the SCSB must prohibit the state contracting agency from utilizing the small purchase procedures.

In addition, the bill authorizes the SCSB, in consultation with the DAS commissioner, to waive the competitive bidding or negotiation requirements in the case of minor, nonrecurring, or emergency purchases of $ 10,000 or less.

The regulations must include situations when an agency contracting officer states, in writing, that there is only one source for the required item. They must specify that a sole source procurement is only permitted when an item is available from a single supplier.

The bill specifies that emergency procurements go through a competitive bidding process when practicable under the circumstances. The regulations must require the contract file to include a written determination of the basis for the emergency and for the contractor selection. The information must be transmitted to the Governor and the six legislative leaders.

The regulations must specify that a cost-reimbursement contract may be used only when the agency procurement officer makes a written determination that (1) such a contract is likely to cost less than any other type or (2) that it is impracticable to obtain the supplies, services, or construction required, except under such a contract.

The bill requires the SCSB to consult with the attorney general on the type of contract that should be used for procuring consultant services.

Under the bill, the regulations must require every contract modification, change order, or contract price adjustment for a state construction contract over $ 50,000 to have prior written certification. The written certification may be signed by (1) the fiscal officer of the contracting state agency, (2) the fiscal officer of the agency responsible for funding the project, or (3) an official responsible for monitoring and reporting on the status of the total project or contract budget.

If the changes will increase the total project or contract budget, the agency procurement officer cannot execute the modification, change order, or adjustment unless sufficient funds are available or the scope of the project or contract is adjusted to permit the degree of completion that is feasible within the total project or contract budget as it existed prior to the contract modification, change order or price adjustment under consideration. However, “with respect to the validity as to the contractor, of any executed contract modification, change order, or adjustment in contract price which the contractor has reasonably relied upon, it shall be presumed that there has been compliance with the provisions of this section. ” It is unclear what this language means.

“Change orders” are written orders signed by the designated official, assigned by the department head, directing the contractor to make authorized changes.

EFFECTIVE DATE: January 1, 2009, except the provision requiring the SCSB to (1) define the terms in § 18, (2) establish the circumstances under which state contracting agencies may use those procurement methods in 319.

The bill appropriates $ 700,000 to the SCSB from the General Fund for FY 08-09 for the purpose of carrying out the board's duties.

§ 37 contains an incorrect reference. By referencing § 35, the bill appears to establish a procedure for appealing an agency's decision to suspend a contractor, but instead it establishes a procedure for appealing the way a contract is awarded. § 37 should reference § 36.