ARTICLE 42 SUBSTITUTE A AS AMENDED

RELATING TO PRIVATIZATION OF STATE SERVICES

CHAPTER 148

PRIVATIZATION OF STATE SERVICES

42-148-1. Statement of intent. – If it is determined that privatization of certain governmental functions may be appropriate, the privatization inquiry process should be well defined with appropriate non-partisan, institutional oversight. The principles that guide a privatization inquiry shall include the following:

(a) To ensure the potential savings are realized and maximized -- build cost controls and containment incentives into contracts to eliminate excessive and unreasonable overhead costs and profits at the expense of citizens of the state;

(b) To preserve and promote competition – permit in-house program managers and public employees to bid for the contract on a level playing field;

(c) To ensure quality and responsiveness – develop reliable measures of service quality, strengthen in-house monitoring capacity and expertise, and write contracts with periodic performance reporting;

(d) To ensure accountability, control, and avoidance of conflicts of interest with departmental managers – write detailed contract specifications, and require record-keeping and periodic reports;

(e) To address legal and political barriers – involve affected groups in the decision making process; and

(f) To recognize the impact on service recipients, employees, and their families – enable public employees to have an opportunity to bid for their work.

42-148-2. Definitions. – When used in this chapter:

(a) "In-house costs" means a detailed budget breakdown of the current costs of providing the service or program proposed for privatization.

(b) "Statement of work and performance standards" means a clear statement of the nature and extent of the work to be performed with measurable performance standards as set forth in section 42-148-3(b)(2) of this chapter.

(c) "In-house bid" shall mean the cost of the proposal proffered by in-house state programs and employees and their representatives pursuant to section 42-148-3(b)(3) of this chapter.

(d) "Cost comparison" means an analysis of the comparative costs of providing the service in-house or by privatization.

(e) "Conversion differential" means transition costs and costs associated with starting up or closing down during conversion to purchase of service or in the event of the need to bring services back in-house.

(f) "Transition costs" means the cost of contracting including monitoring vendors for accountability, costs associated with unemployment compensation, payment of accrued leave credits, bumping, and retention factors for those with statutory status. Transitional costs shall not include department overhead or other costs that would continue even if the services were privatized.

42-148-3. Preclosure analysis. – (a) Prior to the closure, consolidation or privatization of any state facility, function or program, the director of administration or his or her designee, shall conduct a thorough cost comparison analysis and evaluate quality performance concerns before deciding to purchase services from private vendors rather than provide services directly.

(b) The director of administration shall, at least sixty (60) days prior to issuing requests for bids or proposals, complete the following process:

(i) Document the current in-house costs of providing the services with a detailed budget breakdown. The in-house cost shall include any department overhead and other costs that would continue even if the service was contracted out.

(ii) Prepare a statement of work and performance standards which shall form the basis for the requests for proposals and which shall include the following:

(A) A clear statement of work with measurable performance standards including qualitative as well as quantitative standards that bidders must meet or exceed;

(B) Requirements that contractors meet affirmative action, disability and other nondiscriminatory and service standards currently required of state agencies.

(C) A clear format that will enable comparison of competitive bids and in-house bids. The format must require detailed budget breakdowns.

(c) Prior to the issuance of the RFP current public employees and program recipients must be notified of the intent to solicit bid proposals and of the decision timeline.

(d) If the statement of work and performance standards differs from the current in-house program procedures and requirements or if current state program employees and their representatives believe that they could perform the work more efficiently, an in-house state work group shall be afforded an opportunity to present a new cost estimate, reflecting any innovations that they could incorporate into the work performance standards. This new cost estimate shall be deemed an in-house bid, which shall form the basis for the eventual cost comparison. The director shall provide technical and informational assistance to the in-house state work group in its preparation of an in-house bid.

(e) The director may elect to accept the in-house bid or proceed to prepare a request for proposal ("RFP") which must:

(i) incorporate the statement of work and performance standards, and

(ii) require bidders to meet the same statement of work performance standards as required of the final in-house cost estimate; and

(iii) include bid forms requiring a sufficiently detailed breakdown of cost categories to allow accurate and meaningful comparisons.

(f) The in-house bid developed pursuant to subsection (d) of this section shall be kept confidential from bidders.

42-148-4. Cost comparison. – The director of administration shall analyze all vendor bids as compared to current delivery of service costs or an in-house bid, whichever is lower, according to the following:

(a) Any cost comparison must include an analysis of:

(i) Comparative benefits for employees to meet the requirements of the statement of work and performance standards;

(ii) All transition costs as defined in section 42-148-2(f) of this chapter;

(iii) Any conversion costs as defined in section 42-148-2(e) of this chapter; and

(iv) Areas where the bidder's costs appear artificially low, thereby putting the state at risk for further cost overruns.

(b) In the event that the state will incur new program costs related to the statement of work and performance standards, such costs shall be included in the cost comparison.

(c) All cost comparisons must include an analysis of whether the cost savings will result in meeting the performance and qualitative measures set out in the statement of work and performance standards.

42-148-5. Award of contract. – After conducting a cost comparison pursuant to section 42-148-4, the director of administration may award the bid to an outside vendor only if the savings to the state is substantial and the quality of performance of service required and specified in statement of work and performance standards will be met or exceeded by the outside vendor.

42-148-6. Appeal. – (a) Before any award is final, the affected parties, which shall include program recipients, state employees and their representatives shall have a right to appeal the award decision of the director of the department of administration.

(b) The parties shall have sixty (60) days from the date of the award to file an appeal. No contracts shall be awarded or services contracted to vendors if an appeal is pending.

(c) All documentation supporting the cost and quality comparison shall be made available to the affected parties upon request after the final decision has been made.

(d) All appeals of the final decision of an award shall be filed in superior court in Providence County.

42-148-7. Report of general assembly. – (a) The director of the department of administration shall notify the chairpersons of the house and senate finance committees of their intent to request bids or proposals to privatize state services. The notice to the committees shall be provided thirty (30) days prior to issuing the request.

(b) Upon the final decision of an award the director of the department of administration shall provide a report to the chairpersons of the house and senate finance committees outlining the bid process and analysis conducted in issuing an award.

42-148-8. Applicability. – Notwithstanding any general law or special law to the contrary, no award shall be made or privatization contract entered into by the state of Rhode Island unless and until the processes and procedures outlined in sections 42-148-3, 42-148-4 and 42-148-5 have been fully complied with in their entirety. All of the aforementioned sections shall apply to all pending awards and pending privatization contracts.