Compromise on state contracting reform not reached

(June 26, 2007) While some state lawmakers identified state contracting reform as a priority this year, agreement was not reached before the end of the session. Two bills raised early in the session were dramatic attacks on privatization contracts — contracts for services which the state could perform itself but opts instead to have private businesses perform.

Both bills would have discouraged businesses from even trying to become state contractors. SB-41 required businesses seeking state contracts to disclose the wage rates or annual salaries of employees covered under the contract. Businesses winning state contracts also would have been required to hire state employees who lost their jobs because of the privatization contract, if the employees met the contractor’s hiring criteria.

Under SB-1290, contractors with the state in excess of $2.5 million would have to disclose private information such as the titles and salaries of their employees. For-profit and non-profit companies contracting with state agencies also would have to disclose information about their highest-paid employees and other personnel compensation data.

Eventually, SB-1485 was proposed, but legislators did not see it until the final day of the session and it was not brought up for debate until the final hour. House Republican legislators successfully resisted the attempt at a late debate.

Although SB-1485 was less onerous than its predecessors, it was still of concern to the business community. For example, it included a 10% cost-benefit savings threshold for privatization contracts. This meant that if a privatization contract did not meet a 10% cost-benefit savings, then the state contracting agency would develop a plan to provide those services utilizing state resources.

The bill also usurped the governor’s power and gave it to the legislature in state privatization contracts in excess of $150 million in one year or $600 million throughout the life of the contract. Those contracts would have had to gain the approval of the state contracting standards board and the legislature.

For more information, contact CBIA’s Kevin Hennessy at 860-244-1979 or hennessk@cbia.com.

CBIA Action Center

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