1.1 	 A bill for an act
1.2 	relating to public employment; establishing procedures and standards for 
1.3 	contracting with private entities for the provision of services that have been, 
1.4 	or otherwise would be, provided by public employees; providing for public 
1.5 	accountability; proposing coding for new law in Minnesota Statutes, chapter 471.
1.6 	 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	 Section 1. [471.706] PRIVATIZATION OF PUBLIC SERVICES.
1.8 		Subdivision 1.Definitions. For purposes of this section:
1.9 	(1) "agency" means a state agency as defined in section 13.02, subdivision 17, 
1.10 	excluding the Minnesota State Colleges and Universities, and the University of Minnesota, 
1.11 	as well as a metropolitan agency as defined in section 473.121, subdivision 5a, and a 
1.12 	municipality as defined in section 471.345, subdivision 1;
1.13 	(2) "employee of a private contractor" means an employee of a private contractor as 
1.14 	defined by this subdivision or an employee of a subcontractor or independent contractor 
1.15 	that provides supplies or services to a private contractor, as well as a former employee of a 
1.16 	private contractor or subcontractor and a former independent contractor;
1.17 	(3) "private contractor" means an entity that enters into a privatization contract 
1.18 	with an agency;
1.19 	(4) "privatization contract" means an enforceable agreement or combination or 
1.20 	series of agreements by which a private contractor agrees with an agency to provide 
1.21 	services, except services provided by persons licensed under sections 326.02 to 326.15, 
1.22 	that are substantially similar to and in place of services previously provided by public 
1.23 	employees of the agency;
2.1 	(5) "public employee" has the meaning as defined in section 179A.03, subdivision 
2.2 	14, except that for purposes of this section public employer means an agency as defined 
2.3 	in clause (1);
2.4 	(6) "services" means all aspects of services provided by a private contractor to 
2.5 	an agency or by a subcontractor to a private contractor to implement a privatization 
2.6 	contract; and 
2.7 	(7) "subcontractor" means a subcontractor of a private contractor for work under a 
2.8 	privatization contract or an amendment to a privatization contract.
2.9 		Subd. 2.Privatization contracts; requirements. (a) This section applies to 
2.10 	privatization contracts in an amount of $25,000 or more.  The requirements imposed by 
2.11 	this section are in addition to, and do not supersede, those imposed by sections 16C.08, 
2.12 	16C.09, 43A.047, and 179A.23.
2.13 	(b) An agency shall prepare a specific written statement of the services to be provided 
2.14 	under a proposed privatization contract.  The statement must indicate whether the same 
2.15 	or substantially similar services are being provided by public employees.  In the case of 
2.16 	proposed new services, the statement must include the agency's reasons why it determined 
2.17 	that those services could or should not be provided by current or additional public 
2.18 	employees.  The agency's solicitation of services under a proposed privatization contract 
2.19 	must be based on the statement.  The agency shall notify any exclusive representative or 
2.20 	representatives of employees that would be affected by a proposed privatization contract 
2.21 	of its intention to enter into such a contract, and shall provide the exclusive representative 
2.22 	or representatives with a copy of the statement prepared under this paragraph.
2.23 	(c) A formal or informal solicitation of services under a proposed privatization 
2.24 	contract must require a responder to disclose:
2.25 	(1) the length of continuous employment of the responder's current employees by 
2.26 	job classification without identifying employees by name and, at the responder's option, 
2.27 	any relevant prior experience of those employees;
2.28 	(2) if the proposed services are to be performed by new employees, the minimum 
2.29 	requirements the responder will impose on job applicants;
2.30 	(3) the responder's current annual rate of employee turnover;
2.31 	(4) the number of hours, if any, planned for each employee relating to duties to 
2.32 	be performed by the employee in providing services under the proposed privatization 
2.33 	contract;
2.34 	(5) any complaints issued by a federal, state, or local enforcement agency relating to 
2.35 	alleged violations of relevant laws or rules, including those relating to employee safety 
2.36 	and health and labor relations, along with any court decisions, administrative findings, 
3.1 	or penalties for violations of those laws and rules, listing the date, the court or agency, 
3.2 	and the law or rule found to be violated;
3.3 	(6) any collective bargaining agreements or personnel policies covering the 
3.4 	employees to perform services under the proposed privatization contract; and 
3.5 	(7) any political contribution made by the responder or managerial employee of the 
3.6 	responder, during the four years immediately preceding the due date of the response, to an 
3.7 	elected official of the state, a candidate for elected state office, and, if the soliciting agency 
3.8 	is a local unit of government, an elected official or candidate for elected office of that unit.
3.9 	If the responder is a subsidiary of a parent entity, the disclosures made in response to 
3.10 	clauses (5), (6), and (7), must cover the parent entity as well as the responder itself.
3.11 	(d) The minimum wage rate for employees of a private contractor providing service 
3.12 	for an agency is the average wage rate for the classification of agency employees whose 
3.13 	duties are most similar, plus the value of health and other benefits provided to the public 
3.14 	employees in that classification.
3.15 	(e) The term of a privatization contract, including any extensions resulting from 
3.16 	amendments or change orders, may not exceed two years.  No amendment or change order 
3.17 	is valid if it has the purpose or effect of avoiding any requirement of this section.
3.18 	(f) A privatization contract must impose affirmative action standards on the private 
3.19 	contractor and any subcontractors that are at least as stringent as those applying to the 
3.20 	contracting agency.  No privatization contract may cause the agency to fail to meet its 
3.21 	affirmative action standards or cause the displacement of agency employees.  For purposes 
3.22 	of this paragraph, "displacement" means a layoff, demotion, involuntary transfer to a new 
3.23 	classification or title, involuntary transfer or reassignment to a new location requiring a 
3.24 	change in residence, or reduction in hours of work, wages, or benefits.
3.25 	(g) A private contractor may not use public money paid to it under a privatization 
3.26 	contract to:
3.27 	(1) support or oppose the organization of its employees by an exclusive 
3.28 	representative;
3.29 	(2) assist a subcontractor to support or oppose the organization of its employees;
3.30 	(3) facilitate or deter the ability of an exclusive representative of its employees to 
3.31 	carry out the exclusive representative's responsibilities; or 
3.32 	(4) assist a subcontractor to facilitate or deter the lawful activities of an exclusive 
3.33 	representative of its employees.
3.34 		Subd. 3.Review of contract costs. (a) An agency considering whether to enter 
3.35 	into a privatization contract for a service shall prepare a comprehensive written estimate 
3.36 	of having the same service provided in the most cost-effective manner by agency 
4.1 	employees.  The estimate must include all direct costs of having agency employees 
4.2 	provide the service, including the cost of pension, insurance, and other employee benefits. 
4.3 	The estimate is nonpublic data, as defined in section 13.02, subdivision 9, until the day 
4.4 	after the deadline for receipt of responses under paragraph (b), when it becomes public 
4.5 	data and must be published in the State Register.  For the purpose of the estimate, an 
4.6 	exclusive representative of agency employees, any time before the final day for the receipt 
4.7 	of responses under paragraph (b), may propose amendments to any relevant collective 
4.8 	bargaining agreement to which it is a party.  Any amendments take effect if they are 
4.9 	subsequently approved by both parties to the collective bargaining agreement and if they 
4.10 	are necessary to reduce the cost estimate determined under this paragraph below the cost 
4.11 	of providing the service under a privatization contract.
4.12 	(b) After soliciting and receiving responses, the agency shall publicly designate the 
4.13 	responder to which it proposes to award the privatization contract.  In making its selection, 
4.14 	the agency shall consider the responder's past performance and record of compliance with 
4.15 	federal and state laws and local ordinances.  The agency shall prepare a comprehensive 
4.16 	written estimate of the cost of the proposal based on the responder's bid, including 
4.17 	the cost of a transition from public to private provision of the service, any additional 
4.18 	unemployment and retirement benefits resulting from the transfer, and costs associated 
4.19 	with monitoring the proposed contract.  If the designated responder proposes to perform 
4.20 	any or all of the desired services outside the state, the commissioner of revenue shall 
4.21 	determine, as nearly as possible, any loss of sales and income tax revenue to the state.  The 
4.22 	agency shall include that amount in the cost estimate prepared under this paragraph.
4.23 	(c) Before awarding a privatization contract, an agency head or a governing body of 
4.24 	a metropolitan agency or municipality shall certify in writing that:
4.25 	(1) the agency head or governing body has complied with this section and other 
4.26 	applicable law;
4.27 	(2) the quality of the services to be provided by the designated responder is likely to 
4.28 	equal or exceed the quality of services that could be provided by agency employees;
4.29 	(3) the cost of the proposed contract, including all costs identified under paragraph 
4.30 	(b), will be at least 15 percent lower than the cost determined under paragraph (a), 
4.31 	taking into account any amendments to a collective bargaining agreement proposed by 
4.32 	an exclusive representative; and 
4.33 	(4) that the proposed privatization contract is in the public interest.
4.34 		Subd. 4.Data practices. A privatization contract must comply with section 
4.35 	13.05, subdivision 11.  All data relating to a privatization contract are public data.  If the 
4.36 	contracting agency is a state or metropolitan agency, it shall submit copies of all public 
5.1 	data associated with the privatization contract to the legislative auditor.  If the contracting 
5.2 	agency is a municipality, it shall submit copies of all public data associated with the 
5.3 	privatization contract to the state auditor.