SF 796

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to public employment; establishing procedures and standards for
contracting with private entities for the provision of services that have been,
or otherwise would be, provided by public employees; providing for public
accountability; proposing coding for new law in Minnesota Statutes, chapter 471.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [471.706] PRIVATIZATION OF PUBLIC SERVICES.
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new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section:
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new text begin (1) "agency" means a state agency as defined in section 13.02, subdivision 17,
excluding the Minnesota State Colleges and Universities, and the University of Minnesota,
as well as a metropolitan agency as defined in section 473.121, subdivision 5a, and a
municipality as defined in section 471.345, subdivision 1;
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new text begin (2) "employee of a private contractor" means an employee of a private contractor as
defined by this subdivision or an employee of a subcontractor or independent contractor
that provides supplies or services to a private contractor, as well as a former employee of a
private contractor or subcontractor and a former independent contractor;
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new text begin (3) "private contractor" means an entity that enters into a privatization contract
with an agency;
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new text begin (4) "privatization contract" means an enforceable agreement or combination or
series of agreements by which a private contractor agrees with an agency to provide
services, except services provided by persons licensed under sections 326.02 to 326.15,
that are substantially similar to and in place of services previously provided by public
employees of the agency;
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new text begin (5) "public employee" has the meaning as defined in section 179A.03, subdivision
14, except that for purposes of this section public employer means an agency as defined
in clause (1);
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new text begin (6) "services" means all aspects of services provided by a private contractor to
an agency or by a subcontractor to a private contractor to implement a privatization
contract; and
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new text begin (7) "subcontractor" means a subcontractor of a private contractor for work under a
privatization contract or an amendment to a privatization contract.
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new text begin Subd. 2. new text end

new text begin Privatization contracts; requirements. new text end

new text begin (a) This section applies to
privatization contracts in an amount of $25,000 or more. The requirements imposed by
this section are in addition to, and do not supersede, those imposed by sections 16C.08,
16C.09, 43A.047, and 179A.23.
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new text begin (b) An agency shall prepare a specific written statement of the services to be provided
under a proposed privatization contract. The statement must indicate whether the same
or substantially similar services are being provided by public employees. In the case of
proposed new services, the statement must include the agency's reasons why it determined
that those services could or should not be provided by current or additional public
employees. The agency's solicitation of services under a proposed privatization contract
must be based on the statement. The agency shall notify any exclusive representative or
representatives of employees that would be affected by a proposed privatization contract
of its intention to enter into such a contract, and shall provide the exclusive representative
or representatives with a copy of the statement prepared under this paragraph.
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new text begin (c) A formal or informal solicitation of services under a proposed privatization
contract must require a responder to disclose:
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new text begin (1) the length of continuous employment of the responder's current employees by
job classification without identifying employees by name and, at the responder's option,
any relevant prior experience of those employees;
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new text begin (2) if the proposed services are to be performed by new employees, the minimum
requirements the responder will impose on job applicants;
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new text begin (3) the responder's current annual rate of employee turnover;
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new text begin (4) the number of hours, if any, planned for each employee relating to duties to
be performed by the employee in providing services under the proposed privatization
contract;
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new text begin (5) any complaints issued by a federal, state, or local enforcement agency relating to
alleged violations of relevant laws or rules, including those relating to employee safety
and health and labor relations, along with any court decisions, administrative findings,
or penalties for violations of those laws and rules, listing the date, the court or agency,
and the law or rule found to be violated;
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new text begin (6) any collective bargaining agreements or personnel policies covering the
employees to perform services under the proposed privatization contract; and
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new text begin (7) any political contribution made by the responder or managerial employee of the
responder, during the four years immediately preceding the due date of the response, to an
elected official of the state, a candidate for elected state office, and, if the soliciting agency
is a local unit of government, an elected official or candidate for elected office of that unit.
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new text begin If the responder is a subsidiary of a parent entity, the disclosures made in response to
clauses (5), (6), and (7), must cover the parent entity as well as the responder itself.
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new text begin (d) The minimum wage rate for employees of a private contractor providing service
for an agency is the average wage rate for the classification of agency employees whose
duties are most similar, plus the value of health and other benefits provided to the public
employees in that classification.
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new text begin (e) The term of a privatization contract, including any extensions resulting from
amendments or change orders, may not exceed two years. No amendment or change order
is valid if it has the purpose or effect of avoiding any requirement of this section.
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new text begin (f) A privatization contract must impose affirmative action standards on the private
contractor and any subcontractors that are at least as stringent as those applying to the
contracting agency. No privatization contract may cause the agency to fail to meet its
affirmative action standards or cause the displacement of agency employees. For purposes
of this paragraph, "displacement" means a layoff, demotion, involuntary transfer to a new
classification or title, involuntary transfer or reassignment to a new location requiring a
change in residence, or reduction in hours of work, wages, or benefits.
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new text begin (g) A private contractor may not use public money paid to it under a privatization
contract to:
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new text begin (1) support or oppose the organization of its employees by an exclusive
representative;
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new text begin (2) assist a subcontractor to support or oppose the organization of its employees;
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new text begin (3) facilitate or deter the ability of an exclusive representative of its employees to
carry out the exclusive representative's responsibilities; or
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new text begin (4) assist a subcontractor to facilitate or deter the lawful activities of an exclusive
representative of its employees.
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new text begin Subd. 3. new text end

new text begin Review of contract costs. new text end

new text begin (a) An agency considering whether to enter
into a privatization contract for a service shall prepare a comprehensive written estimate
of having the same service provided in the most cost-effective manner by agency
employees. The estimate must include all direct costs of having agency employees
provide the service, including the cost of pension, insurance, and other employee benefits.
The estimate is nonpublic data, as defined in section 13.02, subdivision 9, until the day
after the deadline for receipt of responses under paragraph (b), when it becomes public
data and must be published in the State Register. For the purpose of the estimate, an
exclusive representative of agency employees, any time before the final day for the receipt
of responses under paragraph (b), may propose amendments to any relevant collective
bargaining agreement to which it is a party. Any amendments take effect if they are
subsequently approved by both parties to the collective bargaining agreement and if they
are necessary to reduce the cost estimate determined under this paragraph below the cost
of providing the service under a privatization contract.
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new text begin (b) After soliciting and receiving responses, the agency shall publicly designate the
responder to which it proposes to award the privatization contract. In making its selection,
the agency shall consider the responder's past performance and record of compliance with
federal and state laws and local ordinances. The agency shall prepare a comprehensive
written estimate of the cost of the proposal based on the responder's bid, including
the cost of a transition from public to private provision of the service, any additional
unemployment and retirement benefits resulting from the transfer, and costs associated
with monitoring the proposed contract. If the designated responder proposes to perform
any or all of the desired services outside the state, the commissioner of revenue shall
determine, as nearly as possible, any loss of sales and income tax revenue to the state. The
agency shall include that amount in the cost estimate prepared under this paragraph.
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new text begin (c) Before awarding a privatization contract, an agency head or a governing body of
a metropolitan agency or municipality shall certify in writing that:
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new text begin (1) the agency head or governing body has complied with this section and other
applicable law;
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new text begin (2) the quality of the services to be provided by the designated responder is likely to
equal or exceed the quality of services that could be provided by agency employees;
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new text begin (3) the cost of the proposed contract, including all costs identified under paragraph
(b), will be at least 15 percent lower than the cost determined under paragraph (a),
taking into account any amendments to a collective bargaining agreement proposed by
an exclusive representative; and
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new text begin (4) that the proposed privatization contract is in the public interest.
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new text begin Subd. 4. new text end

new text begin Data practices. new text end

new text begin A privatization contract must comply with section
13.05, subdivision 11. All data relating to a privatization contract are public data. If the
contracting agency is a state or metropolitan agency, it shall submit copies of all public
data associated with the privatization contract to the legislative auditor. If the contracting
agency is a municipality, it shall submit copies of all public data associated with the
privatization contract to the state auditor.
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