1.1                          A bill for an act 
  1.2             relating to state government; placing limitations on 
  1.3             use of consultants; making changes in provisions 
  1.4             governing contracts for professional or technical 
  1.5             services; amending Minnesota Statutes 2000, sections 
  1.6             16A.11, subdivision 3; 16C.08, subdivisions 2, 3; 
  1.7             16C.10, subdivision 1. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9                              ARTICLE 1
  1.10         LIMITS ON PROFESSIONAL/TECHNICAL SERVICE CONTRACTS
  1.11     Section 1.  [REDUCTION IN CONSULTANT CONTRACT 
  1.12  EXPENDITURES.] 
  1.13     During the biennium ending June 30, 2003, the governor must 
  1.14  reduce planned executive branch state agency expenditures on 
  1.15  contracts for professional or technical services by at least 
  1.16  $100,000,000.  The governor must allocate this reduction among 
  1.17  executive branch state agencies.  For purposes of this section, 
  1.18  "professional or technical services" has the meaning given in 
  1.19  Minnesota Statutes, section 16C.08, and "executive branch state 
  1.20  agency" has the meaning given in Minnesota Statutes, section 
  1.21  16A.011, subdivision 12a.  The base for these reductions is the 
  1.22  amount allocated for professional or technical service contracts 
  1.23  in agency spending plans as of January 1, 2002. 
  1.24     Sec. 2.  [MORATORIUM ON CONSULTANT CONTRACTS.] 
  1.25     An entity in the executive, legislative, or judicial branch 
  1.26  of state government may not enter into a new contract or renew 
  2.1   an existing contract for professional or technical services 
  2.2   after the effective date of this section and before July 1, 
  2.3   2003.  This section does not apply to a contract:  (1) that 
  2.4   relates to a threat to public health, welfare or safety that 
  2.5   threatens the functioning of government, the protection of 
  2.6   property, or the health or safety of people; or (2) that is paid 
  2.7   for entirely with federal funds received before the effective 
  2.8   date of this section. 
  2.9      Sec. 3.  [REVIEW OF CONTRACTING PRACTICES.] 
  2.10     The legislative auditor must review and report to the 
  2.11  legislature by January 15, 2003, on professional or technical 
  2.12  services contracting practices of the departments of human 
  2.13  services, transportation, natural resources, administration, 
  2.14  finance, and revenue.  The auditor must examine the general 
  2.15  practices of these agencies in entering into contracts for 
  2.16  professional or technical services, including compliance with 
  2.17  law, length of contracts, and average hourly costs for 
  2.18  contractors compared with costs of using state employees.  The 
  2.19  auditor also must examine the use of master contracts, single 
  2.20  source contracts, and emergency contracts for obtaining 
  2.21  professional or technical services in these agencies. 
  2.22     Sec. 4.  [EFFECTIVE DATE.] 
  2.23     Sections 1 to 3 are effective the day following final 
  2.24  enactment. 
  2.25                             ARTICLE 2
  2.26      CHANGES IN PROFESSIONAL/TECHNICAL CONTRACTING PRACTICES
  2.27     Section 1.  Minnesota Statutes 2000, section 16A.11, 
  2.28  subdivision 3, is amended to read: 
  2.29     Subd. 3.  [PART TWO:  DETAILED BUDGET.] (a) Part two of the 
  2.30  budget, the detailed budget estimates both of expenditures and 
  2.31  revenues, must contain any statements on the financial plan 
  2.32  which the governor believes desirable or which may be required 
  2.33  by the legislature.  The detailed estimates shall include the 
  2.34  governor's budget arranged in tabular form. 
  2.35     (b) The detailed estimates must include a separate line 
  2.36  listing, by fund, the total number of professional or technical 
  3.1   service contracts and the total cost of those contracts for the 
  3.2   prior biennium and the projected number of professional or 
  3.3   technical service contracts and the projected costs of those 
  3.4   contracts for the current and upcoming biennium.  They must also 
  3.5   include a summary of the personnel employed by the agency, 
  3.6   reflected as full-time equivalent positions, and the number of 
  3.7   professional or technical service consultants for the current 
  3.8   biennium.  The detailed estimates required by this paragraph 
  3.9   must be integrated into the budget information and proposals for 
  3.10  each agency program, and may not be presented as a separate 
  3.11  document. 
  3.12     (c) The detailed estimates for internal service funds must 
  3.13  include the number of full-time equivalents by program; detail 
  3.14  on any loans from the general fund, including dollar amounts by 
  3.15  program; proposed investments in technology or equipment of 
  3.16  $100,000 or more; an explanation of any operating losses or 
  3.17  increases in retained earnings; and a history of the rates that 
  3.18  have been charged, with an explanation of any rate changes and 
  3.19  the impact of the rate changes on affected agencies. 
  3.20     Sec. 2.  Minnesota Statutes 2000, section 16C.08, 
  3.21  subdivision 2, is amended to read: 
  3.22     Subd. 2.  [DUTIES OF CONTRACTING AGENCY.] Before an agency 
  3.23  may seek approval of a professional or technical services 
  3.24  contract in which the initial contract, including any possible 
  3.25  extensions is valued in excess of $5,000, it must certify to the 
  3.26  commissioner that: 
  3.27     (1) no current state employee is able and available to 
  3.28  perform the services called for by the contract; 
  3.29     (2) the normal competitive bidding mechanisms will not 
  3.30  provide for adequate performance of the services; 
  3.31     (3) the contractor has certified that the product of the 
  3.32  services will be original in character; 
  3.33     (4) reasonable efforts were made to publicize the 
  3.34  availability of the contract to the public; 
  3.35     (5) the agency has received, reviewed, and accepted a 
  3.36  detailed work plan from the contractor for performance under the 
  4.1   contract, if applicable; 
  4.2      (6) the agency has developed, and fully intends to 
  4.3   implement, a written plan providing for the assignment of 
  4.4   specific agency personnel to managing the contract, including a 
  4.5   monitoring and liaison function, the periodic review of interim 
  4.6   reports or other indications of past performance, and the 
  4.7   ultimate utilization of the final product of the services; ~~and~~ 
  4.8      (7) the agency will not allow the contractor to begin work 
  4.9   before funds are fully encumbered; and 
  4.10     (8) in the case of a contract involving development of 
  4.11  information or communications technology or systems, the 
  4.12  contractor is required to include state employees in the 
  4.13  development of the technology or systems to the extent necessary 
  4.14  to ensure that after completion of the contract, state employees 
  4.15  can perform any further development and implementation work.  
  4.16     Sec. 3.  Minnesota Statutes 2000, section 16C.08, 
  4.17  subdivision 3, is amended to read: 
  4.18     Subd. 3.  [PROCEDURE FOR PROFESSIONAL OR TECHNICAL SERVICES 
  4.19  CONTRACTS.] Before approving a proposed contract for 
  4.20  professional or technical services, the commissioner must 
  4.21  determine, at least, that: 
  4.22     (1) all provisions of subdivision 2 and section 16C.16 have 
  4.23  been verified or complied with; 
  4.24     (2) the work to be performed under the contract is 
  4.25  necessary to the agency's achievement of its statutory 
  4.26  responsibilities and there is statutory authority to enter into 
  4.27  the contract; 
  4.28     (3) the contract will not establish an employment 
  4.29  relationship between the state or the agency and any persons 
  4.30  performing under the contract; 
  4.31     (4) the contractor and agents are not employees of the 
  4.32  state; 
  4.33     (5) no agency has previously performed or contracted for 
  4.34  the performance of tasks which would be substantially duplicated 
  4.35  under the proposed contract; 
  4.36     (6) the contracting agency has specified a satisfactory 
  5.1   method of evaluating and using the results of the work to be 
  5.2   performed; and 
  5.3      (7) the combined contract and amendments will not exceed 
  5.4   one year, unless otherwise provided by law, or if the contract 
  5.5   involves an "emergency" as defined in section 16C.10, 
  5.6   subdivision 2, the combined contract and amendments will not 
  5.7   exceed five years, unless otherwise provided for by law.  ~~The~~ 
  5.8   ~~term of the original contract must not exceed two years unless~~ 
  5.9   ~~the commissioner determines that a longer duration is in the~~ 
  5.10  ~~best interest of the state.~~ 
  5.11     A contract establishes an employment relationship for 
  5.12  purposes of clause (3) if the state or the agency must withhold 
  5.13  income taxes from the employee. 
  5.14     Sec. 4.  Minnesota Statutes 2000, section 16C.10, 
  5.15  subdivision 1, is amended to read: 
  5.16     Subdivision 1.  [SINGLE SOURCE.] (a) The solicitation 
  5.17  process described in this chapter is not required when there is 
  5.18  clearly and legitimately only a single source for the goods and 
  5.19  services and the commissioner determines that the price has been 
  5.20  fairly and reasonably established. 
  5.21     (b) The commissioner must report to the governor and the 
  5.22  legislature by September 1 each year on single source contracts 
  5.23  entered into by executive branch agencies during the prior 
  5.24  fiscal year.  For each contract, the report must list, if the 
  5.25  contract is for goods, for nonprofessional or technical 
  5.26  services, or for professional or technical services, the name of 
  5.27  the contractor and the contracting agency; the amount of the 
  5.28  contract; the duration of the contract, including possible 
  5.29  extensions; and the duration of previous single source 
  5.30  contracts, if any, between the agency and the same contractor.  
  5.31  The report must also include the total number and dollar amount 
  5.32  of single source contracts entered into by each agency, and by 
  5.33  all agencies during the fiscal year, broken down by contracts 
  5.34  for goods, nonprofessional or technical service contracts, and 
  5.35  professional or technical service contracts. 
  5.36     Sec. 5.  [EFFECTIVE DATE.] 
  6.1      Sections 1 to 4 are effective the day following final 
  6.2   enactment.  The provisions of sections 2 to 4 that relate to 
  6.3   entering into contracts apply to contracts for which a 
  6.4   solicitation is issued on or after the effective date.