1.1                          A bill for an act 
  1.2             relating to public employment; establishing procedures 
  1.3             and standards for contracting with private entities 
  1.4             for the provision of services that have been, or 
  1.5             otherwise would be, provided by public employees; 
  1.6             providing for public accountability; proposing coding 
  1.7             for new law in Minnesota Statutes, chapter 471. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [471.706] [PRIVATIZATION OF PUBLIC SERVICES.] 
  1.10     Subdivision 1.  [DEFINITIONS.] For purposes of this section:
  1.11     (1) "agency" means a state agency as defined in section 
  1.12  13.02, subdivision 17, including the Minnesota state colleges 
  1.13  and universities, but not the University of Minnesota, as well 
  1.14  as a metropolitan agency as defined in section 473.121, 
  1.15  subdivision 5a, and a municipality as defined in section 
  1.16  471.345, subdivision 1; 
  1.17     (2) "employee of a private contractor" means an employee of 
  1.18  a private contractor as defined by this subdivision or an 
  1.19  employee of a subcontractor or independent contractor that 
  1.20  provides supplies or services to a private contractor, as well 
  1.21  as a former employee of a private contractor or subcontractor 
  1.22  and a former independent contractor; 
  1.23     (3) "private contractor" means an entity that enters into a 
  1.24  privatization contract with an agency; 
  1.25     (4) "privatization contract" means an enforceable agreement 
  1.26  or combination or series of agreements by which a private 
  2.1   contractor agrees with an agency to provide services that are 
  2.2   substantially similar to and in place of services previously 
  2.3   provided by public employees of the agency or, in the case of 
  2.4   new services, services that could be provided by public 
  2.5   employees of the agency; 
  2.6      (5) "public employee" has the meaning as defined in section 
  2.7   179A.03, subdivision 14, except that for purposes of this 
  2.8   section public employer means an agency as defined in clause 
  2.9   (1); 
  2.10     (6) "services" means all aspects of services provided by a 
  2.11  private contractor to an agency or by a subcontractor to a 
  2.12  private contractor to implement a privatization contract; and 
  2.13     (7) "subcontractor" means a subcontractor of a private 
  2.14  contractor for work under a privatization contract or an 
  2.15  amendment to a privatization contract. 
  2.16     Subd. 2.  [PRIVATIZATION CONTRACTS; REQUIREMENTS.] (a) This 
  2.17  section applies to privatization contracts in an amount of 
  2.18  $25,000 or more.  The requirements imposed by this section are 
  2.19  in addition to, and do not supersede, those imposed by sections 
  2.20  16C.07; 16C.08; and 179A.23. 
  2.21     (b) An agency shall prepare a specific written statement of 
  2.22  the services to be provided under a proposed privatization 
  2.23  contract.  The statement must indicate whether the same or 
  2.24  substantially similar services are being provided by public 
  2.25  employees.  In the case of proposed new services, the statement 
  2.26  must include the agency's reasons why it determined that those 
  2.27  services could or should not be provided by current or 
  2.28  additional public employees.  The agency's solicitation of 
  2.29  services under a proposed privatization contract must be based 
  2.30  on the statement.  The agency shall notify any exclusive 
  2.31  representative or representatives of employees that would be 
  2.32  affected by a proposed privatization contract of its intention 
  2.33  to enter into such a contract, and shall provide the exclusive 
  2.34  representative or representatives with a copy of the statement 
  2.35  prepared under this paragraph. 
  2.36     (c) A formal or informal solicitation of services under a 
  3.1   proposed privatization contract must require a responder to 
  3.2   disclose: 
  3.3      (1) the length of continuous employment of the responder's 
  3.4   current employees by job classification without identifying 
  3.5   employees by name and, at the responder's option, any relevant 
  3.6   prior experience of those employees; 
  3.7      (2) if the proposed services are to be performed by new 
  3.8   employees, the minimum requirements the responder will impose on 
  3.9   job applicants; 
  3.10     (3) the responder's current annual rate of employee 
  3.11  turnover; 
  3.12     (4) the number of hours, if any, planned for each employee 
  3.13  relating to duties to be performed by the employee in providing 
  3.14  services under the proposed privatization contract; 
  3.15     (5) any complaints issued by a federal, state, or local 
  3.16  enforcement agency relating to alleged violations of relevant 
  3.17  laws or rules, including those relating to employee safety and 
  3.18  health and labor relations, along with any court decisions, 
  3.19  administrative findings, or penalties for violations of those 
  3.20  laws and rules, listing the date, the court or agency, and the 
  3.21  law or rule found to be violated; 
  3.22     (6) any collective bargaining agreements or personnel 
  3.23  policies covering the employees to perform services under the 
  3.24  proposed privatization contract; and 
  3.25     (7) any political contribution made by the responder or 
  3.26  managerial employee of the responder, during the four years 
  3.27  immediately preceding the due date of the response, to an 
  3.28  elected official of the state, a candidate for elected state 
  3.29  office, and, if the soliciting agency is a local unit of 
  3.30  government, an elected official or candidate for elected office 
  3.31  of that unit. 
  3.32     If the responder is a subsidiary of a parent entity, the 
  3.33  disclosures made in response to clauses (5), (6), and (7), must 
  3.34  cover the parent entity as well as the responder itself. 
  3.35     (d) The minimum wage rate for employees of a private 
  3.36  contractor providing service for an agency is the average wage 
  4.1   rate for the classification of agency employees whose duties are 
  4.2   most similar, plus the value of health and other benefits 
  4.3   provided to the public employees in that classification. 
  4.4      (e) The term of a privatization contract, including any 
  4.5   extensions resulting from amendments or change orders, may not 
  4.6   exceed two years.  No amendment or change order is valid if it 
  4.7   has the purpose or effect of avoiding any requirement of this 
  4.8   section. 
  4.9      (f) A privatization contract must impose affirmative action 
  4.10  standards on the private contractor and any subcontractors that 
  4.11  are at least as stringent as those applying to the contracting 
  4.12  agency.  No privatization contract may cause the agency to fail 
  4.13  to meet its affirmative action standards or cause the 
  4.14  displacement of agency employees.  For purposes of this 
  4.15  paragraph, "displacement" means a layoff, demotion, involuntary 
  4.16  transfer to a new classification or title, involuntary transfer 
  4.17  or reassignment to a new location requiring a change in 
  4.18  residence, or reduction in hours of work, wages, or benefits. 
  4.19     (g) A private contractor may not use public money paid to 
  4.20  it under a privatization contract to: 
  4.21     (1) support or oppose the organization of its employees by 
  4.22  an exclusive representative; 
  4.23     (2) assist a subcontractor to support or oppose the 
  4.24  organization of its employees; 
  4.25     (3) facilitate or deter the ability of an exclusive 
  4.26  representative of its employees to carry out the exclusive 
  4.27  representative's responsibilities; or 
  4.28     (4) assist a subcontractor to facilitate or deter the 
  4.29  lawful activities of an exclusive representative of its 
  4.30  employees.  
  4.31     Subd. 3.  [REVIEW OF CONTRACT COSTS.] (a) An agency 
  4.32  considering whether to enter into a privatization contract for a 
  4.33  service shall prepare a comprehensive written estimate of having 
  4.34  the same service provided in the most cost-effective manner by 
  4.35  agency employees.  The estimate must include all direct costs of 
  4.36  having agency employees provide the service, including the cost 
  5.1   of pension, insurance, and other employee benefits.  The 
  5.2   estimate is nonpublic data, as defined in section 13.02, 
  5.3   subdivision 9, until the day after the deadline for receipt of 
  5.4   responses under paragraph (b), when it becomes public data and 
  5.5   must be published in the State Register.  For the purpose of the 
  5.6   estimate, an exclusive representative of agency employees, any 
  5.7   time before the final day for the receipt of responses under 
  5.8   paragraph (b), may propose amendments to any relevant collective 
  5.9   bargaining agreement to which it is a party.  Any amendments 
  5.10  take effect if they are subsequently approved by both parties to 
  5.11  the collective bargaining agreement and if they are necessary to 
  5.12  reduce the cost estimate determined under this paragraph below 
  5.13  the cost of providing the service under a privatization contract.
  5.14     (b) After soliciting and receiving responses, the agency 
  5.15  shall publicly designate the responder to which it proposes to 
  5.16  award the privatization contract.  In making its selection, the 
  5.17  agency shall consider the responder's past performance and 
  5.18  record of compliance with federal and state laws and local 
  5.19  ordinances.  The agency shall prepare a comprehensive written 
  5.20  estimate of the cost of the proposal based on the responder's 
  5.21  bid, including the cost of a transition from public to private 
  5.22  provision of the service, any additional unemployment and 
  5.23  retirement benefits resulting from the transfer, and costs 
  5.24  associated with monitoring the proposed contract.  If the 
  5.25  designated responder proposes to perform any or all of the 
  5.26  desired services outside the state, the commissioner of revenue 
  5.27  shall determine, as nearly as possible, any loss of sales and 
  5.28  income tax revenue to the state.  The agency shall include that 
  5.29  amount in the cost estimate prepared under this paragraph. 
  5.30     (c) Before awarding a privatization contract, an agency 
  5.31  head or a governing body of a metropolitan agency or 
  5.32  municipality shall certify in writing that: 
  5.33     (1) the agency head or governing body has complied with 
  5.34  this section and other applicable law; 
  5.35     (2) the quality of the services to be provided by the 
  5.36  designated responder is likely to equal or exceed the quality of 
  6.1   services that could be provided by agency employees; 
  6.2      (3) the cost of the proposed contract, including all costs 
  6.3   identified under paragraph (b), will be at least 15 percent 
  6.4   lower than the cost determined under paragraph (a), taking into 
  6.5   account any amendments to a collective bargaining agreement 
  6.6   proposed by an exclusive representative; and 
  6.7      (4) that the proposed privatization contract is in the 
  6.8   public interest.  
  6.9      Subd. 4.  [DATA PRACTICES.] A privatization contract must 
  6.10  comply with section 13.05, subdivision 11.  All data relating to 
  6.11  a privatization contract are public data.  If the contracting 
  6.12  agency is a state or metropolitan agency, it shall submit copies 
  6.13  of all public data associated with the privatization contract to 
  6.14  the legislative auditor.  If the contracting agency is a 
  6.15  municipality, it shall submit copies of all public data 
  6.16  associated with the privatization contract to the state auditor.