Bill Text: NY S06810 | 2015-2016 | General Assembly | Amended
Bill Title: Relates to the cost effectiveness of consultant contracts by state agencies; defines "consultant services".
Spectrum: Moderate Partisan Bill (Republican 4-1)
Status: (Introduced - Dead) 2016-06-13 - PRINT NUMBER 6810A [S06810 Detail]
Download: New_York-2015-S06810-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 6810--A IN SENATE February 24, 2016 ___________ Introduced by Sens. ROBACH, AVELLA -- read twice and ordered printed, and when printed to be committed to the Committee on Finance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the state finance law, in relation to the cost effec- tiveness of consultant contracts by state agencies The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Legislative intent. The legislature hereby finds and 2 declares that it is in the public interest to enact a cost benefit 3 review process when a state agency enters into contracts for personal 4 services. New York State spends over $3.5 billion annually on personal 5 service contracts, over $840 million more than the State spent on these 6 contracts in SFY 2003-04, a 32% increase. Despite an Executive Order 7 that has implemented a post contract review process for some personal 8 service contracts the cost of those contracts continues to escalate 9 every year well above the inflation rate. In addition the State Finance 10 Law does not require state agencies to compare the cost or quality of 11 personal services to be provided by consultants with the cost or quality 12 of providing the same services by the state employees. Numerous audits 13 by the Office of State Comptroller as well as a KPMG study commissioned 14 by the department of transportation have found that consultants hired 15 under personal service contracts can cost between fifty percent and 16 seventy-five percent more than state employees that do the exact same 17 work including the cost of state employee benefits. The Contract Disclo- 18 sure Law (Chapter 10 of the laws of 2006) required consultants who 19 provide personal services to file forms for each contract that outline 20 how many consultants they hired, what titles they employed them in and 21 how much they paid them. A review of these forms show that the average 22 consultant makes about fifty percent more than state employees doing 23 comparable work. It is in the public interest for state agencies to 24 compare the cost of doing work by consultants with the cost of doing the 25 same work with state employees as well as document whether or not that 26 such work can be done by state employees. If state government is to be EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD05999-03-6S. 6810--A 2 1 smarter, more efficient, and transparent then a cost benefit analysis 2 process that makes its findings public should be required by law. 3 § 2. Section 163 of the state finance law is amended by adding a new 4 subdivision 16 to read as follows: 5 16. Consultant services. a. Before a state agency enters into a 6 contract for consultant services which is anticipated to cost more than 7 seven hundred fifty thousand dollars in a twelve month period the state 8 agency shall conduct a cost comparison review to determine whether the 9 services to be provided by the consultant can be performed at equal or 10 lower cost by utilizing state employees, unless the contract meets one 11 of the exceptions set forth in paragraph g of this subdivision. As used 12 in this section, the term "consultant services" shall mean any contract 13 entered into by a state agency for analysis, evaluation, research, 14 training, data processing, computer programming, the design, development 15 and implementation of technology, communications or telecommunications 16 systems or the infrastructure pertaining thereto, including hardware and 17 software, engineering including inspection and professional design 18 services, health services, mental health services, accounting, auditing, 19 or similar services and such services that are substantially similar to 20 and in lieu of services provided, in whole or in part, by state employ- 21 ees, but shall not include legal services or services in connection with 22 litigation including expert witnesses and shall not include contracts 23 for construction of public works. For purposes of this subdivision, the 24 costs of performing the services by state employees shall include any 25 salary, pension costs, all other benefit costs, costs that are required 26 for equipment, facilities and all other overhead. The costs of consult- 27 ant services shall include the total cost of the contract including 28 costs that are required for equipment, facilities and all other overhead 29 and any continuing state costs directly associated with a contractor 30 providing a contracted function including, but not limited to, those 31 costs for inspection, supervision, monitoring of the contractor's work 32 and any pro rata share of existing costs or expenses, including adminis- 33 trative salaries and benefits, rent, equipment costs, utilities and 34 materials. The cost comparison shall be expressed where feasible as an 35 hourly rate, or where such a calculation is not feasible, as a total 36 estimated cost for the anticipated term of the contract. 37 b. Prior to entering any consultation services contract for the priva- 38 tization of a state service that is not currently privatized, the state 39 agency shall develop a cost comparison review in accordance with the 40 provisions of paragraph a of this subdivision. 41 c. (i) If such cost comparison review identifies a cost savings to the 42 state of ten percent or more, and such consultant services contract will 43 not diminish the quality of such service, the state agency shall develop 44 a business plan, in accordance with the provisions of paragraph d of 45 this subdivision, in order to evaluate the feasibility of entering any 46 such contract and to identify the potential results, effectiveness and 47 efficiency of such contract. 48 (ii) If such cost comparison review identifies a cost savings of less 49 than ten percent to the state and such consultant services contract will 50 not diminish the quality of such service, the state agency may develop a 51 business plan, in order to evaluate the feasibility of entering any such 52 contract and to identify the potential results, effectiveness and effi- 53 ciency of such contract, provided there is a significant public policy 54 reason to enter into such consultant services contract. 55 (iii) If any such proposed consultant services contract would result 56 in the layoff, transfer or reassignment of fifty or more state agencyS. 6810--A 3 1 employees, after consulting with the potentially affected bargaining 2 units, if any, the state agency shall notify the state employees of such 3 bargaining unit, after such cost comparison review is completed. Such 4 state agency shall provide an opportunity for said employees to reduce 5 the costs of conducting the operations to be privatized and provide 6 reasonable resources for the purpose of encouraging and assisting such 7 state employees to organize and submit a bid to provide the services 8 that are the subject of the potential consultant services contact. 9 d. Any business plan developed by a state agency for the purpose of 10 complying with paragraph c of this subdivision shall include: (i) the 11 cost comparison review as described in paragraph b of this subdivision, 12 (ii) a detailed description of the service or activity that is the 13 subject of such business plan, (iii) a description and analysis of the 14 state agency's current performance of such service or activity, (iv) the 15 goals to be achieved through the proposed consultant services contract 16 and the rationale for such goals, (v) a description of available options 17 for achieving such goals, (vi) an analysis of the advantages and disad- 18 vantages of each option, including, at a minimum, potential performance 19 improvements and risks attendant to termination of the contract or 20 rescission of such contract, (vii) a description of the current market 21 for the services or activities that are the subject of such business 22 plan, (viii) an analysis of the quality of services as gauged by stand- 23 ardized measures and key performance requirements including compen- 24 sation, turnover, and staffing ratios, (ix) a description of the specif- 25 ic results based performance standards that shall, at a minimum be met, 26 to ensure adequate performance by any party performing such service or 27 activity, (x) the projected time frame for key events from the beginning 28 of the procurement process through the expiration of a contract, if 29 applicable, (xi) a specific and feasible contingency plan that addresses 30 contractor nonperformance and a description of the tasks involved in and 31 costs required for implementation of such plan, and (xii) a transition 32 plan, if appropriate, for addressing changes in the number of agency 33 personnel, affected business processes, employee transition issues, and 34 communications with affected stakeholders, such as agency clients and 35 members of the public, if applicable. Such transition plan shall contain 36 a reemployment and retraining assistance plan for employees who are not 37 retained by the state or employed by the contractor. If any part of such 38 business plan is based upon evidence that the state agency is not suffi- 39 ciently staffed to provide the services required by the consultant 40 services contract, the state agency shall also include within such busi- 41 ness plan a recommendation for remediation of the understaffing to allow 42 such services to be provided directly by the state agency in the future. 43 e. Upon the completion of such business plan, the state agency shall 44 submit the business plan to the state comptroller. 45 f. (i) Not later than sixty days after receipt of any business plan, 46 the state comptroller shall transmit a report detailing its review, 47 evaluation and disposition regarding such business plan to the state 48 agency that submitted such cost comparison review. Such sixty-day period 49 may be extended for an additional thirty days upon a showing of good 50 cause. 51 (ii) The state comptroller's report shall include the business plan 52 prepared by the state agency, the reasons for approval or disapproval, 53 any recommendations or other information to assist the state agency in 54 determining if additional steps are necessary to move forward with a 55 consultant services contract.S. 6810--A 4 1 (iii) If the state comptroller does not act on a business plan submit- 2 ted by a state agency within ninety days of receipt of such business 3 plan, such business plan shall be deemed approved. 4 g. A cost comparison shall not be required if the contracting agency 5 demonstrates: 6 (i) the services are incidental to the purchase of real or personal 7 property; or 8 (ii) the contract is necessary in order to avoid a conflict of inter- 9 est on the part of the agency or its employees; or 10 (iii) the services are of such a highly specialized nature that it is 11 not feasible to utilize state employees to perform them or require 12 special equipment that is not feasible for the state to purchase or 13 lease; or 14 (iv) the services are of such an urgent nature that it is not feasible 15 to utilize state employees; or 16 (v) the services are anticipated to be short term and are not likely 17 to be extended or repeated after the contract is completed; or 18 (vi) a quantifiable improvement in services that cannot be reasonably 19 duplicated. 20 h. Nothing in this section shall be deemed to authorize a state agency 21 to enter into a contract which is otherwise prohibited by law. 22 i. All documents related to the cost comparison and business plan 23 required by this subdivision and the determinations made pursuant to 24 paragraph g of this subdivision shall be public records subject to 25 disclosure pursuant to article six of the public officers law. 26 § 3. On or before December 31, 2019 the state comptroller shall 27 prepare a report, to be delivered to the governor, the temporary presi- 28 dent of the senate and the speaker of the assembly. Such report shall 29 include, but need not be limited to, an analysis of the effectiveness of 30 the cost comparison review program and an analysis of the cost savings 31 associated with performing such cost comparison. 32 § 4. This act shall take effect on the ninetieth day after it shall 33 have become a law and shall apply to all contracts solicited or entered 34 into by state agencies after the effective date of this act; provided, 35 however, the amendments to section 163 of the state finance law made by 36 section two of this act shall not affect the repeal of such section and 37 shall be deemed repealed therewith.
