Report Title:

Privatization; Managed Competition

 

Description:

Amends the law relating to privatization to provide that certain identified state or county government services be subject to public-private competitive bidding (managed competition).

 

 

HOUSE OF REPRESENTATIVES

H.B. NO.

1788

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO PRIVATIZATION.

 

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

SECTION 1. Act 90, Session Laws of Hawaii 2001, section 2 is amended by amending section -2, Hawaii Revised Statutes, entitled "determination; standards", to read as follows:

"§ -2 Determination; standards. (a) Notwithstanding any law to the contrary, including but not limited to chapters 46, 76, 77, 78, 89, and 89A, any other applicable civil service law, customary or historical past practices, or the fact that the services hereinafter described may have been performed by persons or positions in civil service, any state or county official in whom procurement authority is vested by law may [enter] identify commercial activities currently being performed by a state or county agency and recommend that the agency engage in a competitive bidding process that creates competition with private entities or other state or county agency service providers. Upon completing the competitive bidding process, the state or county official shall award the bid to the agency that currently performs the service or may enter into a contract financed by public funds, with a private entity to obtain services, including services provided in conjunction with the procurement of goods or construction, from a private entity[, when] only:

(1) When there is a reasonable basis to believe that the identified state or county service of equivalent or better quality than that which could be provided by a government agency can be provided, at lower cost[.], by requiring competition with private entities or other state or county agency service providers; and

(2) Upon first complying with the requirements of subsections (c) and (d).

(b) For purposes of this chapter[, a "private]:

"Commercial activity" means an activity that provides a product or service that is available from a private entity.

"Identified state or county service" means a service provided by the state or a county that is under consideration to determine whether the service may be better provided through competition with private entities.

"Private entity" [is] means any individual, company, or organization that is not an employee or agency within the federal, state, or county government.

(c) In the determination made pursuant to subsection (a), the state or county official shall:

(1) Conduct an in-house cost estimate, a management study, or any other hearing, study, review, or cost estimate concerning any aspect of an identified state or county service;

(2) Accurately and fairly estimate and account for the cost of providing an identified state or county service;

(3) Require that an identified state or county service be submitted to competitive bidding or another process that creates competition with private entities or other governmental entities. In determining whether an identified state or county service should be submitted to competitive bidding, the state or county official shall consider, at a minimum:

(A) Any constitutional and legal implications which may arise as a result of that action;

(B) The cost of supervising the work of any private entity; and

(C) The total cost to the state or county agency of that agency’s performance of a service, including all indirect costs related to that agency and the costs of support agencies to the extent that costs would not be incurred if a contract is awarded. Costs for the current provision of the service shall be considered only when those costs would actually be saved if the contract were awarded to another entity;

(4) Develop the specifications and conditions of purchase procedures that must be followed by the agency or a private entity engaged in competitive bidding to provide an identified state or county service;

(5) Award a contract to the agency currently providing the service, another state or county agency, a private entity, or any combination of those entities, if the bidder presents the best and most reasonable bid, which is not necessarily the lowest bid. Consideration shall be given as to how to transfer the program back to the agency if the bidder is not successful in carrying out the requirements of the contract. The bid shall include, without limitation, an analysis of health care benefits, retirement, and workers’ compensation insurance for employees of the contractor which are reasonably comparable to those provided by the State or county;

(6) Determine the terms and conditions of a contract for service or interagency contract to provide an identified state or county service or other commercial activity. The terms and conditions may include the requirement that a minimum level of health insurance coverage for employees, including optional family coverage, whether employer-paid or employee-paid, or a combination thereof, is available to employees; and

(7) Encourage state or county employees in the affected agency to organize and submit a bid for the identified state or county service.

[(c)] (d) In the determination made pursuant to [this chapter,] subsection (a), the state or county official shall consider whether contracting with [the] a private entity will:

(1) Jeopardize the government's ability to provide the service if the private entity fails to perform, or the contract becomes unprofitable or impossible for a private entity to perform;

(2) Impact on any employee covered by civil service laws; provided that the impact shall not prevent the procurement of services pursuant to this chapter;

(3) Affect the nature of the service the agency needs, including whether:

(A) The service is self-contained or part of a larger service delivery system;

(B) The service is geographically dispersed;

(C) The service is a core or ancillary government service and if in-house resources are available or needed;

(D) Government control is necessary;

(E) Government accountability can be shared; and

(F) Governmental authority will be diluted;

(4) Increase the potential for achieving cost savings, including:

(A) The need to abandon or repurchase capital improvements or equipment that are not fully depreciated;

(B) The extent to which the service is available in the private sector marketplace; and

(C) The extent to which federal or state restrictions may reduce private sector interest in providing or performing the needed or required service; and

(5) Affect the extent to which the services are needed or required, and how the criteria to select a service provider can be described in objective specifications.

[(d)] (e) Any employee displacements shall be subject to section 46-   or 89A-1(e) as appropriate."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:

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