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A02499 Summary:

A02499 Actions:

A02499 Committee Votes:

Committee:WAYS AND MEANS   Chair:Farrell      
DATE:05/24/2016AYE/NAY:27/6  Action: Favorable         
Farrell
Aye
Oaks
Nay
Lentol
Aye
Crouch
Nay
Schimminger
Aye
Barclay
Nay
Gantt
Aye
Fitzpatrick
Nay
Weinstein
Aye
Saladino
Aye
Glick
Aye
Hawley
Nay
Nolan
Aye
Duprey
Aye
Pretlow
Aye
Corwin
Aye
Perry
Aye
Malliotakis
Aye
Colton
Aye
Walter
Nay
Cook
Aye
Cahill
Excused
Aubry
Aye
Hooper
Aye
Thiele
Aye
Wright
Aye
Cusick
Aye
Ortiz
Aye
Benedetto
Aye
Markey
Aye
Moya
Aye
Weprin
Aye
Rodriguez
Aye
Ramos
Excused
Braunstein
Aye

A02499 Floor Votes:

A02499 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         2499--A
                                                                Cal. No. 751
 
                               2015-2016 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 16, 2015
                                       ___________
 
        Introduced by M. of A. BRONSON, LUPARDO, COLTON, ORTIZ, FAHY, WOERNER --
          read  once and referred to the Committee on Governmental Operations --
          recommitted to the Committee on Governmental Operations in  accordance
          with Assembly Rule 3, sec. 2 -- reported and referred to the Committee
          on  Ways  and  Means  --  reported from committee, advanced to a third
          reading, amended and ordered reprinted, retaining  its  place  on  the
          order of third reading
 
        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
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05999-02-6
        A. 2499--A                          2
 
     1  how  much  they paid them. A review of these forms show that the average
     2  consultant makes about fifty percent more  than  state  employees  doing
     3  comparable  work.  It  is  in  the public interest for state agencies to
     4  compare the cost of doing work by consultants with the cost of doing the
     5  same  work  with state employees as well as document whether or not that
     6  such work can be done by state employees.  If state government is to  be
     7  smarter,  more  efficient,  and transparent then a cost benefit analysis
     8  process that makes its findings public should be required by law.
     9    § 2. Section 163 of the state finance law is amended by adding  a  new
    10  subdivision 16 to read as follows:
    11    16.  Consultant  services.  a.  Before  a  state  agency enters into a
    12  contract for consultant services which is anticipated to cost more  than
    13  seven  hundred fifty thousand dollars in a twelve month period the state
    14  agency shall conduct a cost comparison review to determine  whether  the
    15  services  to  be provided by the consultant can be performed at equal or
    16  lower cost by utilizing state employees, unless the contract  meets  one
    17  of  the exceptions set forth in paragraph g of this subdivision. As used
    18  in this section, the term "consultant services" shall mean any  contract
    19  entered  into  by  a  state  agency  for analysis, evaluation, research,
    20  training, data processing, computer programming, the design, development
    21  and implementation of technology, communications  or  telecommunications
    22  systems or the infrastructure pertaining thereto, including hardware and
    23  software,  engineering  including  inspection  and  professional  design
    24  services, health services, mental health services, accounting, auditing,
    25  or similar services and such services that are substantially similar  to
    26  and  in lieu of services provided, in whole or in part, by state employ-
    27  ees, but shall not include legal services or services in connection with
    28  litigation including expert witnesses and shall  not  include  contracts
    29  for  construction of public works. For purposes of this subdivision, the
    30  costs of performing the services by state employees  shall  include  any
    31  salary,  pension costs, all other benefit costs, costs that are required
    32  for equipment, facilities and all other overhead. The costs of  consult-
    33  ant  services  shall  include  the  total cost of the contract including
    34  costs that are required for equipment, facilities and all other overhead
    35  and any continuing state costs directly  associated  with  a  contractor
    36  providing  a  contracted  function  including, but not limited to, those
    37  costs for inspection, supervision, monitoring of the  contractor's  work
    38  and any pro rata share of existing costs or expenses, including adminis-
    39  trative  salaries  and  benefits,  rent,  equipment costs, utilities and
    40  materials. The cost comparison shall be expressed where feasible  as  an
    41  hourly  rate,  or  where  such a calculation is not feasible, as a total
    42  estimated cost for the anticipated term of the contract.
    43    b. Prior to entering any consultation services contract for the priva-
    44  tization of a state service that is not currently privatized, the  state
    45  agency  shall  develop  a  cost comparison review in accordance with the
    46  provisions of paragraph a of this subdivision.
    47    c. (i) If such cost comparison review identifies a cost savings to the
    48  state of ten percent or more, and such consultant services contract will
    49  not diminish the quality of such service, the state agency shall develop
    50  a business plan, in accordance with the provisions  of  paragraph  d  of
    51  this  subdivision,  in order to evaluate the feasibility of entering any
    52  such contract and to identify the potential results,  effectiveness  and
    53  efficiency of such contract.
    54    (ii)  If such cost comparison review identifies a cost savings of less
    55  than ten percent to the state and such consultant services contract will
    56  not diminish the quality of such service, the state agency may develop a
        A. 2499--A                          3
 
     1  business plan, in order to evaluate the feasibility of entering any such
     2  contract and to identify the potential results, effectiveness and  effi-
     3  ciency  of  such contract, provided there is a significant public policy
     4  reason to enter into such consultant services contract.
     5    (iii)  If  any such proposed consultant services contract would result
     6  in the layoff, transfer or reassignment of fifty or  more  state  agency
     7  employees,  after  consulting  with  the potentially affected bargaining
     8  units, if any, the state agency shall notify the state employees of such
     9  bargaining unit, after such cost comparison review  is  completed.  Such
    10  state  agency  shall provide an opportunity for said employees to reduce
    11  the costs of conducting the operations  to  be  privatized  and  provide
    12  reasonable  resources  for the purpose of encouraging and assisting such
    13  state employees to organize and submit a bid  to  provide  the  services
    14  that are the subject of the potential consultant services contact.
    15    d.  Any  business  plan developed by a state agency for the purpose of
    16  complying with paragraph c of this subdivision shall  include:  (i)  the
    17  cost  comparison review as described in paragraph b of this subdivision,
    18  (ii) a detailed description of the  service  or  activity  that  is  the
    19  subject  of  such business plan, (iii) a description and analysis of the
    20  state agency's current performance of such service or activity, (iv) the
    21  goals to be achieved through the proposed consultant  services  contract
    22  and the rationale for such goals, (v) a description of available options
    23  for  achieving such goals, (vi) an analysis of the advantages and disad-
    24  vantages of each option, including, at a minimum, potential  performance
    25  improvements  and  risks  attendant  to  termination  of the contract or
    26  rescission of such contract, (vii) a description of the  current  market
    27  for  the  services  or  activities that are the subject of such business
    28  plan, (viii) an analysis of the quality of services as gauged by  stand-
    29  ardized  measures  and  key  performance  requirements including compen-
    30  sation, turnover, and staffing ratios, (ix) a description of the specif-
    31  ic results based performance standards that shall, at a minimum be  met,
    32  to  ensure  adequate performance by any party performing such service or
    33  activity, (x) the projected time frame for key events from the beginning
    34  of the procurement process through the  expiration  of  a  contract,  if
    35  applicable, (xi) a specific and feasible contingency plan that addresses
    36  contractor nonperformance and a description of the tasks involved in and
    37  costs  required  for implementation of such plan, and (xii) a transition
    38  plan, if appropriate, for addressing changes in  the  number  of  agency
    39  personnel,  affected business processes, employee transition issues, and
    40  communications with affected stakeholders, such as  agency  clients  and
    41  members of the public, if applicable. Such transition plan shall contain
    42  a  reemployment and retraining assistance plan for employees who are not
    43  retained by the state or employed by the contractor. If any part of such
    44  business plan is based upon evidence that the state agency is not suffi-
    45  ciently staffed to provide  the  services  required  by  the  consultant
    46  services contract, the state agency shall also include within such busi-
    47  ness plan a recommendation for remediation of the understaffing to allow
    48  such services to be provided directly by the state agency in the future.
    49    e.  Upon  the completion of such business plan, the state agency shall
    50  submit the business plan to the state comptroller.
    51    f. (i) Not later than sixty days after receipt of any  business  plan,
    52  the  state  comptroller  shall  transmit  a report detailing its review,
    53  evaluation and disposition regarding such business  plan  to  the  state
    54  agency that submitted such cost comparison review. Such sixty-day period
    55  may  be  extended  for  an additional thirty days upon a showing of good
    56  cause.
        A. 2499--A                          4
 
     1    (ii) The state comptroller's report shall include  the  business  plan
     2  prepared  by  the state agency, the reasons for approval or disapproval,
     3  any recommendations or other information to assist the state  agency  in
     4  determining  if  additional  steps  are necessary to move forward with a
     5  consultant services contract.
     6    (iii) If the state comptroller does not act on a business plan submit-
     7  ted  by  a  state  agency within ninety days of receipt of such business
     8  plan, such business plan shall be deemed approved.
     9    g. A cost comparison shall not be required if the  contracting  agency
    10  demonstrates:
    11    (i)  the  services  are incidental to the purchase of real or personal
    12  property; or
    13    (ii) the contract is necessary in order to avoid a conflict of  inter-
    14  est on the part of the agency or its employees; or
    15    (iii)  the services are of such a highly specialized nature that it is
    16  not feasible to utilize state  employees  to  perform  them  or  require
    17  special  equipment  that  is  not  feasible for the state to purchase or
    18  lease; or
    19    (iv) the services are of such an urgent nature that it is not feasible
    20  to utilize state employees; or
    21    (v) the services are anticipated to be short term and are  not  likely
    22  to be extended or repeated after the contract is completed; or
    23    (vi)  a quantifiable improvement in services that cannot be reasonably
    24  duplicated.
    25    h. Nothing in this section shall be deemed to authorize a state agency
    26  to enter into a contract which is otherwise prohibited by law.
    27    i. All documents related to the  cost  comparison  and  business  plan
    28  required  by  this  subdivision  and the determinations made pursuant to
    29  paragraph g of this subdivision  shall  be  public  records  subject  to
    30  disclosure pursuant to article six of the public officers law.
    31    §  3.  On  or  before  December  31,  2019 the state comptroller shall
    32  prepare a report, to be delivered to the governor, the temporary  presi-
    33  dent  of  the  senate and the speaker of the assembly. Such report shall
    34  include, but need not be limited to, an analysis of the effectiveness of
    35  the cost comparison review program and an analysis of the  cost  savings
    36  associated with performing such cost comparison.
    37    §  4.  This  act shall take effect on the ninetieth day after it shall
    38  have become a law and shall apply to all contracts solicited or  entered
    39  into  by  state agencies after the effective date of this act; provided,
    40  however, the amendments to section 163 of the state finance law made  by
    41  section  two of this act shall not affect the repeal of such section and
    42  shall be deemed repealed therewith.