•  Summary 
  •  Actions 
  •  Committee Votes 
  •  Floor Votes 
  •  Memo 
  •  Text 
  •  LFIN 
  •  Chamber Video/Transcript 

A02022 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
SPONSOR: Bronson
  TITLE OF BILL: An act to amend the state finance law, in relation to the cost effectiveness of consultant contracts by state agencies   PURPOSE OR GENERAL IDEA OF BILL: Sets forth conditions when an agency shall enter into a contract for consultant services. Requires agencies to conduct a cost comparison prior to entering into a contract for consultant services to determine if there is a less expensive alternative.   SUMMARY OF SPECIFIC PROVISIONS: Amends the state finance law by amending section 163 to add a new subdi- vision 16, setting forth conditions that must be met when an agency shall enter into a contract for consulting services of more than $750,000, The agency shall compare costs to determine whether the work can be performed at lower cost by utilizing state employees rather than consultants. Certain exceptions are specified when this cost comparison is not required. The agency must retain documentation of the cost comparison as a public record.   JUSTIFICATION: The purpose of this bill is to require state agencies to do cost compar- isons before entering into contracts for consultant services. Any time the taxpayers' money is used to fund a contract. for services there is a need to insure that this expenditure is necessary and prudent, The State of New York spends over $2 Billion per year on consultants, In many cases these consultants perform work that could be done by profes- sional state employees and the cost of using consultants is substantial- ly higher. In 1998 the use of engineering consultants by the State Department of Transportation was studied by the State, Comptroller and OSC concluded that the State could save millions of dollars by reducing the use of consultants. The Comptroller recommended cost/benefit. analysis prior to contracting with consultants. Other studies have confirmed this find- ing, including an analysis by the State Assembly in 2009 that estimated the state could save $250 million over three years by reducing the use of information technology consultants. In 2010 The state Senate Task Force on Government Efficiency estimated that the Department of Trans- portation could save about $46 million per year by implementing this policy. In 2009 the Federal Office of Management and Budget issued a directive to Federal government agencies that calls for them to perform a cost benefit analysis before entering into contracts and to initiate pilot projects for in-sourcing work in cases where the cost analysis supports the conclusion that the work can be performed by government employers at lower cost that by using contractors. OMB estimates that this and other contracting reforms can save the Federal government $40 billion.   PRIOR LEGISLATIVE HISTORY: A10781 of 2011-12: vetoed; A7506 of 2013-14: referred to Government Operations; A2499 of 2015-16: referred to Government Operations   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect on the ninetieth day after it shall have become a law, with provisions.
Go to top

A02022 Text:

                STATE OF NEW YORK
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                    January 17, 2017
        Introduced  by M. of A. BRONSON -- read once and referred to the Commit-
          tee on Governmental Operations
        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
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 2022                             2
     1  such work can be done by state employees.  If state government is to  be
     2  smarter,  more  efficient,  and transparent then a cost benefit analysis
     3  process that makes its findings public should be required by law.
     4    §  2.  Section 163 of the state finance law is amended by adding a new
     5  subdivision 16 to read as follows:
     6    16. Consultant services. a.  Before  a  state  agency  enters  into  a
     7  contract  for consultant services which is anticipated to cost more than
     8  seven hundred fifty thousand dollars in a twelve month period the  state
     9  agency  shall  conduct a cost comparison review to determine whether the
    10  services to be provided by the consultant can be performed at  equal  or
    11  lower  cost  by utilizing state employees, unless the contract meets one
    12  of the exceptions set forth in paragraph g of this subdivision. As  used
    13  in  this section, the term "consultant services" shall mean any contract
    14  entered into by a  state  agency  for  analysis,  evaluation,  research,
    15  training, data processing, computer programming, the design, development
    16  and  implementation  of technology, communications or telecommunications
    17  systems or the infrastructure pertaining thereto, including hardware and
    18  software,  engineering  including  inspection  and  professional  design
    19  services, health services, mental health services, accounting, auditing,
    20  or  similar services and such services that are substantially similar to
    21  and in lieu of services provided, in whole or in part, by state  employ-
    22  ees, but shall not include legal services or services in connection with
    23  litigation  including  expert  witnesses and shall not include contracts
    24  for construction of public works. For purposes of this subdivision,  the
    25  costs  of  performing  the services by state employees shall include any
    26  salary, pension costs, all other benefit costs, costs that are  required
    27  for  equipment, facilities and all other overhead. The costs of consult-
    28  ant services shall include the total  cost  of  the  contract  including
    29  costs that are required for equipment, facilities and all other overhead
    30  and  any  continuing  state  costs directly associated with a contractor
    31  providing a contracted function including, but  not  limited  to,  those
    32  costs  for  inspection, supervision, monitoring of the contractor's work
    33  and any pro rata share of existing costs or expenses, including adminis-
    34  trative salaries and benefits,  rent,  equipment  costs,  utilities  and
    35  materials.  The  cost comparison shall be expressed where feasible as an
    36  hourly rate, or where such a calculation is not  feasible,  as  a  total
    37  estimated cost for the anticipated term of the contract.
    38    b. Prior to entering any consultation services contract for the priva-
    39  tization  of a state service that is not currently privatized, the state
    40  agency shall develop a cost comparison review  in  accordance  with  the
    41  provisions of paragraph a of this subdivision.
    42    c. (i) If such cost comparison review identifies a cost savings to the
    43  state of ten percent or more, and such consultant services contract will
    44  not diminish the quality of such service, the state agency shall develop
    45  a  business  plan,  in  accordance with the provisions of paragraph d of
    46  this subdivision, in order to evaluate the feasibility of  entering  any
    47  such  contract  and to identify the potential results, effectiveness and
    48  efficiency of such contract.
    49    (ii) If such cost comparison review identifies a cost savings of  less
    50  than ten percent to the state and such consultant services contract will
    51  not diminish the quality of such service, the state agency may develop a
    52  business plan, in order to evaluate the feasibility of entering any such
    53  contract  and to identify the potential results, effectiveness and effi-
    54  ciency of such contract, provided there is a significant  public  policy
    55  reason to enter into such consultant services contract.

        A. 2022                             3
     1    (iii)  If  any such proposed consultant services contract would result
     2  in the layoff, transfer or reassignment of fifty or  more  state  agency
     3  employees,  after  consulting  with  the potentially affected bargaining
     4  units, if any, the state agency shall notify the state employees of such
     5  bargaining  unit,  after  such cost comparison review is completed. Such
     6  state agency shall provide an opportunity for said employees  to  reduce
     7  the  costs  of  conducting  the  operations to be privatized and provide
     8  reasonable resources for the purpose of encouraging and  assisting  such
     9  state  employees  to  organize  and submit a bid to provide the services
    10  that are the subject of the potential consultant services contact.
    11    d. Any business plan developed by a state agency for  the  purpose  of
    12  complying  with  paragraph  c of this subdivision shall include: (i) the
    13  cost comparison review as described in paragraph b of this  subdivision,
    14  (ii)  a  detailed  description  of  the  service or activity that is the
    15  subject of such business plan, (iii) a description and analysis  of  the
    16  state agency's current performance of such service or activity, (iv) the
    17  goals  to  be achieved through the proposed consultant services contract
    18  and the rationale for such goals, (v) a description of available options
    19  for achieving such goals, (vi) an analysis of the advantages and  disad-
    20  vantages  of each option, including, at a minimum, potential performance
    21  improvements and risks attendant  to  termination  of  the  contract  or
    22  rescission  of  such contract, (vii) a description of the current market
    23  for the services or activities that are the  subject  of  such  business
    24  plan,  (viii) an analysis of the quality of services as gauged by stand-
    25  ardized measures and  key  performance  requirements  including  compen-
    26  sation, turnover, and staffing ratios, (ix) a description of the specif-
    27  ic  results based performance standards that shall, at a minimum be met,
    28  to ensure adequate performance by any party performing such  service  or
    29  activity, (x) the projected time frame for key events from the beginning
    30  of  the  procurement  process  through  the expiration of a contract, if
    31  applicable, (xi) a specific and feasible contingency plan that addresses
    32  contractor nonperformance and a description of the tasks involved in and
    33  costs required for implementation of such plan, and (xii)  a  transition
    34  plan,  if  appropriate,  for  addressing changes in the number of agency
    35  personnel, affected business processes, employee transition issues,  and
    36  communications  with  affected  stakeholders, such as agency clients and
    37  members of the public, if applicable. Such transition plan shall contain
    38  a reemployment and retraining assistance plan for employees who are  not
    39  retained by the state or employed by the contractor. If any part of such
    40  business plan is based upon evidence that the state agency is not suffi-
    41  ciently  staffed  to  provide  the  services  required by the consultant
    42  services contract, the state agency shall also include within such busi-
    43  ness plan a recommendation for remediation of the understaffing to allow
    44  such services to be provided directly by the state agency in the future.
    45    e. Upon the completion of such business plan, the state  agency  shall
    46  submit the business plan to the state comptroller.
    47    f.  (i)  Not later than sixty days after receipt of any business plan,
    48  the state comptroller shall transmit  a  report  detailing  its  review,
    49  evaluation  and  disposition  regarding  such business plan to the state
    50  agency that submitted such cost comparison review. Such sixty-day period
    51  may be extended for an additional thirty days upon  a  showing  of  good
    52  cause.
    53    (ii)  The  state  comptroller's report shall include the business plan
    54  prepared by the state agency, the reasons for approval  or  disapproval,
    55  any  recommendations  or other information to assist the state agency in

        A. 2022                             4
     1  determining if additional steps are necessary to  move  forward  with  a
     2  consultant services contract.
     3    (iii) If the state comptroller does not act on a business plan submit-
     4  ted  by  a  state  agency within ninety days of receipt of such business
     5  plan, such business plan shall be deemed approved.
     6    g. A cost comparison shall not be required if the  contracting  agency
     7  demonstrates:
     8    (i)  the  services  are incidental to the purchase of real or personal
     9  property; or
    10    (ii) the contract is necessary in order to avoid a conflict of  inter-
    11  est on the part of the agency or its employees; or
    12    (iii)  the services are of such a highly specialized nature that it is
    13  not feasible to utilize state  employees  to  perform  them  or  require
    14  special  equipment  that  is  not  feasible for the state to purchase or
    15  lease; or
    16    (iv) the services are of such an urgent nature that it is not feasible
    17  to utilize state employees; or
    18    (v) the services are anticipated to be short term and are  not  likely
    19  to be extended or repeated after the contract is completed; or
    20    (vi)  a quantifiable improvement in services that cannot be reasonably
    21  duplicated.
    22    h. Nothing in this section shall be deemed to authorize a state agency
    23  to enter into a contract which is otherwise prohibited by law.
    24    i. All documents related to the  cost  comparison  and  business  plan
    25  required  by  this  subdivision  and the determinations made pursuant to
    26  paragraph g of this subdivision  shall  be  public  records  subject  to
    27  disclosure pursuant to article six of the public officers law.
    28    §  3.  On  or  before  December  31,  2020 the state comptroller shall
    29  prepare a report, to be delivered to the governor, the temporary  presi-
    30  dent  of  the  senate and the speaker of the assembly. Such report shall
    31  include, but need not be limited to, an analysis of the effectiveness of
    32  the cost comparison review program and an analysis of the  cost  savings
    33  associated with performing such cost comparison.
    34    §  4.  This  act shall take effect on the ninetieth day after it shall
    35  have become a law and shall apply to all contracts solicited or  entered
    36  into  by  state agencies after the effective date of this act; provided,
    37  however, the amendments to section 163 of the state finance law made  by
    38  section  two of this act shall not affect the repeal of such section and
    39  shall be deemed repealed therewith.
Go to top