HB 1427 -- PUBLIC PRIVATIZATION CONTRACTS

CO-SPONSORS:  Hosmer, Marsh, Murphy, Lowe

COMMITTEE ACTION:  Voted "do pass" by the Committee on Labor by a
vote of 10 to 5.

This bill regulates the use of privatization contracts by the
state.  The Department of Transportation; municipal fire
departments who contract with private companies as contained in
Section 85.012, RSMo; and public bodies who contract for
architectural services, engineering services, or land surveying
services are not covered.

Privatization contracts are agreements or a combination or series
of agreements in which a non-governmental person or entity agrees
with a public body to provide services valued at $25,000 or more
which could have been provided by regular employees of a public
body.  The bill:

(1)  Creates the Public Service Accountability Act and prohibits
public bodies from entering into privatization contracts, except
under the conditions of the bill;

(2)  Requires public bodies to solicit competitive sealed bids
for privatization contracts based on a written proposal.  Bid
requirements are outlined in the bill;

(3)  Requires contractors who enter into privatization contracts
to compensate employees at the rate a state employee doing
similar work would receive or the average private sector
compensation rate, whichever is greater.  The compensation must
include the value of health insurance and other benefits;

(4)  Limits privatization contracts to two years;

(5)  Requires privatization contracts to contain a provision
requiring the contractor to offer available positions to
qualified public employees whose employment was terminated due to
privatization contracts;

(6)  Requires a nondiscrimination and equal opportunity provision
in all privatization contracts;

(7)  Prohibits public funds from being used to support or oppose
unionization;

(8)  Requires public bodies to prepare a comprehensive written
estimate of the cost of using regular public employees before
considering privatization contracts.  The estimate must include
employee pension, insurance, and other benefits;

(9)  Requires a public body to consider a contractor's past
performance and its record of compliance with federal, state, and
local laws before awarding the contract;

(10)  Requires a public body to publicly designate the bidder
that it proposes to award the privatization contract to;

(11)  Requires a public body to prepare a comprehensive written
privatization contract cost analysis;

(12)  Requires a public body to certify in writing that all
provisions of this law have been followed, the quality of
services satisfies fiscal and quality requirements, the cost is
10% less than if the public body had completed the services, and
the privatization contract is in the public's best interest;

(13)  Prohibits a privatization contractor from subcontracting
without the approval of a public body;

(14)  Requires privatization contractors and subcontractors to
file an annual financial audit with a public body;

(15)  Requires that a public body have reasonable access to
privatization contractors' project financial records, facilities,
and employees;

(16)  Requires the privatization contractor to submit a report,
at least annually, detailing progress and quality of the project.
The contractor must also submit a report of its compliance with
all federal, state, and local laws and citations, complaints, or
findings issued by an administrative agency or court;

(17)  Allows a public body to seek contractual remedies for any
violation of the privatization contract.  Other persons or
entities are also allowed to bring a claim against a contractor
for certain violations of the bill;

(18)  Restricts ownership rights or interest in any public record
by a privatization contractor and requires public bodies and
contractors to comply with all open records laws;

(19)  Restricts the use of privatization contract records and
contract records of a public body.  The bill outlines remedies
which may be taken for violation of these restrictions;

(20)  Prohibits retaliation against any public employee or
private contractor employee who, acting in good faith, discloses
information or participates in any investigation or proceedings
against any governmental entity relating to a violation of a
privatization contract.  The identity of any employee complaining
in good faith to a public body or elected official about a
violation of a privatization contract will be confidential; and

(21)  Requires private contractors to post provisions of the
privatization contract law and information pertaining to the
filing of a charge for the violation of certain provisions of the
bill.

FISCAL NOTE:  Estimated Net Cost to All General Revenue Funds of
$187,870 to Unknown in FY 2003, $183,339 to Unknown in FY 2004,
and $188,530 to Unknown in FY 2005.  Does not include possible
increased costs for services and goods.  Estimated Net Cost to
Various State Funds of Unknown in FY 2003, FY 2004, and FY 2005.

PROPONENTS:  Supporters say that the bill allows the state to
assess the performance of privatization contractors; ensures cost
savings of at least 10%; and provides for displaced public
workers.

Testifying for the bill were Representative Hosmer; and Service
Employees International Union.

OPPONENTS:  There was no opposition voiced to the committee.

Mark Pioli, Legislative Analyst

Missouri House of Representatives
Last Updated October 11, 2002 at 9:01 am