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90_HB0194
New Act
Creates the Privatization Regulation Act. Provides that
a State agency may enter into a contract with a private
entity (rather than having the work done by State employees)
only if specified conditions are met. Applies to contracts
executed after the Act takes effect.
LRB9000627DNcd
LRB9000627DNcd
1 AN ACT in relation to privatization of government
2 services.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 1. Short title. This Act may be cited as the
6 Privatization Regulation Act.
7 Section 5. Purpose. It is the purpose of this Act and
8 the policy of the State to ensure that the residents of the
9 State receive high quality public services at the lowest
10 possible cost, with due regard for the taxpayers of the State
11 and the needs of both public and private sector workers.
12 Section 10. Definitions. As used in this Act:
13 "Privatization" means a contract between a State agency
14 and a person or firm in the private sector, regardless of
15 whether the person or firm is a for-profit entity or a
16 not-for-profit entity, for any function performed by
17 personnel employed by a State agency on the effective date of
18 this Act.
19 "Displace" means the layoff, demotion, bumping,
20 involuntary transfer to a new class, title, or location, time
21 based reductions, reductions in customary hours of work,
22 wages, or benefits of any State employee.
23 "Cost-effectiveness study" means an analysis conducted in
24 accordance with the standard methodology of the Bureau of the
25 Budget comparing the projected cost of delivering the service
26 under the proposed contract to the cost of delivering the
27 service in-house. The analysis shall include in the
28 projected cost of the proposed contract any continuing State
29 costs associated with the service, such as the costs of
30 inspection, supervision, and monitoring. The analysis shall
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1 exclude from the cost of delivering the service in-house all
2 overhead costs unless the costs are attributable solely to
3 the service.
4 Section 15. Privatization requirements. Privatization
5 is permissible to achieve cost savings when all of the
6 following conditions are met:
7 (a) The contracting agency clearly demonstrates that the
8 proposed contract will result in actual overall cost savings
9 to the State, provided that:
10 (1) In comparing costs, there shall be included the
11 State's additional cost of providing the same services as
12 proposed by a contractor. These additional costs shall
13 include the salaries and benefits of additional staff
14 that would be needed and the cost of additional space,
15 equipment, and materials needed to perform the function.
16 (2) In comparing costs, there shall not be included
17 the State's indirect overhead costs unless these costs
18 can be attributed solely to the function in question and
19 would not exist if that function was not performed in
20 State service. Indirect overhead costs shall mean the
21 pro rata share of existing administrative salaries and
22 benefits, rent, equipment costs, utilities, and
23 materials.
24 (3) In comparing costs, there shall be included in
25 the cost of a contractor providing a service any
26 continuing State costs that would be directly associated
27 with the contracted function. These continuing State
28 costs shall include, but not be limited to, those for
29 inspection, supervision, and monitoring.
30 (b) The savings shall be large enough to ensure that
31 they will not be eliminated by private sector and State cost
32 fluctuations that could normally be expected during the
33 contracting period.
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1 (c) The amount of savings clearly justifies the size and
2 duration of the contracting agreement.
3 (d) The contract is awarded through a publicized,
4 competitive bidding process.
5 (e) The contract includes specific provisions pertaining
6 to the qualifications of the staff that will perform the work
7 under the contract, as well as assurance that the
8 contractor's hiring practices meet applicable
9 nondiscrimination, affirmative action standards and the Rutan
10 decree prohibition against hiring and firing employees on the
11 basis of political beliefs and activities.
12 (f) The potential for future economic risk to the State
13 from potential contractor rate increases is minimal.
14 (g) The contract is with a firm. A "firm" means a
15 corporation, partnership, nonprofit organization, or sole
16 proprietorship.
17 (h) The potential economic advantage of contracting is
18 not outweighed by the public's interest in having a
19 particular function performed directly by State government.
20 (i) The contract must provide that the contractor shall
21 not pay wages and benefits at a rate and level lower than
22 that provided to State employees performing comparable tasks.
23 Section 20. Privatization permitted. Privatization
24 initiatives also shall be permissible when any of the
25 following conditions are met:
26 (a) The services contracted are not available or cannot
27 be performed satisfactorily by State employees, or are of
28 such a highly specialized or technical nature that the
29 necessary expert knowledge, experience, and ability are not
30 available in the State workforce.
31 (b) The services are incidental to a contract for the
32 purchase or lease of real or personal property, including,
33 but not limited to, agreements to service or maintain leased
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1 or rented office equipment or computers.
2 (c) A private contractor is necessary to protect against
3 a conflict of interest or to ensure independent and unbiased
4 findings in circumstances where an outside perspective is
5 clearly needed.
6 (d) A private contractor can provide equipment,
7 materials, facilities, or support services that cannot
8 feasibly be provided by the State in the location where the
9 service is to be performed.
10 (e) The services are of such an urgent, temporary, or
11 occasional nature that they cannot adequately be performed by
12 State employees.
13 Section 25. Eligibility of contractors. All contractors
14 submitting bids must submit an eligibility report to the
15 department overseeing the privatization contract and the
16 Office of the Comptroller. The report shall include, but not
17 be limited to: (a) documentation of compliance with federal,
18 State, and city labor, anti-discrimination, affirmative
19 action, unemployment, occupational safety and health,
20 environmental protection, and workers' compensation laws; (b)
21 quarterly payroll records listing the name, address, hours
22 worked, hourly wage paid, and fringe benefits paid for each
23 employee for the last 2 years; (c) the union status and
24 representation for each employee for the last 2 years; (d)
25 the ethnic, racial, and gender make-up of its workforce for
26 the last 2 years; and (e) a list of the political
27 contributions of the contractor and its principals for the
28 last 4 years. The reports shall be public documents
29 available for public inspection.
30 Section 30. Annual performance reports. All contractors
31 awarded a procurement under Sections 15 and 20 of this Act
32 shall submit annual performance reports to the department
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1 overseeing the contract and the Office of the Comptroller.
2 The performance report shall include, but not be limited
3 to: (a) documentation of compliance with federal, State, and
4 city labor, anti-discrimination, affirmative action,
5 unemployment, occupational safety and health, environmental
6 protection, and workers' compensation laws; (b) payroll
7 records listing the name, address, social security number,
8 hours worked, hourly wage paid, and fringe benefits paid for
9 each employee; (c) the union status and representation for
10 each employee; (d) the ethnic, racial, and gender make-up of
11 the workforce; and (e) a list of the political contributions
12 of the contractor and its principals for the last year. The
13 reports shall be public documents available for public
14 inspection.
15 Section 35. Withholding reimbursement. When
16 privatization initiatives are funded under this Act, the
17 department overseeing the contract shall include a
18 withholding clause in the privatization contract providing
19 the State with the authority to withhold reimbursement if the
20 contractor fails to comply with Section 30 of this Act.
21 Section 40. Assistance for displaced State employees.
22 When privatization initiatives are funded under Sections 15
23 and 20 of this Act, the department overseeing the
24 privatization contract shall prepare and implement a plan of
25 assistance for State employees who will be displaced as a
26 result of the contract. The plan of assistance shall include
27 efforts, including training if necessary, to place displaced
28 State employees in a comparable position within that agency
29 or any other State agency. The plan of assistance shall
30 include notification to the Department of Central Management
31 Services at least 3 months before letting the contract. The
32 notification shall include all supporting documentation and
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1 analyses in support of the privatization initiative and a
2 copy of the contract. The Department of Central Management
3 Services shall, within 5 business days of receipt of the
4 notification, forward notice and all supporting documentation
5 provided in this Section to all duly certified collective
6 bargaining representatives who represent State employees who
7 may be displaced by the contract.
8 Section 45. Procedures. Any State agency proposing to
9 execute a contract under Section 15 shall notify the
10 Commission of its intention. All organizations that
11 represent State employees who perform the type of work to be
12 contracted, and any person or organization that has filed
13 with the board a request for notice, shall be contacted
14 immediately by the Commission upon receipt of this notice so
15 that they may be given a reasonable opportunity to comment on
16 the proposed contract. Departments or agencies submitting
17 proposed contracts shall retain and provide all data and
18 other information relevant to the contracts and necessary for
19 a specific application of the standards set forth in Section
20 15. Any employee organization may request, within 10 days of
21 notification, the Commission to review any contract proposed
22 or executed under Section 15. Upon such a request, the
23 Commission shall review the contract for compliance with the
24 standards specified in Section 15.
25 Section 50. Other proposed contracts; review. The
26 Commission, at the request of an employee organization that
27 represents State employees, shall review the adequacy of any
28 proposed or executed contract which is of a type enumerated
29 in Section 15. However, a contract that was reviewed at the
30 request of an employee organization when it was proposed need
31 not be reviewed again after its execution.
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1 Section 55. Applicability. This Act applies only to
2 contracts executed after the effective date of this Act.
3 Section 60. Severability. The provisions of this Act
4 are severable under Section 1.31 of the Statute on Statutes.