Governor Rell has signed SB1600, An Act Concerning Clean Contracting Standards, which passed the General Assembly last month during a special session. Legislators have been trying to pass variations of this legislation since the scandals of Governor Rowland. Governor Rell has vetoed the bill several times, but it has been watered down to meet many of the original objections to the legislation. Such controversial legislation would probably have died if it were not for the DOT’s I-84 scandal in recent months.
Although the bill has passed and been signed into law by the Governor, legislators haven’t seen the last of this issue. Immediately after the bill passed the Senate last month, legislators realized that they had passed the wrong legislation. In fact they had included a revised bill in another bill they passed only hours later. But that bill, the famous “bond package” was vetoed by the Governor and is currently being negotiated. Therefore, what we see in this bill is likely to be changed in future legislation.
Having said that here’s a brief summary of the bill. If you want a longer summary click here. The full text can be found here.
The new law creates a State Contracting Standards Board (SCSB) with far-reaching powers to establish procurement policy and standards for state agencies, quasi-public agencies and municipal projects using state funds. The SCSB’s 14 members must have experience in procurement and related issues (including engineering) and will be appointed by the Governor and legislative leaders. The Board will appoint an executive director and chief procurement officer, hire staff and contract for services.
The SCSB’s powers include reviewing, monitoring and auditing state contracting procurement processes. The Board has the power to suspend state contractors and cancel contracts. It can invalidate a state contract if it finds that state law has been broken. The SCSB will review state contracting statutes, regulations and policies and recommend changes. It will audit each state agency at least every three years and issue a public report. All state contracts must include provisions to ensure accountability, transparency, and results-based outcomes, as prescribed by the SCSB.
By far, the most controversial aspect of this legislation has been the privatization provisions of Section 16. Before privatizing any state service that is not currently privatized, a state contracting agency must develop a cost-benefit analysis and a business case. During floor debate on this bill, legislators said that the privatization provision would not include services which are currently being performed by both state workers and private contractors. An example mentioned was snow plowing. This service is performed by both DOT employees and contracted out. The DOT could continue to contract out this service without having to go through the lengthy cost-benefit analysis and business case analysis. There are additional restrictions placed on privatization contracts for “essential government services” such as inspections. The privatization contract provisions would appear to apply only to very large contracts which result in layoffs of state employees. In those cases, the final decision rests with the Governor and the General Assembly.
What will be the impact of this legislation for those doing business with the state? It depends on several factors. The SCSB may be able to standardize some contracting policies like the use of QBS by state agencies, quasi-public agencies and municipalities not now using QBS. This could be a major improvement for design professionals. But if the process is abused by state employee labor unions or disgruntled bidders, the legislation could add layers of delays to an already cumbersome contracting process. Anyone who disagrees with the SCSB’s decisions may appeal to the courts. How deeply the SCSB’s control of state contracting will reach into the bureaucracy remains to be seen. And don’t forget that the legislators will be amending the bill, probably before the regular session which begins in February, 2008.
