MODEL BILLS

Privatization Accountability Act

Summary: The Privatization Accountability Act improves public oversight and accountability of privatization contracts.

SECTION 1. SHORT TITLE

This Act may be cited as the “Privatization Accountability Act”.

SECTION 2. LEGISLATIVE INTENT

The [legislature/council/commission] finds and declares that using private contractors to provide public services formerly provided by public employees does not always promote the public interest. To ensure that citizens receive high quality public services at low cost, with due regard for the taxpayers, the service recipients, and the needs of public and private workers, the [legislature/council/commission] finds it necessary to bring more oversight to privatization contracts, and to protect those workers who report conditions and practices which impact on the efficiency and quality of public services provided by private contractors. The [legislature/council/commission] further finds it necessary to ensure that access to public information guaranteed by the freedom of information act is not in any way hindered by the fact that public services are provided by private contractors.

SECTION 3. DEFINITIONS

For purposes of this act:

(1) “Agency” includes an executive office, department, division, board, commission or other office or officer in the executive branch of the government.

(2) “Employee of a private contractor ” includes a worker directly employed by a private contractor, as defined in this section, as well as an employee of a subcontractor or an independent contractor that provides supplies or services to a private contractor. Such term includes former employees of a private contractor or subcontractor and former independent contractors.

(3) “Discrimination or retaliation” includes a threat, intimidation, or any adverse change in an employee’s wages, benefits, or terms or conditions of employment. In the case of a person who is not an employee of the private contractor, such term includes any adverse action taken against the person or the person’s employer, including the cancellation of or refusal to renew a contract with the person or the person’s employer.

(4) “Services” includes, with respect to a private contractor, all aspects of the provision of services provided by a private contractor pursuant to a privatization contract, or any services provided by a subcontractor of a private contractor.

(5) “Person” includes an individual, institution, federal, State, or local governmental entity, or any other public or private entity.

(6) “Privatization contract” is an agreement or combination or series of agreements by which a non-governmental person or entity agrees with an agency to provide services, valued at [insert value, i.e.: one hundred thousand dollars or more], which are substantially similar to and in lieu of, services heretofore provided, or that could have been provided, in whole or in part, by regular employees of an agency.

(7) “Private contractor” refers to any entity which enters into a privatization contract as that term is defined in this section.

(8) “Public employee” refers to an employee as defined in section ____ of the civil service law [or cross reference to the law which defines public employment].

(9) “Public Record” refers to a public record as defined in [insert reference to freedom of information act], and also includes any document relating to the privatization contract or performance under the contract, prepared, received or retained by a contractor or subcontractor whether such document be handwritten, typed, tape-recorded, printed, photocopied, photographed or recorded by any other method.

(10) “Subcontractor” means a subcontractor of a private contractor for work under a privatization contract or an amendment to a privatization contract.

SECTION 4. PRIVATIZATION CONTRACTS; REQUIREMENTS

A. Generally. No agency shall make any privatization contract and no such contract shall be valid unless the agency and the contractor comply with each of the requirements in this section and sections 5 through 8 and includes the specified provisions in the privatization contract.

B. Statement of services, analysis of bids for privatization contract. The agency shall prepare a specific written statement of the services proposed to be the subject of the privatization contract, including the specific quantity and standard of quality of the subject services. The agency shall solicit competitive sealed bids for the privatization contracts based upon this statement. The day designated by the agency upon which it will accept these sealed bids shall be the same for any and all parties. This statement shall be a public record, shall be filed in the agency, and shall be published in the state register not later than 30 business days prior to the date on which bids are due.

C. Disclosure. Every bid shall detail: 1) the length of continuous employment of current employees with the contractor by job classification without identifying employee names. In addition, the contractor may submit information detailing the relevant prior experience of employees within each job classification. If the positions identified by the bidder shall be newly created, the bid shall identify the minimum requirements for prospective applicants for each such position; 2) the annual rate of current staff turnover; 3) the number of hours of training planned for each employee in subject matters directly related to providing services to state residents and clients; 4) any legal complaints issued by an enforcement agency for alleged violations of applicable federal, state or local rules, regulations or laws, including laws governing employee safety and health, labor relations and other employment requirements, and any citations, court findings or administrative findings for violations of such federal, state or local rules, regulations or laws. The information must include the date, enforcement agency, the rule, law or regulation involved and any additional information the contractor may wish to submit; 5) any collective bargaining agreements or personnel policies covering the employees to provide services to the [state/city/county]; 6) political contributions made by the bidder or any employee in a management position with the bidding company, to any elected officer of the [state/city/county] or member of the state legislature, during the four years prior to the due date of the bid.

D. Maintenance of Wage Standards. For each position in which a contractor will employ any person pursuant to the privatization contract, the minimum compensation to be paid for said position shall be the greater of the wage rate paid at step one of the grade or classification under which an agency employee whose duties are most similar is paid, plus the cash value of health and other benefits provided to such [state/city/county] employees, or the average private sector compensation rate, including the value of health and other benefits, for said position as determined by the department of employment and training.

E. Term. The term of any privatization contract shall not exceed two years. No amendment to a privatization contract shall be valid if it has the purpose or effect of avoiding any requirement of any section of this Act.

F. Preference. Every privatization contract shall contain provisions requiring the contractor to offer available employee positions pursuant to the contract to qualified regular employees of the agency whose government employment is terminated because of the privatization contract. Every such contract shall also contain provisions requiring the contractor to comply with a policy of nondiscrimination and equal opportunity for all persons, and to take affirmative steps to provide such equal opportunity for all such persons.

G. Union neutrality. [State/city/county] funds shall not be used to support or oppose unionization, including but not limited to, preparation and distribution of materials which advocate for or against unionization; hiring or consulting legal counsel or other consultants to advise the contractor about how to assist, promote or deter union organizing or how to impede a union which represents the contractor’s employees from fulfilling its representational responsibilities; holding meetings to influence employees about unionization; planning or conducting activities by supervisors to assist, promote, or deter union activities; or defending against unfair labor practice charges brought by federal or state enforcement agencies.

SECTION 5. REVIEW OF CONTRACT COSTS

A. Estimate of Costs. Any agency considering whether to enter into a privatization contract shall prepare a comprehensive written estimate of the costs of regular agency employees’ providing the subject services in the most cost efficient manner. The estimate shall include all direct and indirect costs of regular agency employees providing the subject services, including but not limited to, pension, insurance and other employee benefit costs. For the purpose of this estimate, any employee organization may, at any time before the final day for the agency to receive sealed bids pursuant to section 4B, propose amendments to any relevant collective bargaining agreement to which it is a party. Any such amendments shall take effect only if necessary to reduce the cost estimate pursuant to this paragraph below the contract cost. Such estimate shall remain confidential until after the final day for the agency to receive sealed bids for the privatization contract at which time the estimate shall become a public record, shall be filed in the agency, and shall be published in the [state register].

B. Evaluation of Contractor Performance and Costs. After soliciting and receiving bids, the agency shall publicly designate the bidder to which it proposes to award the privatization contract. In selecting a contractor, the agency shall consider the contractors’ past performance and its record of compliance with federal, state and local laws, including the disclosures as required in section 4C. The agency shall prepare a comprehensive written analysis of the contract cost based upon the designated bid, specifically including the costs of transition from public to private operation, of additional unemployment and retirement benefits, if any, and of monitoring and otherwise administering contract performance. If the designated bidder proposes to perform any or all of the contract outside the boundaries of the [state/city/county], said contract cost shall be increased by the amount of tax revenue, if any, which will be lost to the [state/city/county] by the corresponding elimination of agency employees, as determined by the department of revenue to the extent that it is able to do so.

C. Agency Certification. The head of the agency shall certify in writing that:

(1) he/she has complied with all provisions of this section and of all other applicable laws;

(2) the quality of the services to be provided by the designated bidder is likely to satisfy the quality requirements of the statement prepared pursuant to section 4B, and to equal or exceed the quality of services which could be provided by regular agency employees;

(3) the contract cost will be at least 10 percent less than the estimated cost pursuant to section 5A, taking into account all comparable types of costs and all the additional costs of the contract as specified in section 5B;

(4) the proposed privatization contract is in the public interest, in that it meets the applicable quality and fiscal standards set forth herein.

Any privatization contract entered into by a government agency and the agency certification described above shall be public records subject to disclosure pursuant to the Freedom of Information Act.

SECTION 6. MONITORING AND ENFORCEMENT OF PRIVATIZATION CONTRACTS

A. Subcontracts, amendments to Privatization Contracts.

(1) No contractor shall award a subcontract for work under a contract or for work under an amendment to a contract without the approval of the agency head or his/her designee of:

(a) the selection of the subcontractor, and

(b) the provisions of the subcontract.

(2) Each such contractor shall file a copy of each executed subcontract or amendment to the subcontract with the agency, who shall maintain the subcontract or amendment as a public record, as defined in the freedom of information act.

B. Submission of Audits. Any private contractor awarded a privatization contract, and any subcontractor to a private contractor subject to these provisions, shall file with the agency head copies of financial audits of the private contractor prepared at least annually during the course of the contract term.

C. Access. All privatization contracts shall include a contract provision specifying that in order to determine compliance with these principles as well as the contract, the private contractor shall be required to provide the [state/city/county] or its agents, except where prohibited by federal or state laws, regulations or rules, reasonable access, through representatives of the private contractor, to facilities, records and employees that are used in conjunction with the provision of contract services.

D. Performance standards. The private contractor shall submit a report, not less than annually during the term of the privatization contract, detailing the extent to which the contractor has achieved the specific quantity and standard of quality of the subject services as specified by the agency pursuant to section 4B of this Act and its compliance with all federal, state and local laws including any complaints, citations or findings issued by administrative agencies or courts.

E. Enforcement. The agency may seek contractual remedies for any violation of a privatization contract. In addition, if a contractor fails to comply with section 4D, F or G any person or entity aggrieved by the violation may bring a claim for equitable and other relief including back pay. In such a suit, an aggrieved person or entity shall be entitled to costs and attorney fees.

SECTION 7. COMPLIANCE WITH FREEDOM OF INFORMATION ACT, PRIVACY PROVISIONS

A. Ownership of Public Records.

(1) No contractor or subcontractor, or employee or agent of a contractor or subcontractor, shall have any ownership rights or interest in any public records which the contractor, subcontractor, employee or agent possesses, modifies or creates pursuant to a contract, subcontract or amendment to a contract or subcontract.

(2) No contractor or subcontractor, or employee or agent of a contractor or subcontractor, shall impair the integrity of any public records which the contractor, subcontractor, employee or agent possesses or creates.

(3) Public records which a contractor, subcontractor, or employee or agent of a contractor or subcontractor, possesses, modifies or creates pursuant to a contract, or subcontract shall at all times and for all purposes remain the property of the [state/city/county].

B. Public Access to Information.

(1) Any public record which a agency provides to a contractor or subcontractor or which a contractor or subcontractor creates shall be and remain a public record for the purposes of the [insert reference to Freedom of Information Act] and the enforcement provisions of that law shall apply to any failure to disclose records under this section.

(2) With regard to any public record, the agency and the contractor or subcontractor shall have a joint and several obligation to comply with the obligations of the state agency under the freedom of information act, as defined in section ___ [insert citation for Freedom of Information Act] as amended, provided the determination of whether or not to disclose a particular record or type of record shall be made solely by such agency.

(3) No contractor or subcontractor, or employee or agent of a contractor or subcontractor, shall disclose to the public any public records

(a) which it possesses, modifies or creates pursuant to a contract, subcontract or amendment to a contract or subcontract and

(b) which the state agency

(i) is prohibited from disclosing pursuant to state or federal law in all cases,

(ii) may disclose pursuant to state or federal law only to certain entities or individuals or under certain conditions or

(iii) may withhold from disclosure pursuant to state or federal law. No provision of this subsection shall be construed to prohibit any such contractor from disclosing such public records to any of its subcontractors to carry out the purposes of its subcontract.

(4) No contractor or subcontractor, or employee or agent of a contractor or subcontractor, shall sell, market or otherwise profit from the disclosure or use of any public records which are in its possession pursuant to a contract, subcontract or amendment to a contract or subcontract, except as authorized in the contract, subcontract or amendment.

(5) Any contractor or subcontractor, or employee or agent of a contractor or subcontractor, which learns of any violation of the provisions of this section act shall, no later than seven calendar days after learning of such violation, notify the agency head and the attorney general of such violation.

C. Penalties. In addition to any remedies provided under the Freedom of Information Act,

(1) If any person violates any provision of subsections A or B the [Attorney General] may bring an action against such person seeking

(a) damages on behalf of the state for such violation,

(b) restitution for damages suffered by any person as a result of the violation, or (c) imposition and recovery of a civil penalty of not more than fifty thousand dollars for the violation.

(2) In addition to the remedies under paragraph (1), any person aggrieved by a violation of any provision of subsections A or B may bring an action in any state court to recover any damages suffered as a result of such violation.

(3) In any action brought under paragraph (1) or (2) of this subsection, the court may

(a) order disgorgement of any profits or other benefits derived as a result of a violation of any provision of subsections A or B,

(b) award punitive damages, costs and reasonable attorneys fees, and

(c) order injunctive or other equitable relief. Proof of public interest or public injury shall not be required in any action brought under paragraph (1) or (2). No action may be brought under paragraph (1) or (2) more than three years after the occurrence of such violation.

(4) Any person who knowingly and willfully violates any provision of subsection A or B shall, for each such violation, be fined not more than five thousand dollars or imprisoned not less than one year nor more than five years, or be both fined and imprisoned.

SECTION 8. PROHIBITION AGAINST DISCRIMINATION OR RETALIATION FOR DISCLOSURE OF INFORMATION

A. In General. No person shall retaliate or discriminate in any manner against any public employee or employee of a private contractor because that employee (or any person acting on behalf of the employee) in good faith—

(1) engaged in any disclosure of information relating to the services provided by a private contractor pursuant to a privatization contract;

(2) advocated on behalf of service recipients with respect to the care or services provided by the private contractor,

(3) initiated, cooperated, or otherwise participated in any investigation or proceeding of any governmental entity relating to the services provided pursuant to a privatization contract.

B. Attempts. No person shall retaliate or discriminate in any manner against any public employee or employee of a private contractor because the employee has attempted or has an intention to engage in an action described in subsection A.

C. Restrictions on reporting prohibited. No person shall by contract, policy, or procedure prohibit or restrict any employee of a private contractor from engaging in any action for which a protection against discrimination or retaliation is provided under subsection A.

D. Confidential information. This section does not protect disclosures that would violate federal or state law or diminish or impair the rights of any person to the continued protection of confidentiality of communications provided by state or federal law.

E. Good faith action. With respect to the conduct described in subsection A(1) an employee of a private contractor shall be considered to be acting in good faith if the employee reasonably believes that

(1) the information is true; and

(2) the information disclosed by the employee

(a) evidences a violation of any law, rule, or regulation, or of a generally recognized professional or clinical standard; or

(b) relates to the care, services or conditions which potentially endanger one or more recipients of service or employees employed pursuant to a privatization contract.

F. Confidentiality of complaints to government agencies. The identity of an employee of a private contractor who complains in good faith to a government agency or department or any member or employee of the [state legislature/city council/county commission] about the quality of services provided by a private contractor shall remain confidential and shall not be disclosed by any person except upon the knowing written consent of the employee of the private contractor and except in the case in which there is imminent danger to health or public safety or an imminent violation of criminal law.

G. Enforcement.

(1) Private cause of action.

(a) Any current or former public employee or employee of a private contractor who believes that he or she has been retaliated or discriminated against in violation of subsections A, B or C may file a civil action in any state court of competent jurisdiction against the person believed to have violated subsections A, B or C.

(b) If the court determines that a violation of subsections A, B or C has occurred, the court shall award such damages which result from the unlawful act or acts, including compensatory damages, reinstatement, reimbursement of any wages, salary, employment benefits, or other compensation denied or lost to such employee by reason of the violation, as well as punitive damages, attorneys’ fees, and costs (including expert witness fees). The court shall award interest on the amount of damages awarded at the prevailing rate.

(c) The court may issue temporary, preliminary, and permanent injunctive relief restraining violations of this law, including the restraint of any withholding of the payment of wages, salary, employment benefits, or other compensation, plus interest, found by the court to be due and the restraint of any other change in the terms and conditions of employment and may award such other equitable relief as may be appropriate, including employment, reinstatement, and promotion.

(d) An action may be brought under this subsection not later than 2 years after the date of the last event constituting the alleged violation for which the action is brought.

(2) Civil penalty. Any person who violates a provision of subsections A, B or C shall be subject to a civil penalty of not to exceed $10,000 for each violation. In determining the amount of any penalty under this subsection, the appropriateness of such penalty to the size of the business of the person charged and the gravity of the violation shall be considered. The amount of any penalty under this subsection, when finally determined, may be

(a) deducted from any sums owing by the state to the person charged; or

(b) ordered by the court, in an action brought for a violation of subsection A, B or C brought by the employee (or employees) who suffered retaliation or discrimination.

H. Burden of Proof.

(1) In any civil action brought under this act, the Complainant shall have the initial burden of making a prima facie showing that any behavior described in subsections A through C was a contributing factor in the adverse action or inaction alleged in the complaint. A prima facie case shall be established if the complainant can show that

(a) the respondent knew of the complainant’s protected activities at the time that the alleged unfavorable action or inaction was taken; and

(b) the discriminatory action occurred within a period of time such that a reasonable person could conclude that an activity protected by subsections A or B was a contributing factor in the discriminatory treatment.

(2) Once the complainant establishes a prima facie case, the burden shifts to the respondent to demonstrate, by clear and convincing evidence, that it would have taken the same adverse action or inaction in the absence of such behavior.

I. Notice.

(1) Each private contractor shall post and keep posted, in conspicuous places on its premises where notices to employees and applicants for employment are customarily posted, a notice, to be prepared or approved by the secretary, setting forth excerpts from, or summaries of, the pertinent provisions of this act and information pertaining to the filing of a charge under this section.

(2) Any employer that willfully violates this section may be assessed by the secretary a civil penalty not to exceed $100 for each separate offense.

SECTION 9. NONPREEMPTION

Nothing in this Act preempts any other law, and nothing in this Act shall be construed or interpreted to impair or diminish in any way the authority of any locality, municipality or subdivision to enact and enforce any law which provides equivalent or greater protections for its employees.

SECTION 10. SEVERABILITY

The provisions of this act shall be severable, and if the application of any clause, sentence, paragraph, subdivision, section or part of this act to any person or circumstance shall be adjudged by a court of competent jurisdiction to be invalid, such judgment shall not necessarily affect, impair or invalidate the application of such clause, sentence, paragraph, subdivision, section or part of this act or remainder thereof, as the case may be, to any other person circumstance but shall be confined in its operation to the clause, sentence, paragraph, subdivision, section or part thereof directly involved in the controversy in which such judgment shall be rendered.

SECTION 11. EFFECTIVE DATE

This Act shall take effect on the thirtieth day succeeding enactment. Section 8 shall apply to acts of retaliation or discrimination occurring on or after the first day of the first month that begins after the date of the enactment of this Act. The remaining sections shall be applicable to any privatization contract entered into after the effective date of this Act.