SENATE, No. 694

STATE OF NEW JERSEY

INTRODUCED FEBRUARY 15, 1996

By Senators SINAGRA and INVERSO

An Act concerning certain State contracts or agreements and supplementing Title 52 of the Revised Statutes.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. As used in this act:

    "cost analysis" means a detailed description of the costs, or pro-rata share of costs, of the following:

    a. costs of labor;

    b. costs of employer-provided fringe benefits;

    c. costs of equipment or materials, whether supplied by the State or a private contractor;

    d. costs directly attributable to transferring the work being performed by State employees to a private business entity;

    e. costs of administering and inspecting the contracted service; and

    f. costs of any anticipated unemployment compensation or other benefits which are likely to be paid to State employees who are displaced as a result of the contracted service; and

    "resource analysis" means an analysis of a State department's finances and personnel.

    2. a. Prior to entering into any contract or agreement in excess of $100,000 with a private business entity for the performance of work usually performed by employees of a State department, the department shall prepare a cost analysis of the work to be performed. The cost analysis shall determine whether it is more cost effective to use employees of the private business entity than to use existing or additional departmental employees to perform the work required. The department shall apply that determination to the contract or agreement in the form of a certification. The cost analysis shall be accompanied by a resource analysis and an analysis of the ability of the State to reassume the contracted service if contracting of the service is not in the public interest. Except as otherwise provided, no contract or agreement that decreases the amount of work assigned to State employees shall be entered into unless the cost analysis determines that the contract or agreement will result in a substantial cost savings to the State and that the potential cost savings of contracting of services is not outweighed by the public's interest in having a particular function performed directly by the State.

    b. In no instance shall a department enter into any contract with a private business entity for work which is being performed by departmental employees if a principal of the contractor, including management employees, has, in the preceding two years, worked for the State department which is entering into the contract in any capacity which affects the work to be performed by the contractor.

    c. For a particular type of work that has not previously been performed by the State, the department shall be permitted to designate a contract or an agreement as a pilot project for the purpose of determining whether contracting a particular type of work can result in cost savings to the State.

    3. The cost analysis required by this act shall be filed with the Office of Management and Budget in the Department of the Treasury and shall be available for inspection by the public during regular business hours upon request. At the time the cost analysis is filed with the Office of Management and Budget, a copy thereof shall be transmitted by the department to the Senate State Government Committee and the Assembly State Government Committee, or the respective successor committees, and the representatives of bargaining units whose members would be affected by the contract or agreement.

    4. A representative of a bargaining unit receiving a copy of the cost analysis shall have 20 business days from receipt thereof to file a response in writing to the Office of Management and Budget. The contract or agreement which is the subject of the cost analysis may not be entered into by the department until the expiration of the 20-day period or until the response is filed, whichever is first, unless the provisions of section 5 of this act shall apply requiring the expiration of a 30-day period before a contract or agreement may be entered into.

    5. If the resource analysis of the department's finances and personnel concludes that the department cannot perform the work with existing or additional departmental employees because such employees lack the expertise, skill or access to appropriate technology or because the work would be of such an intermittent nature as to be likely to cause regular periods of unemployment for departmental employees, then, even though the cost analysis indicates that it would be more cost effective to use departmental employees, the department may enter into a contract with a private business entity for the performance of the work. However, such a contract shall not be entered into until 30 business days after receipt of the copy of the cost analysis by the respective Senate and Assembly State Government committees. If during that time the Legislature acts to remove the constraints preventing the use of departmental employees, the contract or agreement shall not be entered into.

    6. This act shall take effect immediately.

STATEMENT

    This bill provides that prior to entering into any contract or agreement in excess of $100,000 with a private business entity for the performance of work usually performed by employees of a State department, the department shall prepare a cost analysis of the work to be performed. The cost analysis shall determine whether it is more cost effective to use employees of the private business entity than to use existing or additional departmental employees to perform the work required. The department shall apply that determination to the contract or agreement in the form of a certification. The cost analysis shall be accompanied by a resource analysis and an analysis of the ability of the State to reassume the contracted service if contracting of the service is not in the public interest. Except as otherwise provided, no contract or agreement that decreases the amount of work assigned to State employees shall be entered into unless the cost analysis determines that the contract or agreement will result in a substantial cost savings to the State and that the potential cost savings of contracting of services is not outweighed by the public's interest in having a particular function performed directly by the State.

    In no instance shall a department enter into any contract with a private business entity for work which is being performed by departmental employees if a principal of the contractor, including management employees, has, in the preceding two years, worked for the State department which is entering into the contract in any capacity which affects the work to be performed by the contractor.

    For a particular type of work that has not previously been performed by the State, the department shall be permitted to designate a contract or an agreement as a pilot project for the purpose of determining whether contracting a particular type of work can result in cost savings to the State.

    The cost analysis shall be filed with the Office of Management and Budget in the Department of the Treasury and shall be available for inspection by the public during regular business hours upon request. At the time the cost analysis is filed with the Office of Management and Budget, a copy thereof shall be transmitted by the department to the Senate State Government Committee and the Assembly State Government Committee, or the respective successor committees, and the representatives of bargaining units whose members would be affected by the contract or agreement.

    A representative of a bargaining unit receiving a copy of the cost analysis shall have 20 business days from receipt thereof to file a response in writing to the Office of Management and Budget. The contract or agreement which is the subject of the cost analysis may not be entered into by the department until the expiration of the 20-day period or until the response is filed, whichever is first, unless the provisions of section 5 of this act shall apply requiring the expiration of a 30-day period before a contract or agreement may be entered into.

    If the resource analysis of the department's finances and personnel concludes that the department cannot perform the work with existing or additional departmental employees because such employees lack the expertise, skill or access to appropriate technology or because the work would be of such an intermittent nature as to be likely to cause regular periods of unemployment for departmental employees, then, even though the cost analysis indicates that it would be more cost effective to use departmental employees, the department may enter into a contract with a private business entity for the performance of the work. However, such a contract shall not be entered into until 30 business days after receipt of the copy of the cost analysis by the respective Senate and Assembly State Government committees. If during that time the Legislature acts to remove the constraints preventing the use of departmental employees, the contract or agreement shall not be entered into.

Requires a cost analysis in certain cases when a State department contracts out work.