AN ACT Relating to personal service contracts; amending RCW 39.29.003, 39.29.006, 39.29.010, 39.29.020, and 39.29.040; and adding new sections to chapter 39.29 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 1, chapter 61, Laws of 1979 ex. sess. and RCW 39.29.003 are each amended to read as follows:

It is the intent of this chapter to ((~~provide for a comprehensive legislative review of~~)) establish a policy of open competition for all personal service contracts negotiated within state government, unless specifically exempted under this chapter. It is further the intent to provide for a comprehensive legislative review of all personal service contracts negotiated without the benefit of an open competitive process, unless specifically exempted under this chapter, and to centralize executive supervision of ((~~these~~)) personal service contract expenditures ((by)) in the office of financial management.

Sec. 2. Section 2, chapter 61, Laws of 1979 ex. sess. as amended by section 1, chapter 263, Laws of 1981 and RCW 39.29.006 are each amended to read as follows:

As used in this chapter:

(1) "Personal service contract" means an agreement, or any amendment or renewal thereto, with an independent contractor for the rendering of personal services to the state.

(2) "Personal service" means performing a specific study, project, or task which requires professional or technical expertise but does not mean personal service performed for the purpose of routine continuing and necessary services, including but not limited to routine maintenance, operation of the physical plant, security, data entry, key punch services, and graphic design. For purposes of this subsection, "routine continuing and necessary services" shall be defined by the director of financial management after consultation with the legislative budget committee.

(3) "Agency" means any state officer or activity of the executive and judicial branches of state government, including state agencies, departments, offices, divisions, boards, commissions, and educational, correctional, and other types of institutions.

NEW SECTION. Sec. 3. Insofar as practicable, all personal service contracts shall be let on the basis of an open competitive process. Instances in which an open competitive process may not be practicable include, but are not limited to, the following:

(1) Emergency contracting, if the competitive bidding procedure would prevent or hinder the emergency from being met appropriately;

(2) Contracts not exceeding ten thousand dollars;

(3) Contracts that are clearly and legitimately limited to a single source and contracts involving special facilities or services, in which instances the contract price may be best established by direct negotiation.

For purposes of this chapter, an "open competitive process" shall be defined by the director of financial management after consultation with the legislative budget committee. The office of financial management shall also adopt rules in accordance with chapter 34.04 RCW to assure that agency personal service contracts are awarded in a manner consistent with this section.

NEW SECTION. Sec. 4. If contracts for services are made through an open competitive process, the contract shall be let to the lowest responsible competitor, subject to any preferences provided by law. If there is reason to believe that the lowest acceptable bid is not the best price obtainable, all bids may be rejected and the agency director may call for new bids or enter into direct negotiations to achieve the best possible price. Each bid with the name of the competitor shall be entered of record and each record, with the successful bid indicated, shall, after letting of the contract, be open to public inspection. In determining lowest responsible competitor, in addition to price, the following elements shall be given consideration:

(1) The ability, capacity, and skill of the competitor to perform the contract or provide the service required;

(2) The character, integrity, reputation, judgment, experience, and efficiency of the competitor;

(3) Whether the competitor can perform the contract within the time specified;

(4) The quality of performance of previous contracts or services;

(5) The previous and existing compliance by the competitor with laws relating to the contract or services; and

(6) Other information as may be secured having a bearing on the decision to award the contract.

NEW SECTION. Sec. 5. The agency director may reject the bid of any competitor who has failed to perform satisfactorily a previous contract with the state.

Sec. 6. Section 1, chapter 191, Laws of 1974 ex. sess. as last amended by section 3, chapter 61, Laws of 1979 ex. sess. and RCW 39.29.010 are each amended to read as follows:

All personal service contracts not let on the basis of an open competitive process, including renewals and amendments of ((~~existing~~)) such contracts, entered into by any state officer or activity of the executive and judicial branches of state government, including state agencies, departments, offices, divisions, boards, commissions, and educational, correctional and other types of institutions, shall be filed with the office of financial management and the legislative budget committee at least ten days prior to the date any work commences under such contracts regardless of the source of funds. The director of financial management may exempt on a limited basis specific classes of personal service contracts involving activities of the executive and judicial branches after preparation of documented justification and consultation with the legislative budget committee: PROVIDED, That approval of the exemption is granted prior to commencement of the contract work.

In special emergency cases when work commencement is clearly a major and overriding factor and immediate contract action is mandatory, filing may be delayed for personal service contracts involving executive and judicial branches by the director of financial management after consultation with the legislative auditor: PROVIDED, That such filing shall be made prior to commencement of the contract work with documented justification for the filing delay.

Standing and other committees of the legislature and officers or employees of the legislative branch shall file personal service contracts not let on the basis of an open competitive process with the legislative budget committee and the office of financial management in accordance with the ten day time limitation set forth in this section. Requests by legislative committees or personnel for either exemptions or delays in filing individual personal service contracts shall be forwarded to the legislative budget committee for review and maintenance of a central control file for use in preparation of summary reports on personal service contracts as directed by the legislature. Filing of personal service contracts delayed for emergency purposes shall be made not more than five days after commencement of the contract work involved.

Sec. 7. Section 2, chapter 191, Laws of 1974 ex. sess. and RCW 39.29.020 are each amended to read as follows:

No state officer or activity of state government subject to this chapter shall expend any funds for personal service contracts without first complying with the provisions of either RCW 39.29.010 or section 3 of this 1985 act. Except in cases where filing delay has been authorized under RCW 39.29.010, no contract entered into without benefit of an open competitive process shall become effective until ten days following the date of filing pursuant to this chapter, or the effective date of the contract whichever is later. The state officer or employee executing the personal service contracts shall be responsible for compliance with the ((~~filing~~)) requirements of this chapter. Failure to comply with the ((~~filing~~)) requirements of this chapter shall subject the state officer or employee to a civil penalty in the amount of three hundred dollars.

Sec. 8. Section 4, chapter 61, Laws of 1979 ex. sess. and RCW 39.29.040 are each amended to read as follows:

This chapter does not apply to:

(1) Contracts specifying a fee of less than two thousand five hundred dollars if the total of such contracts from that agency with the contractor within a twelve-month period does not exceed two thousand five hundred dollars;

(2) ((Contracts awarded through competitive bids if the bidding follows a formal, documented bid procedure and if the request for bids is advertised through the media normally used by the particular service being sought: PROVIDED, That for management purposes, the office of financial management may require the filing of certain contracts exempted under this subsection;

~~(3) Contracts where the contracting agency recognizes that an employee-employer relationship exists;~~

~~(4)~~)) Contracts awarded to companies that furnish a service where the ((~~tariff is~~)) charges are established or regulated by the utilities and transportation commission or other public entity;

((~~(5)~~)) (3) Intergovernmental agreements awarded to any public corporation, whether federal, state, or local and any department, division, or subdivision thereof; and

((~~(6)~~)) (4) Contracts awarded for services to be performed for a standard fee, when the standard fee is established by the contracting agency or any other public corporation and a like contract is available to all qualified applicants.

NEW SECTION. Sec. 9. Before its effective date, the director of financial management shall disapprove any personal service contract filed by an agency of the executive branch of state government pursuant to RCW 39.29.010 for appropriate cause, including but not limited to, a determination by the director that the contract:

(1) Is for services which could be provided more economically or efficiently through an interagency agreement;

(2) Represents a wasteful expenditure of public funds; or

(3) Establishes an employer-employee relationship inconsistent with state laws and regulations.

NEW SECTION. Sec. 10. Beginning on the effective date of this act, all personal service contracts entered into by agencies of the executive branch of state government shall include the following clause: "This contract shall not take effect if disapproved by the director of financial management pursuant to section 9 of this act."

NEW SECTION. Sec. 11. Sections 3, 4, 5, 9, and 10 of this act are each added to chapter 39.29 RCW.