[atlas:bill]

AN ACT Relating to state agency personal service contracting practices; amending RCW 39.29.040; adding new sections to chapter 39.29 RCW; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. A new section is added to chapter 39.29 RCW to read as follows:

(1) The office of financial management shall adopt uniform guidelines for the effective and efficient management of personal service contracts and client service contracts by all state agencies. The guidelines must, at a minimum, include:

(a) Accounting methods, systems, measures, and principles to be used by agencies and contractors;

(b) Precontract procedures for selecting potential contractors based on their qualifications and ability to perform;

(d) Uniform contract terms to ensure contract performance and compliance with state and federal standards;

(e) Proper payment and reimbursement methods to ensure that the state receives full value for taxpayer moneys, including cost settlements and cost allowance;

(f) Postcontract procedures, including methods for recovering improperly spent or overspent moneys for disallowance and adjustment;

(g) Adequate contract remedies and sanctions to ensure compliance;

(h) Monitoring, fund tracking, risk assessment, and auditing procedures and requirements;

(i) Financial reporting, record retention, and record access procedures and requirements;

(j) Procedures and criteria for terminating contracts for cause or otherwise; and

(k) Any other subject related to effective and efficient contract management.

(2) The office of financial management shall submit the guidelines required by subsection (1) of this section to the governor and the appropriate standing committees of the legislature no later than December 1, 2002.

(3) The office of financial management shall publish a guide book for use by state agencies containing the guidelines required by subsection (1) of this section.

NEW SECTION. Sec. 2. A new section is added to chapter 39.29 RCW to read as follows:

(1) A state agency entering into or renewing personal service contracts or client service contracts shall follow the guidelines required by section 1 of this act.

(2) A state agency that has entered into or renewed personal service contracts or client service contracts during a calendar year shall, on or before January 1st of the following calendar year, provide the office of financial management with a report detailing the procedures the agency employed in entering into, renewing, and managing the contracts.

(3) The provisions of this section apply to state agencies entering into or renewing contracts after January 1, 2003.

NEW SECTION. Sec. 3. A new section is added to chapter 39.29 RCW to read as follows:

(1) The office of financial management shall provide a training course for agency personnel responsible for executing and managing personal service contracts and client service contracts. The course must contain training on effective and efficient contract management under the guidelines established under section 1 of this act. State agencies shall require agency employees responsible for executing or managing personal service contracts and client service contracts to complete the training course to the satisfaction of the office of financial management. Beginning January 1, 2004, no agency employee may execute or manage personal service contracts or client service contracts unless the employee has completed the training course. Any request for exception to this requirement shall be submitted to the office of financial management in writing and shall be approved by the office of financial management prior to the employee executing or managing the contract.

(2)(a) The office of financial management shall conduct risk-based audits of the contracting practices associated with individual personal service and client service contracts from multiple state agencies to ensure compliance with the guidelines established in section 1 of this act. The office of financial management shall conduct the audits according to the following schedule:

(i) In fiscal 2003, the office of financial management shall conduct a minimum of eighteen risk-based audits, involving at least six contracts from each of at least three agencies; and

(ii) In fiscal 2004 and each fiscal year thereafter, the office of financial management shall conduct a statistically appropriate number of risk-based audits.

(b) The office of financial management shall forward the results of the audits conducted under this section to the governor, the appropriate standing committees of the legislature, and the joint legislative audit and review committee.

(c) This section does not preclude the office of financial management from conducting additional risk-based audits of the contracting practices of agencies to ensure compliance with the guidelines established in section 1 of this act.

NEW SECTION. Sec. 4. A new section is added to chapter 39.29 RCW to read as follows:

The state auditor and the attorney general shall annually by November 30th of each year provide a collaborative report of contract audit and investigative findings, enforcement actions, and the status of agency resolution to the governor and the policy and fiscal committees of the legislature.

Sec. 5. RCW 39.29.040 and 1998 c 101 s 7 are each amended to read as follows:

This chapter does not apply to:

(1) Contracts specifying a fee of less than five thousand dollars if the total of the contracts from that agency with the contractor within a fiscal year does not exceed five thousand dollars;

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

(3) Intergovernmental agreements awarded to any governmental entity, whether federal, state, or local and any department, division, or subdivision thereof;

(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 governmental entity and a like contract is available to all qualified applicants;

(5) Contracts for services that are necessary to the conduct of collaborative research if prior approval is granted by the funding source;

(6) Contracts for client services except as otherwise indicated in this chapter;

(7) Contracts for architectural and engineering services as defined in RCW 39.80.020, which shall be entered into under chapter 39.80 RCW;

(8) Contracts for the employment of expert witnesses for the purposes of litigation; and

(9) Contracts for bank supervision authorized under RCW 30.38.040.

NEW SECTION. Sec. 6. Section 1 of this act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.

NEW SECTION. Sec. 7. Sections 2 and 3 of this act take effect January 1, 2003.