BILL REQ. #:  S-2261.1 

Read first time 04/03/13.   Referred to Committee on Ways & Means.

     AN ACT Relating to state technology expenditures; amending RCW 41.06.142, 43.41A.075, 43.41A.025, 39.26.100, 43.41A.010, and 43.88.092; adding a new section to chapter 43.41 RCW; and creating new sections.

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

Sec. 1   RCW 41.06.142 and 2011 1st sp.s. c 43 s 408 are each amended to read as follows:
     (1) Any department, agency, or institution of higher education may purchase services, including services that have been customarily and historically provided by employees in the classified service under this chapter, by contracting with individuals, nonprofit organizations, businesses, employee business units, or other entities if the following criteria are met:
     (a) The invitation for bid or request for proposal contains measurable standards for the performance of the contract;
     (b) Employees in the classified service whose positions or work would be displaced by the contract are provided an opportunity to offer alternatives to purchasing services by contract and, if these alternatives are not accepted, compete for the contract under competitive contracting procedures in subsection (4) of this section;
     (c) The contract with an entity other than an employee business unit includes a provision requiring the entity to consider employment of state employees who may be displaced by the contract;
     (d) The department, agency, or institution of higher education has established a contract monitoring process to measure contract performance, costs, service delivery quality, and other contract standards, and to cancel contracts that do not meet those standards; and
     (e) The department, agency, or institution of higher education has determined that the contract results in savings or efficiency improvements. The contracting agency must consider the consequences and potential mitigation of improper or failed performance by the contractor.
     (2) Any provision contrary to or in conflict with this section in any collective bargaining agreement in effect on July 1, 2005, is not effective beyond the expiration date of the agreement.
     (3) Contracting for services that is expressly mandated by the legislature or was authorized by law prior to July 1, 2005, including contracts and agreements between public entities, shall not be subject to the processes set forth in subsections (1), (4), and (5) of this section.
     (4) Competitive contracting shall be implemented as follows:
     (a) At least ninety days prior to the date the contracting agency requests bids from private entities for a contract for services provided by classified employees, the contracting agency shall notify the classified employees whose positions or work would be displaced by the contract. The employees shall have sixty days from the date of notification to offer alternatives to purchasing services by contract, and the agency shall consider the alternatives before requesting bids.
     (b) If the employees decide to compete for the contract, they shall notify the contracting agency of their decision. Employees must form one or more employee business units for the purpose of submitting a bid or bids to perform the services.
     (c) The department of enterprise services, with the advice and assistance of the office of financial management, shall develop and make available to employee business units training in the bidding process and general bid preparation.
     (d) The director of enterprise services, with the advice and assistance of the office of financial management, shall, by rule, establish procedures to ensure that bids are submitted and evaluated in a fair and objective manner and that there exists a competitive market for the service. Such rules shall include, but not be limited to: (i) Prohibitions against participation in the bid evaluation process by employees who prepared the business unit's bid or who perform any of the services to be contracted; (ii) provisions to ensure no bidder receives an advantage over other bidders and that bid requirements are applied equitably to all parties; and (iii) procedures that require the contracting agency to receive complaints regarding the bidding process and to consider them before awarding the contract. Appeal of an agency's actions under this subsection is an adjudicative proceeding and subject to the applicable provisions of chapter 34.05 RCW, the administrative procedure act, with the final decision to be rendered by an administrative law judge assigned under chapter 34.12 RCW.
     (e) An employee business unit's bid must include the fully allocated costs of the service, including the cost of the employees' salaries and benefits, space, equipment, materials, and other costs necessary to perform the function. An employee business unit's cost shall not include the state's indirect overhead costs unless those costs can be attributed directly to the function in question and would not exist if that function were not performed in state service.
     (f) A department, agency, or institution of higher education may contract with the department of enterprise services to conduct the bidding process.
     (5) As used in this section:
     (a) "Employee business unit" means a group of employees who perform services to be contracted under this section and who submit a bid for the performance of those services under subsection (4) of this section.
     (b) "Indirect overhead costs" means the pro rata share of existing agency administrative salaries and benefits, and rent, equipment costs, utilities, and materials associated with those administrative functions.
     (c) "Competitive contracting" means the process by which classified employees of a department, agency, or institution of higher education compete with businesses, individuals, nonprofit organizations, or other entities for contracts authorized by subsection (1) of this section.
     (6) The processes set forth in subsections (1), (4), and (5) of this section do not apply to:
     (a) RCW 74.13.031(((5))) (6);
     (b) The acquisition of printing services by a state agency; and
     (c) Contracting for services or activities by the department of enterprise services under RCW 43.19.008 and the department may continue to contract for such services and activities after June 30, 2018.
     (7) The processes set forth in subsections (1), (4), and (5) of this section do not apply to the consolidated technology services agency and the department of enterprise services when contracting for services or activities as follows:
     (a) Contracting for services and activities that are necessary to establish, operate, or manage the state data center, including architecture, design, engineering, installation, and operation of the facility that are approved by the technology services board created in RCW 43.41A.070.
     (b) Contracting for services and activities recommended by the chief information officer through a business plan and approved by the technology services board created in RCW 43.41A.070. For the department of enterprise services, contracting that may be recommended by the chief information officer and approved by the technology services board is limited to services and activities that support enterprise technology applications.

Sec. 2   RCW 43.41A.075 and 2011 1st sp.s. c 43 s 716 are each amended to read as follows:
     The board shall have the following powers and duties related to information services:
     (1) To review and approve standards and procedures, developed by the office of the chief information officer, governing the acquisition and disposition of equipment, proprietary software, and purchased services, licensing of the radio spectrum by or on behalf of state agencies, and confidentiality of computerized data;
     (2) To review and approve statewide or interagency technical policies, standards, and procedures developed by the office of the chief information officer;
     (3) To review, approve, and provide oversight of major information technology projects to ensure that no major information technology project proposed by a state agency is approved or authorized funding by the board without consideration of the technical and financial business case for the project, including a review of:
     (a) The total cost of ownership across the life of the project;
     (b) All major technical options and alternatives analyzed, and reviewed, if necessary, by independent technical sources; and
     (c) Whether the project is technically and financially justifiable when compared against the state's enterprise-based strategy, long-term technology trends, and existing or potential partnerships with private providers or vendors;
     (4) To review and approve standards and common specifications for new or expanded telecommunications networks proposed by agencies, public postsecondary education institutions, educational service districts, or statewide or regional providers of K-12 information technology services, and to assure the cost-effective development and incremental implementation of a statewide video telecommunications system to serve: Public schools; educational service districts; vocational-technical institutes; community colleges; colleges and universities; state and local government; and the general public through public affairs programming;
     (5) To develop a policy to determine whether a proposed project, product, or service should undergo an independent technical and financial analysis prior to submitting a request to the office of financial management for the inclusion in any proposed operating, capital, or transportation budget;
     (6) To approve contracting for services and activities under RCW 41.06.142(7) for the consolidated technology service agency and the department of enterprise services. To approve any service or activity to be contracted under RCW 41.06.142(7)(b), the board must also review the proposed business plan and recommendation submitted by the office;
     (7) To consider, on an ongoing basis, ways to promote strategic investments in enterprise-level information technology projects that will result in service improvements and cost efficiency;
     (8) To provide a forum to solicit external expertise and perspective on developments in information technology, enterprise architecture, standards, and policy development; and
     (9) To provide a forum where ideas and issues related to information technology plans, policies, and standards can be reviewed.

Sec. 3   RCW 43.41A.025 and 2011 1st sp.s. c 43 s 706 are each amended to read as follows:
     (1) The chief information officer shall establish standards and policies to govern information technology in the state of Washington.
     (2) The office shall have the following powers and duties related to information services:
     (a) To develop statewide standards and policies governing the acquisition and disposition of equipment, software, and personal and purchased services, licensing of the radio spectrum by or on behalf of state agencies, and confidentiality of computerized data;
     (b) To develop statewide or interagency technical policies, standards, and procedures;
     (c) To review and approve standards and common specifications for new or expanded telecommunications networks proposed by agencies, public postsecondary education institutions, educational service districts, or statewide or regional providers of K-12 information technology services;
     (d) To develop or approve a detailed business plan for any service or activity to be contracted under RCW 41.06.142(7)(b) by the consolidated technology services agency or department of enterprise services;
     (e) To provide direction concerning strategic planning goals and objectives for the state. The office shall seek input from the legislature and the judiciary; ((and))
     (f) To establish policies for the periodic review by the office of agency performance which may include but are not limited to analysis of:
     (i) Planning, management, control, and use of information services;
     (ii) Training and education; and
     (iii) Project management;
     (g) To coordinate with state agencies with an annual information technology expenditure that exceeds ten million dollars to implement a technology business management program to identify opportunities for savings and efficiencies in information technology expenditures and to monitor ongoing financial performance of technology investments; and
     (h) In conjunction with the consolidated technology services agency, to develop statewide standards for agency purchases of technology networking equipment and services.
     (3) Statewide technical standards to promote and facilitate electronic information sharing and access are an essential component of acceptable and reliable public access service and complement content-related standards designed to meet those goals. The office shall:
     (a) Establish technical standards to facilitate electronic access to government information and interoperability of information systems, including wireless communications systems; and
     (b) Require agencies to include an evaluation of electronic public access needs when planning new information systems or major upgrades of systems.
     In developing these standards, the office is encouraged to include the state library, state archives, and appropriate representatives of state and local government.
     (4) The office shall perform other matters and things necessary to carry out the purposes and provisions of this chapter.

Sec. 4   RCW 39.26.100 and 2012 c 224 s 11 are each amended to read as follows:
     (1) The provisions of this chapter do not apply in any manner to the operation of the state legislature except as requested by the legislature.
     (2) The provisions of this chapter do not apply to the contracting for services, equipment, and activities that are necessary to establish, operate, or manage the state data center, including architecture, design, engineering, installation, and operation of the facility, that are approved by the technology services board or the acquisition of proprietary software, equipment, and information technology services necessary for or part of the provision of services offered by the consolidated technology services agency.
     (3) Primary authority for the purchase of specialized equipment, and instructional and research material, for their own use rests with the institutions of higher education as defined in RCW 28B.10.016.
     (4) Universities operating hospitals with approval from the director, as the agent for state hospitals as defined in RCW 72.23.010, and for health care programs provided in state correctional institutions as defined in RCW 72.65.010(3) and veterans' institutions as defined in RCW 72.36.010 and 72.36.070, may make purchases for hospital operation by participating in contracts for materials, supplies, and equipment entered into by nonprofit cooperative hospital group purchasing organizations if documented to be more cost-effective.
     (5) Primary authority for the purchase of materials, supplies, and equipment, for resale to other than public agencies, rests with the state agency concerned.
     (6) The authority for the purchase of insurance and bonds rests with the risk manager under RCW 43.19.769, except for institutions of higher education that choose to exercise independent purchasing authority under RCW 28B.10.029.
     (7) The authority to purchase interpreter services and interpreter brokerage services on behalf of limited-English speaking or sensory-impaired applicants and recipients of public assistance rests with the department of social and health services and the health care authority.
     (8) The provisions of this chapter do not apply to information technology purchases by state agencies, other than institutions of higher education and agencies of the judicial branch, if (a) the purchase is less than one hundred thousand dollars, (b) the initial purchase is approved by the chief information officer of the state, and (c) the agency director and the chief information officer of the state jointly prepare a public document providing a detailed justification for the expenditure.

Sec. 5   RCW 43.41A.010 and 2011 1st sp.s. c 43 s 702 are each amended to read as follows:
     (1) The office of the chief information officer is created within the office of financial management.
     (2) Powers, duties, and functions assigned to the department of information services as specified in this chapter shall be transferred to the office of chief information officer as provided in this chapter.
     (3) The primary duties of the office are:
     (a) To prepare and lead the implementation of a strategic direction and enterprise architecture for information technology for state government;
     (b) To enable the standardization and consolidation of information technology infrastructure across all state agencies to support enterprise-based system development and improve and maintain service delivery;
     (c) To establish standards and policies for the consistent and efficient operation of information technology services throughout state government;
     (d) To establish statewide enterprise architecture that will serve as the organizing standard for information technology for state agencies;
     (e) (([To])) To educate and inform state managers and policymakers on technological developments, industry trends and best practices, industry benchmarks that strengthen decision making and professional development, and industry understanding for public managers and decision makers.
     (4) In the case of institutions of higher education, the powers of the office and the provisions of this chapter apply to business and administrative applications but do not apply to (a) academic and research applications; and (b) medical, clinical, and health care applications, including the business and administrative applications for such operations. However, institutions of higher education must disclose to the office any proposed academic applications that are enterprise-wide in nature relative to the needs and interests of other institutions of higher education. Institutions of higher education shall provide to the chief information officer sufficient data and information on proposed expenditures on business and administrative applications to permit the chief information officer to evaluate the proposed expenditures pursuant to RCW 43.88.092(3).
     (5) The legislature and the judiciary, which are constitutionally recognized as separate branches of government, are strongly encouraged to coordinate with the office and participate in shared services initiatives and the development of enterprise-based strategies, where appropriate. Legislative and judicial agencies of the state shall submit to the chief information officer sufficient information on proposed information technology expenditures to allow the chief information officer to evaluate the proposed expenditures on an advisory basis.

Sec. 6   RCW 43.88.092 and 2011 1st sp.s. c 43 s 733 are each amended to read as follows:
     (1) As part of the biennial budget process, the office of financial management shall collect from agencies, and agencies shall provide, information to produce reports, summaries, and budget detail sufficient to allow review, analysis, and documentation of all current and proposed expenditures for information technology by state agencies. Information technology budget detail must be included as part of the budget submittal documentation required pursuant to RCW 43.88.030.
     (2) The office of financial management must collect, and present as part of the biennial budget documentation, information for all existing information technology projects as defined by ((information)) technology services board policy. The office of financial management must work with the office of the chief information officer to maximize the ability to draw this information from the information technology portfolio management data collected by the ((department of information services pursuant to RCW 43.105.170)) consolidated technology services agency. Connecting project information collected through the portfolio management process with financial data developed under subsection (1) of this section provides transparency regarding expenditure data for existing technology projects.
     (3) The chief information officer shall evaluate proposed information technology expenditures and establish priority ranking categories of the proposals. No more than one-third of the proposed expenditures shall be ranked in the highest priority category.
     (4) The biennial budget documentation submitted by the office of financial management pursuant to RCW 43.88.030 must include an information technology plan and a technology budget for the state identifying current baseline funding for information technology, proposed and ongoing major information technology projects, and their associated costs. This plan and technology budget must be presented using a method similar to the capital budget, identifying project costs through stages of the project and across fiscal periods and biennia from project initiation to implementation. This information must be submitted electronically, in a format to be determined by the office of financial management and the legislative evaluation and accountability program committee.
     (((4))) (5) The office of financial management shall also institute a method of accounting for information technology-related expenditures, including creating common definitions for what constitutes an information technology investment.
     (((5))) (6) For the purposes of this section, "major information technology projects" includes projects that have a significant anticipated cost, complexity, or are of statewide significance, such as enterprise-level solutions, enterprise resource planning, and shared services initiatives.

NEW SECTION.  Sec. 7   A new section is added to chapter 43.41 RCW to read as follows:
     (1) Subject to funds appropriated for this specific purpose, the office of financial management may establish an information technology investment pool and may enter into financial contracts for the acquisition of information technology projects for state agencies. Information technology projects funded under this section must meet the following requirements:
     (a) The project begins or continues replacement of information technology systems with modern and more efficient information technology systems;
     (b) The project improves the ability of an agency to recover from major disaster; or
     (c) The project provides future savings and efficiencies for an agency through reduced operating costs, improved customer service, or increased revenue collections.
     (2) Preference for project approval under this section must be given to an agency that has prior project approval from the office of the chief information officer and an approved business plan, and the primary hurdle to project funding is the lack of funding capacity.
     (3) The office of financial management with assistance from the office of the chief information officer shall report to the governor and the fiscal committees of the legislature by November 1st of each year on the status of distributions and expenditures on information technology projects and improved statewide or agency performance results achieved by project funding.

NEW SECTION.  Sec. 8   The consolidated technology services agency, in consultation with the office of the chief information officer, shall review and assess the current state telecommunications and information services network model with the objective of agency network consolidation into consolidated technology services. The assessment must include a review of cost management, state and federal regulatory issues, development and feasibility of each option, and a migration strategy and implementation plan for each option. The report is due to the office of financial management and the fiscal committees of the legislature by September 30, 2013.

NEW SECTION.  Sec. 9   The office of the chief information officer must prepare a report that inventories legacy information technology systems of the executive branch, both enterprise-wide and agency specific, and develop a prioritized plan for the modernization and funding of these systems. The report is due to the office of financial management and the fiscal committees of the legislature by September 1, 2014.