HOUSE BILL REPORT
ESHB 88
BYHouse Committee on State Government (originally sponsored by Representatives Belcher, H. Sommers, Valle, Vekich, Cantwell, Dellwo, Hankins, Meyers, Holm, Unsoeld, Wang, Niemi, P. King, Fisch and Winsley; by request of Department of General Administration)
Revising provisions governing personal service contracts.
House Committe on State Government
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. (8)
Signed by Representatives H. Sommers, Chair; Peery, Vice Chair; Baugher, Hankins, O'Brien, Sayan, Taylor and Walk.
House Staff:Pam Madson (786-7135)
AS PASSED HOUSE MARCH 10, 1987
BACKGROUND:
Personal services contracting is a category of state purchasing that includes consulting contracts. The authority to enter into personal services contracts is vested with each individual agency. There is no central authority responsible for procuring these contracts. An exception is architectural and engineering contracts that are processed and negotiated through the Department of General Administration, Division of Engineering and Architecture. There is no requirement that personal services contracts be competitively let.
Personal services contracts must be filed with the Office of Financial Management and the Legislative Budget Committee 10 days prior to execution of the contract or commencement of work. No personal services contract may become effective for at least ten days following the date of filing. Any state officer or employee who fails to comply with the filing requirements pertaining to personal services contracts is subject to a $300.00 fine.
Personal services contracting uses two definitions for personal services, one for filing purposes and one for accounting purposes. Not all contracts that are filed by an agency as personal services contracts are reported by that agency through the budget and accounting process as a personal service contract. During the 1986 legislative session, a bill was passed requiring all state agencies to submit an annual report listing every personal services contract entered into or amended during the preceding fiscal year. In addition to this legislation, a twelve-agency task force appointed by the governor met to address the following concerns: Non-competitive contracting; the need for greater visibility of personal services contracts not filed with OFM or LBC; the lack of standard contracting procedures, record keeping and reporting; and the need for common definitions of terms including personal services.
SUMMARY:
Personal services contracts are defined as consultant contracts for services that provide professional and technical expertise to accomplish a specific study project, task or other work statement. It specifically excludes purchased services and specifically includes client services.
Agencies may use personal services contracts if the expertise is unavailable in the agency, the work could be done cheaper by contracting out, or the work could not be completed in a reasonable time. OFM may disapprove contracts that do not comply with this criteria.
All personal services contracts must be entered into through competitive solicitation. Exceptions to this requirement include emergency contracts, sole source contracts, contract amendments, personal services contracts of less than $10,000.00 and others specifically exempted by the Office of Financial Management (OFM). Contracts of $2,500.00 but less that $10,000.00 must show evidence of competition.
Emergency contracts must be filed with OFM and the Legislative Budget Committee (LBC) within three working days of the contract's execution or commencement of work under the contract whichever comes first.
Sole source contracts must be filed with OFM and LBC 10 days before the proposed starting date of the contract. OFM must approve sole source contracts of $10,000.00 or more before they become binding. If an individual contractor enters into contracts with a state agency totaling $10,000.00 or more during a fiscal year, any subsequent contract must be approved by OFM.
All personal services contracts entered into by the Legislative branch are excluded from competitive process requirements but shall be filed with the Legislative Budget Committee within three working days of the contract's execution or the commencement of work whichever occurs first.
OFM will provide information to LBC as requested by the Legislative Auditor on all contracts filed under this chapter.
EFFECT OF SENATE AMENDMENT(S): Legislative personal services contracts and expert witness contracts are exempt from requirements for competitive solicitation and filing with LBC or OFM. Consultants who violate the chapter shall be subject to a civil fine of $300 or 25 percent of the contract, whichever is greater. A personal service contract that establishes an employer-employee relationship is specifically prohibited. OFM shall provide information to the legislative auditor upon request for purposes of preparing a summary report on personal services contracts. A registered lobbyist or any business that has a lobbyist as one of the principal owners or partners may not enter into a personal services contract with the legislature or executive branch during the legislative session.
Fiscal Note: No Impact.
Effective Date:The bill contains an emergency clause and takes effect immediately.
House Committee ‑ Testified For: Representative Jennifer Belcher; Representative Bob Williams; Mary Faulk, Director, Department of General Administration; Meredeth Jennings, Purchasing Director, Department of General Administration; Mark Brown, Washington State Federation of State Employees; and Cliff Webster, Architects and Engineers Legislative Council.
House Committee - Testified Against: None Presented.
House Committee - Testimony For: This legislation establishes state control of personal services contracts by clearly defining what a personal service contract is and by requiring a competitive process that is not cumbersome to agencies and businesses. Filing and approval by OFM provides oversight and control of sole source contracts that are exempt from competitive solicitation. This bill represents the work of an executive cabinet task force addressing the concern over control of personal services contracts and development of an open and responsive process.
House Committee - Testimony Against: None Presented.
VOTE ON FINAL PASSAGE:
Yeas 96; Nays 1; Absent 0; Excused 1
Voting Nay: Representative Sanders
Excused: Representative Doty