SENATE 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

Senate Committee on Governmental Operations

Senate Hearing Date(s):March 26, 1987; April 1, 1987

Majority Report:  Do pass as amended.

      Signed by Senators Halsan, Chairman; Garrett, Vice Chairman; DeJarnatt, Talmadge, Zimmerman.

Senate Staff:Barbara Howard (786-7410); Eugene Green (786-7405)

                  April 2, 1987

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, APRIL 1, 1987

BACKGROUND:

State agencies enter into personal service contracts with consultants for a variety of professional services, including accounting and auditing, administrative analysis, engineering and architecture, training, and research, surveys and appraisals. Competition is not required for the award of most such contracts, but they must be filed with the Office of Financial Management (OFM) and the Legislative Budget Committee (LBC).  A 1986 statute required that all agencies of the executive and judicial branches provide an annual report of all of their personal contracts to OFM and LBC.

A preliminary report on the first three months of the reporting system confirmed several of the findings in the new statute: that definitions in the current law are not sufficiently clear; that many personal service contracts cover activities such as client services which are not traditionally considered consulting; and that new, non-competitive contracts for the period represented expenditures of $6.3 million.

Over the summer, a Governor's Task Force of representatives from 12 agencies examined the issues relating to personal service and made several recommendations for strengthening the process. In reviewing the draft proposals, the Legislative Budget Committee recommended that the legislation be strengthened even further.

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, but includes client services.

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 and others specifically exempted by the Office of Financial Management (OFM).  Contracts of $2,500 but less that $10,000 must show evidence of competition.

Agencies may not use personal services contracts unless the expertise is unavailable in the agency, the work could be done less expensively by contracting out, or the work could not be completed by the agency in a reasonable time.  OFM may disapprove contracts that do not comply with these criteria.

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 or more before they become binding.  If an individual contractor enters into contracts with a state agency totaling $10,000 or more during a fiscal year, any subsequent contract must be approved by OFM.

Personal services contracts entered into by the Legislative branch must 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.

Fiscal Note:      available

Effective Date:The bill declares an emergency and takes effect immediately.

SUMMARY OF PROPOSED SENATE AMENDMENT:

The striking amendment makes the following changes:  (1) The filing requirement for legislative contracts is deleted; (2) a civil penalty may be assessed upon a consultant who knowingly violates the contracting process in the amount of $300 or 25 percent of the amount of the contract, whichever is greater; (3) contracts for employment of expert witnesses in litigation are exempted from the process; (4) specific language is added to prohibit a contract from establishing an employer-employee relationship; (5) the information provided by OFM on request of the Legislative Auditor is for purposes of preparing summary reports on consulting contracts; and (6) the specific criteria which an agency must follow in order to justify that it cannot do the work without a contract are deleted.

Senate Committee - Testified: Meredith Jennings, Director of Purchasing, GA; Ted Torve, Office of Attorney General; Mark Brown, WFSE