AN ACT Relating to government competition in commercial activity; adding a new chapter to Title 43 RCW; and declaring an emergency.

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

NEW SECTION. Sec. 1. In the process of governing, the state of Washington should not engage in commercial activity in competition with its citizens. The competitive enterprise system, characterized by individual freedom and initiative, is the primary source of national economic strength. In recognition of this principle, it has been and continues to be the general policy of the state of Washington to rely on commercial sources to supply the products and services it needs. This act may be cited as the "freedom from government competition act."

NEW SECTION. Sec. 2. It is the policy of the state to:

(1) Rely on the commercial sector. The state shall rely on commercially available sources to provide commercial products and services. The state shall not start or carry on any activity to provide a commercial product or service if the product or service can be procured more economically from a commercial source.

(2) Achieve economy and enhance productivity. Competition enhances quality, economy, and productivity. Whenever a state performs or proposes to perform a commercial activity, a comparison of the cost of contracting and the cost of in-house performance shall be performed to determine who will do the work. Such comparison shall be done by an independent private sector auditor.

(3) Retain governmental functions in-house. Certain functions are inherently governmental in nature, and are intimately related to the public interest as to mandate performance only by state employees. These functions are not in competition with the commercial sector. Therefore, these functions shall be performed by state employees.

NEW SECTION. Sec. 3. (1) "Commercial activity" means one which is operated by a state agency and which provides a product or service which could be obtained from a commercial source. A commercial activity is not a governmental function. A commercial activity also may be part of an organization or a type of work that is separable from other functions or activities and is suitable for performance by contract.

(2) "Conversion to contract" means the changeover of an activity from government performance to performance under contract by a commercial source.

(3) "Conversion to in-house" means the changeover of an activity from performance under contract to state performance.

(4) "Commercial source" means a for-profit business located in the United States, its territories and possessions, the District of Columbia, or the Commonwealth of Puerto Rico, which provides a commercial product or service.

NEW SECTION. Sec. 4. State performance of a commercial activity is authorized under any of the following conditions:

(1) No satisfactory commercial source is available. Either no commercial source is capable of providing the needed product or service, or use of such a source would cause unacceptable delay or disruption of an essential program. Findings shall be supported as follows:

(a) If the finding is that no commercial source is capable of providing the needed product or service, the efforts made to find commercial sources must be documented and made available to the public upon request. Specifications and requirements in the solicitation shall not be unduly restrictive and shall not exceed those required of in-house state personnel or operations.

(b) If the finding is that a commercial source would cause unacceptable delay or disruption of an agency program, a written explanation, approved by the department head or designee in section 5(1) of this act must show the specific impact on an agency mission in terms of cost and performance. Urgency alone is not adequate reason to continue in-house operation of a commercial activity. Temporary disruption resulting from conversion to contract is not sufficient support for such a finding, nor is the possibility of a strike by contract employees. If the commercial activity has ever been performed by contract, an explanation of how the instant circumstances differ must be documented. These decisions must be made available to the public upon request.

(2) State performance of a commercial activity is authorized if a cost comparison done by an independent private sector auditor prepared pursuant to regulations demonstrates that the state is operating or can operate the activity on an ongoing basis at an estimated lower cost than a qualified commercial source.

NEW SECTION. Sec. 5. To ensure that the provisions of this law are followed, each agency head shall:

(1) Designate an official at the department head or equivalent level and officials at a comparable level in major component organizations to have responsibility for implementation of this chapter within the agency.

(2) Establish one or more offices as central points of contact to carry out implementation. These offices shall have access to all documents and data pertinent to actions taken under this chapter and will respond in a timely manner to all requests concerning inventories, schedules, reviews, results of cost comparisons and cost comparison data.

NEW SECTION. Sec. 6. No later than March 15 of each year, agencies shall submit to the office of the governor a report on the implementation of this chapter.

NEW SECTION. Sec. 7. Sections 1 through 6 of this act shall constitute a new chapter in Title 43 RCW.

NEW SECTION. Sec. 8. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.