BILL REQ. #:  H-0807.1 

Read first time 01/24/2003.   Referred to Committee on State Government.

     AN ACT Relating to incentives to increase transportation revenues by requiring the secretary of transportation to report to the legislature regarding contracting out, and prohibiting collective bargaining agreements with state employees from bargaining away the ability of a state agency to contract out; amending RCW 41.06.142, 41.80.020, and 41.80.910; adding a new section to chapter 47.01 RCW; repealing RCW 41.06.380 and 41.06.382; 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 47.01 RCW to read as follows:
     The secretary of transportation shall report no later than November 30th of every even-numbered year to the house of representatives and senate transportation committees on both current practices regarding contracting out and on further opportunities for contracting out within the department. In recommending programs that might be performed by the private sector, the secretary shall place emphasis on programs that could be undertaken at a lower cost by the private sector than by state employees, and on programs in which the use of the private sector could augment the department's workforce in order to increase the department's capacity to complete projects as quickly as possible. The secretary may issue the report electronically by publishing it on the department's web site and by transmitting the report electronically to all members of the house of representatives and senate transportation committees.

Sec. 2   RCW 41.06.142 and 2002 c 354 s 208 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)(a) Departments, agencies, and institutions of higher education are prohibited from bargaining matters pertaining to purchasing by contract.
     (b) 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) and (4) through (6) 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 director of personnel, with the advice and assistance of the department of general administration, shall develop and make available to employee business units training in the bidding process and general bid preparation.
     (d) The director of general administration, with the advice and assistance of the department of personnel, 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 general administration 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 joint legislative audit and review committee shall conduct a performance audit of the implementation of this section, including the adequacy of the appeals process in subsection (4)(d) of this section, and report to the legislature by January 1, 2007, on the results of the audit.

Sec. 3   RCW 41.80.020 and 2002 c 354 s 303 are each amended to read as follows:
     (1) Except as otherwise provided in this chapter, the matters subject to bargaining include wages, hours, and other terms and conditions of employment, and the negotiation of any question arising under a collective bargaining agreement.
     (2) The employer is not required to bargain over matters pertaining to:
     (a) Health care benefits or other employee insurance benefits, except as required in subsection (3) of this section;
     (b) Any retirement system or retirement benefit; or
     (c) Rules of the director of personnel or the Washington personnel resources board adopted under section 203, chapter 354, Laws of 2002.
     (3) Matters subject to bargaining include the number of names to be certified for vacancies, promotional preferences, and the dollar amount expended on behalf of each employee for health care benefits. However, except as provided otherwise in this subsection for institutions of higher education, negotiations regarding the number of names to be certified for vacancies, promotional preferences, and the dollar amount expended on behalf of each employee for health care benefits shall be conducted between the employer and one coalition of all the exclusive bargaining representatives subject to this chapter. Any such provision agreed to by the employer and the coalition shall be included in all master collective bargaining agreements negotiated by the parties. For institutions of higher education, promotional preferences and the number of names to be certified for vacancies shall be bargained under the provisions of RCW 41.80.010(4).
     (4) The employer and the exclusive bargaining representative shall not agree to any proposal that would prevent the implementation of approved affirmative action plans or that would be inconsistent with the comparable worth agreement that provided the basis for the salary changes implemented beginning with the 1983-1985 biennium to achieve comparable worth.
     (5) The employer and the exclusive bargaining representative shall not bargain over matters pertaining to management rights established in RCW 41.80.040 or over matters pertaining to purchasing services by contract.
     (6) Except as otherwise provided in this chapter, if a conflict exists between an executive order, administrative rule, or agency policy relating to wages, hours, and terms and conditions of employment and a collective bargaining agreement negotiated under this chapter, the collective bargaining agreement shall prevail. A provision of a collective bargaining agreement that conflicts with the terms of a statute is invalid and unenforceable.
     (((7) This section does not prohibit bargaining that affects contracts authorized by RCW 41.06.142.))

Sec. 4   RCW 41.80.910 and 2002 c 354 s 411 are each amended to read as follows:
     (1) Sections 203, 204, 213 through 223, 227, 229 through 231, 241, 243, 246, 248, 301, 302, 304 through 307, 309 through 316, 318, 319, and 402 of this act take effect July 1, 2004.
     (2) Section 224 of this act takes effect March 15, 2005.
     (3) Sections ((208,)) 234 through 238((,)) and 403 of this act take effect July 1, 2005.
     (4) Sections 225, 226, 233, and 404 of this act take effect July 1, 2006.

NEW SECTION.  Sec. 5   The following acts or parts of acts are each repealed:
     (1) RCW 41.06.380 (Purchasing services by contract not prohibited--Limitations) and 1979 ex.s. c 46 s 2; and
     (2) RCW 41.06.382 (Purchasing services by contract not prohibited--Limitations) and 1979 ex.s. c 46 s 1.

NEW SECTION.  Sec. 6   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 July 1, 2003.