BILL REQ. #: H-1836.1
| State of Washington | 59th Legislature | 2005 Regular Session |
Read first time 02/21/2005. Referred to Committee on Commerce & Labor.
AN ACT Relating to requiring state agencies to contract for services in a manner consistent with the state's best interests; amending RCW 39.29.008, 41.06.142, and 43.19.1911; adding a new section to chapter 39.29 RCW; creating new sections; providing an effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1
NEW SECTION. Sec. 2 A new section is added to chapter 39.29 RCW
to read as follows:
(1) Whether a proposal to provide services to this state from a
location outside of this state or the United States would be
detrimental to Washington, its residents, or its economy;
(2) Whether the acquisition of services from an expatriated
business entity located in a tax haven country or an affiliate of an
expatriated business entity located in a tax haven country would be
detrimental to Washington, its residents, or its economy. As used in
this subsection:
(a) "Expatriated business entity" means a corporation or an
affiliate of the corporation incorporated in a tax haven country after
September 11, 2001, but with the United States as the principal market
for the public trading of the corporation's stock, as determined by the
director of the office of financial management;
(b) "Tax haven country" means a country that has no corporate
income tax or an effective tax rate less than ten percent on income
that does not arise in or is not derived from that country. Tax haven
countries include, but are not limited to, Barbados, Bermuda, British
Virgin Islands, Cayman Islands, Commonwealth of the Bahamas, Cyprus,
Gibraltar, Isle of Man, the Principality of Liechtenstein, the
Principality of Monaco, and the Republic of the Seychelles;
(3) Whether the provision of services to this state at a location
outside of this state or the United States would be detrimental to the
privacy interests of Washington residents, or risk the disclosure of
personal information of Washington residents, such as social security,
financial, or medical data; and
(4) Whether the provision of services to this state from a location
outside of this state or the United States would constitute undue risk
under Washington's risk management policies, practices, or procedures.
Sec. 3 RCW 39.29.008 and 1993 c 433 s 6 are each amended to read
as follows:
(1) Personal services may be procured only to resolve a particular
agency problem or issue or to expedite a specific project that is
temporary in nature. An agency may procure personal services only if
it documents that:
(((1))) (a) The service is critical to agency responsibilities or
operations, or is mandated or authorized by the legislature;
(((2))) (b) Sufficient staffing or expertise is not available
within the agency to perform the service; and
(((3))) (c) Other qualified public resources are not available to
perform the service.
(2) Personal services contracts must be in the state's best
interests, as specified in section 2 of this act.
Sec. 4 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 department, agency, or institution of higher education has
determined that the contract is in the state's best interests, as
specified in section 2 of this act;
(b) The invitation for bid or request for proposal contains
measurable standards for the performance of the contract;
(((b))) (c) 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))) (d) 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))) (e) 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))) (f) 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) 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. 5 RCW 43.19.1911 and 2003 c 136 s 6 are each amended to read
as follows:
(1) Preservation of the integrity of the competitive bid system
dictates that after competitive bids have been opened, award must be
made to that responsible bidder who submitted the lowest responsive bid
pursuant to subsections (7) and (9) of this section, unless there is a
compelling reason to reject all bids and cancel the solicitation.
(2) Every effort shall be made to anticipate changes in a
requirement before the date of opening and to provide reasonable notice
to all prospective bidders of any resulting modification or
cancellation. If, in the opinion of the purchasing agency, division,
or department head, it is not possible to provide reasonable notice,
the published date for receipt of bids may be postponed and all known
bidders notified. This will permit bidders to change their bids and
prevent unnecessary exposure of bid prices. In addition, every effort
shall be made to include realistic, achievable requirements in a
solicitation.
(3) After the opening of bids, a solicitation may not be canceled
and resolicited solely because of an increase in requirements for the
items being acquired. Award may be made on the initial solicitation
and an increase in requirements may be treated as a new acquisition.
(4) A solicitation may be canceled and all bids rejected before
award but after bid opening only when, consistent with subsection (1)
of this section, the purchasing agency, division, or department head
determines in writing that:
(a) Unavailable, inadequate, ambiguous specifications, terms,
conditions, or requirements were cited in the solicitation;
(b) Specifications, terms, conditions, or requirements have been
revised;
(c) The supplies or services being contracted for are no longer
required;
(d) The solicitation did not provide for consideration of all
factors of cost to the agency;
(e) Bids received indicate that the needs of the agency can be
satisfied by a less expensive article differing from that for which the
bids were invited;
(f) All otherwise acceptable bids received are at unreasonable
prices or only one bid is received and the agency cannot determine the
reasonableness of the bid price;
(g) No responsive bid has been received from a responsible bidder;
or
(h) The bid process was not fair or equitable.
(5) The agency, division, or department head may not delegate his
or her authority under this section.
(6) After the opening of bids, an agency may not reject all bids
and enter into direct negotiations to complete the planned acquisition.
However, the agency can enter into negotiations exclusively with the
lowest responsible bidder in order to determine if the lowest
responsible bid may be improved. Until December 31, 2007, for
purchases requiring a formal bid process the agency shall also enter
into negotiations with and may consider for award the lowest
responsible bidder that is a vendor in good standing, as defined in RCW
43.19.525. An agency shall not use this negotiation opportunity to
permit a bidder to change a nonresponsive bid into a responsive bid.
(7) In determining the lowest responsible bidder, the agency shall
consider any preferences provided by law to Washington products and
vendors and to RCW 43.19.704, and further, may take into consideration
the quality of the articles proposed to be supplied, their conformity
with specifications, the purposes for which required, and the times of
delivery.
(8) Each bid with the name of the bidder shall be entered of record
and each record, with the successful bid indicated, shall, after
letting of the contract, be open to public inspection.
(9) In determining "lowest responsible bidder", in addition to
price, the following elements shall be given consideration:
(a) Whether the contract is in the state's best interests, as
specified in section 2 of this act;
(b) The ability, capacity, and skill of the bidder to perform the
contract or provide the service required;
(((b))) (c) The character, integrity, reputation, judgment,
experience, and efficiency of the bidder;
(((c))) (d) Whether the bidder can perform the contract within the
time specified;
(((d))) (e) The quality of performance of previous contracts or
services;
(((e))) (f) The previous and existing compliance by the bidder with
laws relating to the contract or services;
(((f))) (g) Such other information as may be secured having a
bearing on the decision to award the contract: PROVIDED, That in
considering bids for purchase, manufacture, or lease, and in
determining the "lowest responsible bidder," whenever there is reason
to believe that applying the "life cycle costing" technique to bid
evaluation would result in lowest total cost to the state, first
consideration shall be given by state purchasing activities to the bid
with the lowest life cycle cost which complies with specifications.
"Life cycle cost" means the total cost of an item to the state over its
estimated useful life, including costs of selection, acquisition,
operation, maintenance, and where applicable, disposal, as far as these
costs can reasonably be determined, minus the salvage value at the end
of its estimated useful life. The "estimated useful life" of an item
means the estimated time from the date of acquisition to the date of
replacement or disposal, determined in any reasonable manner. Nothing
in this section shall prohibit any state agency, department, board,
commission, committee, or other state-level entity from allowing for
preferential purchase of products made from recycled materials or
products that may be recycled or reused.
NEW SECTION. Sec. 6
NEW SECTION. Sec. 7
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 If any part of this act is found to be in
conflict with federal requirements that are a prescribed condition to
the allocation of federal funds to the state, the conflicting part of
this act is inoperative solely to the extent of the conflict and with
respect to the agencies directly affected, and this finding does not
affect the operation of the remainder of this act in its application to
the agencies concerned. Rules adopted under this act must meet federal
requirements that are a necessary condition to the receipt of federal
funds by the state.
NEW SECTION. Sec. 10 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
immediately, except for section 4 of this act, which takes effect July
1, 2005.