Senate Bill sb2504
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Florida Senate - 2003 SB 2504
By Senator Lawson
6-1371A-03 See HB
1 A bill to be entitled
2 An act relating to procurement of personal
3 property and services; creating s. 287.019,
4 F.S.; defining "privatization"; requiring the
5 head of a state agency, prior to the purchase,
6 lease, or acquisition of commodities or
7 contractual services by privatization, to
8 conduct an evaluation of the proposed
9 privatization; requiring the head of a state
10 agency, subsequent to the purchase, lease, or
11 acquisition of commodities or contractual
12 services by privatization, to conduct an
13 evaluation of the privatization; providing
14 evaluation criteria; requiring the State
15 Council for Competitive Government to conduct a
16 quarterly review of completed agency
17 privatization evaluations; providing that a
18 vendor must be a domiciled state corporation or
19 have a significant business presence in the
20 state; providing an effective date.
21
22 WHEREAS, a continuing issue in government reform is the
23 option of privatizing public services, and
24 WHEREAS, privatization is often proposed as a way to
25 improve public services, with proponents claiming that
26 privatization can cut government waste, increase employee
27 productivity, and save tax dollars, and
28 WHEREAS, however, concerns have been raised that
29 privatization can cost more than it saves, can lead to the
30 loss of public control over government services, and may
31 reduce service quality, and
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Florida Senate - 2003 SB 2504
6-1371A-03 See HB
1 WHEREAS, experience has shown that privatization can
2 work well in some cases, produces mixed results in others, and
3 can raise a variety of problems if the process is not well
4 managed, and
5 WHEREAS, privatization in Florida is occurring in a
6 host of public services, ranging from delivery of social
7 services to building roads, and
8 WHEREAS, Florida is also outsourcing government
9 programs and services through public-private partnerships, and
10 WHEREAS, in these partnerships, which are an
11 alternative to full privatization, the private sector and
12 government assume joint responsibility for the design and
13 delivery of public programs and services, and
14 WHEREAS, when assessing privatization potential, the
15 best candidates are programs where there are clearly defined
16 tasks to be performed, good unit cost data can be developed
17 for comparison, good quality and quantity measures are
18 available so that service delivery can be monitored, and
19 private sector service providers already exist, and
20 WHEREAS, it must also be recognized that it may be
21 difficult to privatize many state functions, and
22 WHEREAS, for example, programs that involve the state's
23 police power in which issues of fairness and equity are
24 critical are not good candidates for privatization, and
25 WHEREAS, it should be recognized that market
26 competition, rather than privatization itself, produces cost
27 savings, and
28 WHEREAS, private companies have incentives to reduce
29 their costs to increase profits and market share, whereas
30 government agencies commonly do not face such competition, and
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Florida Senate - 2003 SB 2504
6-1371A-03 See HB
1 WHEREAS, however, when agencies have been placed in a
2 competitive situation, they have frequently improved their
3 performance and were able to under-bid private vendors, and
4 WHEREAS, it is in the public interest of the citizens
5 of the State of Florida that a diligent, comprehensive,
6 ongoing effort at providing realistic assessments and
7 evaluations of privatization efforts be undertaken, NOW,
8 THEREFORE,
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10 Be It Enacted by the Legislature of the State of Florida:
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12 Section 1. Section 287.019, Florida Statutes, is
13 created to read:
14 287.019 Privatization evaluation and assessment.--
15 (1) For the purposes of this section, "privatization"
16 means entering into a contract with one or more private
17 entities for the purchase, lease, or acquisition of any
18 commodity or contractual service required by an agency of the
19 state under this chapter when:
20 (a) It is maintained by the department that such
21 commodity or contractual service can be provided in a more
22 efficient manner by a private entity; and
23 (b) The expenditure by the contracting agency for the
24 purchase, lease, or acquisition of commodities or contractual
25 services meets or exceeds the threshold amount provided in s.
26 287.017 for CATEGORY FIVE:
27 1. Twice in any 1-year period; or
28 2. Four or more times during any 3-year period.
29 (2) Prior to the purchase, lease, or acquisition of
30 any commodity or contractual service required by an agency of
31 the state under this chapter which meets the definition
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Florida Senate - 2003 SB 2504
6-1371A-03 See HB
1 provided in subsection (1), the head of the state agency shall
2 conduct an evaluation of the proposed privatization which
3 shall specifically address the potential for the privatization
4 to result in a verifiable cost savings. If it is determined
5 that the proposed privatization will result in a verifiable
6 cost savings, the evaluation must ascertain whether the cost
7 savings be will directly attributable to any of the following:
8 (a) Lower labor costs than that of the state agency.
9 (b) Reduced regulatory requirements.
10 (c) Reduced overhead.
11 (d) Increased flexibility with respect to the
12 motivation, reward, and termination of employees.
13 (e) Access to better equipment than that available to
14 the state agency.
15 (f) The ability to react more quickly to changing
16 conditions than the state agency. If so was this ability
17 attributable to:
18 1. An ability to shift funds to pay unexpected
19 expenses without the encumbrance of budget transfer authority
20 under which the state agency must operate.
21 2. An ability to expand operations more quickly than
22 the state agency.
23 (g) Staffing flexibility, including the ability to
24 obtain specialized expertise by contract or through the hiring
25 of a consultant for one-time occasional projects.
26 (h) The avoidance of political factors, which may
27 include the use of private-sector experts not aligned or
28 associated with partisan political groups.
29 (i) The avoidance of prohibitive or excessive start-up
30 costs needed to provide appropriate up-front funding for
31 service infrastructure.
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Florida Senate - 2003 SB 2504
6-1371A-03 See HB
1 (3) One year after entering into a contract for the
2 purchase, lease, or acquisition of any commodity or
3 contractual service required by an agency of the state under
4 this chapter which meets the definition provided in subsection
5 (1), the head of the state agency shall conduct an evaluation
6 of the results of the privatization to determine whether the
7 privatization yielded or failed to yield the projected cost
8 savings based on the evaluation conducted pursuant to
9 subsection (2) prior to entering into the contract, and an
10 evaluation of the results of the privatization during its
11 first year which shall specifically address whether the
12 privatization resulted in a verifiable cost increase. If it is
13 determined that the privatization resulted in a verifiable
14 cost increase, the evaluation must ascertain whether the cost
15 increase was directly attributable to any of the following:
16 (a) Reduced public accountability. If so, did the lack
17 of public accountability or reduced public accountability
18 manifest itself in increased costs resulting from:
19 1. Lack of public access to service and financial
20 records maintained by the provider.
21 2. Variations in the quality of services being
22 provided to citizens.
23 3. Entering into a contract the term of which was too
24 lengthy, thus precluding the ability to adjust to a changing
25 condition or circumstance.
26 4. A resultant inability to gauge or monitor poor
27 performance. In an instance where such an inability and poor
28 performance resulted in termination of a contract, was
29 increased cost and or hardship incurred because:
30 a. The contractor was a sole-source provider of a
31 service; or
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Florida Senate - 2003 SB 2504
6-1371A-03 See HB
1 b. The contractor was providing a service in which no
2 service disruptions could be tolerated.
3 (b) Service quality problems which include, but are
4 not limited to:
5 1. Providing service to only those who do not have
6 many needs, commonly known as "creaming."
7 2. Identifiable cost-cutting measures that result in
8 cost increases, including, but not limited to, frequent
9 replacement of poorly maintained equipment.
10 3. Service quality problems that arise from contract
11 deficiencies which include, but are not limited to:
12 a. Poorly defined responsibilities of the contractor;
13 b. Lack of service quality performance measures;
14 c. The absence of penalties for nonperformance;
15 d. The absence of contingency plans.
16 (c) Higher long-term costs. If so, did the higher
17 long-term costs result from:
18 1. The submission by the contractor of a low initial
19 bid in order to obtain the contract followed by substantially
20 increasing costs in subsequent years when the agency
21 previously providing the service no longer has the staff or
22 authority to perform the service.
23 2. The acceptance of a contract bid that appears low
24 but is in actuality higher than the in-house costs of the
25 agency due to the agency's inability to determine the actual
26 cost of providing services in-house because of agency
27 accounting systems which do not allocate all direct and
28 indirect costs to services.
29 3. Failure in the request for proposals that solicited
30 the bid for the service to mandate that the contractor achieve
31 a specified level of savings.
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Florida Senate - 2003 SB 2504
6-1371A-03 See HB
1 4. Failure of the contract to limit future price
2 increases.
3 (d) Workforce issues including, but not limited to:
4 1. Employee layoffs resulting in morale problems.
5 2. Union challenges to privatization.
6 3. Disruptions resulting from bumping rights when
7 affected employees assume jobs in other areas.
8 4. Failure of an agency's ability to meet Equal
9 Employment Opportunity goals and subsequent discrimination
10 challenges resulting from inordinate numbers of minority
11 groups being removed from state payrolls.
12 5. Failure in a contract to require the contractor to
13 guarantee jobs and wages for a limited time period.
14 (6) The State Council for Competitive Government must
15 conduct a quarterly review of each completed agency
16 privatization evaluation required pursuant to subsection (3).
17 The council may authorize the Office of Program Policy
18 Analysis and Governmental Accountability to conduct the
19 quarterly reviews required under this subsection.
20 Section 2. Any other provision of law to the contrary
21 notwithstanding, a contract for services, request for
22 proposals, or invitation to bid between an agency of the state
23 and a contract vendor succeeding to the operation of a program
24 or function of a state agency shall not be executed unless the
25 vendor is a domiciled corporation in this state or has a
26 significant business presence in the state for the duration of
27 the contract. For purposes of this section, the term
28 "significant business presence" means a retention of
29 substantially all of the filled positions previously assigned
30 to the state agency at substantially the same total cash
31 equivalent of salaries and benefits.
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Florida Senate - 2003 SB 2504
6-1371A-03 See HB
1 Section 3. This act shall take effect upon becoming a
2 law.
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