S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  9698

                          I N  A S S E M B L Y

                              May 16, 2014
                               ___________

Introduced  by M. of A. BRONSON -- read once and referred to the Commit-
  tee on Governmental Operations

AN ACT to amend the state finance law, in relation to  the  cost  effec-
  tiveness  of consultant contracts by state agencies; and providing for
  the repeal of such provisions upon expiration thereof

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Legislative  intent.  The  legislature  hereby  finds and
declares that it is in the public  interest  to  enact  a  cost  benefit
review  process  when  a state agency enters into contracts for personal
services. New York State spends over $3.5 billion annually  on  personal
service  contracts, over $840 million more than the State spent on these
contracts in SFY 2003-04, a 32% increase.  Despite  an  Executive  Order
that  has  implemented  a post contract review process for some personal
service contracts the cost of  those  contracts  continues  to  escalate
every  year well above the inflation rate. In addition the State Finance
Law does not require state agencies to compare the cost  or  quality  of
personal services to be provided by consultants with the cost or quality
of  providing  the same services by the state employees. Numerous audits
by the Office of State Comptroller as well as a KPMG study  commissioned
by  the  department  of transportation have found that consultants hired
under personal service contracts can  cost  between  fifty  percent  and
seventy-five  percent  more  than state employees that do the exact same
work including the cost of state employee benefits. The Contract Disclo-
sure Law (Chapter 10 of the  laws  of  2006)  required  consultants  who
provide  personal  services to file forms for each contract that outline
how many consultants they hired, what titles they employed them  in  and
how  much they paid them. A review of these forms shows that the average
consultant makes about fifty percent more  than  state  employees  doing
comparable  work.  It  is  in  the public interest for state agencies to
compare the cost of doing work by consultants with the cost of doing the
same work with state employees as well as document whether or  not  such
work can be done by state employees.  If state government is to be smar-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11164-04-4
              

A. 9698                             2

ter,  more efficient, and transparent then a cost benefit analysis proc-
ess that makes its findings public should be required by law.
  S  2.  Section 163 of the state finance law is amended by adding a new
subdivision 15 to read as follows:
  15. CONSULTANT SERVICES. A.  BEFORE  A  STATE  AGENCY  ENTERS  INTO  A
CONTRACT  FOR CONSULTANT SERVICES WHICH IS ANTICIPATED TO COST MORE THAN
TWO HUNDRED FIFTY THOUSAND DOLLARS IN A TWELVE MONTH  PERIOD  THE  STATE
AGENCY  SHALL  CONDUCT A COST COMPARISON REVIEW TO DETERMINE WHETHER THE
SERVICES TO BE PROVIDED BY THE CONSULTANT CAN BE PERFORMED AT  EQUAL  OR
LOWER  COST  BY UTILIZING STATE EMPLOYEES, UNLESS THE CONTRACT MEETS ONE
OF THE EXCEPTIONS SET FORTH IN PARAGRAPH B OF THIS SUBDIVISION. AS  USED
IN  THIS SECTION, THE TERM "CONSULTANT SERVICES" SHALL MEAN ANY CONTRACT
ENTERED INTO BY A  STATE  AGENCY  FOR  ANALYSIS,  EVALUATION,  RESEARCH,
TRAINING,  DATA  PROCESSING, COMPUTER PROGRAMMING, ENGINEERING INCLUDING
PROFESSIONAL DESIGN SERVICES, HEALTH SERVICES, MENTAL  HEALTH  SERVICES,
ACCOUNTING,  AUDITING,  OR SIMILAR SERVICES, BUT SHALL NOT INCLUDE LEGAL
SERVICES OR SERVICES IN  CONNECTION  WITH  LITIGATION  INCLUDING  EXPERT
WITNESSES  AND  SHALL  NOT  INCLUDE CONTRACTS FOR CONSTRUCTION OF PUBLIC
WORKS. FOR PURPOSES OF THIS SUBDIVISION, THE  COSTS  OF  PERFORMING  THE
SERVICES BY STATE EMPLOYEES SHALL INCLUDE ANY SALARY, PENSION COSTS, ALL
OTHER  BENEFIT  COSTS, COSTS THAT ARE REQUIRED FOR EQUIPMENT, FACILITIES
AND ALL OTHER OVERHEAD. THE COSTS OF CONSULTANT SERVICES  SHALL  INCLUDE
THE  TOTAL  COST  OF  THE CONTRACT INCLUDING COSTS THAT ARE REQUIRED FOR
EQUIPMENT, FACILITIES AND ALL OTHER OVERHEAD AND  ANY  CONTINUING  STATE
COSTS DIRECTLY ASSOCIATED WITH A CONTRACTOR PROVIDING A CONTRACTED FUNC-
TION  INCLUDING,  BUT NOT LIMITED TO, THOSE COSTS FOR INSPECTION, SUPER-
VISION, MONITORING OF THE CONTRACTOR'S WORK AND ANY PRO  RATA  SHARE  OF
EXISTING  COSTS OR EXPENSES, INCLUDING ADMINISTRATIVE SALARIES AND BENE-
FITS, RENT, EQUIPMENT COSTS, UTILITIES AND MATERIALS. THE  COST  COMPAR-
ISON  SHALL BE EXPRESSED WHERE FEASIBLE AS AN HOURLY RATE, OR WHERE SUCH
A CALCULATION IS NOT FEASIBLE, AS A TOTAL ESTIMATED COST FOR THE  ANTIC-
IPATED TERM OF THE CONTRACT.
  B.  A  COST COMPARISON SHALL NOT BE REQUIRED IF THE CONTRACTING AGENCY
DEMONSTRATES:
  (I) THE SERVICES ARE INCIDENTAL TO THE PURCHASE OF  REAL  OR  PERSONAL
PROPERTY; OR
  (II)  THE CONTRACT IS NECESSARY IN ORDER TO AVOID A CONFLICT OF INTER-
EST ON THE PART OF THE AGENCY OR ITS EMPLOYEES; OR
  (III) THE SERVICES ARE OF SUCH A HIGHLY SPECIALIZED NATURE THAT IT  IS
NOT  FEASIBLE  TO  UTILIZE  STATE  EMPLOYEES  TO PERFORM THEM OR REQUIRE
SPECIAL EQUIPMENT THAT IS NOT FEASIBLE FOR  THE  STATE  TO  PURCHASE  OR
LEASE; OR
  (IV) THE SERVICES ARE OF SUCH AN URGENT NATURE THAT IT IS NOT FEASIBLE
TO UTILIZE STATE EMPLOYEES; OR
  (V)  THE  SERVICES ARE ANTICIPATED TO BE SHORT TERM AND ARE NOT LIKELY
TO BE EXTENDED OR REPEATED AFTER THE CONTRACT IS COMPLETED; OR
  (VI) A QUANTIFIABLE IMPROVEMENT IN SERVICES THAT CANNOT BE  REASONABLY
DUPLICATED.
  C. NOTHING IN THIS SECTION SHALL BE DEEMED TO AUTHORIZE A STATE AGENCY
TO ENTER INTO A CONTRACT WHICH IS OTHERWISE PROHIBITED BY LAW.
  D.  ALL  DOCUMENTS  RELATED  TO  THE  COST COMPARISON REQUIRED BY THIS
SUBDIVISION AND THE DETERMINATIONS MADE PURSUANT TO PARAGRAPH B OF  THIS
SUBDIVISION  SHALL  BE  PUBLIC RECORDS SUBJECT TO DISCLOSURE PURSUANT TO
ARTICLE SIX OF THE PUBLIC OFFICERS LAW.

A. 9698                             3

  E. THIS ANALYSIS SHALL BE COMPLETED NO MORE THAN THIRTY DAYS AFTER  IT
COMMENCES  AND MUST BE INITIATED WITHIN THREE DAYS OF THE CONTRACT BEING
IDENTIFIED.
  S  3.  On  or  before December 31, 2016 the office of general services
shall prepare a report, to be delivered to the governor,  the  temporary
president  of  the  senate  and the speaker of the assembly. Such report
shall include, but need not be limited to, an analysis of the effective-
ness of the cost comparison study and an analysis of  the  cost  savings
associated with performing such cost comparison.
  S  4.  This  act shall take effect on the ninetieth day after it shall
have become a law and shall expire and be deemed repealed  December  31,
2017; provided, however, that the amendments to section 163 of the state
finance  law made by section one of this act shall not affect the repeal
of such section and shall be deemed repealed therewith.