S T A T E   O F   N E W   Y O R K
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                                 2499--A
                                                        Cal. No. 751

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 16, 2015
                               ___________

Introduced by M. of A. BRONSON, LUPARDO, COLTON, ORTIZ, FAHY, WOERNER --
  read  once and referred to the Committee on Governmental Operations --
  recommitted to the Committee on Governmental Operations in  accordance
  with Assembly Rule 3, sec. 2 -- reported and referred to the Committee
  on  Ways  and  Means  --  reported from committee, advanced to a third
  reading, amended and ordered reprinted, retaining  its  place  on  the
  order of third reading

AN  ACT  to  amend the state finance law, in relation to the cost effec-
  tiveness of consultant contracts by state agencies

  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

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

                                                           LBD05999-02-6

A. 2499--A                          2

how  much  they paid them. A review of these forms show 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 that
such work can be done by state employees.  If state government is to  be
smarter,  more  efficient,  and transparent then a cost benefit analysis
process 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 16 to read as follows:
  16.  CONSULTANT  SERVICES.  A.  BEFORE  A  STATE  AGENCY ENTERS INTO A
CONTRACT FOR CONSULTANT SERVICES WHICH IS ANTICIPATED TO COST MORE  THAN
SEVEN  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 G 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, THE DESIGN, DEVELOPMENT
AND IMPLEMENTATION OF TECHNOLOGY, COMMUNICATIONS  OR  TELECOMMUNICATIONS
SYSTEMS OR THE INFRASTRUCTURE PERTAINING THERETO, INCLUDING HARDWARE AND
SOFTWARE,  ENGINEERING  INCLUDING  INSPECTION  AND  PROFESSIONAL  DESIGN
SERVICES, HEALTH SERVICES, MENTAL HEALTH SERVICES, ACCOUNTING, AUDITING,
OR SIMILAR SERVICES AND SUCH SERVICES THAT ARE SUBSTANTIALLY SIMILAR  TO
AND  IN LIEU OF SERVICES PROVIDED, IN WHOLE OR IN PART, BY STATE EMPLOY-
EES, 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  CONSULT-
ANT  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  FUNCTION  INCLUDING, BUT NOT LIMITED TO, THOSE
COSTS FOR INSPECTION, SUPERVISION, MONITORING OF THE  CONTRACTOR'S  WORK
AND ANY PRO RATA SHARE OF EXISTING COSTS OR EXPENSES, INCLUDING ADMINIS-
TRATIVE  SALARIES  AND  BENEFITS,  RENT,  EQUIPMENT COSTS, UTILITIES AND
MATERIALS. THE COST COMPARISON SHALL BE EXPRESSED WHERE FEASIBLE  AS  AN
HOURLY  RATE,  OR  WHERE  SUCH A CALCULATION IS NOT FEASIBLE, AS A TOTAL
ESTIMATED COST FOR THE ANTICIPATED TERM OF THE CONTRACT.
  B. PRIOR TO ENTERING ANY CONSULTATION SERVICES CONTRACT FOR THE PRIVA-
TIZATION OF A STATE SERVICE THAT IS NOT CURRENTLY PRIVATIZED, THE  STATE
AGENCY  SHALL  DEVELOP  A  COST COMPARISON REVIEW IN ACCORDANCE WITH THE
PROVISIONS OF PARAGRAPH A OF THIS SUBDIVISION.
  C. (I) IF SUCH COST COMPARISON REVIEW IDENTIFIES A COST SAVINGS TO THE
STATE OF TEN PERCENT OR MORE, AND SUCH CONSULTANT SERVICES CONTRACT WILL
NOT DIMINISH THE QUALITY OF SUCH SERVICE, THE STATE AGENCY SHALL DEVELOP
A BUSINESS PLAN, IN ACCORDANCE WITH THE PROVISIONS  OF  PARAGRAPH  D  OF
THIS  SUBDIVISION,  IN ORDER TO EVALUATE THE FEASIBILITY OF ENTERING ANY
SUCH CONTRACT AND TO IDENTIFY THE POTENTIAL RESULTS,  EFFECTIVENESS  AND
EFFICIENCY OF SUCH CONTRACT.
  (II)  IF SUCH COST COMPARISON REVIEW IDENTIFIES A COST SAVINGS OF LESS
THAN TEN PERCENT TO THE STATE AND SUCH CONSULTANT SERVICES CONTRACT WILL
NOT DIMINISH THE QUALITY OF SUCH SERVICE, THE STATE AGENCY MAY DEVELOP A

A. 2499--A                          3

BUSINESS PLAN, IN ORDER TO EVALUATE THE FEASIBILITY OF ENTERING ANY SUCH
CONTRACT AND TO IDENTIFY THE POTENTIAL RESULTS, EFFECTIVENESS AND  EFFI-
CIENCY  OF  SUCH CONTRACT, PROVIDED THERE IS A SIGNIFICANT PUBLIC POLICY
REASON TO ENTER INTO SUCH CONSULTANT SERVICES CONTRACT.
  (III)  IF  ANY SUCH PROPOSED CONSULTANT SERVICES CONTRACT WOULD RESULT
IN THE LAYOFF, TRANSFER OR REASSIGNMENT OF FIFTY OR  MORE  STATE  AGENCY
EMPLOYEES,  AFTER  CONSULTING  WITH  THE POTENTIALLY AFFECTED BARGAINING
UNITS, IF ANY, THE STATE AGENCY SHALL NOTIFY THE STATE EMPLOYEES OF SUCH
BARGAINING UNIT, AFTER SUCH COST COMPARISON REVIEW  IS  COMPLETED.  SUCH
STATE  AGENCY  SHALL PROVIDE AN OPPORTUNITY FOR SAID EMPLOYEES TO REDUCE
THE COSTS OF CONDUCTING THE OPERATIONS  TO  BE  PRIVATIZED  AND  PROVIDE
REASONABLE  RESOURCES  FOR THE PURPOSE OF ENCOURAGING AND ASSISTING SUCH
STATE EMPLOYEES TO ORGANIZE AND SUBMIT A BID  TO  PROVIDE  THE  SERVICES
THAT ARE THE SUBJECT OF THE POTENTIAL CONSULTANT SERVICES CONTACT.
  D.  ANY  BUSINESS  PLAN DEVELOPED BY A STATE AGENCY FOR THE PURPOSE OF
COMPLYING WITH PARAGRAPH C OF THIS SUBDIVISION SHALL  INCLUDE:  (I)  THE
COST  COMPARISON REVIEW AS DESCRIBED IN PARAGRAPH B OF THIS SUBDIVISION,
(II) A DETAILED DESCRIPTION OF THE  SERVICE  OR  ACTIVITY  THAT  IS  THE
SUBJECT  OF  SUCH BUSINESS PLAN, (III) A DESCRIPTION AND ANALYSIS OF THE
STATE AGENCY'S CURRENT PERFORMANCE OF SUCH SERVICE OR ACTIVITY, (IV) THE
GOALS TO BE ACHIEVED THROUGH THE PROPOSED CONSULTANT  SERVICES  CONTRACT
AND THE RATIONALE FOR SUCH GOALS, (V) A DESCRIPTION OF AVAILABLE OPTIONS
FOR  ACHIEVING SUCH GOALS, (VI) AN ANALYSIS OF THE ADVANTAGES AND DISAD-
VANTAGES OF EACH OPTION, INCLUDING, AT A MINIMUM, POTENTIAL  PERFORMANCE
IMPROVEMENTS  AND  RISKS  ATTENDANT  TO  TERMINATION  OF THE CONTRACT OR
RESCISSION OF SUCH CONTRACT, (VII) A DESCRIPTION OF THE  CURRENT  MARKET
FOR  THE  SERVICES  OR  ACTIVITIES THAT ARE THE SUBJECT OF SUCH BUSINESS
PLAN, (VIII) AN ANALYSIS OF THE QUALITY OF SERVICES AS GAUGED BY  STAND-
ARDIZED  MEASURES  AND  KEY  PERFORMANCE  REQUIREMENTS INCLUDING COMPEN-
SATION, TURNOVER, AND STAFFING RATIOS, (IX) A DESCRIPTION OF THE SPECIF-
IC RESULTS BASED PERFORMANCE STANDARDS THAT SHALL, AT A MINIMUM BE  MET,
TO  ENSURE  ADEQUATE PERFORMANCE BY ANY PARTY PERFORMING SUCH SERVICE OR
ACTIVITY, (X) THE PROJECTED TIME FRAME FOR KEY EVENTS FROM THE BEGINNING
OF THE PROCUREMENT PROCESS THROUGH THE  EXPIRATION  OF  A  CONTRACT,  IF
APPLICABLE, (XI) A SPECIFIC AND FEASIBLE CONTINGENCY PLAN THAT ADDRESSES
CONTRACTOR NONPERFORMANCE AND A DESCRIPTION OF THE TASKS INVOLVED IN AND
COSTS  REQUIRED  FOR IMPLEMENTATION OF SUCH PLAN, AND (XII) A TRANSITION
PLAN, IF APPROPRIATE, FOR ADDRESSING CHANGES IN  THE  NUMBER  OF  AGENCY
PERSONNEL,  AFFECTED BUSINESS PROCESSES, EMPLOYEE TRANSITION ISSUES, AND
COMMUNICATIONS WITH AFFECTED STAKEHOLDERS, SUCH AS  AGENCY  CLIENTS  AND
MEMBERS OF THE PUBLIC, IF APPLICABLE. SUCH TRANSITION PLAN SHALL CONTAIN
A  REEMPLOYMENT AND RETRAINING ASSISTANCE PLAN FOR EMPLOYEES WHO ARE NOT
RETAINED BY THE STATE OR EMPLOYED BY THE CONTRACTOR. IF ANY PART OF SUCH
BUSINESS PLAN IS BASED UPON EVIDENCE THAT THE STATE AGENCY IS NOT SUFFI-
CIENTLY STAFFED TO PROVIDE  THE  SERVICES  REQUIRED  BY  THE  CONSULTANT
SERVICES CONTRACT, THE STATE AGENCY SHALL ALSO INCLUDE WITHIN SUCH BUSI-
NESS PLAN A RECOMMENDATION FOR REMEDIATION OF THE UNDERSTAFFING TO ALLOW
SUCH SERVICES TO BE PROVIDED DIRECTLY BY THE STATE AGENCY IN THE FUTURE.
  E.  UPON  THE COMPLETION OF SUCH BUSINESS PLAN, THE STATE AGENCY SHALL
SUBMIT THE BUSINESS PLAN TO THE STATE COMPTROLLER.
  F. (I) NOT LATER THAN SIXTY DAYS AFTER RECEIPT OF ANY  BUSINESS  PLAN,
THE  STATE  COMPTROLLER  SHALL  TRANSMIT  A REPORT DETAILING ITS REVIEW,
EVALUATION AND DISPOSITION REGARDING SUCH BUSINESS  PLAN  TO  THE  STATE
AGENCY THAT SUBMITTED SUCH COST COMPARISON REVIEW. SUCH SIXTY-DAY PERIOD
MAY  BE  EXTENDED  FOR  AN ADDITIONAL THIRTY DAYS UPON A SHOWING OF GOOD
CAUSE.

A. 2499--A                          4

  (II) THE STATE COMPTROLLER'S REPORT SHALL INCLUDE  THE  BUSINESS  PLAN
PREPARED  BY  THE STATE AGENCY, THE REASONS FOR APPROVAL OR DISAPPROVAL,
ANY RECOMMENDATIONS OR OTHER INFORMATION TO ASSIST THE STATE  AGENCY  IN
DETERMINING  IF  ADDITIONAL  STEPS  ARE NECESSARY TO MOVE FORWARD WITH A
CONSULTANT SERVICES CONTRACT.
  (III) IF THE STATE COMPTROLLER DOES NOT ACT ON A BUSINESS PLAN SUBMIT-
TED  BY  A  STATE  AGENCY WITHIN NINETY DAYS OF RECEIPT OF SUCH BUSINESS
PLAN, SUCH BUSINESS PLAN SHALL BE DEEMED APPROVED.
  G. 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.
  H. NOTHING IN THIS SECTION SHALL BE DEEMED TO AUTHORIZE A STATE AGENCY
TO ENTER INTO A CONTRACT WHICH IS OTHERWISE PROHIBITED BY LAW.
  I. ALL DOCUMENTS RELATED TO THE  COST  COMPARISON  AND  BUSINESS  PLAN
REQUIRED  BY  THIS  SUBDIVISION  AND THE DETERMINATIONS MADE PURSUANT TO
PARAGRAPH G OF THIS SUBDIVISION  SHALL  BE  PUBLIC  RECORDS  SUBJECT  TO
DISCLOSURE PURSUANT TO ARTICLE SIX OF THE PUBLIC OFFICERS LAW.
  S  3.  On  or  before  December  31,  2019 the state comptroller shall
prepare a report, to be delivered to the governor, the temporary  presi-
dent  of  the  senate and the speaker of the assembly. Such report shall
include, but need not be limited to, an analysis of the effectiveness of
the cost comparison review program 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 apply to all contracts solicited or  entered
into  by  state agencies after the effective date of this act; provided,
however, the amendments to section 163 of the state finance law made  by
section  two of this act shall not affect the repeal of such section and
shall be deemed repealed therewith.