S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    383
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 4, 2017
                                ___________
 
 Introduced  by  Sen.  ROBACH -- read twice and ordered printed, and when
   printed to be committed to the Committee on Finance
 
 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
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD03040-01-7

 S. 383                              2
 
 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.
   §  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
 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.

 S. 383                              3

   (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.
   (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

 S. 383                              4
 
 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.
   §  3.  On  or  before  December  31,  2020 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.
   §  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.