senate Bill S5643A

Relates to the cost effectiveness of consultant contracts by state agencies

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 31 / May / 2013
    • REFERRED TO FINANCE
  • 08 / Jan / 2014
    • REFERRED TO FINANCE
  • 10 / Feb / 2014
    • AMEND AND RECOMMIT TO FINANCE
  • 10 / Feb / 2014
    • PRINT NUMBER 5643A

Summary

Relates to the cost effectiveness of consultant contracts by state agencies; defines "consultant services".

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Bill Details

See Assembly Version of this Bill:
A9698
Versions:
S5643
S5643A
Legislative Cycle:
2013-2014
Current Committee:
Senate Finance
Law Section:
State Finance Law
Laws Affected:
Amd ยง163, St Fin L
Versions Introduced in 2011-2012 Legislative Cycle:
S7782

Sponsor Memo

BILL NUMBER:S5643A

TITLE OF BILL: An act to amend the state finance law, in relation to
the cost effectiveness of consultant contracts by state agencies; and
providing for the repeal of such provisions upon expiration thereof

PURPOSE OR GENERAL IDEA OF BILL:

Sets forth conditions when an agency shall enter into a contract for
consultant services. Requires agencies to conduct a cost comparison
prior to entering into a contract for consultant services to determine
if there is a less expensive alternative.

SUMMARY PROVISIONS:

Amends the state finance law by amending section 163 to add a new
subdivision 15, setting forth conditions that must be met when an
agency shall enter into a contract for consulting services of more
than $250,000, The agency shall compare costs to determine whether the
work can be performed at lower cost by utilizing state employees
rather than consultants. Certain exceptions are specified when this
cost comparison is not required. The agency must retain documentation
of the cost comparison as a public record.

JUSTIFICATION:

The purpose of this bill is to require state agencies to do cost
comparisons before entering into contracts for consultant services.
Any time the taxpayers' money is used to fund a contract. for
services there is a need to insure that this expenditure is necessary
and prudent, The State of New York spends over $2 Billion per year on
consultants, In many cases these consultants perform work that could
be done by professional state employees and the cost of using
consultants is substantially higher.

In 1998 the use of engineering consultants by the State Department of
Transportation was studied by the State, Comptroller and OSC concluded
that the State could save millions of dollars by reducing the use of
consultants. The Comptroller recommended cost/benefit. analysis prior
to contracting with consultants. Other studies have confirmed this
finding, including an analysis by the State Assembly in 2009 that
estimated the state could save $250 million over three years by
reducing the use of information technology consultants. In 2010 The
state Senate Task Force on Government Efficiency estimated that the
Department of Transportation could save about $46 million per year by
implementing this policy. In 2009 the Federal Office of Management and
Budget issued a directive to Federal government agencies that calls
for them to perform a cost benefit analysis before entering into
contracts and to initiate pilot projects for in-sourcing work in cases
where the cost analysis supports the conclusion that the work can be
performed by government employers at lower cost that by using
contractors. OMB estimates that this and other contracting reforms can
save the Federal government $40 Billion.

LEGISLATIVE HISTORY:

2012 Vetoed


FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect on the ninetieth day after it shall have
become a law, with provisions.

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

                                 5643--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 31, 2013
                               ___________

Introduced  by  Sen.  ROBACH -- read twice and ordered printed, and when
  printed to be committed to the Committee on Finance -- recommitted  to
  the  Committee  on Finance in accordance with Senate Rule 6, sec. 8 --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11164-02-4

S. 5643--A                          2

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-
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.

S. 5643--A                          3

  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.
  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.

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