The New York State Senate

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

                                  2022

                       2017-2018 Regular Sessions

                          I N  A S S E M B L Y

                            January 17, 2017
                               ___________

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

  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
same  work  with state employees as well as document whether or not that

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

                                                           LBD03040-01-7

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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.

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  (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

A. 2022                             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.