An Act concerning certain contracts to privatize State services and supplementing chapter 24 of Title 52 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. It is the policy of this State that State employees shall perform the public services of the State in preference to contracting out those services to the private sector. The Legislature finds and declares that using private contractors to provide public services formerly provided by State employees, or which are substantially similar to and in lieu of services heretofore provided, or that could be provided, in whole or in part, by State employees, does not always promote the public interest. To ensure that citizens of the State receive high quality public service at a fair cost, and to ensure fair treatment of those State employees who have been providing the public services, the Legislature finds it necessary to regulate the circumstances which may result in the awarding of public service contracts to private business entities, and to require that no decision regarding the privatization of any service provided by the State should be made without a careful evaluation of the long term impact of the privatization on the State, its citizens and its employees. Therefore, no agency of the State shall enter into a privatization contract and no such contract shall be valid unless it complies with the conditions set forth in this act.

2. As used in this act:

"Agency" includes, but is not limited to, an executive officer, department, division, board, commission or other office or officer in the executive branch of the State government, or any authority or other instrumentality of the State, but does not include any political subdivision of the State.

"Aggregate cost savings" with respect to a privatization contract means the amount by which the net reduction of in-house costs exceeds the entire cost of the privatization contract.

"Entire cost of the privatization contract" means a detailed accounting of all costs under a privatization contract, or pro-rata share of the costs, and all costs resulting from the contract, including:

(1) Costs of labor;

(2) Costs of employer-provided fringe benefits;

(3) Costs of equipment or materials, whether supplied by the State or a private contractor;

(4) All other costs directly or indirectly attributable to transferring the work being performed by State employees to a private business entity under the contract, including, but not limited to, the costs of preparing and bidding the contract, the costs of training the new workforce, bonding costs, insurance liability costs, costs to the public of delayed or reduced services, and recovery costs of returning the work to the agency if required by future decision makers;

(5) Costs borne by the State in the maintenance of any publicly supplied property, equipment or materials;

(6) Costs of administering, inspecting or monitoring the contracted service, including, but not limited to, the use of consultant services for this purpose;

(7) Cost of any anticipated unemployment compensation or other benefits, including retraining expenses, for State employees who are displaced as a result of the contracted service;

(8) Cost of lost income tax revenue and other tax revenue to the State through the elimination of agency employees if the contractor performs functions outside of the State.

"Fringe benefits" means all employer-provided fringe benefits including health, dental, vision care, prescription, holidays, vacations, sick and administrative leave, pensions and other retirement benefits.

"Maintenance work" means the repair or maintenance of existing facilities when the size, type or extent of those facilities is not thereby changed or increased.

"Net reduction of in-house costs" means the net reduction of cost to an agency caused by the agency not providing or performing a service which is instead performed or provided by a private business entity under a privatization contract.

"Private business entity" means a non-governmental person or entity.

"Privatization contract" means an agreement, modification of a prior agreement, or combination or series of agreements between a private business entity and an agency under which the entity performs or provides services substantially similar to, and in lieu of, services heretofore provided, or that could be provided, in whole or in part, by employees of the agency, except that "privatization contract" shall not include any agreement between an agency and a private business entity exclusively for the provision to the agency of services substantially similar to those performed for the agency by managerial executives as defined by subsection (f) of section 3 of P.L.1941, c.100 (C.34:13A-3), confidential employees as defined by subsection (g) of section 3 of P.L.1941, c.100 (C.34:13A-3) or State employees assigned to the senior executive service pursuant to N.J.S.11A:3-3, or exclusively for the provision of legal services to the agency, or any contract for public work under which all non-managerial workers are required by law to be paid the prevailing wage determined by the Commissioner of Labor pursuant to the provisions of the "New Jersey Prevailing Wage Act," P.L.1963, c.150 (C.34:11-56.25 et seq.), and under which none of those workers are engaged in maintenance work. To "renew" a privatization contract, or the "renewal" of the contract, means entering into an agreement in which the type, scope and amount of the work under the contract as renewed are the same as the type, scope and amount of the work under the original contract, the added duration of the contract is the same as the original contract, and the cost of the contract as renewed is not more than the original contract except for a reasonable cost of living adjustment. To "extend" a privatization contract, or the "extension" of the contract, means entering into an agreement in which the type and scope of the work under the contract as extended are the same as the type and scope of the work under the original contract, the added duration of the contract is less than the original contract, and the rate of cost of the contract as extended is not more than the original contract except for a reasonable cost of living adjustment. An agreement which changes the type or scope of the work under a privatization contract or increases the cost of a privatization contract by more than $250,000 shall not be regarded as a renewal or extension of the contract, but shall instead be regarded as a newly entered-into privatization contract, distinct from the previous contract, for the purposes of this act.

3. In any case of a privatization contract entered into, renewed or extended by an agency after the effective date of this act, the agency shall, prior to soliciting bids or proposals from any prospective or current contractor for the contract or its renewal or extension, prepare and make available to the public a written statement which describes: the requirements of the contract; the procedures for awarding the contract, which shall be in compliance with this act and all other applicable laws; the quantity and standard of quality of the specific services proposed to be the subject of the contract; the number of employees, the rate and total amounts of wages and benefits needed for employees of the agency to do the work involved in the contract; and the net reduction of in-house costs anticipated by the agency in connection with the contract.

4. a. In any case of a privatization contract with a total value of more than $250,000 entered into, renewed or extended by an agency after the effective date of this act, the agency, upon selecting a contractor but prior to making a final award of the contract, shall prepare a certification that the contract complies with the provisions of section 5 of this act and shall prepare a cost analysis of the work to be performed under the contract, which shall be used to assess whether it is more effective to use employees of the private business entity or to use existing or additional agency employees to perform the work required. The cost analysis shall be based on the quantity and quality of service described in the statement prepared by the agency pursuant to section 3 of this act and on the agency's calculations of the net reduction of in-house costs attributable to the privatization contract, of the entire cost of the contract, and of the aggregate cost savings due to the contract.

b. The agency shall make copies of the certification and cost analysis available to the public and transmit copies to the State Auditor and representatives of all employee organizations whose members perform services which may be subject to the privatization contract. The Speaker of the General Assembly, the President of the Senate, or any representative of an employee organization representing affected employees, or affected member of the public may, not more than 15 days after the certification and cost analysis are made available to the public, submit to the agency and the State Auditor written comments regarding the certification, the cost analysis and the proposed privatization contract, and may request the State Auditor to hold a public hearing on the proposed contract. If the State Auditor determines that the nature of the privatization contract warrants a hearing, or if the hearing is requested by the Speaker of the General Assembly, the President of the Senate, or any union representing affected employees, a public hearing shall be held not more than 30 days after the receipt of the cost analysis. The purpose of the public hearing shall be to gather testimony regarding all aspects of the agency's plan to privatize the service which is the subject of the cost analysis.

c. The State Auditor shall, whether or not a public hearing is held, review the certification and perform an independent audit of the agency's calculations, make such adjustments to those calculations as it deems appropriate, and issue its determination of the aggregate cost savings, if any, with respect to the privatization contract, and its determination of whether the contract is in full compliance with the provisions of this act. The State Auditor shall, not more than 30 days after receiving the certification and cost analysis pursuant to subsection a. of this section, submit to the agency, and make available to the public and representatives of the employee organizations representing affected employees, together with copies of the documents submitted by the bidder as part of the bid, a written report of its determination of the aggregate cost savings of the contract and of any analysis or concerns the State Auditor may have regarding the proposed contract and its determination of whether the contract is in full compliance with the provisions of this act, except that the State Auditor may extend, by not more than 30 days, the length of time in which to submit the report, if needed to conduct a hearing or other further investigation. If the State Auditor determines that the aggregate cost savings of the contract are inadequate or the contract is otherwise not in conformance with the requirements of this act, the agency may not make a final award of the privatization contract and the contract shall not be valid. If the State Auditor does not determine that the contract is not in conformance with the requirements of this act, the agency shall review the report before making a final award of the contract.

d. The agency, when preparing the certification that the contract complies with section 5 of this act, and the auditor, when reviewing the certification, shall seek information from the State Departments of Labor and Workforce Development, Environmental Protection, Law and Public Safety and Health and Senior Services, regarding any convictions, criminal convictions, debarments, suspensions or other measures resulting from actions taken by a department for noncompliance of the contractor and its subsidiaries, affiliates, principals, and managerial or supervisory employees with laws regarding labor relations, workplace standards, occupational health and safety, public health and safety, environmental protection, nondiscrimination and affirmative action, tax payment and conflicts of interest.

e. If the agency decides not to make a final award of the contract to a contractor after making the review of the proposed contract required pursuant to this section and selects another contractor, the agency shall comply with requirements of subsections a., b., c. and d. of this section when considering any other contractor.

5. Except as provided by section 6 of this act, no privatization contract with a total value of more than $250,000 shall be entered into, renewed or extended by an agency after the effective date of this act unless all the following conditions are met:

a. The aggregate cost savings for the privatization contract are substantial and the cost savings are not outweighed by the public's interest in having a particular function performed directly by the State, and, in the case of a privatization contract first entered into after the effective date of this act, the savings are not outweighed by any substantial reduction of the ability of the State to resume the service as a State employee-provided service if the contracted service proves not to be in the public interest, including a reduction caused by any divestment of capital and equipment by the State in connection with the contract;

b. If the privatization contract is first entered into after the effective date of this act, but not in any case of a renewal or extension of a privatization contract, the contract provides that State employees directly or indirectly displaced by the terms of the privatization contract after the effective date of this act have the right of first refusal for the jobs under the contract;

c. If the privatization contract is first entered into after the effective date of this act, but not in any case of a renewal or extension of a privatization contract, the agency prepares a plan of assistance for each employee displaced after the effective date of this act who chooses not to work under the terms of the contract, including any training needed to place the employee in a comparable position in that agency, or if that is not possible, with another agency;

d. If the privatization contract is first entered into after the effective date of this act, but not in any case of a renewal or extension of a privatization contract, the contract requires the contractor to provide fringe benefit coverage and a rate of pay and pay progression to its employees performing work under the contract not less than what is provided to State employees performing the work and requires the contractor to submit annual payroll reports to the agency, which shall be available for public inspection, listing the hours worked and the hourly wage paid for each employee who performed work under the contract. The Attorney General may bring a civil action for equitable relief in the Superior Court to enforce this subsection or to prevent or remedy any noncompliance with the provisions of this subsection;

e. The contract prohibits the contractor from increasing fees or other direct or indirect charges to the public for the provision of services and requires the contractor to maintain staffing levels sufficient to ensure that there is no deterioration in the quality and quantity of services provided to the public and to provide staff which has certification, licensing and levels of job proficiency equal to or exceeding that of the public employees who would provide the services if there was no privatization contract;

f. The contractor, and its subsidiaries, affiliates, principals and managerial or supervisory employees are not, at the time of the awarding of the contract, subject to debarment, suspension, adjudication or conviction and have not been subject to any debarment, suspension or conviction during the ten-year period before the awarding of the contract, or any criminal conviction at any time, which debarment, suspension, adjudication or conviction is due to substantial or repeated noncompliance with any federal or state law regarding the operation of a business, including, but not limited to, laws regarding labor relations, workplace standards, occupational health and safety, public health and safety, environmental protection, nondiscrimination and affirmative action, tax payment and conflicts of interest;

g. The contractor has disclosed to the State Treasurer and to the State Auditor every suit to which it, or its subsidiaries or affiliates are, or have been a party, whether for alleged violations of law, or arising out of the terms of a contract;

h. The agency and the contractor have disclosed to the State Treasurer and to the State Auditor every report generated by the agency, the contractor or any entity retained by the agency or contractor, analyzing the ability of the contractor to comply with the specifications of the contract;

i. The contract clearly states the legal and financial responsibility for damages which arise out of contractor noncompliance, theft, damage, negligence or inability to perform to the quantity and quality standards specified in the contract;

j. The contractor certifies that its hiring practices meet applicable nondiscrimination and affirmative action standards and the contract requires the contractor to comply with a policy of nondiscrimination and equal opportunity for all persons in accordance with applicable nondiscrimination laws, regulations and standards;

k. The awarding of the contract does not have a significant adverse effect on any affirmative action effort of the State;

l. The term of the contract is three years or less and the contract provides that it will be voided if it is amended in a manner which has the purpose or effect of avoiding any requirement this act;

m. If the privatization contract is first entered into after the effective date of this act, but not in any case of a renewal or extension of a privatization contract, no principal or management employee of the contractor has worked in the preceding four years for the State in any capacity which relates to work to be performed under the contract;

n. The contractor has complied with requests of the agency, the State Auditor and affected employee organizations, to provide copies of any union contract, personnel manual and documents describing fringe benefits, that cover its employees;

o. The contracted service is exactly the same as that which is or would be performed by State employees if there was no privatization contract;

p. In the case of a privatization contract in which a contractor provides to an agency services to create, develop, enhance or update a data processing system or other system based on information technology, the contract requires the contractor to utilize the knowledge of State employees and involve State employees at all stages of the work as needed to ensure, to the maximum practical extent, that the skills of State employees have been upgraded sufficiently by the time of the completion of the work to provide the employees with the expertise needed to operate and maintain the system and an increased ability to perform future work to establish, develop, enhance or update existing and subsequently established data processing systems or other systems based on information technology; and

q. The contract is in conformance with all applicable provisions of law, including the provisions of the "New Jersey Contractual Liability Act," N.J.S.59:13-1 et seq. and is consistent with the provisions of any collective bargaining agreement applicable to the affected public employees and is subject to any employee protection arrangements established pursuant to 49 U.S.C. 5333(b).

Failure of a contractor to meet the conditions of subsection f., g., h., m. or n. of this section shall result in termination of the contract, if the failure becomes known after the award of the contract.

6. a. If it is impossible for the agency to perform the work with existing or additional employees of the agency because no training is available to provide the employees with the required level of expertise or skill and no workers with the required level of expertise or skill are available to hire, or it is impractical because the work would be of such an intermittent nature as to be likely to cause regular periods of unemployment for the employees if they were hired by the agency, or because it is impractical for the agency to perform the work with existing or additional employees of the agency because the work is in response to emergency situations which do not occur on a regular basis, such as snow removal, the agency may enter into, or renew or extend, a contract with a private business entity, exclusively for the performance of that portion of the work for which it is impossible for any of the reasons indicated in this subsection a., or impractical for any of the reasons indicated in this subsection a., for the agency to perform the work with existing or with newly-hired, additional employees of the agency, even if the contract does not provide any cost savings, and the contract shall not be subject to any other procedures provided by this act, if all of the following conditions are met:

(1) The agency makes a determination that it is impossible for any of the reasons indicated in this subsection a., or impractical for any of the reasons indicated in this subsection a., for the agency to perform the work with existing or additional employees of the agency;

(2) The agency, not less than 20 days before any solicitation of bids or proposals, makes available a statement of that determination, with supporting documentation for the statement, to the public, the State Auditor and the representatives of all employee organizations whose members are or may be affected by the privatization contract; and

(3) The State Auditor reviews the statement of the determination of the agency and reviews any comments regarding the statement submitted by any representative of the employee organizations or any affected member of the public to the State Auditor not more than 10 days after the statement is made available, and the State Auditor, before the contract is awarded, makes public a statement that the State Auditor concurs with the determination of the agency.

The State Auditor shall annually conduct a post audit of the contract and issue a report, the first report not later than the end of the first year of the contract, reviewing and evaluating: the compliance of the agency and the contractor with the provisions of this act; whether it has, since the contract was entered into, become possible or practical to train or hire agency employees to perform any part of the work under the contract; what, if any, cost savings the agency may obtain by hiring or training agency employees to perform the work; and any efforts made by the agency to obtain those savings.

Each department and each State entity other than a department authorized by law to adopt regulations regarding its operations shall, not more than 180 days after the effective date of this act, adopt regulations establishing criteria to be used when making determinations of whether it is, for any of the reasons indicated in this subsection a., impossible or impractical for the department or entity, with existing or with additional employees of the department or entity, to perform work being considered for a privatization contract.

b. In the case of a privatization contract which was in effect upon the effective date of this act and expires after the effective date of this act, the agency may, on a one-time-only basis, extend the contract for a period not to exceed two years and the contract shall not be subject to any other procedures provided by this act, if all of the following conditions are met:

(1) The agency makes a determination that the entire extension period is necessary for the agency to hire or train State employees and to take other actions needed to ensure that, when the extension is ended, the services provided under the contract will continue to be provided in a timely and satisfactory manner by State employees;

(2) The agency makes available, not less than 30 days before the extension period begins, a statement of that determination, with supporting documentation, to the public, the State Auditor and the representatives of all employee organizations whose members are or may be affected by the privatization contract; and

(3) The State Auditor reviews the statement of the determination of the agency and reviews any comments regarding the statement submitted to the State Auditor by any representative of the employee organizations or any affected member of the public not more than 15 days after the statement is made available, and the State Auditor, before the extension period begins, makes public a statement that the State Auditor concurs with the determination of the agency.

c. In the case of a privatization contract which was in effect upon the effective date of this act and expires less than 120 days after the effective date of this act, if the agency elects to seek an extension or renewal of the contract, the contract shall not be regarded as expired until the agency has had the amount of time needed to comply with the provisions of sections 3 and 4 of this act.

d. This section shall not be construed or applied as authorizing the privatization of work that has been regularly performed by State employees, including permanent intermittent employees.

7. Except in the case of any privatization contract which, pursuant to subsections a. or b. of section 6 of this act, is not subject to the provisions of this section, the State Auditor shall, as part of his responsibility under R.S.52:24-4, conduct a post audit of each privatization contract entered into, renewed or extended after the effective date of this act with a total value of more than $250,000 and shall issue, and make available to the public and representatives of employee organizations representing affected employees, an annual report to the Governor and the Legislature regarding the contract, the first of which shall be issued not more than 90 days after the end of the first year that the contract is in effect, or, in the case of a contract in effect upon the effective date of this act, not more than 90 days after the end of the first year after the contract is renewed or extended. The report shall include an evaluation of any actual net reduction of in-house costs, the actual entire cost of the privatization contract, and any actual aggregate cost savings of the contract, and shall include, in the case of a contract entered into, renewed or extended after the effective date of this act, a review of the compliance of the agency and the contractor with the provisions of this act in connection with the contract and a comparison of any calculation made by the agency pursuant to section 4 of this act of anticipated aggregate cost savings due to the contract with any actual aggregate cost savings. The State Auditor shall, upon the conclusion of the contract, prepare and make available to the public a final comprehensive audit report on the effectiveness of the contractor in meeting the goals and requirements of the contract. For the purposes of paragraph 6 of section 1 of Article 7 of the State Constitution, the duties assigned to the State Auditor by sections 3, 4 and 6 of this act are duties related to post-audits required pursuant to this act and make an essential contribution to the conduct of those post-audits. Any malfeasance, misfeasance or nonfeasance of an agency or any officer of the agency in connection with a privatization contract which is disclosed by any audit or investigation conducted pursuant to this act shall be subject to the provisions of R.S.52:24-7.

8. a. The provisions of this act shall not apply to any privatization contract entered into upon or prior to the effective date of this act under which health or human services are provided to an agency by a non-profit entity, or bus line services are provided to an agency, and shall not apply to any renewal or extension of that contract, except that:

(1) Each State department or other agency which has entered into privatization contracts which are exempted from the provisions of this act pursuant to this section shall conduct a review of each of those contracts which has a total value of more than $500,000, and was entered into during the seven-year period ending on the effective date of this act. The purpose of the review shall be to evaluate cost and policy issues regarding the contract, including the amount of any net aggregate savings provided to the agency by the contract. The agency shall issue and make available to the public and the State Auditor a comprehensive report of the findings for all contracts reviewed, organized by categories of contracts, with supporting documentation for each contract, and the report shall be issued and made available to the public and the State Auditor not later than one year after the effective date of this act;

(2) In the case of any privatization contract reviewed by an agency pursuant to paragraph (1) of this subsection, the State Auditor shall review the report of the agency's review, and if the State Auditor finds that savings may be obtained by using current or newly hired agency employees instead of contractors, then any renewal or extension of the contract occurring after the issuing of the report of the review shall be subject to the provisions and procedures of this act; and

(3) In the case of any privatization contract reviewed by an agency pursuant to paragraph (1) of this subsection which is renewed or extended before the report of the review is issued, the renewal or extension shall not be for a duration of longer than one year, and the contract shall be subject to the provisions of paragraph (2) of this subsection if and when the contract is again renewed or extended after the report is issued.

b. In the case of any privatization contract first entered into after the effective date of this act, or of the renewal or extension of any privatization contract which was in effect upon the effective date of this act, under which engineering services are provided to the Department of Transportation or the New Jersey Transit Corporation, if the contract and the process for awarding the contract meets the requirements of all applicable laws other than this act, and if the Commissioner of Transportation certifies that the contract complies with the requirements of this act or certifies that it is impossible for the department or the corporation to perform the work with existing or additional employees of the department or the corporation because no training is available to provide the employees with the required level of expertise or skill and no workers with the required level of expertise or skill are available to hire and that the contract complies with all of the provisions of this act except for subsection a. of section 5 of this act, then the contract may be entered into, extended or renewed immediately upon that certification, and the procedures of sections 3, 4, 6 and 7 of this act shall not apply to the contract, except that the contract shall be subject to all of the provisions of this act requiring contractors and agencies to make disclosures, determinations, cost analysis and reviews. The commissioner may, as long as it meets the requirements of this act, certify at the time of the annual submission of the transportation capital programs of the department and the corporation whether it is impossible for the department or the corporation to perform the work under each contract subject to this subsection with existing or additional employees of the department or the corporation because no training is available to provide the employees with the required level of expertise or skill and workers with the required level of expertise or skill are available to hire. The State Auditor shall annually conduct a post audit of all of the contracts subject to the provisions of this subsection and issue a report to representatives of all employee organizations whose members may be affected by each contract, the Speaker of the General Assembly, the President of the Senate and the agencies, which report reviews and evaluates:

(1) The compliance of the agencies and contractors with the provisions of this act in connection with the contracts;

(2) Any actual net reduction of in-house costs, the actual entire cost of the privatization contracts and any actual aggregate cost savings of the contracts;

(3) Whether it is possible or practical to train or hire agency employees to perform any part of the work under the contracts;

(4) What, if any, cost savings the agency may obtain by hiring or training agency employees to perform the work; and

(5) Any efforts made by the agency to obtain those savings.

The commissioner shall, not more than 180 days after the effective date of this act, adopt regulations establishing criteria to be used when making determinations of whether it is, for any of the reasons indicated in this subsection, impossible for the department or corporation, with existing or with additional employees of the department or corporation, to perform work being considered for a privatization contract.

9. In the case of any document or information required to be made available to the public by the provisions of this act, the means to do so shall include being made available to the public on the Internet.

10. This act shall take effect immediately.

STATEMENT

This bill establishes requirements and procedures regarding privatization contracts between State agencies and private business entities under which the business entities provide services substantially similar to services provided by State agency employees.

The bill requires that any State agency, before soliciting bids or proposals for a privatization contract or its renewal or extension, prepare and make available to the public a statement describing: contract requirements; procedures for awarding the contract; services subject to the contract; the wages and benefits of the agency employees performing the work; and the anticipated net reduction of in-house costs.

The bill requires the agency, upon selecting a contractor for any privatization contract with a total value of more than $250,000, but before making a final award of the contract, to prepare a cost analysis of the contract and certification that the contract complies with the requirements of the bill. The agency is required to make the cost analysis and certification available to the public, the State Auditor and affected employee organizations. The Speaker of the General Assembly, the President of the Senate or affected employee organization representative or member of the public may, not more than 15 days after the certification and cost analysis are made available, submit comments to the agency and the State Auditor and request a public hearing. The State Auditor is required to review the certification and perform an audit of the agency's calculations and report its own determination of the aggregate cost savings, if any, with respect to the contract.

The bill requires that for any privatization contract with a total value of more than $250,000:

1. The contract results in substantial aggregate cost savings not outweighed by the public's interest in having the service performed directly by the State;

2. Displaced State workers are given a right of first refusal for the jobs under the contract, or training and other assistance if they choose not to work under the contract;

3. The contactor provides workers under the contract with benefits and a rate of pay not less than that provided to State employees performing the work;

4. The contracted service is the same as that performed by State employees in lieu of the privatization contract, there is no increase in charges to the public and staffing levels are maintained at the level needed to sustain the quality of the service;

5. The contractor, its subsidiaries and affiliates, and its managerial and supervisory employees have not been subject to debarment, suspension, adjudication or conviction during the 10-year period before the awarding of the contract or any criminal conviction at anytime and no principal or management employee of the contractor worked in the preceding four years for the State in any capacity related to work under the contract;

6. The contractor discloses every suit involving it or its subsidiaries or affiliates, and every report regarding the contractor's ability to comply with the contract, and provides copies of all requested union contracts, personnel manuals, and documents describing fringe benefits, that cover its employees;

7. The contract has a term of not more than three years and states the contractor's liability for damages arising out of contractor noncompliance, theft, damage, negligence or inability of the contractor to perform;

8. The contractor's practices meet all applicable nondiscrimination and affirmative action standards and the contract has no significant adverse effect on State affirmative action efforts;

9. For any privatization contract to perform development work on an information technology-based system, the contractor involves State employees in the work to ensure, as much as practical, that their skills are upgraded enough to permit them to operate and maintain the system and perform future development work; and

10. The contract is in conformance with the provisions of any applicable collective bargaining agreement and subject to the provisions of any employee protection arrangement established under 49 U.S.C. 5333(b).

The bill requires the State Auditor to conduct annual post audits of each privatization contract with a total value of more than $250,000 and issue a report which includes evaluations of any actual net reduction of in-house costs, the actual entire cost of the contract and any actual aggregate cost savings of the contract, and a review of the compliance of the agency and the contractor with the requirements of the bill.