SB447: Bill Text

LRB-3274/3

RAC/CMH/ARG:bjk:rs

2009 - 2010 LEGISLATURE

2009 Senate BILL 447

January 7, 2010 - Introduced by Senators Lassa, Carpenter, Coggs, Darling, Hansen, Holperin, Kreitlow, Lehman, Risser, Taylor, Vinehout and Wirch, cosponsored by Representatives Jorgensen, Barca, Mason, Roys, Vruwink, Berceau, Cullen, Hilgenberg, Hixson, Milroy, Molepske Jr., Pasch, Pocan, Pope-Roberts, Smith, Turner and Zepnick. Referred to Committee on Ethics Reform and Government Operations.

SB447,1,11 An Act to renumber and amend 16.705 (1), 16.705 (2), 16.705 (3) and 16.705 (6); to amend 16.705 (7), 16.705 (8) (a), 23.41 (5), 25.18 (1) (a), 25.18 (1) (f), 25.18 (1) (m), 84.01 (13), 84.06 (2) (a), 84.06 (3), 84.06 (4), 85.015, 102.81 (2), 165.08, 165.25 (11), 221.0903 (4) (b), 801.02 (1), 803.09 (1) and (2), 804.01 (2) (intro.), 805.04 (2m) and 893.981; and to create 16.42 (1) (h), 16.46 (10), 16.705 (1) (a) 3., (b) and (c), 16.705 (2) (a) 3. and 4., (b) and (c), 16.705 (3) (am) 4., 16.705 (3) (bm), 16.705 (4), 16.705 (5g), (5m) and (5r), 16.705 (6) (a), 16.705 (9), 16.75 (1) (a) 4., 16.771, 16.871, 20.932, 66.0902 and 84.06 (13) of the statutes; relating to: state contractual services and false claims submitted to state and local governments, requiring the exercise of rule-making authority, and providing penalties.

Analysis by the Legislative Reference Bureau

Currently, the Department of Administration (DOA) or any state agency to which DOA delegates purchasing authority may contract for services if the services can be performed more efficiently or economically by contract than by state employees. This bill allows contracting for services if at least two of the following three conditions are met: 1) The services may be performed more economically by contract than by state employees; 2) When considering expertise, the services can be performed more efficiently by contract than by use of current full-time state positions; or 3) When considering timeliness, the services can be performed more efficiently by contract than by state employees. Currently, under rules promulgated by DOA, certain persons aggrieved by a solicitation for, or an award of, a contract have five days from the solicitation or award to file a notice of intent to protest with the agency soliciting the services or awarding the contract and ten days to serve that agency with the written protest. This bill extends the time to file a notice of intent to protest to seven working days and the time to file a protest to 12 working days.

Under current law, if a state agency enters into or renews a contract for services that involves an estimated expenditure of more than $25,000, the agency must conduct either a uniform cost-benefit analysis, for a new contract, or a continued appropriateness review, for a contract renewal. This bill requires a cost-benefit analysis or continued appropriateness review to consider all relevant costs including salaries and benefits, training requirements, liability insurance, overhead, facility costs, and taxes. Under this bill, no cost-benefit analysis may be shown to any bidder until a letter of intent to contract has been issued. This bill generally requires that, if a contract is for more than $25,000, any expenditures of the contractor that exceed the bid by more than 10 percent may be paid only if the secretary of administration approves payment of the increased amount and submits to the Joint Committee on Finance (JCF) his or her rationale for approval. In addition, this bill requires DOA to review each cost-benefit analysis or continued appropriateness review and certify them as accurate, and requires each contracting agency to perform periodic audits on its cost-benefit analyses and continued appropriateness reviews and on its subsequent contracts.

The bill requires the Division of Legal Services in DOA to develop standard performance measures, as well as benchmark indicators, to evaluate services performed by contract for a state agency and to determine what actions taken by the contractor would result in the state agency recovering the expenditures it paid to the contractor.

Under current law, if a state agency for which services are performed concludes that the services were unsatisfactory, the agency must file an evaluation with DOA, and DOA must ensure that future contracts are not awarded to contractors whose past performance was unsatisfactory. This bill adds that a state agency must file an evaluation with DOA if the contractual services are unsatisfactory according to the standard performance measures or benchmark indicators developed by the Division of Legal Services or if the state agency recovers expenditures from the contractor under the guidelines developed by the Division of Legal Services.

Currently, if a contractor or vendor does business with this state or a local government, the terms of the contract or order govern the performance of, and the price to be paid to, the contractor or vendor. If the contractor or vendor claims payment for materials, supplies, equipment, or services that are not provided in accordance with the contract or order, or at a price that is different from the price specified in the contract or order, the state or a local government has a remedy against the contractor or vendor for breach of contract. If the contractor or vendor is asked to swear to the truth of a claim for payment and the claim is false, the contractor or vendor may be prosecuted for false swearing. Currently, except with regard to medical assistance, a private person has no means to recover, on behalf of the state, damages sustained by the state as a result of a fraud committed against the state.

This bill provides that whoever knowingly presents or causes to be presented a false claim under any contract or order for materials, supplies, equipment, or services to be provided to a state agency is subject to a forfeiture (civil penalty) of not less than $5,000 nor more than $10,000, plus three times the amount of the damages that were sustained by the state or would have been sustained by the state, whichever is greater, as a result of the false claim. The bill permits the attorney general to bring an action to recover any forfeiture for which a contractor or vendor is liable as a result of a false claim submitted to a state agency. This bill contains similar provisions that apply to local governmental units.

The bill creates separate prohibitions against state contractors, grantees, vendors, and other recipients of state resources who knowingly commit certain fraudulent acts against the state. The bill makes these persons liable for treble the amount of damages sustained by the state resulting from such acts and imposes additional forfeitures of not less than $5,000 nor more than $10,000 for each violation. The bill permits the attorney general to pursue an alternate remedy, such as an administrative remedy, against an alleged offender in lieu of an action in court. With certain exceptions, the bill provides that a person who brings an action on behalf of the state is entitled to receive his or her reasonable expenses of bringing the action, including his or her costs and reasonable, actual attorney fees, which are assessed against the defendant.

The bill entitles an employee to all relief to make the employee whole if the employee is discriminated against by an employer as a result of lawful actions the employee took to further the investigation of any act of fraud, as defined in the bill, the employer committed against the state. Under the bill, the relief may include reinstatement and double back pay with interest from the time of any discharge to the time of reinstatement. The bill also permits the employee to recover any costs, including reasonable, actual attorney fees, from his or her employer.

This bill also does all of the following relating to state contracts:

1. Requires executive branch state agencies to submit to DOA and the Legislative Fiscal Bureau, by September 15 of the even-numbered year, information on the number of contracted positions, including the number of service hours and recurring service rate payments, providing services for the agency that are paid from the agency's base level funding and an identification of the appropriation or appropriations used to fund the contracted positions; the total amount of agency base level funding used to pay for the contracted positions; and the amount of funding requested for contracted positions and an identification of the appropriation or appropriations that will be used to fund the contracted positions.

2. Requires the secretary of administration to include in the biennial budget report all of the information specified in Item 1.

3. Provides that if in any fiscal year an executive branch agency is prohibited from hiring employees to fill vacant positions or its employees are required to serve an unpaid leave of absence, the agency may not enter into, renew, or extend any contractual services contracts with private contractors or consultants for the remainder of that fiscal year for the performance of services of agency employees who would have performed the services had they been hired or had they not have been required to take an unpaid leave of absence. This provision, however, does not apply to certain contracts of the Office of the State Public Defender, as well as certain contractual services contracts funded with federal economic stimulus funds. The bill further provides that an agency may submit a written request to the JCF to exempt an agency with respect to a specific contractual services contract. If the cochairpersons of JCF do not notify the agency within 14 working days after the date of the agency's submittal that JCF intends to schedule a meeting to review the request, approval of the request is granted. If, within 14 working days after the date of the agency's request submittal, the cochairpersons notify the agency that JCF intends to schedule a meeting to review the request, the request may be granted only as approved by JCF.

The bill also requires the Department of Transportation (DOT), not a contractor, to conduct all tests of concrete thickness on its highway improvement projects. Under the bill, DOT must also submit a report to JCF containing recommendations on actions that DOT and local governments can take to improve the efficiency, cost-effectiveness, and timeliness of local road construction projects and proposed legislative changes to implement these recommendations.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB447, s. 1 Section 1. 16.42 (1) (h) of the statutes is created to read:

SB447,4,5 16.42 (1) (h) 1. The total amount of contracted positions, including the number of service hours and recurring service rate payments, providing services for the agency that are paid from the agency's base level funding and an identification of the appropriation or appropriations used to fund the contract expenditures.

SB447,4,7 2. The total amount of agency base level funding used to pay for the contracted positions under subd. 1.

SB447,5,3 3. The amount of funding requested for contracted positions identified under subd. 1 and an identification of the appropriation or appropriations that will be used to fund the contracted positions.

SB447, s. 2 Section 2. 16.46 (10) of the statutes is created to read:

SB447,5,8 16.46 (10) (a) A statement of the number of contracted positions providing services for each state agency that are paid from the agency's base level funding and an identification of the appropriation or appropriations used to fund the contracted positions.

SB447,5,10 (b) A statement of the total amount of each state agency's base level funding used to pay for the contracted positions.

SB447,5,13 (c) A statement of the amount of funding requested by state agencies for contracted positions and an identification of the appropriation or appropriations that will be used to fund the contracted positions.

SB447, s. 3 Section 3. 16.705 (1) of the statutes is renumbered 16.705 (1) (a) (intro.) and amended to read:

SB447,5,17 16.705 (1) (a) (intro.) The department or its agents may contract for services which if at least 2 of the following conditions apply:

SB447,5,18 1. The services can be performed more economically or by contract.

SB447,5,21 2. When considering expertise of the current full-time positions, whether filled or vacant, the services can be performed more efficiently by such contract than by use of employees in those positions.

SB447,5,23 (d) The department shall, by rule, prescribe uniform procedures for determining whether services are appropriate for contracting under this subsection.

SB447, s. 4 Section 4. 16.705 (1) (a) 3., (b) and (c) of the statutes are created to read:

SB447,6,2 16.705 (1) (a) 3. When considering timeliness of delivery, the services can be performed more efficiently by contract.

SB447,6,5 (b) Notwithstanding par. (a), the department or its agents may contract for any services if the contract will be for a period that is not more than one year and if the contract is not eligible for renewal.

SB447,6,6 (c) No contract under this section may be automatically renewed.

SB447, s. 5 Section 5. 16.705 (2) of the statutes is renumbered 16.705 (2) (a) (intro.) and amended to read:

SB447,6,11 16.705 (2) (a) (intro.) The department shall promulgate rules for the procurement of contractual services by the department and its designated agents, including but not limited to rules the following:

SB447,6,13 1. Rules prescribing approval and monitoring processes for contractual service contracts.

SB447,7,3 2. Except as provided in par. (b), a requirement for agencies to conduct a uniform cost-benefit analysis of each proposed contractual service procurement involving an estimated expenditure of more than $25,000 in accordance with standards prescribed in the rules, and, except as provided in par. (b), a requirement for agencies to review periodically, and before any renewal, the continued appropriateness of contracting under each contractual services agreement involving an estimated expenditure of more than $25,000. The rules shall require the cost-benefit analysis or continued appropriateness review to compare the costs of using a current employee who is providing, or who would provide, the service, or a similarly situated employee if the current position is vacant, to the costs of using an employee under a contract and shall require the comparison to include all relevant costs including the salary and fringe benefit costs, costs of any training that will be necessary to fulfill the task, materials, inspections, unemployment insurance, transitional costs, liability insurance, overhead, facility costs, taxes, and other incidental costs.

SB447,7,12 (d) Each officer requesting approval to engage any person to perform contractual services shall submit to the department written justification for such contracting which shall include a description of the contractual services to be procured, justification of need, justification for not contracting with other agencies, a specific description of the scope of contractual services to be performed, and justification for the procurement process if a process other than competitive bidding is to be used. The department may not approve any contract for contractual services unless it is satisfied that the justification for contracting conforms to the requirements of this section and ss. 16.71 to 16.77.

SB447, s. 6 Section 6. 16.705 (2) (a) 3. and 4., (b) and (c) of the statutes are created to read:

SB447,7,16 16.705 (2) (a) 3. A requirement that each agency preparing a cost-benefit analysis or continued appropriateness review submit the analysis or review to the department for certification of accuracy.

SB447,7,20 4. A requirement that each agency that contracts for services under this section perform periodic audits on cost-benefit analyses or continued appropriateness reviews and contracts that required a cost-benefit analysis or continued appropriateness review.

SB447,8,2 (b) A cost-benefit analysis or continued appropriateness review is not required for services that federal or state law requires to be performed by contract; services that are incidental to the purchase of a commodity; services that a state employee may not or does not perform; or services that must be provided per a contract, license, or warranty by the original equipment manufacturer or publisher unless the contract, license, or warranty has expired or is no longer valid.

SB447,8,4 (c) 1. Neither a cost-benefit analysis nor a continued appropriateness review may be conducted by contract.

SB447,8,6 2. A cost-benefit analysis may not be shown to a bidder prior to the issuance of a letter of intent to contract.

SB447, s. 7 Section 7. 16.705 (3) of the statutes is renumbered 16.705 (3) (am), and 16.705 (3) (am) (intro.), 1. and 2., as renumbered, are amended to read:

SB447,8,12 16.705 (3) (am) (intro.) The director of the office of state employment relations, prior to award, under conditions established by rule of the department, shall review contracts for contractual services in order to ensure that agencies do all of the following:

SB447,8,13 1. Properly utilize the services of state employees; .

SB447,8,15 2. Evaluate the feasibility of using limited term appointments prior to entering into a contract for contractual services; and.

SB447, s. 8 Section 8. 16.705 (3) (am) 4. of the statutes is created to read:

SB447,8,19 16.705 (3) (am) 4. Notify all representatives of interested collective bargaining units under subch. V of ch. 111 by providing them with a copy of all documents soliciting bids or proposals.

SB447, s. 9 Section 9. 16.705 (3) (bm) of the statutes is created to read:

SB447,9,2 16.705 (3) (bm) The director of the office of state employment relations, after the issuance of a letter of intent to contract, under conditions established by rule of the department, shall review contracts for contractual services in order to ensure that agencies have notified all representatives of interested collective bargaining units under subch. V of ch. 111 by providing them with a copy of the letter of intent to contract.

SB447, s. 10 Section 10. 16.705 (4) of the statutes is created to read:

SB447,9,11 16.705 (4) Any person submitting a bid or proposal, or any representative of an interested collective bargaining unit under subch. V of ch. 111, that is aggrieved by a solicitation for bids or by a letter of intent to contract may protest to the agency that solicited or awarded the contractual services. The protesting party shall file a written notice of intent to protest with the agency that solicited or awarded the contractual services within 7 working days after the solicitation or the letter, whichever is appropriate, and shall serve a written protest within 12 working days after issuance of the solicitation or the letter, whichever is appropriate.

SB447, s. 11 Section 11. 16.705 (5g), (5m) and (5r) of the statutes are created to read:

SB447,9,15 16.705 (5g) All contracts for contractual services must provide notice of the rules promulgated by the division of legal services under sub. (5m) (a) and of the requirements under sub. (5r).

SB447,9,17 (5m) The division of legal services shall promulgate rules on all of the following:

SB447,9,21 (a) Actions by the person performing the contractual services that would result in the agency for which contractual services are performed recovering any expenditures for those contractual services that the agency paid to the person performing the contractual services.

SB447,9,23 (b) Standard performance measures, including quantifiable benchmark indicators, to evaluate persons performing contractual services.

SB447,9,25 (5r) (a) 1. If the cost of the contractual services exceeds $25,000, any expenditures of the person performing the contractual services that exceed its original bid by 10 percent or more may not be paid unless the secretary approves payment of the increased amount and provides, in writing, to the joint committee on finance his or her rationale for the approval.