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It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 3 V.S.A. § 311(a)(10) is amended to read:

(10) A person or persons engaged under retainer, contract, or special agreement, when certified to the *[governor]* secretary of administration by the attorney general that such engagement is not contrary to the spirit and intent of the classification plan and merit system principles and standards provided by this chapter.

Sec. 2. 3 V.S.A. chapter 14 is added to read:




As used in this chapter:

(1) "Agency" means any agency, board, department, commission, committee or authority of the executive branch of state government.

(2) "Personal services contract" or "contract" means an agreement or combination or series of agreements, by which an entity or individual who is not a state employee agrees with an agency to provide services, valued at $10,000.00 or more per year.

(3) "Privatization contract" means a personal services contract by which an entity or an individual who is not a state employee agrees with an agency to provide services, valued at $20,000.00 or more per year, which are the same or substantially similar to and in lieu of services previously provided, in whole or in part, by permanent, classified state employees, and which result in the reduction in force of at least one permanent, classified employee.



(a) A personal services contract is contrary to the spirit and intent of the classification plan and merit system and standards of this title, and shall not be certified by the attorney general under subdivision 311(a)(10) of this title, unless the provisions of subdivisions (1), (2) and (3) of this subsection are met, or one or more of the exceptions described in subdivision (4) of this subsection apply.

(1) The agency will not exercise supervision over the daily activities or methods and means by which the contractor provides services other than supervision necessary to ensure that the contractor meets performance expectations and standards; and

(2) The services provided are not the same as those provided by classified state employees within the agency; and

(3) The contractor customarily engages in an independently established trade, occupation, profession or business; or

(4) Any of the following apply:

(A) The services are not available within the agency or are of such a highly specialized or technical nature that the necessary knowledge, skills or expertise is not available within the agency.

(B) The services are incidental to a contract for purchase or lease of real or personal property.

(C) There is a demonstrated need for an independent audit, review or investigation; or independent management of a facility is needed as a result of, or in response to, an emergency such as licensure loss or criminal activity.

(D) The state is not able to provide equipment, materials, facilities or support services in the location where the services are to be performed in a cost-effective manner.

(E) The contract is for professional services, such as legal, engineering, or architectural services, that are typically rendered on a case-by-case or project-by-project basis, and the services are for a period limited to the duration of the project, normally not to exceed two years or provided on an intermittent basis for the duration of the contract.

(F) The need for services is urgent, temporary or occasional, such that the time necessary to hire and train employees would render obtaining the services from state employees imprudent. Such contract shall be limited to 90 days duration, with any extension subject to review and approval by the secretary of administration.

(G) Contracts for the type of services covered by the contract are specifically authorized by law.

(H) Efforts to recruit state employees to perform work, authorized by law, have failed in that no applicant meeting the minimum qualifications has applied for the job.

(I) The cost of obtaining the services by contract is lower than the cost of obtaining the same services by utilizing state employees. When comparing costs, the provisions of section 343 of this title shall apply.


No agency may enter a privatization contract, unless all of the following are satisfied:

(1) 35 days prior to the beginning of any open bidding process, the agency provides written notice to the collective bargaining representative of the intent to seek to enter a privatization contract. During those 35 days, the collective bargaining representative shall have the opportunity to discuss alternatives to contracting. Such alternatives may include amendments to the contract if mutually agreed upon by the parties. Notices regarding the bid opportunity may not be issued during the 35-day discussion period. The continuation of discussions beyond the end of the 35-day period shall not delay the issuance of notices.

(2) The proposed contract is projected to result in overall cost savings to the state of at least ten percent above the projected cost of having the services provided by classified state employees.

(3) When comparing the cost of having a service provided by classified state employees to the cost of having the service provided by a contractor:

(A) The expected costs of having services provided by classified state employees and obtaining the service through a contractor should be compared over the life of the contract. One-time costs associated with having services provided by a contractor rather than classified state employees, such as the expected cost of leave pay-outs for separating employees, unemployment compensation and the cost of meeting the state's obligation, if any, to continue health insurance benefits, shall be spread over the expected life of the contract.

(B) The basic cost of services by a contractor includes:

(i) the bid price or maximum acceptable bid identified by the contracting authority; and

(ii) any additional costs to be incurred by the agency for inspection, facilities, reimbursable expenses, supervision, training and materials, but only to the extent that these costs exceed the costs the agency could expect to incur for inspection, facilities, reimbursable expenses and materials if the services were provided by classified state employees.

(C) The basic cost for services provided by a classified state employee includes:

(i) wages, benefits and training;

(ii) the cost of supervision and facilities, but only to the extent that these costs exceed the costs the agency could expect to incur for supervision or facilities if the services were provided by a contractor; and

(iii) the estimated cost of obtaining goods when the comparison is with the cost of a contract that includes both goods and services.

(D) Possible reductions in the cost of obtaining services from classified state employees that require concessions shall not be considered unless proposed in writing by the certified collective bargaining agent and mutually agreed to by the state and collective bargaining agent.


(a) The secretary of administration shall maintain a database with information about approved privatization contracts and approved personal services contracts. The secretary shall also maintain a database with information about privatization contracts which are rejected because they fail to qualify under subdivision 343(2) of this title. Contracts shall be public record to the extent provided under chapter 5 of Title 1, and shall be located at the agency of origin, including information about names of contractors, summaries of work to be performed, costs and duration.

(b) The information on contracts shall be reported to the general assembly in the annual workforce report required under subdivision 309(a)(19) of this title.

Approved: March 28, 2000