Public Services Accountablility Act

The following sample bill is a compilation of Missouri HB 354 (2003) and the model Public Services Accountability Act (2001) from the Center for Policy Alternatives (CPA). Much of the actual language in the Missouri bill and the model act is identical. Both the Missouri bill and the model act are considered good examples of monitoring privatization contracts and ensuring high quality of public services. We have included, in our bill text, a provision that confers upon the state agency the right to terminate the privatization contract without liability, and provisions that relate specifically to the privatization of public water utilities.

Public Services Accountability Act

An Act Relating to Public Services Accountability.

BE IT ENACTED BY THE LEGISLATURE OF <insert your state’s name here>:

Section 1. Short Title.

This Act shall be known and may be cited as the “Public Services Accountability Act.”

Section 2. Intent.

(A) The Legislature finds that using private contractors to provide public services, formerly provided by public employees, does not always promote the public interest.

(B) To ensure that citizens of this state receive high quality public services at a reasonable cost, with due regard for the taxpayers of this state, the service recipients, and the needs of public and private workers, the Legislature further finds it necessary to regulate such privatization contracts, and to protect those workers who report conditions and practices which impact on the efficiency and quality of public services provided by private contractors.

(C) The Legislature further finds that water utilities owned and operated by private contractors should be managed in a way that promotes the public interest, with appropriate citizen oversight.

(D) The Legislature further finds it necessary to ensure that access to public information, guaranteed by the <insert applicable reference(s) to your state’s Freedom of Information Act>, is not, in any way, hindered by the fact that public services are provided by private contractors.

Section 3. Definitions.

For the purposes of this Act, the following terms are defined as follows:

(A) “Agency” means an executive office, department, division, board, commission, or other office or officer in the executive branch of the <insert your state’s name here> government.

(B) “Discrimination or retaliation” means a threat, intimidation, or any adverse change in an employee’s wages, benefits, or terms or conditions of employment. In the case of a person who is not an employee of the private contractor, such term includes any adverse action taken against the person or the person’s employer, including the cancellation of, or refusal to renew, a contract with the person or the person’s employer.

(C) “Employee of a private contractor” means a worker directly employed by a private contractor, as defined in this Section, as well as an employee of a subcontractor or an independent contractor that provides supplies or services to a private contractor. Such term includes former employees of a private contractor or subcontractor and former independent contractors.

(D) “Median household income” means the highest of statewide median household income, countywide median household income, or median family income for an area as determined by the U.S. Department of Housing and Urban Development (HUD), with respect to either a standard metropolitan statistical area or an area outside of a standard metropolitan statistical area.

(E) “Municipal water utilities” means every component and facility of the water storage, treatment, and delivery system of a municipality.

(F) “Net proceeds” means proceeds, less transaction and other related costs.

(G) “Person” means an individual, institution, federal, state, or local governmental entity, or any other public or private entity.

(H) “Private contractor” means any entity which enters into a privatization contract as that term is defined in this Section.

(I) “Privatization contract” means an agreement, or combination or series of agreements, by which a non-governmental person agrees with an agency to provide services, valued at <insert value; e.g., one hundred thousand dollars or more>, which are substantially similar to, and in lieu of, services which have been provided, in whole or in part, by public employees of an agency.

(J) “Public employee” means an employee as defined in <insert appropriate state civil service law or the state law which defines public employment>.

(K) “Public record” means, in addition to a public record as defined in <insert applicable reference(s) to your state’s Freedom of Information Act>, any record relating to the privatization contract or performance under the contract, including, but not limited to, records of monitoring, treatment, water quality, and any record relevant to public health, prepared, received, or retained by a contractor or subcontractor, whether such record be handwritten, typed, tape-recorded, printed, photocopied, emailed, photographed, or recorded electronically or by any other method.

(L) “Services” means, with respect to a private contractor, all aspects of the provision of services provided by a private contractor pursuant to a privatization contract, or any services provided by a subcontractor of a private contractor. In particular, services relating to water utilities include financing, designing, construction, improvement, operation, maintenance, administration, or any combination thereof, of such utilities.

(M) “Subcontractor” means a subcontractor of a private contractor for work under a privatization contract or an amendment to a privatization contract.

(N) “Water treatment system” includes any structure or structures by means of which, prior to discharge into a public water supply system, water is subjected to the addition or abstraction of a substance or substances in order to enhance the safety, palatability, public health, or aesthetic qualities, or reduce the corrosive or hazardous properties of the water used for potable or domestic purposes. A water treatment system includes wastewater systems, including collection systems and treatment systems that generate or collect two thousand five hundred (2,500) or more gallons a day. This does not include any wastewater treatment system operated and maintained exclusively by a single family residence or any wastewater system consisting solely of a gravity flow, nonmechanical septic tank and subsurface treatment and distribution system, or industrial wastewater systems under private ownership.

Section 4. Privatization Contracts; Requirements.

(A) No agency shall make any privatization contract and no such contract shall be valid unless the agency and the contractor comply with each of the requirements in this Act and include the specified provisions in the privatization contract.

(B) The agency shall prepare a specific written statement of the services proposed to be the subject of the privatization contract, including the specific quantity and standard of quality of the subject services. The agency shall solicit competitive sealed bids for the privatization contracts based upon this statement. The day designated by the agency upon which it will accept these sealed bids shall be the same for any and all parties. This statement shall be a public record, shall be filed in the agency, and shall be published in the state register not later than thirty business days prior to the date on which bids are due.

(C) Every bid shall detail:

(1) The length of continuous employment of current employees with the contractor by job classification without identifying employee names. In addition, the contractor may submit information detailing the relevant prior experience of employees within each job classification. If the positions identified by the bidder shall be newly created, the bid shall identify the minimum requirements for prospective applicants for each such position;

(2) The annual rate of current staff turnover;

(3) The number of hours of training planned for each employee in subject matters directly related to providing services to state residents and clients;

(4) Any legal complaints issued by an enforcement agency for alleged violations of applicable federal, state, or local rules, regulations, or laws, including laws governing employee safety and health, labor relations, and other employment requirements, and any enforcement actions, penalties, citations, court findings, or administrative findings for violations of such federal, state, or local rules, regulations, or laws. The information shall include the date, enforcement agency, the rule, law, or regulation involved, and any additional information the contractor may wish to submit;

(5) Any collective bargaining agreements or personnel policies covering the employees to provide services to the state; and

(6) Political contributions made by the bidder, or any employee in a management position with the bidding company, to any elected officer of the state or member of the state Legislature, during the four years prior to the due date of the bid.

(D) For each position in which a contractor will employ any person pursuant to the privatization contract, the minimum compensation to be paid for said position shall be the greater of the wage rate paid at step one of the grade or classification under which an agency employee whose duties are most similar is paid, plus the cash value of health and other benefits provided to such state employees, or the average private sector compensation rate, including the value of health and other benefits, for said position as determined by <insert the appropriate state agency; e.g., the Department of Employment and Training>.

(E) The term of any privatization contract shall not exceed two years.

(F) Every privatization contract shall contain provisions:

(1) Requiring the contractor to offer available employee positions, pursuant to the contract, to qualified public employees of the agency whose state employment is terminated because of the privatization contract;

(2) Requiring the contractor to comply with a policy of nondiscrimination and equal opportunity for all persons, and to take affirmative steps to provide such equal opportunity for all such persons; and

(3) Giving the agency the right to terminate the contract without liability if the contractor fails to comply with the service quality requirements of the statement prepared pursuant to subsection (B) of this Section or carry out any contractual obligations set forth in this Act.

(G) In addition to the requirements as specified in subsection (F) of this Section, any privatization contract relating to public water utilities shall contain provisions:

(1) Requiring the contractor to comply with applicable primary drinking water quality regulations set forth in <insert applicable reference(s) to your state’s primary drinking water regulations> and the service quality requirements of the statement prepared pursuant to subsection (B) of this Section;

(2) Requiring the agency to retain primary oversight and enforcement responsibilities relating to applicable drinking water quality regulations set forth in <insert applicable reference(s) to your state’s primary drinking water regulations> and the service quality requirements of the statement prepared pursuant to subsection (B) of this Section; and

(3) Requiring a one-year moratorium on any rate increase, or new or increased surcharge, billed by the agency or the contractor for services it provides to its customers. The maximum water bill thereafter shall be set at one percent of the median household income unless the contractor invests seventy-five percent of the net proceeds from water bills in water system infrastructure, plants, facilities, and properties that are necessary or useful in the performance of its duties in providing services to the public, and public education programs designed to encourage water use efficiency and water conservation. For purposes of tracking the net proceeds and its investment, the contractor shall maintain records necessary to document the investment of the net proceeds. The amount of the net proceeds shall be the contractor’s primary source of capital for investment in such utility infrastructure, plants, facilities, properties, and public education programs.

(H) No amendment to a privatization contract shall be valid if it has the purpose or effect of avoiding any requirement of any Section of this Act.

Section 5. Review of Contract Costs.

(A) Any agency considering whether to enter into a privatization contract shall prepare a comprehensive written estimate of the costs of public agency employees providing the subject services in the most cost efficient manner. The estimate shall include all direct and indirect costs of public agency employees providing the subject services, including, but not limited to, pension, insurance, and other employee benefit costs. For the purpose of this estimate, any employee organization may, at any time before the final day for the agency to receive sealed bids pursuant to subsection (B) of Section 4, propose amendments to any relevant collective bargaining agreement to which it is a party. Any such amendments shall take effect only if necessary to reduce the cost estimate, pursuant to this subsection, below the contract cost. Such estimate shall remain confidential until after the final day for the agency to receive sealed bids for the privatization contract, at which time the estimate shall become a public record, shall be filed in the agency, and shall be published in the state register.

(B) After soliciting and receiving bids, the agency shall publicly designate the bidder to which it proposes to award the privatization contract. In selecting a contractor, the agency shall consider the contractor’s past performance and its record of compliance with federal, state, and local laws, including the disclosures as required in subsection (C) of Section 4. The agency shall prepare a comprehensive written analysis of the contract cost based upon the designated bid, specifically including the costs of transition from public to private operation, of additional unemployment and retirement benefits, if any, and of monitoring and otherwise administering contract performance. If the designated bidder proposes to perform any or all of the contract outside the boundaries of the state, said contract cost shall be increased by the amount of income tax revenue, if any, which will be lost to the state by the corresponding elimination of agency employees, as determined by the <insert appropriate state agency; e.g., Department of Revenue> to the extent that it is able to do so.

(C) The head of the agency shall certify in writing that:

(1) He/she has complied with all provisions of this Section and of all other applicable laws;

(2) The quality of the services to be provided by the designated bidder is likely to satisfy the service quality requirements of the statement prepared pursuant to subsection (B) of Section 4, and to equal, or exceed, the quality of services which could be provided by public agency employees;

(3) The contract cost will be at least 10 percent less than the estimated cost pursuant to subsection (A) of this Section, taking into account all comparable types of costs and all the additional costs of the contract as specified in subsection (B) of this Section; and

(4) The proposed privatization contract is in the public interest, in that it meets the applicable quality and fiscal standards set forth herein.

(D) Any privatization contract entered into by a state agency and the agency certification described above shall be a public record subject to disclosure pursuant to <insert applicable reference(s) to your state’s Freedom of Information Act>.

Section 6. Monitoring and Enforcement of Privatization Contracts.

(A) No contractor shall award a subcontract for work under a contract, or for work under an amendment to a contract, without the approval of the head of the appropriate agency, or his/her designee, of:

(1) The selection of the subcontractor, and

(2) The provisions of the subcontract.

(B) The agency shall develop and publish the standards by which subcontactors will be approved or rejected.

(C) Each contractor described in subsection (A) of this Section shall file a copy of each executed subcontract or amendment to the subcontract with the agency, who shall maintain the subcontract or amendment as a public record pursuant to <insert applicable reference(s) to your state’s Freedom of Information Act>.

(D) Any private contractor awarded a privatization contract, and any subcontractor to a private contractor subject to these provisions, shall file with the head of the agency copies of financial audits of the private contractor prepared at least annually during the course of the contract term.

(E) All privatization contracts shall include a contract provision specifying that, in order to determine compliance with these principles as well as the contract, the private contractor shall be required to provide the state or its agents, except where prohibited by federal or state laws, regulations, or rules, reasonable access, through representatives of the private contractor, to facilities, records, and employees that are used in conjunction with the provision of contract services.

(F) The private contractor shall submit a report, not less than annually during the term of the privatization contract, detailing the extent to which the contractor has achieved the specific quantity and standard of quality of the subject services as specified by the agency pursuant to subsection (B) of Section 4 and its compliance with all federal, state, and local laws, including any complaints, citations, or findings issued by administrative agencies or courts.

(G) The state agency may seek contractual remedies for any violation of a privatization contract. In addition, if a contractor fails to comply with Section 4 (D) or (F) or Section 8, any person aggrieved by the violation may bring a claim for equitable and other relief, including backpay. In such a suit, a successful plaintiff shall be entitled to costs and attorneys’ fees.

(H) Any water utility that is covered by a privatization contract shall be subject to oversight and regulation by the <insert reference(s) to your state’s public utility commission and/or citizen utility board(1)>.

Section 7. Ownership of Public Records; Public Access to Information.

(A) No contractor or subcontractor, or employee or agent of a contractor or subcontractor, shall:

(1) Have any ownership rights or interest in any public record, which the contractor, subcontractor, employee, or agent possesses, modifies, or creates pursuant to a contract, subcontract, or amendment to a contract or subcontract; or

(2) Impair the integrity of any public record, which the contractor, subcontractor, employee, or agent possesses or creates.

(B) Any public record, which a state agency provides to a contractor or subcontractor or which a contractor or subcontractor creates, shall be and remain a public record for the purposes of <insert applicable reference(s) to your state’s Freedom of Information Act>, and the enforcement provisions of that law shall apply to any failure by the contractor, subcontractor, or agency to disclose records pursuant to this Section. Any monitoring, recordkeeping, or other records created or maintained on paper, in electronic format, or otherwise, by the contractor, subcontractor, or agency, in order to comply with applicable drinking water regulations, or to monitor or assure water quality or public or worker safety, shall be considered a public record for the purposes of <insert applicable reference(s) to your state’s Freedom of Information Act>.

(C) With regard to any public record, the state agency and the contractor or subcontractor shall have a joint and several obligation to comply with the obligations of the state agency under <insert applicable reference(s) to your state’s Freedom of Information Act>, provided the determination of whether or not to disclose a particular record or type of record shall be made solely by such state agency.

(D) No contractor or subcontractor, or employee or agent of a contractor or subcontractor, shall disclose to the public any public record deemed closed or confidential, pursuant to state or federal law. No provision of this subsection shall be construed to prohibit any such contractor from disclosing such public record to any of its subcontractors to carry out the purposes of its subcontract.

(E) No contractor or subcontractor, or employee or agent of a contractor or subcontractor, shall sell, market, or otherwise profit from the disclosure or use of any public record in his/her possession pursuant to a contract, subcontract, or amendment to a contract or subcontract, except as authorized in the contract, subcontract, or amendment.

(F) Any contractor or subcontractor, or employee or agent of a contractor or subcontractor, who learns of any violation of the provisions of this Section shall, no later than seven calendar days after learning of such violation, notify the head of the agency and the Attorney General of such violation.

Section 8. Unions.

State funds shall not be used to support or oppose unionization, including, but not limited to:

(A) Preparation and distribution of materials which advocate for or against unionization;

(B) Hiring or consulting legal counsel or other consultants to advise the contractor about how to assist, promote, or deter union organizing or how to impede a union, which represents the contractor’s employees, from fulfilling its representational responsibilities;

(C) Holding meetings to influence employees about unionization;

(D) Planning or conducting activities by supervisors to assist, promote, or deter union activities; or

(E) Defending against unfair labor practice charges brought by federal or state enforcement agencies.

Section 9. Remedies and Penalties.

(A) The remedies provided pursuant to this Section shall be in addition to any remedies provided pursuant to <insert applicable reference(s) to your state’s primary drinking water regulations> or <insert applicable reference(s) to your state’s Freedom of Information Act>, and other applicable laws.

(B) If any person violates any provision of either Section 4 (G) or Section 7, the Attorney General may bring an action against such person seeking:

(1) Damages on behalf of the state for such violation;

(2) Restitution for damages suffered by any person as a result of the violation; or

(3) Imposition and recovery of a civil penalty of not more than fifty thousand dollars per violation.

(C) In addition to the remedies under subsection (B) of this Section, any person aggrieved by a violation of any provision of either Section 4 (G) or Section 7 may bring an action in any state court to recover any damages suffered as a result of such violation and a contractor or subcontractor shall be considered an agency for purposes of <insert applicable reference(s) to your state’s Freedom of Information Act>.

(D) In any action brought pursuant to subsection (B) or (C) of this Section, the court may:

(1) Order disgorgement of any profits or other benefits derived as a result of a violation of any provision of either Section 4 (G) or Section 7;

(2) Award punitive damages, costs, and reasonable attorneys’ fees; and

(3) Order injunctive or other equitable relief. Proof of public interest or public injury shall not be required in any action brought under subsection (B) or (C) of this Section. No action may be brought under subsection (B) or (C) of this Section more than three years after the occurrence of such violation.

(E) Any person who knowingly and willfully violates any provision of either Section 4 (G) or Section 7 shall, for each such violation, be fined not more than five thousand dollars for each day in which such violation occurs or failure to comply continues, or imprisoned not less than one year nor more than five years, or both.

(F) The contract of any contractor or subcontractor may be voided, without penalty or liability to the state or municipality, upon any violation of a drinking water regulation or material breach of the contract or this Act by the contractor or subcontractor.

Section 10. Prohibition Against Discrimination or Retaliation for Disclosure of Information.

(A) No person shall retaliate or discriminate in any manner against any public employee or employee of a private contractor because that employee, or any person acting on behalf of the employee, in good faith:

(1) Engaged in any disclosure of information relating to the services provided by a private contractor pursuant to a privatization contract or relating to any other matter that may affect water quality, or public health or safety;

(2) Advocated on behalf of service recipients with respect to the care or services provided by the private contractor; or

(3) Initiated, cooperated, or otherwise participated in any investigation or proceeding of any governmental entity relating to the services provided pursuant to a privatization contract.

(B) No person shall retaliate or discriminate in any manner against any public employee or employee of a private contractor because the employee has attempted, or has an intention to, engage in an action described in subsection (A) of this Section.

(C) No person shall by contract, policy, or procedure prohibit or restrict any employee of a private contractor from engaging in any action for which a protection against discrimination or retaliation is provided under subsection (A) of this Section.

(D) This Section shall not protect disclosures that would violate federal or state law, or diminish or impair the rights of any person to the continued protection of confidentiality of communications provided by state or federal law.

(E) With respect to the conduct described in paragraph (1) of subsection (A) of this Section, an employee of a private contractor shall be considered to be acting in good faith if the employee reasonably believes that:

(1) The information is true; and

(2) The information disclosed by the employee:

(a) Evidences a violation of any law, rule, or regulation, or of a generally recognized professional or clinical standard; or

(b) Relates to the care, services, or conditions, which potentially endanger one or more recipients of service or employees employed pursuant to a privatization contract, or relates to any matter that may affect water quality, or public health or safety.

(F) The identity of an employee of a private contractor, who complains in good faith to a government agency, department, or any member or employee of the state Legislature about the quality of services provided by a private contractor, shall remain confidential and shall not be disclosed by any person except upon the knowing written consent of the employee of the private contractor, and in the case in which there is imminent danger to health or public safety, or an imminent violation of criminal law.

(G) Any current or former public employee or employee of a private contractor who believes that he or she has been retaliated or discriminated against in violation of subsection (A), (B), or (C) of Section 10 may file a civil action in any state court of competent jurisdiction against the person believed to have violated subsection (A), (B), or (C) of Section 10.

(H) If the court determines that a violation of subsection (A), (B), or (C) of Section 10 has occurred, the court shall award such damages which result from the unlawful act or acts, including compensatory damages, reinstatement, reimbursement of any wages, salary, employment benefits, or other compensation denied or lost to such employee by reason of the violation as well as punitive damages, attorneys’ fees, and costs, including expert witness fees. The court shall award interest on the amount of damages awarded at the prevailing rate.

(I) The court may issue temporary, preliminary, and permanent injunctive relief restraining violations of this law, including the restraint of any withholding of the payment of wages, salary, employment benefits, or other compensation, plus interest, found by the court to be due and the restraint of any other change in the terms and conditions of employment, and may award such other equitable relief as may be appropriate, including employment, reinstatement, and promotion.

(J) An action may be brought under this Section not later than two years after the date of the last event constituting the alleged violation for which the action is brought.

(K) Any person who violates a provision of subsection (A), (B), or (C) of Section 10 shall be subject to a civil penalty not to exceed ten thousand dollars for each violation. In determining the amount of any penalty under this Section, the appropriateness of such penalty to the size of the business of the person charged and the gravity of the violation shall be considered. The amount of any penalty under this Section, when finally determined, may be:

(1) Deducted from any sums owed by the state to the person charged; or

(2) Ordered by the court, in an action brought for a violation of subsection (A), (B), or (C) of Section 10 brought by the employee or employees who suffered retaliation or discrimination.

(L) In any civil action brought under this Act, the complainant shall have the initial burden of making a prima facie showing that any behavior described in subsection (A) or (B) of Section 10 was a contributing factor in the adverse action or inaction alleged in the complaint. A prima facie case shall be established if the complainant can show that:

(1) The respondent knew of the complainant’s protected activities at the time that the alleged unfavorable action or inaction was taken; and

(2) The discriminatory action occurred within a period of time such that a reasonable person could conclude that an activity protected by subsection (A) or (B) of Section 10 was a contributing factor in the discriminatory treatment.

(M) Once the complainant establishes a prima facie case, the burden shifts to the respondent to demonstrate, by clear and convincing evidence, that it would have taken the same adverse action or inaction in the absence of such behavior.

Section 11. Notice.

(A) Each private contractor shall post and keep posted, in conspicuous places on its premises where notices to employees and applicants for employment are customarily posted, a notice, to be prepared or approved by the <insert applicable state department official; e.g., secretary>, setting forth excerpts from, or summaries of, the pertinent provisions of this Act and information pertaining to the filing of a charge under Section 10.

(B) Any employer that willfully violates this Section may be assessed by the <insert applicable state department official; e.g., secretary> a civil penalty not to exceed one hundred dollars for each separate offense.

Section 12. Severability.

If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity shall not affect other provisions or applications of this Act, which can be given effect without regard to the invalid provision or application and, to this end, the provisions of this Act are severable.

Section 13. Effective Date.

This Act shall take effect immediately upon enactment.

Sources:
(1) If your state does not have a citizen utility board or similar organization, text that could be modified to establish one may be found on the Public Citizen web site. See Title 1, Section 107 of HR 2645, “The Electricity Consumer, Worker, and Environmental Protection Act of 1999.”