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Second Regular Session

Sixty-first General Assembly

LLS NO. 98­0952.01D DLC/BJA HOUSE BILL 98­1419

STATE OF COLORADO

BY REPRESENTATIVE Pfiffner;

also SENATOR Mutzebaugh.

REENGROSSED

STATE, VETERANS & MILITARY AFFAIRS

A BILL FOR AN ACT

CONCERNING GOVERNMENTAL EFFICIENCY.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.)

Specifies that managed competition for personal services contracts may be implemented by a state agency as an additional management tool. Requires that a labor­management council be organized within any state agency that chooses to implement managed competition. Specifies the membership of such council and its duties. Specifies criteria for implementation of managed competition.

Requires that, prior to implementing managed competition, a state agency must submit a proposal for managed competition to the commission on government efficiency for review and to the governor for approval.

Specifies that prior to requesting bids from private entities for a personal services contract, the head of the state agency shall notify the agency's employees of such request. Allows agency employees to organize an employee business unit to prepare and submit a bid for the contract. If employees inform a state agency of their desire to submit such a bid, requires a state agency to provide such employees with adequate training for the bidding process and to assist in bid preparation. Describes the criteria for awarding a contract to an employee business unit.

Makes the head of the state agency responsible for implementing managed competition in that agency. Provides for allocation of any cost savings gained by an agency from successfully fulfilling the terms of a personal services contract between the employee business unit performing the contract and the state agency. Requires that participating state agencies file an annual status report.

Creates a task force on managerial accounting software. Specifies the members of such task force and requires their appointment no later than September 1, 1998. Requires the task force to investigate, identify, and oversee the acquisition of computer software that best enables state agencies to determine their per­unit costs for providing goods and services. Specifies that the purpose of determining per­unit costs shall be to more easily compare state agency costs to the costs of providing the same goods and services through the private sector. Requires the task force to make its recommendation to the state department of personnel no later than January 1, 1999.

Creates a commission on government efficiency. Specifies the membership for the commission. Specifies the term limits and the method of filling vacancies for the members of the commission. Requires the commission to select a chairman at a meeting held no later than October 1, 1998. Requires the commission to conduct meetings at least quarterly thereafter. Specifies that a majority of the commission constitutes a quorum and that members of the commission serve without compensation. Allows the commission to request staff assistance from the department of personnel. Subjects the activities performed by the commission to an annual audit by the state auditor. Requires the commission to report annually to the state, veterans, and military affairs committees of the senate and the house of representatives. Sets forth the powers of the commission.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  24­50­502, Colorado Revised Statutes, is amended to read:

24­50­502.  Definitions.  As used in this part 5, unless the context otherwise requires:

(1)  "BID" MEANS A COMPETITIVE SEALED BID OR A COMPETITIVE SEALED PROPOSAL DESCRIBED IN ARTICLE 103 OF THIS TITLE OR AS OTHERWISE AUTHORIZED BY RULE.

(2)  "BUSINESS UNIT" MEANS A GROUP OF EMPLOYEES SUBMITTING A BID PURSUANT TO SECTION 24­50­504.5.

(1) (3)  "Contract" means any type of state agreement, regardless of what it may be called, for the acquisition of services.

(4)  "EMPLOYEE" MEANS ANY EMPLOYEE UNDER THE STATE PERSONNEL SYSTEM.

(5)  "MANAGED COMPETITION" MEANS THE PROCESS BY WHICH A STATE AGENCY AUTHORIZES EMPLOYEES OF THE AGENCY TO COMPETE WITH PRIVATE BUSINESSES OR FIRMS FOR A PERSONAL SERVICES CONTRACT AUTHORIZED BY SECTION 24­50­503 OR 24­50­504.

(2) (6)  "Personal services" means services acquired for the state's direct benefit in its operations.

(3) (7)  "Purchased services" means the acquisition of services which THAT directly benefit specific groups or individuals in the public at large as defined by law, from public or private entities licensed, certified, or otherwise authorized by statute to provide such services.

(4) (8)  "Services" means the furnishing of labor, time, or effort.

(9)  "STATE AGENCY" MEANS ANY DEPARTMENT, BOARD, BUREAU, COMMISSION, DIVISION, INSTITUTION, OR OTHER AGENCY OF THE STATE, INCLUDING INSTITUTIONS OF HIGHER EDUCATION.

SECTION 2.  Part 5 of article 50 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF THE FOLLOWING NEW SECTIONS to read:

24­50­504.5.  Managed competition ­ personal services contracts ­ criteria ­ employee proposals. (1)  THE GENERAL ASSEMBLY FINDS THAT MANAGED COMPETITION MAY BE IMPLEMENTED AT THE DISCRETION OF A STATE AGENCY AS AN ADDITIONAL MANAGEMENT STRATEGY OR TOOL TO MAXIMIZE THE EFFECTIVENESS AND EFFICIENCY OF GOVERNMENT SERVICES. THE STATE PERSONNEL DIRECTOR SHALL PROVIDE ASSISTANCE WITH IMPLEMENTATION AND COORDINATION OF MANAGED COMPETITION BY A STATE AGENCY AND SHALL ENSURE THAT MANAGED COMPETITION IS ADMINISTERED IN ADHERENCE TO THE CRITERIA DESCRIBED IN THIS SECTION.

(2)  THE STATE PERSONNEL DIRECTOR SHALL NOTIFY THE GOVERNOR, THE PRESIDENT OF THE SENATE, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, AND ALL STATE AGENCIES WHEN THE MANAGERIAL ACCOUNTING SOFTWARE DESCRIBED IN SECTION 24­50­504.6 IS OPERATIONAL.

(3)  NOTWITHSTANDING THE PROVISIONS OF ARTICLE 113 OF THIS TITLE, ANY STATE AGENCY MAY IMPLEMENT MANAGED COMPETITION FOR A PERSONAL SERVICES CONTRACT IMPLICATING THE STATE PERSONNEL SYSTEM THAT IS AUTHORIZED BY SECTION 24­50­503 OR A PERSONAL SERVICES CONTRACT NOT IMPLICATING THE STATE PERSONNEL SYSTEM AUTHORIZED BY SECTION 24­50­504. MANAGED COMPETITION FOR SUCH A CONTRACT MAY BE IMPLEMENTED BY SOLICITING BIDS FROM BUSINESS UNITS PURSUANT TO SUBSECTION (7) OF THIS SECTION.

(4)  A LABOR­MANAGEMENT COOPERATION COUNCIL SHALL BE ORGANIZED WITHIN ANY STATE AGENCY THAT CHOOSES TO IMPLEMENT MANAGED COMPETITION. SUCH COUNCIL SHALL BE COMPRISED OF REPRESENTATIVES FROM THE STATE AGENCY'S MANAGEMENT, NONMANAGEMENT EMPLOYEES, AND STATE EMPLOYEE ORGANIZATIONS, AS FULL PARTNERS. THE COUNCIL SHALL PRIMARILY FOCUS ON ACHIEVING SUCCESSFUL OUTCOMES IN THE AREAS OF GENERAL PRIVATIZATION INITIATIVES AND EMPLOYEE MANAGED COMPETITION PROJECTS. THE COUNCIL SHALL PARTICIPATE IN ALL STAGES OF THE CONSIDERATION AND IMPLEMENTATION OF A STATE AGENCY'S PROPOSAL FOR MANAGED COMPETITION.

(5)  MANAGED COMPETITION MAY BE IMPLEMENTED BY A STATE AGENCY WHEN ALL OF THE FOLLOWING CONDITIONS ARE MET:

(a)  THE MANAGERIAL ACCOUNTING SOFTWARE DESCRIBED IN SECTION 24­50­504.6 IS OPERATIONAL.

(b)  THE STATE AGENCY HAS UNDERTAKEN SPECIFIC, DESCRIBED MEASURES TO IMPROVE OPERATIONS AND REDUCE COSTS FOR THE PERSONAL SERVICES COVERED BY THE PERSONAL SERVICES CONTRACT FOR A PERIOD OF NOT LESS THAN ONE YEAR PRIOR TO MAKING A REQUEST FOR PROPOSALS, AND THE STATE AGENCY PROVIDES WRITTEN DOCUMENTATION AND OTHER RELEVANT DATA EVIDENCING THAT SUCH MEASURES HAVE NOT IMPROVED OPERATIONS, REDUCED COSTS, OR CHANGED THE AGENCY'S ABILITY TO BE COMPETITIVE WITH THE PRIVATE SECTOR IN THE PROVISION OF SUCH PERSONAL SERVICES.

(c)  THE PERSONAL SERVICES CONTRACT SHALL NOT EXCEED A TERM OF ONE YEAR BUT MAY BE RENEWABLE FOR UP TO FOUR ADDITIONAL ONE­YEAR TERMS AT THE SOLE OPTION OF THE STATE AGENCY.

(d)  THE PERSONAL SERVICES CONTRACT INCLUDES A PROVISION DIRECTING A PRIVATE ENTITY THAT IS AWARDED THE CONTRACT TO CONSIDER OFFERING EMPLOYMENT TO STATE AGENCY EMPLOYEES TO PERFORM THE SERVICES UNDER SUCH CONTRACT.

(e)  AT LEAST TWO PRIVATE ENTITIES EXIST THAT PROVIDE THE SERVICE TO BE CONTRACTED FOR OR THAT AT LEAST TWO COMPETITIVE BIDS FOR THE SERVICE HAVE BEEN MADE BY PRIVATE ENTITIES TO THE STATE AGENCY, OR IF TWO SUCH PRIVATE ENTITIES DO NOT EXIST, THE STATE AGENCY CAN DEMONSTRATE THAT A REQUEST FOR BIDS WILL RESULT IN AT LEAST TWO COMPETITIVE BIDS FOR THE SERVICE.

(f)  THE STATE AGENCY HAS OBTAINED THE APPROVAL TO IMPLEMENT MANAGED COMPETITION DESCRIBED IN SUBSECTION (6) OF THIS SECTION.

(6) (a)  A STATE AGENCY THAT DESIRES TO IMPLEMENT MANAGED COMPETITION SHALL PREPARE A PROPOSAL TO IMPLEMENT MANAGED COMPETITION FOR A PERSONAL SERVICES CONTRACT. THE STATE AGENCY SHALL SOLICIT INPUT FROM THE LABOR­MANAGEMENT COOPERATION COUNCIL ORGANIZED WITHIN THE STATE AGENCY. THE PROPOSAL SHALL BE SUBMITTED TO THE COMMISSION ON GOVERNMENT EFFICIENCY CREATED BY SECTION 24­50­515. THE COMMISSION SHALL REVIEW AND, IF APPROPRIATE, MAKE RECOMMENDATIONS ON THE PROPOSAL.

(b)  THE AGENCY PROPOSAL SHALL INCLUDE, IN ADDITION TO ANY OTHER INFORMATION REQUIRED OR REQUESTED BY THE COMMISSION, THE FOLLOWING DETERMINATIONS:

(I)  A COST­BENEFIT ANALYSIS COMPARISON THAT SHALL INCLUDE BUT NOT BE LIMITED TO, THE COLLECTION AND ANALYSIS OF THE TOTAL FIXED, VARIABLE, DIRECT, AND INDIRECT COSTS OF THE GOVERNMENTAL OPERATION, THE PRIVATE CONTRACTOR OPERATION, AND THE REENGINEERING OF THE CURRENT GOVERNMENTAL OPERATION. AS USED IN THIS SUBPARAGRAPH (I), "COSTS" INCLUDE, BUT ARE NOT LIMITED TO:

(A)  FACILITY AND EQUIPMENT MAINTENANCE;

(B)  DEPRECIATION AND REPLACEMENT COSTS;

(C)  INFLATION­ADJUSTED COSTS, WHERE COMPARISON OF PAST YEARS IS BEING CONDUCTED;

(D)  TRANSITION COSTS ASSOCIATED WITH SHIFTING THE SERVICE DELIVERY FROM THE GOVERNMENT AGENCY TO A PRIVATE CONTRACTOR OR ANY COSTS ASSOCIATED WITH CONVERTING THE PROVISION OF GOVERNMENT SERVICES TO A PERSONAL SERVICES CONTRACT PERFORMED BY A BUSINESS UNIT;

(E)  COSTS OF MONITORING, EVALUATING, AND ENFORCING THE CONTRACT;

(F)  COST OF RESUMING GOVERNMENT OPERATION OF THE SERVICE IF THE PRIVATIZATION EFFORT FAILS;

(G)  COST OF TRAINING STATE EMPLOYEES AND THEIR REPRESENTATIVES ON THE BIDDING PROCESS; AND

(H)  PERSONNEL COSTS SUCH AS THOSE FOR PROVIDING BENEFITS, EARLY RETIREMENTS, RETRAINING, AND RELOCATION TO ANOTHER POSITION.

(II)  REVIEW AND EVALUATION OF THE STAFF CAPACITY, RESOURCES, AND EXPERTISE IN THE AGENCY TO MONITOR THE CONTRACT; AND

(III)  A PROCESS FOR MONITORING, EVALUATING, AND ENFORCING A CONTRACT WITH A PRIVATE CONTRACTOR THAT WILL INCLUDE, BUT NOT BE LIMITED TO:

(A)  DEVELOPMENT OF A METHOD FOR ONGOING, COMPREHENSIVE PERFORMANCE EVALUATION OF THE PRIVATE CONTRACTOR;

(B)  ESTABLISHMENT OF PERFORMANCE CRITERIA AND STANDARDS TO EVALUATE THE PRIVATE CONTRACTOR; AND

(C)  THE DEVELOPMENT AND IMPLEMENTATION OF A DETAILED COST­BENEFIT ANALYSIS COMPARISON FORMAT THAT WOULD ENSURE A THREE­WAY COMPARISON OF THE CURRENT GOVERNMENT OPERATION, THE PRIVATE CONTRACTOR OPERATION, AND A REENGINEERING OF THE CURRENT OPERATION TO PROVIDE THE SERVICE WITH STATE EMPLOYEES.

(c)  IN ADDITION TO ANY OTHER INFORMATION REQUESTED BY THE COMMISSION, THE PROPOSAL SHALL INCLUDE THE FOLLOWING DETERMINATIONS:

(I)  THE NECESSITY FOR THE SERVICE AND THE INTENDED GOALS OF THE SERVICE;

(II)  A DESCRIPTION OF THE PROBLEMS AND INEFFICIENCIES EXISTING WITH THE CURRENT GOVERNMENTAL OPERATION OF THE SERVICE;

(III)  THE AVAILABILITY OF MULTIPLE, QUALIFIED, AND COMPETITIVE PRIVATE CONTRACTORS AND THE STATE'S ABILITY TO CHANGE FROM ONE PRIVATE CONTRACTOR TO ANOTHER.

(d)  FOLLOWING A REVIEW OF THE PROPOSAL BY THE COMMISSION, THE PROPOSAL SHALL BE SUBMITTED TO THE GOVERNOR FOR FINAL APPROVAL OR REJECTION. IF THE PROPOSAL IS NOT APPROVED BY THE GOVERNOR, THE GOVERNOR SHALL RETURN THE PROPOSAL TO THE STATE AGENCY WITH COMMENTS OUTLINING THE REASONS FOR ITS REJECTION AND THE PERIOD OF TIME IN WHICH THE STATE AGENCY MAY RESUBMIT THE PROPOSAL TO THE GOVERNOR. ANY PROPOSAL NOT OBJECTED TO BY THE GOVERNOR WITHIN THIRTY DAYS OF ITS SUBMITTAL SHALL BE DEEMED APPROVED.

(7) (a)  AT LEAST NINETY DAYS PRIOR TO REQUESTING BIDS FROM PRIVATE ENTITIES FOR A PERSONAL SERVICES CONTRACT, THE HEAD OF THE STATE AGENCY SHALL NOTIFY THE EMPLOYEES OF THE STATE AGENCY REGARDING THE REQUEST FOR BIDS.

(b)  IF EMPLOYEES OF A STATE AGENCY INFORM THE HEAD OF THE AGENCY OF THEIR DESIRE TO SUBMIT A BID THROUGH ONE OR MORE BUSINESS UNITS ESTABLISHED FOR THE SOLE PURPOSE OF PROVIDING THE PERSONAL SERVICES THAT ARE THE SUBJECT OF THE REQUEST FOR BIDS, THE STATE AGENCY SHALL PROVIDE THE BUSINESS UNIT OR UNITS WITH ADEQUATE TRAINING FOR THE BIDDING PROCESS AND SHALL ASSEMBLE A TEAM COMPRISED OF MANAGERS, KNOWLEDGEABLE EMPLOYEES, AND REPRESENTATIVES OF LABOR ORGANIZATIONS TO ASSIST THE BUSINESS UNIT OR UNITS IN PREPARING THE BID.

(c)  THE EMPLOYEES MAY SUBMIT A BID THROUGH ONE OR MORE BUSINESS UNITS ESTABLISHED FOR THE SOLE PURPOSE OF PROVIDING THE PERSONAL SERVICES THAT ARE THE SUBJECT OF THE REQUEST FOR BIDS ISSUED BY THE STATE AGENCY.

(d)  THE BUSINESS UNIT MAY SUBMIT A BID AND BE AWARDED A CONTRACT TO PROVIDE SUCH PERSONAL SERVICES, SUBJECT TO THE FOLLOWING CONDITIONS:

(I)  THE BUSINESS UNIT SHALL SUBMIT A SEALED BID BEFORE THE ADVERTISED DEADLINE FOR SUCH BIDS; SUCH BID MAY NOT BE ALTERED AFTER SUCH DEADLINE; AND THE HEAD OF THE STATE AGENCY, OR HIS OR HER DESIGNEE, SHALL PUBLICLY OPEN SUCH BID AND MAKE THE CONTENTS OF THE BID PUBLIC AT SUCH DEADLINE.

(II)  THE STATE PERSONNEL DIRECTOR SHALL DEFINE IN ADVANCE AND IMPLEMENT PROCEDURES TO ENSURE AN OBJECTIVE AND FAIR EVALUATION PROCESS, INCLUDING, BUT NOT LIMITED TO, A PROHIBITION AGAINST BID EVALUATION PARTICIPATION BY ANY PERSONNEL THAT ASSISTED IN PREPARING THE BUSINESS UNIT'S BID OR THAT HAS WITHIN ITS SCOPE OF RESPONSIBILITY THE PROVISION OF ANY OF THE PERSONAL SERVICES TO BE CONTRACTED FOR. IF THE HEAD OF THE STATE AGENCY DETERMINES TO AWARD A CONTRACT TO A BUSINESS UNIT OF THE AGENCY, SUCH AWARD MAY NOT BE MADE UNLESS: THE BUSINESS UNIT RECEIVED NO UNFAIR ADVANTAGE OVER OTHER BIDDERS SUCH AS UNEQUAL ACCESS TO EVALUATION INFORMATION OR A SCORING PREFERENCE BASED SOLELY ON ITS STATUS AS A BUSINESS ENTITY; THE EVALUATION PROCESS WAS OBJECTIVE AND FAIR; AND ALL REQUIREMENTS OF THIS SUBSECTION (7) GOVERNING BIDS BY BUSINESS UNITS OF THE AGENCY WERE MET. FOR PURPOSES OF THIS SUBPARAGRAPH (II), AN UNFAIR ADVANTAGE SHALL NOT EXIST SOLELY BY VIRTUE OF POTENTIAL COST SAVINGS DISTRIBUTIONS TO STATE EMPLOYEES OR TRAINING OR BID PREPARATION ASSISTANCE TO A BUSINESS UNIT BY A STATE AGENCY. THE STATE AGENCY SHALL PROVIDE A REASONABLE OPPORTUNITY FOR PRIVATE BUSINESSES AND OTHER BUSINESS UNITS TO COMMENT REGARDING THE EVALUATION PROCESS AND ANY BID MADE BY A BUSINESS UNIT OF THE STATE AGENCY AND SHALL CONSIDER SUCH COMMENTS IN MAKING THE FINAL CONTRACT AWARD.

(III)  THE BUSINESS UNIT'S BID PRICE IS NOT LESS THAN ITS ATTRIBUTABLE FULLY­ALLOCATED COSTS FOR THE PERSONAL SERVICES, INCLUDING ANY COSTS ASSOCIATED WITH CONVERTING THE PROVISION OF GOVERNMENT SERVICES TO A PERSONAL SERVICES CONTRACT PERFORMED BY A BUSINESS UNIT.

(IV)  THE BUSINESS UNIT IS BOUND BY THE SAME TERMS, CONDITIONS, FINANCIAL PENALTIES, AND STANDARDS OF PERFORMANCE AND OUTCOMES AS WOULD HAVE APPLIED TO THE SCOPE OF WORK FOR A PRIVATE BUSINESS IF IT HAD BEEN AWARDED THE CONTRACT UNDER THE REQUEST FOR BIDS.

(V)  IF DURING ANY FINANCIAL QUARTER DURING THE TERM OF THE CONTRACT THE COST OF THE BUSINESS UNIT ATTRIBUTABLE TO THE SERVICE PROVIDED PURSUANT TO ANY REQUEST FOR BIDS EXCEEDS THE CONTRACT PRICE FOR THE PERIOD FOR SUCH SERVICE, THE STATE AGENCY SHALL CANCEL THE CONTRACT AND ISSUE NEW REQUESTS FOR BIDS FOR THE SERVICE PROVIDED UNDER THE CONTRACT. THE STATE AGENCY SHALL ISSUE A NEW REQUEST FOR BIDS FOR SUCH SERVICE WITHIN ONE HUNDRED TWENTY DAYS AFTER THE END OF SUCH FINANCIAL QUARTER.

(8)  A STATE AGENCY IMPLEMENTING MANAGED COMPETITION FOR A PERSONAL SERVICES CONTRACT MAY UTILIZE COMPETITIVE SEALED BEST VALUE BIDDING FOR SUCH CONTRACT PURSUANT TO SECTION 24­103­202.3.

(9)  THE HEAD OF A STATE AGENCY SHALL BE RESPONSIBLE FOR IMPLEMENTING MANAGED COMPETITION IN THAT AGENCY AND FOR MONITORING A PERSONAL SERVICES CONTRACT ENTERED INTO BY THE AGENCY WITH A BUSINESS UNIT UNDER MANAGED COMPETITION.

(10) (a)  ANY COST SAVINGS GAINED BY A STATE AGENCY FROM SUCCESSFULLY FULFILLING THE TERMS OF A PERSONAL SERVICES CONTRACT WITH A BUSINESS UNIT MAY BE RETAINED BY SUCH AGENCY. WHERE SUCH COST SAVINGS IS RETAINED BY THE AGENCY, THE AGENCY SHALL DIRECT THE PREPONDERANCE OF SUCH SAVINGS TO THE OFFICE OR DIVISION WHERE THE SAVINGS ORIGINATED AS PROVIDED IN PARAGRAPH (b) OF THIS SUBSECTION (10). THE CALCULATION OF THE AMOUNT OF COST SAVINGS FROM SUCH A CONTRACT SHALL BE MADE PURSUANT TO PROCEDURES ESTABLISHED BY THE STATE PERSONNEL DIRECTOR FOR CALCULATING SUCH COST SAVINGS AND SHALL BE SUBJECT TO APPROVAL BY THE COMMISSION ON GOVERNMENT EFFICIENCY CREATED BY SECTION 24­50­515.

(b)  COST SAVINGS SHALL BE UTILIZED BY THE STATE AGENCY AS FOLLOWS:

(I)  UP TO ONE­HALF OF SUCH AMOUNT MAY BE DISTRIBUTED AS BONUSES TO THE EMPLOYEES IN THE BUSINESS UNIT THAT PERFORMED THE PERSONAL SERVICES UNDER THE CONTRACT UNDER AN EMPLOYEE BONUS AWARD PLAN ESTABLISHED BY THE STATE AGENCY AND APPROVED BY THE GOVERNOR; EXCEPT THAT NO BONUS AWARDED TO AN EMPLOYEE MAY EXCEED AN AMOUNT EQUAL TO TWO TIMES THAT EMPLOYEE'S ANNUAL SALARY.

(II)  UP TO ONE­HALF OF SUCH AMOUNT MAY BE RETAINED AND EXPENDED BY THE STATE AGENCY TO IMPROVE THE WORKPLACE CONDITIONS OF THE EMPLOYEES IN THE BUSINESS UNIT THAT PERFORMED THE PERSONAL SERVICES UNDER THE CONTRACT.

(III)  IN THE EVENT EMPLOYEES IN THE BUSINESS UNIT ARE AWARDED THE MAXIMUM BONUS ALLOWED PURSUANT TO SUBPARAGRAPH (I) OF THIS PARAGRAPH (b) AND THE STATE AGENCY DETERMINES, IN CONSULTATION WITH THE LABOR MANAGEMENT COUNCIL, THAT THE BALANCE OF THE COST SAVINGS ALLOCATED PURSUANT TO SUBPARAGRAPH (II) OF THIS PARAGRAPH (b) EXCEED THE REASONABLY NECESSARY RETAINED EARNINGS FOR IMPROVED EFFICIENCY OF THE EMPLOYEES IN THE BUSINESS UNIT, THE EXECUTIVE DIRECTOR OF THE STATE AGENCY MAY ALLOCATE SUCH EXCESS COST SAVINGS TO OTHER PROGRAMS OR FUNCTIONS WITHIN THE STATE AGENCY.

(c)  NO DISTRIBUTION OF COST SAVINGS TO A BUSINESS UNIT PURSUANT TO PARAGRAPH (b) OF THIS SUBSECTION (10) MAY BE MADE UNTIL ALL OF THE TERMS OF THE PERSONAL SERVICES CONTRACT HAVE BEEN COMPLETED.

(d)  ANY DISTRIBUTION OF COST SAVINGS TO A BUSINESS UNIT OR EMPLOYEE SHALL BE MADE AS A LUMP SUM PAYMENT TO SUCH BUSINESS UNIT OR EMPLOYEE.

(e)  ANY BONUS PAYABLE TO AN EMPLOYEE PURSUANT TO THIS SUBSECTION (10) SHALL NOT BE SALARY TO THAT EMPLOYEE, AS THAT TERM IS DEFINED IN SECTION 24­51­101 (42), FOR PURPOSES OF CALCULATING ANY EMPLOYEE BENEFIT UNDER ARTICLE 51 OF THIS TITLE.

(f)  ANY BONUS PAYABLE TO AN EMPLOYEE PURSUANT TO THIS SUBSECTION (10) SHALL BE IN ADDITION TO AND SHALL NOT REDUCE ANY BONUS PAYABLE TO SUCH EMPLOYEE UNDER A PERFORMANCE­BASED PAY PLAN PURSUANT TO SECTION 24­50­104 (8).

(11)  A STATE AGENCY MAY NOT SELL, DISPOSE OF, OR OTHERWISE TRANSFER CONTROL OR OWNERSHIP OF STATE­OWNED EQUIPMENT AND FACILITIES TO ANY PRIVATE ENTITY THAT IS A PARTY TO A PERSONAL SERVICES CONTRACT WITH THAT STATE AGENCY OR TO ANY OTHER PERSON FOR THE PURPOSES OF ALLOWING THE STATE AGENCY TO ENTER INTO THAT CONTRACT. NOTHING IN THIS SUBSECTION (11) SHALL PROHIBIT A STATE AGENCY FROM LEASING, AT FAIR MARKET VALUE, STATE­OWNED EQUIPMENT AND FACILITIES TO A PRIVATE ENTITY PURSUANT TO A WRITTEN AGREEMENT BETWEEN THE STATE AGENCY AND THE PRIVATE ENTITY.

(12)  NOTHING IN THIS SECTION SHALL BE CONSTRUED TO REQUIRE MANAGED COMPETITION FOR ALL PERSONAL SERVICES CONTRACTS AUTHORIZED BY SECTIONS 24­50­503 AND 24­50­504, AND SUCH CONTRACTS MAY BE ENTERED INTO WITHOUT MANAGED COMPETITION.

(13)  ANY STATE AGENCY THAT IMPLEMENTS MANAGED COMPETITION FOR A PERSONAL SERVICES CONTRACT SHALL PRESENT AN ANNUAL STATUS REPORT ON SUCH IMPLEMENTATION ON OR BEFORE JANUARY 1 OF EACH YEAR TO THE GOVERNOR'S OFFICE, THE STATE PERSONNEL DIRECTOR, AND THE HOUSE AND SENATE STATE, VETERANS, AND MILITARY AFFAIRS COMMITTEES.

(14)  NOTWITHSTANDING THE PROVISIONS OF SECTIONS 24­50­503 (1) AND 24­50­504 (2), A CONTRACT BETWEEN A STATE AGENCY AND BUSINESS UNIT PURSUANT TO THIS SECTION SHALL NOT CREATE AN INDEPENDENT CONTRACTOR RELATIONSHIP WITH THE EMPLOYEES IN SUCH BUSINESS UNIT.

(15)  THE PROVISIONS OF SECTION 24­50­505 SHALL NOT APPLY TO CONTRACTS BETWEEN A STATE AGENCY AND A BUSINESS UNIT PURSUANT TO THIS SECTION.

(16)  RECORDS CREATED OR MAINTAINED BY A BUSINESS UNIT IN PREPARATION FOR SUBMITTING A BID PURSUANT TO THIS SECTION SHALL NOT BE OPEN TO PUBLIC INSPECTION PURSUANT TO ARTICLE 72 OF THIS TITLE UNTIL THE BIDS ARE OPENED AND THE CONTRACT AWARDED.

(17)  A BUSINESS UNIT AND ITS EMPLOYEES SHALL HAVE THE SAME APPEAL RIGHTS AS A PRIVATE BUSINESS.

(18)  THE DISTRIBUTION OF COST SAVINGS DESCRIBED IN SUBSECTION (10) OF THIS SECTION SHALL NOT BE CONSTRUED TO CONFLICT WITH OR VIOLATE SECTION 24­50­507 (2) OR SECTION 24­18­201.

24­50­504.6.  Task force on managerial accounting software ­ creation ­ duties ­ repeal. (1)  THERE IS HEREBY CREATED A TASK FORCE ON MANAGERIAL ACCOUNTING SOFTWARE THAT SHALL CONSIST OF THE STATE CONTROLLER OR THE STATE CONTROLLER'S DESIGNEE, THE STATE AUDITOR OR THE STATE AUDITOR'S DESIGNEE, THE STATE PERSONNEL DIRECTOR OR THE DIRECTOR'S DESIGNEE, ONE MEMBER OF THE HOUSE OF REPRESENTATIVES APPOINTED BY THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, AND ONE MEMBER OF THE SENATE APPOINTED BY THE PRESIDENT OF THE SENATE. APPOINTMENTS TO THE TASK FORCE SHALL BE MADE NO LATER THAN SEPTEMBER 1, 1998. THE STATE PERSONNEL DIRECTOR SHALL CALL THE FIRST MEETING OF THE TASK FORCE NO LATER THAN OCTOBER 1, 1998. THE MEMBERS OF THE TASK FORCE SHALL ELECT A CHAIRMAN FROM AMONG ITS MEMBERS. THE TASK FORCE SHALL MEET AS OFTEN AS NECESSARY TO COMPLETE ITS DUTIES.

(2) THE TASK FORCE ON MANAGERIAL ACCOUNTING SOFTWARE SHALL INVESTIGATE, IDENTIFY, AND OVERSEE THE ACQUISITION OF COMPUTER SOFTWARE THAT BEST ENABLES STATE AGENCIES TO DETERMINE THEIR PER­UNIT COSTS FOR PROVIDING GOODS AND SERVICES. THE PURPOSE OF DETERMINING PER­UNIT COSTS SHALL BE TO MORE EASILY COMPARE STATE AGENCY COSTS TO THE COSTS OF PROVIDING THE SAME GOODS AND SERVICES THROUGH THE PRIVATE SECTOR FOR PURPOSES OF IMPLEMENTING MANAGED COMPETITION PURSUANT TO SECTION 24­50­504.5. THE TASK FORCE SHALL MAKE ITS RECOMMENDATIONS CONCERNING COMPUTER SOFTWARE TO THE DEPARTMENT OF PERSONNEL NO LATER THAN JANUARY 1, 1999. THE JANUARY 1, 1999, DEADLINE MUST BE MET IN ORDER TO ALLOW ACQUISITION OF THE ACCOUNTING SOFTWARE THROUGH THE NORMAL PROCESS AS REVIEWED BY THE JOINT BUDGET COMMITTEE.

24­50­515.  Commission on government efficiency ­ creation ­ membership ­ powers ­ repeal. (1)  THERE IS HEREBY CREATED A COMMISSION ON GOVERNMENT EFFICIENCY, TO BE COMPOSED OF ELEVEN MEMBERS AS FOLLOWS:

(a)  FIVE MEMBERS APPOINTED BY THE GOVERNOR;

(b)  THREE MEMBERS REPRESENTING PUBLIC EMPLOYEES AS FOLLOWS:

(I)  ONE MEMBER APPOINTED BY THE COLORADO ASSOCIATION OF PUBLIC EMPLOYEES;

(II)  ONE MEMBER APPOINTED BY THE AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES; AND

(III)  ONE MEMBER APPOINTED BY THE COLORADO FEDERATION OF PUBLIC EMPLOYEES;

(c)  ONE MEMBER APPOINTED BY THE COLORADO MANAGERS ASSOCIATION;

(d)  THE STATE PERSONNEL DIRECTOR OR HIS OR HER DESIGNEE; AND

(e)  THE STATE AUDITOR OR HIS OR HER DESIGNEE.

(2) (a)  OF THE FIRST MEMBERS APPOINTED TO THE COMMISSION ON GOVERNMENT EFFICIENCY UNDER SUBSECTION (1) OF THIS SECTION, THE FOLLOWING MEMBERS SHALL SERVE ON THE COMMISSION FOR TERMS OF ONE YEAR:

(I)  TWO OF THE FIVE MEMBERS APPOINTED BY THE GOVERNOR;

(II)  THE MEMBER APPOINTED BY THE AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES; AND

(III)  THE MEMBER APPOINTED BY THE COLORADO MANAGERS ASSOCIATION.

(b)  THE REMAINING MEMBERS INITIALLY APPOINTED TO THE COMMISSION ON GOVERNMENT EFFICIENCY IN ACCORDANCE WITH SUBSECTION (1) OF THIS SECTION AND MEMBERS SUBSEQUENTLY APPOINTED TO THE COMMISSION SHALL SERVE FOR TERMS OF TWO YEARS; EXCEPT THAT A MEMBER APPOINTED TO SUCCEED ANOTHER MEMBER WHOSE TERM HAS NOT EXPIRED SHALL BE APPOINTED FOR THE PERIOD OF THE UNEXPIRED TERM AND MAY BE SUBSEQUENTLY APPOINTED FOR A TWO­YEAR TERM.

(3)  VACANCIES IN THE MEMBERSHIP OF THE COMMISSION ON GOVERNMENT EFFICIENCY SHALL BE FILLED IN THE SAME MANNER AS ORIGINAL APPOINTMENTS ARE MADE UNDER SUBSECTIONS (1) AND (2) OF THIS SECTION.

(4)  THE COMMISSION ON GOVERNMENT EFFICIENCY SHALL SELECT ITS OWN CHAIRMAN BY A MAJORITY VOTE OF THE QUORUM PRESENT AT A MEETING TO BE HELD NO LATER THAN OCTOBER 1, 1998. BEGINNING IN 1999, AND FOR EACH YEAR THEREAFTER, THE COMMISSION SHALL MEET NOT LESS THAN QUARTERLY UPON THE CALL OF THE CHAIRMAN. A MAJORITY OF THE COMMISSION SHALL CONSTITUTE A QUORUM TO TRANSACT BUSINESS AND FOR THE EXERCISE OF ANY OF THE POWERS AND DUTIES CONFERRED THEREON. MEMBERS OF THE COMMISSION SHALL SERVE WITHOUT COMPENSATION.

(5)  IN CARRYING OUT ITS DUTIES IN ACCORDANCE WITH THIS SECTION, THE COMMISSION ON GOVERNMENT EFFICIENCY MAY REQUEST STAFF ASSISTANCE FROM THE DEPARTMENT OF PERSONNEL, WHICH ASSISTANCE SHALL BE PROVIDED WITHIN AVAILABLE APPROPRIATIONS.

(6)  THE ACTIVITIES PERFORMED BY THE COMMISSION ON GOVERNMENT EFFICIENCY IN ACCORDANCE WITH THIS SECTION SHALL BE SUBJECT TO AN ANNUAL AUDIT BY THE STATE AUDITOR OR HIS OR HER DESIGNEE. ON OR BEFORE MARCH 1, 1999, AND EACH YEAR THEREAFTER, THE COMMISSION SHALL REPORT TO THE STATE, VETERANS, AND MILITARY AFFAIRS COMMITTEES OF THE SENATE AND THE HOUSE OF REPRESENTATIVES CONCERNING THE COMMISSION'S ACTIVITIES DURING THE PREVIOUS YEAR.

(7)  THE POWERS AND DUTIES OF THE COMMISSION ON GOVERNMENT EFFICIENCY SHALL BE:

(a)  TO CONDUCT RESEARCH, INCLUDING SURVEYS AND MARKET­TESTING, OF CURRENTLY PERFORMED GOVERNMENT FUNCTIONS, INCLUDING THOSE GOVERNMENT FUNCTIONS CURRENTLY PERFORMED BY THE PRIVATE SECTOR;

(b)  TO EVALUATE AND MAKE RECOMMENDATIONS CONCERNING THE APPROPRIATE FUNCTIONS OF STATE GOVERNMENT AND TO MAKE RECOMMENDATIONS AS TO WHICH FUNCTIONS OF STATE GOVERNMENT SHOULD BE PERFORMED BY STATE PERSONNEL SYSTEM EMPLOYEES, INCLUDING THOSE GOVERNMENT FUNCTIONS CURRENTLY PERFORMED BY THE PRIVATE SECTOR, AND WHICH FUNCTIONS OF STATE GOVERNMENT SHOULD BE PROVIDED BY THE PRIVATE SECTOR;

(c)  TO RECOMMEND NEW STANDARDS FOR GOVERNMENT EFFICIENCY, EVALUATE THE EFFECTS OF SUCH STANDARDS ON THE STATE PERSONNEL SYSTEM, AND ADVISE THE EXECUTIVE AND LEGISLATIVE BRANCHES OF STATE GOVERNMENT TO IMPLEMENT CHANGES, INCLUDING, BUT NOT BE LIMITED TO, CHANGES RELATING TO THE SELECTION OF MANAGED COMPETITION PROJECTS;

(d)  TO IDENTIFY OPPORTUNITIES FOR PRIVATIZATION;

(e)  TO REVIEW AND MAKE RECOMMENDATIONS CONCERNING PROPOSALS FROM STATE AGENCIES TO PRIVATIZE CERTAIN GOVERNMENT FUNCTIONS;

(f)  TO IDENTIFY SPECIFIC GOVERNMENT FUNCTIONS CURRENTLY PERFORMED BY THE PRIVATE SECTOR THAT COULD BE PERFORMED MORE EFFECTIVELY AND EFFICIENTLY BY STATE PERSONNEL SYSTEM EMPLOYEES AND SHOULD THEREFORE BE TRANSFERRED TO THE APPROPRIATE STATE AGENCY;

(g)  TO DEVELOP GUIDELINES AND PROCEDURES FOR SOLICITING PROPOSALS FOR NEW AND EXISTING PERSONAL SERVICES CONTRACTS FROM PRIVATE ENTITIES AND STATE EMPLOYEES TO PERFORM SERVICES OR FUNCTIONS; AND

(h)  TO IDENTIFY AND MAKE RECOMMENDATIONS TO THE JOINT BUDGET COMMITTEE CONCERNING ANY OTHER EFFICIENT MEANS OF ENHANCING RESPONSIVENESS AND ACCOUNTABILITY IN STATE GOVERNMENT.

(8)  THIS SECTION IS REPEALED, EFFECTIVE JULY 1, 2003.

SECTION 3.  No appropriation.  The general assembly has determined that this act can be implemented within existing appropriations, and therefore no separate appropriation of state moneys is necessary to carry out the purposes of this act.

SECTION 4.  Effective date.  This act shall take effect on July 1, 1998; except that, if a referendum petition is filed against this act or an item, section, or part of this act within the ninety­day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1 (3) of the state constitution, then the act, item, section, or part, if approved by the people, shall take effect on the date of the official declaration of the vote thereon by proclamation of the governor.