Criteria for Personal Service Contracts
May 20, 2007
The Business Council opposes this bill that would impose additional criteria on state agencies seeking to enter into contracts with private sector businesses for the performance of “personal services.” Importantly, this legislation would preclude a state agency from entering into a personal service contract with a private entity unless one of the specific listed criteria is met.
The Business Council has several concerns regarding this legislation:
- While the bill presents seemingly
reasonable guidelines for use of personal
service contract, it is unclear whether
it provides for all
possible circumstances under which it would be beneficial to the
state to use contracts rather than additional
state hires. Therefore, this legislation
may result in unintended consequences by
limiting state agency flexibility in responding
to future staffing demands.
- Agencies are most likely to use
personal service contracts for the performance
of activities of a limited duration. In such
instances, the hiring of “temporary” labor
through contracts, rather than additional
full time state employees, may be in the
best interest of the state. However, the
criteria for demonstration of “actual
cost savings” of personal service contracts
fails to consider the long term costs to
the state of hiring an additional employee
related to such temporary duties, compared
to the use of contract employees.
- It may be inconsistent with provisions
of the annual state budget, which may or
may not contain sufficient personal service
appropriations to allow for the hiring
of permanent staff.
- As noted in last year's veto message, concerns have been raised that restrictions on the use of personal service contracts may have a particular adverse impact on small business and on minority and women owned enterprises.
Given the existing requirements for the review and approval of state contracts, we see no compelling need for these additional restrictions. Therefore, for the reasons discussed above, The Business Council opposes approval of A.7092.