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.