Bills propose changes to state contracting process
The Government, Military and Veterans Affairs Committee heard testimony Feb. 13 on four bills intended to improve the process of contracting for state services. The measures resulted from concern over contracting practices undertaken during the state Department of Health and Human Services (DHHS) reform of the child welfare system
Omaha Sen. Bob Krist introduced LB765 and LB1159. He said the bills would reflect best practices in contract administration.
“We have a broken contracting system in health and human services and we need to fix it,” he said.
LB765 would require the DHHS director to conduct a cost-benefit analysis of any contract with direct providers valued at more than $25 million to provide individuals with medical, behavioral or developmental health services, child care or child welfare services.
LB1159 would create additional accountability for personal services contracts valued at more than $25 million.
Among other provisions, LB1159 would require that contracting officers with the state Department of Administrative Services (DAS) handle all service contracts valued at more than $25 million. Contracts valued below $25 million could be handled by individual state agencies.
The bill would require that DAS establish training requirements for contracting officers and guidelines for a proof-of-need analysis for contracts over $25 million.
Among other the provisions, the analysis would be required to include:
• alternatives considered;
• a process outlining quality control mechanisms; and
• a review of any long-term actual cost savings expected from the contract.
In addition, LB1159 would repeal existing law that requires agencies to undertake additional steps in the service contract process if a proposed contract is expected to replace state workers.
LB858, introduced by Lincoln Sen. Bill Avery, also would apply to contracts valued at more than $25 million. The bill would require an agency to submit a copy of a proposed contract and a proof-of-need analysis to DAS, which would certify a submitted analysis as complete before an agency could proceed with contracting services.
The bill also would allow an exemption for competitive bidding and other provisions of personal service contracts if the value of a contract were less than $25 million.
“LB858 would ensure adequate accountability and sound contracting practices,” Avery said.
Finally, LB792, introduced by Omaha Sen. Heath Mello, would clarify that Nebraska law dealing with personal services contracts is applicable regardless of whether any state employee is displaced by such a contract.
Jule Dake Able, executive director of the Nebraska Association of Public Employees, testified in support of LB765, LB1159 and LB792. She said all three bills demonstrate the importance of engaging in cost-benefit analysis prior to the implementation of contracts that use taxpayer dollars.
Scottsbluff Sen. John Harms testified in support of LB858.
Harms said the bill addressed concerns outlined by the Legislative Performance Audit Committee – on which he serves as chairperson – regarding personal service contracts. He said the state should not enter into a contract without obtaining a detailed analysis of its financial implications.
DAS director Carlos Castillo testified in a neutral capacity on LB858, saying the department is willing to work with Avery to improve the state’s current personal service contract process.
No one testified in opposition to any of the proposals and the committee took no immediate action on the bills.
