Bill would tighten state contracting requirements

Lawmakers gave first-round approval March 19 to a bill that seeks to improve the procedure by which state agencies contract for services.

LB858, as introduced by Lincoln Sen. Bill Avery, would apply to contracts valued at more than $25 million and would require the involvement of the state Department of Administrative Services (DAS).

Avery said 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.

The bill would require a state 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.

Currently, contracts with direct providers of medical, behavioral or development health services, child care or child welfare service to an individual are exempt from the state’s bidding requirements.

LB858 would remove the exception for a personal services contract valued at $25 million or more.

“This provision is important because DHHS relied on the child welfare exception in order to enter into the contracts to privatize child welfare,” Avery said.

A Government, Military and Veterans Affairs Committee amendment, adopted 37-0, lowered from $25 million to $15 million the threshold for DAS involvement in the contracting process. The exemption for child welfare service contracts also was lowered to $15 million.

Among other provisions, the amendment specifies that a proof-of-need analysis include a:
• review and analysis of feasible alternatives;
• review of the projected long-term cost savings;
• justification for entering into a contract if it will not result in cost savings;
• rationale for purchasing a service rather than using state employees;
• designation of state agency employees to monitor the contract for performance; and
• demonstration by the state agency that it has taken formal and positive steps to consider alternatives to private contracting, such as agency reorganization.

Sen. Bob Krist of Omaha supported the bill, saying it would provide accountability in state contracting.

“It is extremely important that if we … enter into a contract and spend the taxpayers’ dollars, we need to be accountable at the end of the day,” he said.

The bill advanced on a 35-0 vote.