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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY GROVE, CLYMER, CREIGHTON, DENLINGER, GABLER, HARRIS, KAUFFMAN, MURT, PYLE, ROCK, STERN AND SWANGER, SEPTEMBER 28, 2010 |
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| REFERRED TO COMMITTEE ON STATE GOVERNMENT, SEPTEMBER 28, 2010 |
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| AN ACT |
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1 | Establishing the Council on Efficient Government; and providing |
2 | for its powers and duties and for business cases to |
3 | outsource. |
4 | The General Assembly of the Commonwealth of Pennsylvania |
5 | hereby enacts as follows: |
6 | Section 1. Short title. |
7 | This act shall be known and may be cited as the Council on |
8 | Efficient Government Act. |
9 | Section 2. Definitions. |
10 | The following words and phrases when used in this act shall |
11 | have the meanings given to them in this section unless the |
12 | context clearly indicates otherwise: |
13 | "Council." The Council on Efficient Government established |
14 | by this act. |
15 | "State agency." Any of the following: |
16 | (1) Any department, agency, board or commission under |
17 | the jurisdiction of the Governor. |
18 | (2) The Office of Attorney General. |
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1 | (3) The Department of the Auditor General. |
2 | (4) The Treasury Department. |
3 | (5) An independent administrative department, agency, |
4 | board or commission of the Executive branch of State |
5 | government. |
6 | Section 3. Council on Efficient Government. |
7 | (a) Establishment.--The Council on Efficient Government is |
8 | established and shall consist of the following members: |
9 | (1) The chief executive or administrative officer of a |
10 | State agency who is appointed by the Governor. |
11 | (2) Two members who are engaged in private enterprise |
12 | and who are appointed by the Governor. |
13 | (3) Two members who are engaged in private enterprise |
14 | and who are appointed by the President pro tempore of the |
15 | Senate. |
16 | (4) Two members who are engaged in private enterprise |
17 | and who are appointed by the Speaker of the House of |
18 | Representatives. |
19 | (b) Terms.--The terms of appointment for members to the |
20 | council are for two years, unless the chief executive or |
21 | administrative officer of a State agency ceases to hold office. |
22 | The Governor shall appoint a replacement member for the |
23 | remainder of the unexpired term. |
24 | (c) Reimbursement of reasonable expenses.--A member of the |
25 | council who is engaged in private enterprise is not eligible to |
26 | receive compensation but is eligible for reimbursement of |
27 | reasonable expenses, pursuant to State law. |
28 | (d) Disqualification on council reviews.--A member of the |
29 | council may not participate in a council review of a business |
30 | case to outsource if the State agency is conducting the proposed |
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1 | outsourcing or, in the case of a member engaged in private |
2 | enterprise, if the member has a business relationship with an |
3 | entity that is involved or potentially could be involved in the |
4 | proposed outsourcing. |
5 | (e) Delegation prohibited.--A member of the council who is |
6 | engaged in private enterprise may not delegate the membership to |
7 | a designee. |
8 | (f) Quorum.--A quorum shall consist of at least three |
9 | members of the council. |
10 | (g) Vacancies.--A vacancy on the council shall be filled in |
11 | the same manner as the original appointment, and any member |
12 | appointed to fill a vacancy occurring for a reason other than |
13 | the expiration of a term shall serve only for the unexpired term |
14 | of the member's predecessor. |
15 | (h) Chairperson.--The council shall select a chairperson |
16 | from among its members. |
17 | Section 4. Powers and duties. |
18 | (a) General rule.--The council shall: |
19 | (1) Review whether or not a good or service provided by |
20 | a State agency may be privatized to provide the same type and |
21 | quality of good or service that would result in cost savings |
22 | or best value. The council may hold public hearings as part |
23 | of its evaluation process and shall report its |
24 | recommendations to the Governor, the President pro tempore of |
25 | the Senate and the Speaker of the House of Representatives. |
26 | (2) Review privatization of a good or service at the |
27 | request of a State agency or a private enterprise. |
28 | (3) Review issues concerning agency competition with one |
29 | or more private enterprises to determine ways to eliminate |
30 | any unfair competition with a private enterprise. |
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1 | (4) Recommend privatization to a State agency if a |
2 | proposed privatization is demonstrated to provide a more |
3 | cost-efficient or more effective manner of providing a good |
4 | or service. |
5 | (5) Employ a standard process for reviewing business |
6 | cases to outsource. |
7 | (6) Review and evaluate business cases to outsource as |
8 | requested by the Governor or the State agency head whose |
9 | State agency is proposing to outsource. |
10 | (7) No later than 30 days before a State agency's |
11 | issuance of a solicitation of $10,000,000 or more, provide to |
12 | the State agency conducting the procurement, the Governor, |
13 | the President pro tempore of the Senate and the Speaker of |
14 | the House of Representatives an advisory report for each |
15 | business case reviewed and evaluated by the council. The |
16 | report shall contain all versions of the business case, an |
17 | evaluation of the business case, any relevant recommendations |
18 | and sufficient information to assist the State agency in |
19 | determining whether the business case to outsource should be |
20 | included with the legislative budget request. |
21 | (8) Recommend and implement standard processes for State |
22 | agency and council review and evaluate State agency business |
23 | cases to outsource, including templates for use by State |
24 | agencies in submitting business cases to the council. |
25 | (9) Recommend standards, processes and guidelines for |
26 | use by State agencies in developing business cases to |
27 | outsource. |
28 | (10) Incorporate any lesson learned from outsourcing |
29 | services and activities into council standards, procedures |
30 | and guidelines, as appropriate, and identify and disseminate |
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1 | to State agencies information regarding best practices in |
2 | outsourcing efforts. |
3 | (11) Develop guidelines for assisting State employees |
4 | whose jobs are eliminated as a result of outsourcing. |
5 | (12) Receive complaints of violations of this act. |
6 | (13) Transmit complaints received under this section to |
7 | the State agency alleged to be in violation. |
8 | (14) Hold public hearings on complaints and determine |
9 | whether a State agency is in violation of this act. |
10 | (15) Issue a written report of its findings to the |
11 | complainant within 90 days after receiving the State agency's |
12 | response. |
13 | (16) Transmit to the Governor, the President pro tempore |
14 | of the Senate and the Speaker of the House of Representatives |
15 | a complete report of each meeting, including recommendations |
16 | to correct violations of prohibitions on competition with |
17 | private enterprise and findings on necessary exceptions to |
18 | the prohibitions. |
19 | (17) (i) Solicit petitions of interest from private |
20 | sector service providers as the council considers |
21 | appropriate. The council may evaluate and review the |
22 | petitions and may hold public hearings as part of the |
23 | evaluation process. The council may recommend some or all |
24 | of the petitions to the Governor's Office for further |
25 | review pursuant to State law. |
26 | (ii) A person does not have a cause of action based |
27 | on the failure of the council to consider a petition of |
28 | interest or make a recommendation. |
29 | (b) Evaluation and review of exemptions.--The council may |
30 | evaluate and review all State agency exemptions and exemptions |
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1 | to the restrictions on competition with private enterprise in |
2 | this act and may determine that any function or functions of a |
3 | State agency are in violation of this act. The council shall |
4 | report its findings and recommendations to the Governor, the |
5 | President pro tempore of the Senate and the Speaker of the House |
6 | of Representatives. |
7 | (c) Annual report.--The council shall prepare an annual |
8 | report on: |
9 | (1) Recommendations on innovative methods of delivering |
10 | government services that would improve the efficiency, |
11 | effectiveness or competition in the delivery of government |
12 | services, including enterprise-wide proposals. |
13 | (2) Outsourcing efforts of each State agency, including |
14 | the number of outsourcing business cases and solicitations, |
15 | the number and dollar value of outsourcing contracts, |
16 | descriptions of performance results as applicable, any |
17 | contract violations or project slippages and the status of |
18 | extensions, renewals and amendments of outsourcing contracts. |
19 | (3) Information about the council's activities. |
20 | (4) The status of the inventory of commercial activities |
21 | created under section 5. |
22 | (d) Submission of annual report.--The council shall submit |
23 | the annual report prescribed by subsection (c) to the Governor, |
24 | the President pro tempore of the Senate and the Speaker of the |
25 | House of Representatives no later than January 15 immediately |
26 | following the calendar year for which the report is made. The |
27 | council shall provide an oral report to the Joint Legislative |
28 | Budget Committee and the Governor's Budget Office when the |
29 | legislature is not in session. |
30 | (e) Staff.--The Auditor General of the Commonwealth shall |
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1 | employ an adequate number of staff who collectively possess |
2 | significant expertise and experience as required to carry out |
3 | the duties specified in this act. |
4 | (f) Cooperation by State agencies.--Each State agency shall |
5 | submit to the council all information, documents and other |
6 | materials required by the council pursuant to this act. |
7 | (g) Release of performance audits.--At the request of the |
8 | council, the Auditor General shall provide performance audit and |
9 | other required information relating to State agency budgets and |
10 | functions. The Auditor General may assist in the development and |
11 | review of the agency inventory of commercial activities |
12 | prescribed in section 5. |
13 | (h) Filing of recommendations for privatization.--In |
14 | addition to filing a copy of recommendations for privatization |
15 | with a State agency head, the council shall file a copy of its |
16 | recommendations for privatization with the Governor's Office, |
17 | the Joint Legislative Budget Committee and the Governor's Budget |
18 | Office for submission to the relevant legislative appropriation |
19 | subcommittee. |
20 | (i) Advisory groups.--The council may appoint advisory |
21 | groups to conduct studies, research or analyses and make reports |
22 | and recommendations with respect to a matter within the |
23 | jurisdiction of the council. At least one member of the council |
24 | shall serve on each advisory group. |
25 | (j) Independent privatizations.--Subject to the provisions |
26 | of section 6, nothing in this act shall be construed to preclude |
27 | a State agency from privatizing the provision of a good or |
28 | service independently of any recommendation of the council, |
29 | provided there is legal authority to do so. |
30 | (k) Aggrieved persons.--Except as provided by statute, any |
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1 | aggrieved person may elect to directly seek judicial relief from |
2 | action of the council. |
3 | Section 5. Commercial activities inventory and review. |
4 | (a) General rule.--On or before a date selected by |
5 | concurrent resolution or act of the General Assembly, the |
6 | council shall create an inventory of activities of State |
7 | agencies to classify whether each activity or elements of the |
8 | activity are: |
9 | (1) A commercial activity that may be obtained in whole |
10 | or in part from a private enterprise. |
11 | (2) An inherently governmental activity. |
12 | (b) Biennial update of inventory.--The council shall update |
13 | the inventory created under this section at least every two |
14 | years. |
15 | (c) Public access to inventory.--The council shall make the |
16 | inventory available to the public through electronic means. |
17 | (d) Cooperation from State agencies.--State agencies shall |
18 | cooperate with inventory requests made by the council. |
19 | Section 6. Business cases to outsource. |
20 | (a) Project cost of more than $10,000,000.--A proposal to |
21 | outsource having a projected cost of more than $10,000,000 in |
22 | any fiscal year shall require: |
23 | (1) An initial business case analysis conducted by the |
24 | State agency and submitted to the council, the Governor, the |
25 | President pro tempore of the Senate and the Speaker of the |
26 | House of Representatives at least 60 days before a |
27 | solicitation is issued. The council shall evaluate the |
28 | business case analysis and submit an advisory report to the |
29 | State agency, the Governor, the President pro tempore of the |
30 | Senate and the Speaker of the House of Representatives when |
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1 | the advisory report is completed, but at least 30 days before |
2 | the State agency issues the solicitation. |
3 | (2) A final business case analysis conducted by the |
4 | State agency and submitted after the conclusion of any |
5 | negotiations, at least 30 days before execution of a |
6 | contract, to the council, the Governor, the President pro |
7 | tempore of the Senate and the Speaker of the House of |
8 | Representatives. |
9 | (b) Project cost of $1,000,000 to $10,000,000.--A proposal |
10 | to outsource having a projected cost of at least $1,000,000 but |
11 | not more than $10,000,000 in any fiscal year shall require: |
12 | (1) An initial business case analysis conducted by the |
13 | State agency and submission of the business case, at least 30 |
14 | days before issuing a solicitation, to the council, the |
15 | Governor, the President pro tempore of the Senate and the |
16 | Speaker of the House of Representatives. |
17 | (2) A final business case analysis conducted by the |
18 | State agency and submitted after the conclusion of any |
19 | negotiations, at least 30 days before execution of a |
20 | contract, to the council, the Governor, the President pro |
21 | tempore of the Senate and the Speaker of the House of |
22 | Representatives. |
23 | (c) Project cost of less than $1,000,000.--A business case |
24 | to outsource having a projected cost of less than $1,000,000 in |
25 | any fiscal year shall require a final business case analysis |
26 | conducted by the State agency after the conclusion of any |
27 | negotiations and provided to the council at least 30 days before |
28 | execution of a contract. The council shall provide the business |
29 | case in its annual report to the President pro tempore of the |
30 | Senate and the Speaker of the House of Representatives. |
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1 | (d) Contents of business case.--For any proposed |
2 | outsourcing, the State agency shall develop a business case that |
3 | justifies the proposal to outsource. The business case is not |
4 | subject to challenge or protest. The business case shall |
5 | include: |
6 | (1) A detailed description of the service or activity |
7 | for which the outsourcing is proposed. |
8 | (2) A description and analysis of the State agency's |
9 | current performance based on existing performance measures if |
10 | the State agency is currently performing the service or |
11 | activity. |
12 | (3) The goals to be achieved through the proposed |
13 | outsourcing and the rationale for the goals. |
14 | (4) A citation to the existing or proposed legal |
15 | authority for outsourcing the service or activity. |
16 | (5) A description of available options for achieving the |
17 | goals. If State employees are currently performing the |
18 | service or activity, at least one option involving |
19 | maintaining State provision of the service or activity shall |
20 | be included. |
21 | (6) An analysis of the advantages and disadvantages of |
22 | each option, including, at a minimum, potential performance |
23 | improvements and risks. |
24 | (7) A description of the current market for the |
25 | contractual services that are under consideration for |
26 | outsourcing. |
27 | (8) (i) A cost-benefit analysis documenting the direct |
28 | and indirect specific baseline costs, savings and |
29 | qualitative and quantitative benefits involved in or |
30 | resulting from the implementation of the recommended |
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1 | option or options. The analysis shall specify the |
2 | schedule that, at a minimum, must be adhered to in order |
3 | to achieve the estimated savings. All elements of cost |
4 | shall be clearly identified in the cost-benefit analysis, |
5 | described in the business case and supported by |
6 | applicable records and reports. The head of the State |
7 | agency shall attest that based on the data and |
8 | information underlying the business case and to the best |
9 | of his knowledge, all projected costs, savings and |
10 | benefits are valid and achievable. |
11 | (ii) For the purposes of this paragraph: |
12 | (A) "Cost" means the reasonable, relevant and |
13 | verifiable cost, which may include elements such as |
14 | personnel, materials and supplies, services, |
15 | equipment, capital depreciation, rent, maintenance |
16 | and repairs, utilities, insurance, personnel travel, |
17 | overhead and interim and final payments. The |
18 | appropriate elements shall depend on the nature of |
19 | the specific initiative. |
20 | (B) "Savings" means the difference between the |
21 | direct and indirect actual annual baseline costs |
22 | compared to the projected annual cost for the |
23 | contracted functions or responsibilities in any |
24 | succeeding State fiscal year during the term of the |
25 | contract. |
26 | (9) A description of differences among current State |
27 | agency policies and processes and, as appropriate, a |
28 | discussion of options for or a plan to standardize, |
29 | consolidate or revise current policies and processes, if any, |
30 | to reduce the customization of any proposed solution that |
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1 | would otherwise be required. |
2 | (10) A description of the specific performance standards |
3 | that must, at a minimum, be met to ensure adequate |
4 | performance. |
5 | (11) The projected time frame for key events from the |
6 | beginning of the procurement process through the expiration |
7 | of the contract. |
8 | (12) A plan to ensure compliance with applicable record |
9 | retention laws and the act of February 14, 2008 (P.L.6, |
10 | No.3), known as the Right-to-Know Law. |
11 | (13) A specific and feasible contingency plan addressing |
12 | contractor nonperformance and a description of the tasks |
13 | involved in and costs required for its implementation. |
14 | (14) A State agency's transition plan for addressing |
15 | changes in the number of agency personnel, affected business |
16 | processes, employee transition issues and communication with |
17 | affected stakeholders, such as State agency clients and the |
18 | public. The transition plan must contain a reemployment and |
19 | retraining assistance plan for employees who are not retained |
20 | by the State agency or employed by the contractor. |
21 | (15) A plan for ensuring access by persons with |
22 | disabilities in compliance with applicable Federal and State |
23 | laws. |
24 | (16) A description of legislative and budgetary actions |
25 | necessary to accomplish the proposed outsourcing. |
26 | (e) Required contents of contracts.--Each contract for a |
27 | proposed outsourcing under this section shall include the |
28 | following: |
29 | (1) A scope-of-work provision that clearly specifies |
30 | each service or deliverable to be provided, including a |
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1 | description of each service or deliverable or activity that |
2 | is quantifiable, measureable and verifiable. This contractual |
3 | provisions shall include a clause stating that if a |
4 | particular service or deliverable is inadvertently omitted or |
5 | not clearly specified, but determined to be operationally |
6 | necessary and verified to have been performed by the agency |
7 | within the 12 months before the execution of the contract, |
8 | the service or deliverable will be provided by the contractor |
9 | through the identified contract amendment process. |
10 | (2) A service-level agreement provision describing all |
11 | services to be provided under the terms of the agreement, the |
12 | State agency's service requirements and performance |
13 | objectives, specific responsibilities of the State agency and |
14 | the contractor and the process for amending any portion of |
15 | the service-level agreement. Each service-level agreement |
16 | shall contain an exclusivity clause that allows the State |
17 | agency to retain the right to perform the service or |
18 | activity, directly or with another contractor, if service |
19 | levels are not being achieved. |
20 | (3) A provision that identifies all associated costs, |
21 | specific payment terms and payment schedules, including |
22 | provisions governing incentives and financial disincentives |
23 | and criteria governing payment. |
24 | (4) A provision that identifies a clear and specific |
25 | transition plan that will be implemented in order to complete |
26 | all required activities needed to transfer the service or |
27 | activity from the State agency to the contractor and operate |
28 | the service or activity successfully. |
29 | (5) A performance standards provision that identifies |
30 | all required performance standards, which shall include at a |
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1 | minimum: |
2 | (i) Detailed and measurable acceptance criteria for |
3 | each service or deliverable to be provided to the State |
4 | agency under the terms of the contract that document the |
5 | required performance level. |
6 | (ii) A method for monitoring and reporting progress |
7 | in achieving specified performance standards and levels. |
8 | (iii) The sanctions or disincentives that will be |
9 | imposed for nonperformance by the contractor or State |
10 | agency. |
11 | (6) A provision that requires the contractor and its |
12 | subcontractors to maintain adequate accounting records that |
13 | comply with all applicable Federal and State laws and |
14 | generally accepted accounting principles. |
15 | (7) A provision that authorizes the State agency to have |
16 | access to and audit all records related to the contract and |
17 | subcontracts, or any responsibilities or functions under the |
18 | contract and subcontracts, for purposes of legislative |
19 | oversight and a requirement for audits by a service |
20 | organization pursuant to professional auditing standards, if |
21 | appropriate. |
22 | (8) A provision that requires the contractor to |
23 | interview and consider for employment with the contractor |
24 | each displaced State employee who is interested in such |
25 | employment. |
26 | (9) A contingency plan provision that describes the |
27 | mechanism for continuing the operation of the service or |
28 | activity, including transferring the service or activity back |
29 | to the State agency or successor contractor, if the |
30 | contractor fails to perform and comply with the performance |
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1 | standards and levels of the contract and the contract is |
2 | terminated. |
3 | (10) A provision that requires the contractor and its |
4 | subcontractors to comply with applicable record retention |
5 | laws and the Right-to-Know Law specifically to: |
6 | (i) Keep and maintain the public records that |
7 | ordinarily and necessarily would be required by the State |
8 | agency in order to perform the service or activity. |
9 | (ii) Provide the public with access to the public |
10 | records on the same terms and conditions that the State |
11 | agency would provide the records. |
12 | (iii) Ensure that records that are exempt or records |
13 | that are confidential and exempt are not disclosed except |
14 | as authorized by law. |
15 | (iv) Meet all requirements for retaining records and |
16 | transfer to the State agency, at no cost, all public |
17 | records in possession of the contractor on termination of |
18 | the contract and destroy any duplicate public records |
19 | that are exempt or confidential. All records stored |
20 | electronically shall be provided to the State agency in a |
21 | format that is compatible with the information technology |
22 | systems of the State agency. |
23 | (11) (i) A provision that addresses ownership of |
24 | intellectual property. |
25 | (ii) This paragraph shall not be construed to |
26 | provide the specific authority needed by a State agency |
27 | to obtain a copyright or trademark. |
28 | (12) If applicable, a provision that allows the State |
29 | agency to purchase from the contractor, at its depreciated |
30 | value, assets used by the contractor in the performance of |
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1 | the contract. If assets have not depreciated, the State |
2 | agency retains the right to negotiate to purchase at an |
3 | agreed-upon cost. |
4 | Section 7. Council accounting method. |
5 | The council, by rule, shall establish an accounting method |
6 | that: |
7 | (1) Is similar to generally accepted accounting |
8 | principles used by a private enterprise. |
9 | (2) Allows a State agency to identify the total actual |
10 | cost of engaging in a commercial activity in a manner similar |
11 | to how a private enterprise identifies the total actual cost |
12 | to the private enterprise, including the following: |
13 | (i) Labor expenses, such as compensation and |
14 | benefits, costs of training, costs of paying overtime, |
15 | costs of supervising labor or other personnel expenses. |
16 | (ii) Operating costs, such as vehicle maintenance |
17 | and repair, marketing, advertising or other sales |
18 | expenses, office expenses, costs of an accounting |
19 | operation, such as billing, insurance expenses, real |
20 | estate or equipment costs, debt service costs or a |
21 | proportionate amount of other overhead or capital |
22 | expenses, such as vehicle depreciation and depreciation |
23 | of other fixed assets. |
24 | (iii) Contract management costs. |
25 | (iv) Other costs particular to a person supplying |
26 | the good or service. |
27 | (3) Provides a process to estimate the taxes a State |
28 | agency would pay related to engaging in a commercial activity |
29 | if the State agency were required to pay Federal, State and |
30 | local taxes to the same extent as a private enterprise |
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1 | engaging in the commercial activity. |
2 | Section 8. Required review of commercial activities by |
3 | Governor. |
4 | Beginning with a fiscal year designated by concurrent |
5 | resolution or act of the General Assembly, the Governor, at |
6 | least once every two fiscal years, shall select at least three |
7 | commercial activities that are being performed by a State agency |
8 | to be examined by the Governor's Budget Office. |
9 | Section 9. Duties of Governor's Budget Office. |
10 | (a) General rule.--The Governor's Budget Office shall: |
11 | (1) Determine the amount of an appropriation that is no |
12 | longer needed by a State agency because all or a portion of |
13 | the State agency's provision of a good or service is |
14 | privatized. |
15 | (2) Adjust the Governor's budget recommendations to |
16 | reflect the amount that is determined under paragraph (1). |
17 | (3) Report its findings to the President pro tempore of |
18 | the Senate and the Speaker of the House of Representatives. |
19 | (b) Construction.--Nothing in this section shall be |
20 | construed to prevent the Governor from making a budget |
21 | recommendation regarding the restoration of a portion of the |
22 | appropriation to a State agency that is reduced under this |
23 | section. |
24 | Section 10. Applicability. |
25 | This act does not apply to contracts in support of the |
26 | planning, development, implementation, operation or maintenance |
27 | of the road, bridge and public transportation construction |
28 | program of the Department of Transportation. |
29 | Section 11. Initial terms of members of the Council on |
30 | Efficient Government. |
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1 | Notwithstanding section 2, the initial members of the council |
2 | who are engaged in private enterprise shall assign themselves by |
3 | lot to terms of one or two years in office. The appointing |
4 | authority shall make all subsequent appointments as prescribed |
5 | by statute. |
6 | Section 12. Effective date. |
7 | This act shall take effect in 60 days. |
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