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ARIZONA HOUSE OF REPRESENTATIVESFifty-sixth Legislature Second Regular Session |
Senate: GOV DP 6-1-1-0 | 3rd Read 25-5-0-0 |
SB 1670: public-private partnership contracts
Sponsor: Senator Gowan, LD 19
Committee on Government
Overview
An emergency measure that outlines requirements relating to public-private partnership contracts.
History
The Director (Director) of the Arizona Department of Administration (ADOA) is authorized to enter into public-private partnership contracts to finance the technology needs of a purchasing agency. The Director may issue requests for information and requests for proposals to solicit private partners who are interested in providing programs under a contract. A contract between the Director and an automated systems vendor must provide for payment of fees on a contractually specific amount based on the achievement of mutually agreed upon performance improvements. Before a public-private partnership contract is awarded, the Joint Legislative Budget Committee (JLBC) staff must be consulted with regard to the potential fiscal impact of the contract to the state (A.R.S. § 41-2559).
Provisions
Public-Private Partnership Contracts
1. Adds that a contract entered into between the Director and an information technology vendor must also provide for payment of fees on a contractually specific amount. (Sec. 1)
2. Enables the Director to authorize a procurement officer to enter into a public-private partnership contract to:
a) finance or provide construction, operations and maintenance services of buildings, infrastructure or improvements to or on state property;
b) finance or facilitate the development of state property; and
c) develop programs or services that:
i. enable a purchasing agency to expand or enhance its operations, including training, employee support and customer service to achieve desired results that serve the interests of Arizona;
ii. are consistent with the legal authority and responsibilities of the purchasing agency; and
iii. are best accomplished by a public-private partnership. (Sec. 2)
3. Stipulates that the term of a public-private partnership contract must be clearly stated in any request for proposals and is at the discretion of the Director, in consultation with the purchasing agency, for no more than 25 years. (Sec. 2)
4. Provides that the Director's determination for contract length must be based on all of the following:
a) the request of the purchasing agency involved following a consultation; and
b) information gathered on matters including:
i. required lead time before operations;
ii. expected time required to achieve a reasonable return on any investments or expenses resulting from a similar contract;
iii. the current and projected availability of potential vendors that can adequately perform the scope of envisioned work; and
iv. the costs and risks associated with short contract time frames or multiple renewal periods. (Sec. 2)
5. Authorizes the Director, if it is in the best interest of the state, to extend, on mutual agreement with the vendor, the length of a public-private partnership contract to facilitate the transition to a new vendor resulting from a new request for proposals or any other allowable process or decision for contract terminations pursuant to the contract's terms. (Sec. 2)
6. Requires the terms of an extension to be shared with JLBC staff before the execution of the extension. (Sec. 2)
7. States that public-private partnership contracts must address the ownership of any infrastructure or buildings developed and constructed during a public-private partnership. (Sec. 2)
8. Specifies that public-private partnership contracts are subject to modification within the contracted time frame as long as the modification fits into the scope of work included in the request for proposals from which the contract was awarded. (Sec. 2)
9. Authorizes the Director to delegate all or a portion of the procurement activities to a purchasing agency seeking a public-private partnership contract. (Sec. 2)
10. Subjects the following to review and approval by the Director:
a) the terms of the contracts entered into;
b) the payment of fees by Arizona based on the achievement of any established performance measures; and
c) the advertising of a public-private partnership request for proposals with outlined requirements. (Sec. 2)
11. Prohibits a public-private partnership contract from:
a) causing the state to share in the liabilities of the private sector partner;
b) exempting the private sector partner from state law and regulations, unless the exemption is specified under state law; or
c) involving manufacturing a good or delivering a service already readily available to the public sector through existing contract mechanisms, unless the Director determines a public-private partnership is required to address outlined requirements. (Sec. 2)
12. Stipulates that a purchasing agency must already possess the legal authority to procure the goods, services or construction it is seeking to enter into a public-private partnership contract. (Sec. 2)
13. Establishes that any leases or sales of state-owned property as part of a public-private partnership contract must be executed in accordance with state law and reported to JLBC staff in a timely manner. (Sec. 2)
Request for Proposals
14. Limits a public-private partnership contract to only resulting from a request for proposals issued by the purchasing agency authorized to solicit private partners interested in providing construction, development, services or other functions under a public-private partnership contract. (Sec. 2)
15. Permits the Director to authorize a procurement officer to issue requests for information at any time to facilitate the development of or modifications to a request for proposals. (Sec. 2)
16. Specifies that before issuing a request for proposals, the following must be completed:
a) the purchasing agency procurement officer must submit to the Director justification regarding the reason the public-private partnership contract approach is being sought and why it is essential or comparatively advantageous over other contracting options;
b) the justification must include information about any financial obligations the purchasing agency would have under the proposed public-private partnership contract and whether the purchasing agency's appropriations or other funding sources are sufficient to meet those obligations; and
c) the Director must determine in writing whether to approve the justification and if approved, must address details regarding how the procurement is to be solicited and awarded and any associated limits. (Sec. 2)
17. Provides that any request for proposals must require each responding potential private partner to provide:
a) specific details of the functions associated with its response to the request for proposals; and
b) an assessment of the potential value of its proposal to Arizona, along with identifying methods of funding its expenses beyond any state funding that may have been specified in the request for proposals. (Sec. 2)
18. Instructs the Director to include an assessment of the proposed value of each proposal as a component within the evaluation criteria developed to select the best solution. (Sec. 2)
19. Prohibits potential private partners, in any response to a request for proposals, to ask the purchasing agency, ADOA or the State of Arizona to guarantee funding or the securing of funding in connection with the proposal. (Sec. 2)
20. Stipulates that unless specifically addressed in the request for proposals that the purchasing agency, ADOA or the State of Arizona is seeking assistance in funding alternatives for some aspect of the proposed partnership, potential private partners may not ask in any response for the assistance in securing funding in connection with the potential private partner's proposal. (Sec. 2)
21. Stipulates that a new request for proposals must be issued if the Director determines that modifications involve new construction that cannot be considered required maintenance or improvements, new services or other new functions not contemplated in the original request for proposals. (Sec. 2)
22. Provides that the use or expansion of military or law enforcement aircraft, vehicles, equipment or technology is considered to have been contemplated in the original request for proposals. (Sec. 2)
Fees
23. Requires a public-private partnership contract entered into between a purchasing agency and a private sector partner to address, if applicable, the matter of payment of any fees by the purchasing agency to the partner based on the achievement of contract requirements mutually agreed to by the partner and agency director. (Sec. 2)
24. Specifies that fees collected are not subject to legislative appropriation, although fee provisions and notice of payment of fees must be report to JLBC and the Joint Committee on Capital Review (JCCR) in a timely manner. (Sec. 2)
25. States that a public-private partnership contract entered into between a purchasing agency and a private sector partner must address, if applicable, the matter of payment of fees to cover administrative overhead, goods, services, leasing of state land, buildings or space or other associated costs mutually agreed to. (Sec. 2)
26. Declares that any monies obtained by the purchasing agency from the partner from fees are:
a) required to be separately accounted for by the purchasing agency; and
b) not subject to legislative appropriation as long as the monies are used for meeting the obligations of Arizona or requirements of the partnership. (Sec. 2)
27. Requires fee collections by a purchasing agency from a public-private partnership contract and related expenditures to be annually reported to JLBC and JCCR. (Sec. 2)
28. Directs public-private partnership contract modifications involving payment of new or increased fees to be reported to JLBC staff with regard to the potential fiscal impact of the contract on Arizona. (Sec. 2)
JLBC & JCCR
29. Instructs JLBC staff, if they find a significant negative fiscal impact to the state, to report its findings to JLBC or JCCR, as appropriate. (Sec. 2)
30. Clarifies that if JLBC staff finds a significant negative fiscal impact to the state from the new or increased fees of a public-private partnership contract, the staff must report its findings to JLBC or JCCR, as appropriate. (Sec. 2)
31. Requires JLBC staff to:
a) be consulted with regard to the potential fiscal impact of the contract to the state before a public-private partnership contract is awarded; and
b) report its findings of a significant negative fiscal impact to the state to JLBC or JCCR, as appropriate. (Sec. 2)
32. Prescribes that JCCR must review the following construction-related public-private partnership activities:
a) planned construction activities as part of a public-private partnership in excess of $500,000 on state-owned land; and
b) planned construction activities as part of a public-private partnership in excess of $500,000 regardless of the ownership of the land. (Sec. 2)
33. Directs ADOA to submit construction plans to JCCR at least 90 days before construction is projected to begin. (Sec. 2)
34. Allows JCCR to hold a hearing to provide recommendations and advice regarding the planned construction. (Sec. 2)
35. States that the Director must cooperate with JCCR staff regarding any requests for construction-related documents. (Sec. 2)
36. Instructs JLBC staff to submit, by August 30, 2028, a report detailing the use of public-private partnerships and that identifies and evaluates policy or fiscal issues relating to such use to the following:
a) the President of the Senate;
b) the Speaker of the House of Representatives;
c) the Minority Leader of the Senate; and
d) the Minority Leader of the House of Representatives. (Sec. 2)
37. Requires JLBC staff to analyze information they receive, as well as other requested data from ADOA and other agencies participating in public-private partnerships. (Sec. 2)
38. Specifies that state agencies involved in public-private partnership matters must cooperate in a timely manner with any data requests. (Sec. 2)
Miscellaneous
39. Specifies that this legislation alone does not provide any agency with the legal authority to procure goods, services or construction. (Sec. 2)
40. Repeals statute relating to public-private partnership contracts on October 1, 2029. (Sec. 3)
41. Specifies that restrictions on activities that compete with private enterprise do not apply to public-private partnership contracts awarded pursuant to statute through October 1, 2029. (Sec. 4)
42. Clarifies that the repeal of statute relating to public-private partnership contracts does not affect any contractual rights, obligations or duties entered into. (Sec. 5)
43. Exempts ADOA from rulemaking for 18 months of this legislation. (Sec. 6)
44. Requires ADOA to issue proposed rules and hold at least one public meeting regarding the proposed rules no earlier than one month after issuing the proposed rules. (Sec. 6)
45.
Contains an emergency clause.
(Sec. 7)
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49. SB 1670
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