Assigned
to GOV AS
PASSED BY HOUSE
ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
public-private partnership contracts
Purpose
An emergency measure that authorizes the Arizona Department of Administration (ADOA) and the Department of Emergency and Military Affairs (DEMA) to jointly establish public-private partnerships (P3s) for military rotary wing aviation flight and maintenance training and services at locations DEMA owns, administers or controls property.
Background
The Arizona Procurement Code regulates the buying, purchasing, renting, leasing and acquiring of materials, services and construction services by the State of Arizona using public monies. The procurement process is overseen by ADOA, with the Director of ADOA (Director) acting as the Central Procurement Officer. Statute outlines requirements for public construction contracts under the Arizona Procurement Code (A.R.S. Title 41 Ch. 23).
The Director may enter into P3 contracts to finance the technology needs of the purchasing agency. The funding for services under a P3 contract must be contingent on and computed according to established performance standards and must be attributable to the successful implementation of the technology program for the period specified in the contract. The Director may issue requests for information and requests for proposals (RFP) to solicit private partners that are interested in providing programs under a contract. Each RFP issued must require each private partner to propose specific performance improvements and measurement approaches to be used to measure the value delivered by the vendor technology solution. The Director must include an assessment of the proposed value of the vendor technology solution in its evaluation criteria to select the best value solution for the purchasing agency. A contract entered into between the Director and an automated systems vendor must provide for payment of fees on a contractually specific amount based on the achievement of measured performance improvements that are mutually agreed to by the contractor and the Director and monies for payment of these fees are not subject to legislative appropriation. The following are subject to review by the Director: 1) the terms of contracts entered into relating to the measurement of the performance improvement attributable to the vendor technology program; and 2) payment of fees based on achievement of the established performance measures. Before a P3 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. JLBC staff, if there is a finding of a significant negative impact to the state, must report the findings to JLBC (A.R.S. § 41-2559).
Certain public bodies, including the Arizona Board of Regents, the legislative and judicial branches and the Arizona Department of Transportation (ADOT), are exempt from requirements of the Arizona Procurement Code (A.R.S. § 41- 2501). Statute outlines requirements for ADOT to enter into highway construction contracts, including authorization for P3 contracts (A.R.S. Title 28, Ch. 22).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows, on legislative authorization, the Director and the Director of DEMA to issue an RFP and enter into a P3 contract for military rotary wing aviation flight and maintenance training and services.
2. Allows the ADOA and DEMA to jointly establish P3s for military rotary wing aviation flight and maintenance training and services at locations DEMA owns, administers or controls property.
3. Requires the ADOA and DEMA, if DEMA determines to proceed with a P3 for military rotary wing aviation flight and maintenance training and services, to work together to develop an RFP.
4. Authorizes the procurement of a private sector entity to only be done through an RFP.
5. Requires the ADOA and DEMA to jointly establish eligibility requirements for private sector entities to be considered and the services and duties to be performed by the selected private sector entity.
6. Requires private sector entities working with other companies to meet the eligibility requirements to provide evidence of executed contracts or agreements with those companies.
7. Requires private sector entities to demonstrate actual experience and ability to perform all elements of the scope of work and other duties contained in the RFP.
8. Requires the private sector entity that is selected to have provided evidence to the satisfaction of the ADOA and DEMA that it has the capacity to operate all facets of the military aviation training partnership program under the oversight of DEMA and the ability to:
a) deliver services without using any state monies;
b) procure required or desired personnel, goods, services and construction at the entity's own expense using the entity's corporate systems, procedures and methods; and
c) administer all assigned aspects of the flight and maintenance training program under the oversight of DEMA.
9. Prohibits DEMA from using any state monies to pay for services rendered by the private sector entity to the United States or any foreign military personnel unless it has established written agreements regarding reimbursement for the expenditures.
10. Requires DEMA to ensure it has written agreements with the private sector entity regarding reimbursement or cost recovery that may include, at DEMA's discretion, accepting desired in-kind services for any allocated space or resources used by the private sector entity.
11. Requires the ADOA and DEMA to comply with the requirement to consult with the JLBC staff with regard to the potential fiscal impact of the contract to the state before any P3 is awarded.
12. Requires the ADOA and DEMA to cooperate with and be responsive to the JLBC staff on information requests made by the staff regarding the operation of the P3 after a contract has been awarded.
13. Exempts the establishment of a military aviation training program P3 by DEMA from the prohibition on state competition with private enterprise if there is:
a) training only of military personnel; and
b) use only of aircraft in the U.S. Department of Defense's inventory or procured by a foreign partner for military purposes through the U.S. Foreign Military Sales Program.
14. Prohibits a P3 contract executed by the ADOA and DEMA for military rotary wing aviation flight and maintenance training services from:
a) causing Arizona to share in the liabilities of the private sector partner; or
b) exempting the private sector partner from state law and regulations unless such an exemption is specific under the laws of Arizona.
15. Stipulates that the existing rules adopted in accordance with the Arizona Procurement Code, including those that apply to the P3 contracts, also apply to P3 contracts for military rotary wing aviation flight and maintenance training and services.
16. Repeals the authorization of P3 contracts for military rotary wing aviation flight and maintenance training and services on October 1, 2026.
17. Stipulates that the repeal of the authorization of P3 contracts for military rotary wing aviation flight and maintenance training and services does not affect any contractual rights, obligations or duties entered into in accordance with those contracts.
18. Specifies, for P3 contracts for the financing of the technology needs of a purchasing agency, that a contract for an information technology vendor must provide for payment of fees which are not subject to legislative appropriation.
19. Makes conforming changes.
20. Becomes effective on signature of the Governor, if the emergency clause is enacted.
Amendment Adopted by Committee of the Whole
1. Subjects the advertising of a P3 RFP to review and approval from the Director.
2. Requires the advertisement to appear no later than 30 days before the submission deadline for the RFP.
3. Requires the Director to ensure that the purchasing agency uses, in addition to the state procurement portal, at least one print or digital publication or website that:
a) targets the appropriate audience; and
b) advertises the basic description of the RFP along with the appropriate links to the state procurement portal and to instructions on how to use the state procurement portal.
4. Requires any leases or sales of state-owned property as part of a P3 contract, including any operating agreement or similar agreement, to be executed in accordance with state law and reported to JLBC staff in a timely manner.
5. Requires the Joint Committee on Capitol Review (JCCR) to review:
a) planned construction activities as part of a P3 in excess of $500,000 on state-owned land; and
b) planned construction activities as part of a P3 in excess of $500,000 including any amount of monies appropriated by Arizona, regardless of the ownership of the land.
6. Requires ADOA, at least 90 days before construction is projected to begin, to submit construction plans to JCCR.
7. Allows JCCR to hold a hearing to provide recommendations and advice regarding the planned construction.
8. Requires the Director or the Director's designee to cooperate with JCCR staff regarding any request for construction-related documents.
9. Requires JLBC staff, by August 20, 2028, to submit a report detailing the use of P3s established in accordance with statute to:
a) the President of the Senate;
b) the Speaker of the House of Representatives; and
c) the minority leaders of the Senate and the House of Representatives.
10. Requires JLBC staff to analyze information received in accordance with statute as well as other data JLBC staff requested from ADOA and other agencies participating in P3s.
11. Requires state agencies involved in P3 matters to cooperate in a timely manner with the data requests.
12. Requires the report to also identify and evaluate policy or fiscal issues relating to the use of P3s in Arizona.
13. Clarifies that the P3 contracts must also be reviewed by JCCR, as appropriate.
14. Repeals the expansion of P3 contracts on October 1, 2029.
15. Stipulates that the delayed repeal of the expansion of P3 contracts does not affect any contractual rights, obligations or duties entered into in accordance with this legislation.
16. Makes technical and conforming changes.
Amendments Adopted by the House of Representatives
1. Eliminates the expansion on the authority of the Director to authorize a procurement officer to enter into a P3 contract to:
a) finance or provide construction services, operations services and maintenance services of buildings, infrastructure or improvements to or on state property;
b) finance or otherwise facilitate the development of state property; or
c) develop programs or services that enable a purchasing agency to expand or enhance any of its operations, including training, employee support and customer service to achieve desired results that serve the interests of the state, are consistent with the legal authority and responsibilities of the purchasing agency and are best accomplished by a P3 contract.
2. Allows, on legislative authorization, the Director and the Director of DEMA to issue an RFP and enter into a P3 contract for military rotary wing aviation flight and maintenance training and services.
3. Allows the ADOA and DEMA to jointly establish P3s for military rotary wing aviation flight and maintenance training and services at locations DEMA owns, administers or controls property.
4. Requires the ADOA and DEMA, if DEMA determines to proceed with a P3 for military rotary wing aviation flight and maintenance training and services, to work together to develop an RFP.
5. Authorizes the procurement of a private sector entity to only be done through an RFP.
6. Requires the ADOA and DEMA to jointly establish eligibility requirements for private sector entities to be considered and the services and duties to be performed by the selected private sector entity.
7. Requires private sector entities working with other companies to meet the eligibility requirements to provide evidence of executed contracts or agreements with those companies.
8. Requires private sector entities to demonstrate actual experience and ability to perform all elements of the scope of work and other duties contained in the RFP.
9. Requires the private sector entity that is selected to have provided evidence to the satisfaction of the ADOA and DEMA that it has the capacity to operate all facets of the military aviation training partnership program under the oversight of DEMA and the ability to:
a) deliver services without using any state monies;
b) procure required or desired personnel, goods, services and construction at the entity's own expense using the entity's corporate systems, procedures and methods; and
c) administer all assigned aspects of the flight and maintenance training program under the oversight of DEMA.
10. Prohibits DEMA from using any state monies to pay for services rendered by the private sector entity to the United States or any foreign military personnel unless it has established written agreements regarding reimbursement for the expenditures.
11. Requires DEMA to ensure it has written agreements with the private sector entity regarding reimbursement or cost recovery that may include, at DEMA's discretion, accepting desired in-kind services for any allocated space or resources used by the private sector entity.
12. Requires the ADOA and DEMA to comply with the requirement to consult with JLBC staff with regard to the potential fiscal impact of the contract to the state before any P3 is awarded.
13. Requires the ADOA and DEMA to cooperate with and be responsive to JLBC staff on information requests made by the staff regarding the operation of the P3 after a contract has been awarded.
14. Exempts the establishment of a military aviation training program P3 by DEMA from the prohibition on state competition with private enterprise if there is:
a) training only of military personnel; and
b) use only of aircraft in the U.S. Department of Defense's inventory or procured by a foreign partner for military purposes through the U.S. Foreign Military Sales Program.
15. Prohibits a P3 contract executed by the ADOA and DEMA for military rotary wing aviation flight and maintenance training services from:
a) causing Arizona to share in the liabilities of the private sector partner; or
b) exempting the private sector partner from state law and regulations unless such an exemption is specific under the laws of Arizona.
16. Stipulates that the existing rules adopted in accordance with the Arizona Procurement Code, including those that apply to the P3 contracts, also apply to P3 contracts for military rotary wing aviation flight and maintenance training and services.
17. Repeals the authorization of P3 contracts for military rotary wing aviation flight and maintenance training and services on October 1, 2026.
18. Stipulates that the repeal of the authorization of P3 contracts for military rotary wing aviation flight and maintenance training and services does not affect any contractual rights, obligations or duties entered into in accordance with those contracts.
19. Makes conforming changes.
Senate Action House Action
GOV 2/14/24 DP 6-1-1 GOV 3/20/24 DP 9-0-0-0
3rd Read 3/6/24 25-5-0 3rd Read 5/15/24 57-0-3
Prepared by Senate Research
May 15, 2024
JT/slp