State contractual services and false claims submitted to state and local governments, requiring the exercise of rule-making authority, and providing penalties

This bill extends the time to file a notice of intent to protest to seven working days and the time to file a protest to 12 working days and permits both to be done electronically.

Under current law, if a state agency enters into or renews a contract for services that involves an estimated expenditure of more than $25,000, the agency must conduct either a uniform cost-benefit analysis, for a new contract, or a continued appropriateness review, for a contract renewal. This bill requires a cost-benefit analysis or continued appropriateness review to consider all relevant costs including salaries and benefits, training requirements, liability insurance, overhead, facility costs, and taxes. Under this bill, no cost-benefit analysis may be shown to any bidder until a letter of intent to contract has been issued. This bill generally requires that, if a contract is for more than $25,000, any expenditures of the contractor that exceed the bid by more than 10 percent may be paid only if the secretary of administration approves payment of the increased amount and submits to the Joint Committee on Finance (JCF) his or her rationale for approval. In addition, this bill requires each contracting agency to perform periodic audits on its cost-benefit analyses and continued appropriateness reviews and on its subsequent contracts.

The bill requires the Division of Legal Services in DOA to develop standard performance measures, as well as benchmark indicators, to evaluate services performed by contract for a state agency and to determine what actions taken by the contractor would result in the state agency recovering the expenditures it paid to the contractor. The division also must promulgate rules on signing bonuses, reimbursements, and per diem costs for such contracts.

Under current law, if a state agency for which services are performed concludes that the services were unsatisfactory, the agency must file an evaluation with DOA, and DOA must ensure that future contracts are not awarded to contractors whose past performance was unsatisfactory. This bill adds that a state agency must file an evaluation with DOA if the contractual services are unsatisfactory according to the standard performance measures or benchmark indicators developed by the Division of Legal Services or if the state agency recovers expenditures from the contractor under the guidelines developed by the Division of Legal Services.

Currently, if a contractor or vendor does business with this state or a local government, the terms of the contract or order govern the performance of, and the price to be paid to, the contractor or vendor. If the contractor or vendor claims payment for materials, supplies, equipment, or services that are not provided in accordance with the contract or order, or at a price that is different from the price specified in the contract or order, the state or a local government has a remedy against the contractor or vendor for breach of contract. If the contractor or vendor is asked to swear to the truth of a claim for payment and the claim is false, the contractor or vendor may be prosecuted for false swearing. Currently, except with regard to medical assistance, a private person has no means to recover, on behalf of the state, damages sustained by the state as a result of a fraud committed against the state.

This bill provides that whoever knowingly presents or causes to be presented a false claim under any contract or order for materials, supplies, equipment, or services to be provided to a state agency is subject to a forfeiture (civil penalty) of not less than $5,000 nor more than $10,000, plus three times the amount of the damages that were sustained by the state or would have been sustained by the state, whichever is greater, as a result of the false claim. The bill permits the attorney general to bring an action to recover any forfeiture for which a contractor or vendor is liable as a result of a false claim submitted to a state agency. This bill contains similar provisions that apply to local governmental units.

The bill creates separate prohibitions against state contractors, grantees, vendors, and other recipients of state resources who knowingly commit certain fraudulent acts against the state. The bill makes these persons liable for treble the amount of damages sustained by the state resulting from such acts and imposes additional forfeitures of not less than $5,000 nor more than $10,000 for each violation. The bill permits the attorney general to pursue an alternate remedy, such as an administrative remedy, against an alleged offender in lieu of an action in court.

With certain exceptions, the bill provides that a person who brings an action on behalf of the state is entitled to receive his or her reasonable expenses of bringing the action, including his or her costs and reasonable, actual attorney fees, which are assessed against the defendant.

The bill entitles an employee to all relief to make the employee whole if the employee is discriminated against by an employer as a result of lawful actions the employee took to further the investigation of any act of fraud, as defined in the bill, the employer committed against the state. Under the bill, the relief may include reinstatement and double back pay with interest from the time of any discharge to the time of reinstatement. The bill also permits the employee to recover any costs, including reasonable, actual attorney fees, from his or her employer.

This bill also does all of the following relating to state contracts:

1. Requires executive branch state agencies to submit to DOA and the Legislative Fiscal Bureau, by September 15 of the even-numbered year, information on the number of contracted positions, including the number of service hours and recurring service rate payments, providing services for the agency that are paid from the agency's base level funding and an identification of the appropriation or appropriations used to fund the contracted positions; the total amount of agency base level funding used to pay for the contracted positions; and the amount of funding requested for contracted positions and an identification of the appropriation or appropriations that will be used to fund the contracted positions.

2. Requires the secretary of administration to include in the biennial budget report all of the information specified in Item 1.

3. Provides that if in any fiscal year an executive branch agency is prohibited from hiring employees to fill vacant positions or its employees are required to serve an unpaid leave of absence, the agency may not enter into, renew, or extend any contractual services contracts with private contractors or consultants for the remainder of that fiscal year for the performance of services of agency employees who would have performed the services had they been hired or had they not have been required to take an unpaid leave of absence. This provision, however, does not apply to certain contracts of the Office of the State Public Defender, as well as certain contractual services contracts funded with federal economic stimulus funds. The bill further provides that an agency may submit a written request to the JCF to exempt an agency with respect to a specific contractual services contract. If the cochairpersons of JCF do not notify the agency within 14 working days after the date of the agency's submittal that JCF intends to schedule a meeting to review the request, approval of the request is granted. If, within 14 working days after the date of the agency's request submittal, the cochairpersons notify the agency that JCF intends to schedule a meeting to review the request, the request may be granted only as approved by JCF.

The bill specifically impacts the Department of Transportation (DOT) in several ways. Under the bill, with respect to DOT's contractual engagement of engineering, consulting, surveying, and other specialized services (engineering services), DOT is subject to certain provisions of state procurement law relating to contractual services from which, under current law, DOT is exempt. The bill also requires DOT to use DOT employees to conduct all tests of concrete thickness on its highway improvement projects. Under the bill, DOT must submit a report to JCF containing recommendations on actions that DOT and local governments can take to improve the efficiency, cost-effectiveness, and timeliness of local road construction projects and proposed legislative changes to implement these recommendations.

DOT must also annually submit a report to the governor, JCF, the Joint Legislative Audit Committee, and the appropriate legislative standing committees relating to its contractual engagement of engineering services.