Over the opposition of the League and other local government organizations, the Assembly Labor Committee favorably released A-919, which establishes procedures regarding public service privatization contracts, including a review and approval from the State Comptroller.
A-919 would apply to privatization contracts valued at $500,000 for local governments and $1 million for all other public agencies. For contracts in which a non-governmental person or entity agrees to provide services which are substantially similar to, and in lieu of the services previously provided by government employees. It does not include contracts for legal, management consulting, planning, engineering, or design services; or any contract solely for public work subject to the Prevailing Wage Act; vendor providing software or other information technology or equipment for the purpose of enhancing or increasing the productivity, efficiency, or effectiveness of regular employees of the agency in providing services; or emergency contracts.
Under the bill, in order to enter into a privatization contract a local government would be subject new requirements such as Office of State Comptroller review and approval, input from employees and their representatives prior to soliciting bid and review from State auditor after contract award.
As municipalities struggle with rising inflation while subject to 2% levy cap, without the full effects of the management reforms and with the continued diversion of energy tax receipts, officials are forced to reexamine their budgets and delivery of their services. A-919 would create such a burden on both municipalities and potential contractors that there would be limited privatization of services.
Making the decision to move from an in-house operation to a private contractor is never made lightly. Municipalities typically conduct a thorough analysis of the benefits and pitfalls of such a change. When developing their analyses, municipalities will involve the affected departments and will examine alternatives to delivering the services.
A-919 would add many layers of review and oversight, rendering the process burdensome and lengthy. If the municipality passes all the hurdles to a bid, we are concerned that there will be limited bidders’ response, resulting in a loss of any savings.
The Senate companion bill, S-1518, has not yet been considered.
We encourage you to reach out to your legislators and oppose this legislation.
Contact: Paul Penna, Director of Government Affairs, ppenna@njlm.org, 609-695-3481, x110.