California Code of Regulations › Title 2 - Administration › Division 1 - Administrative Personnel › Chapter 1 - State Personnel Board › Subchapter 1.5 - Personal Services Contracts › Article 6 - Procedures that Apply to Contracts Under Government Code Section 19130(a) › Section 547.69 - State Agency Notice of Intent to Execute Cost Savings Personal Services Contract

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
					 Any state agency proposing to execute a contract pursuant to Government Code
					 section
					 19130(a),
					 shall file with the board a Notice of Intent to Execute Personal Services
					 Contract.
(b) The Notice of Intent
					 shall include the following:
(1) A complete
					 copy of the proposed contract;
(2)
					 The following information with respect to those civil service employees who
					 would otherwise perform the services to be rendered under the contract:
(A) The number of civil service employees in
					 each classification who would otherwise perform the services;
(B) The number of hours required for each
					 civil service employee to perform the services;
(C) The base hourly wage, as set forth in the
					 State of California Civil Service Pay Scale, that the agency would be required
					 to pay civil service employees to perform those services to be rendered under
					 the contract.
(i) The cost of any employee
					 benefits, as set forth in section (b)(2)(D), direct overhead costs, as set
					 forth in section (b)(2)(E), indirect overhead costs, as set forth in section
					 (b)(2)(F), or any other costs, shall not be included in the base hourly wage
					 calculation, unless specifically authorized by this section;
(ii) The cost of any recruitment or retention
					 pay bonus or differential, or any geographic pay bonus or differential, that
					 the agency is required by law or collective bargaining agreement to pay to
					 employ civil service employees to perform those services to be rendered under
					 the contract, shall be calculated as part of the base hourly wage. If the bonus
					 or differential is disbursed as a lump sum payment, the cost of the bonus or
					 differential shall be amortized over the term of the proposed contract. The
					 cost of any remuneration paid to an employee due to the employee possessing
					 specialized skills or abilities (e.g., bilingual verbal and written skills),
					 shall not be included as part of the base hourly wage, unless the specialized
					 skill or ability is a prerequisite for employment in the civil service position
					 that performs those services to be rendered under the contract. The state
					 agency shall provide detailed, factual information concerning its assertion
					 that it is required to pay any recruitment or retention pay bonus or
					 differential, or any geographic pay bonus or differential, or that it incurs
					 any additional costs to compensate individuals with specialized skills or
					 abilities, in order to employ civil service employees to perform those services
					 to be rendered under the contract.
(D) The hourly cost of employee benefits the
					 agency would be required to provide to each civil service employee to perform
					 those services to be rendered under the contract.
(i) For those proposed contracts not subject
					 to the provisions of Government Code section
					 19134,
					 employee benefits shall be itemized and limited to the following: health
					 insurance premiums; dental insurance premiums; vision insurance premiums;
					 employer contributions to employee retirement plans, including social security;
					 paid holidays; sick leave benefits; and vacation leave benefits. For purposes
					 of this section, hourly benefit costs shall be derived by calculating the
					 annual cost per employee for each specified benefit, divided by the number of
					 hours each employee is employed on an annual basis. The state agency shall also
					 disclose the basis for, and methodology utilized, in arriving at its
					 conclusions as to the annual cost for each specified employee
					 benefit;
(ii) For those proposed
					 contracts subject to the provisions of Government Code section
					 19134,
					 hourly benefit costs shall be established using rates based on single employee,
					 employee plus one dependent, and employee plus two or more dependents, or the
					 costs may be based on a blended rate, as set forth in the "Personal Services
					 Contract Pay Rates" published by the Department of Personnel Administration. To
					 the extent that the hourly benefit rates established by the Department of
					 Personnel Administration consist of items that would otherwise be categorized
					 under the base hourly wage, direct overhead cost, or indirect overhead cost
					 provisions of this section, the agency may only include those items as hourly
					 benefit costs;
(E) The
					 hourly cost of direct overhead costs the state agency would incur if it
					 employed civil service employees to perform those services to be rendered under
					 the contract.
(i) For purposes of this
					 section, direct overhead costs shall be itemized and include, but not be
					 limited to, the following: workers compensation insurance budget costs;
					 unemployment insurance budget costs; disability insurance budget costs;
					 additional rent and utilities that would only be incurred if the services in
					 question were performed by the civil service; additional equipment and
					 materials needed to perform those services to be rendered under the contract
					 that would only be incurred if the services in question were performed by the
					 civil service; uniforms; training mandated by law or otherwise required by the
					 agency; background investigations, medical examinations, or drug testing,
					 mandated by law or otherwise required by the agency; and reimbursement for
					 licenses, certificates, or similar requirements needed before a civil service
					 employee can perform those services to be rendered under the contract. For
					 purposes of this section, hourly direct overhead costs shall be derived by
					 calculating the annual cost per employee for each specified direct overhead
					 cost, divided by the number of hours each employee is employed on an annual
					 basis. The state agency shall also disclose the basis for, and methodology
					 utilized, in arriving at its conclusions as to the annual cost for each
					 specified direct overhead cost;
(ii) The cost of any equipment necessary to
					 perform the contracted-for services claimed as a direct overhead cost shall be
					 calculated by establishing the cost incurred each year by the contracting
					 agency for the use of the equipment. (For example, a laptop computer purchased
					 at an initial cost of $2,000.00, depreciates at a rate of $500.00 per year for
					 each year of use. For a contract of three years duration, the state agency can
					 claim computer equipment costs of $500.00 per year, for a total contract cost
					 of $1,500.00.) If the equipment is leased, the contracting agency can claim the
					 annual lease cost of the equipment as an annual direct overhead cost. The state
					 agency shall disclose the basis for, and methodology utilized, in arriving at
					 its conclusions as to the annual cost for each piece of equipment identified as
					 a direct overhead cost incurred in the performance of the contracted-for
					 services.
(iii) The cost of any
					 uniforms claimed as a direct overhead cost shall be calculated by establishing
					 the cost incurred each year by the contracting agency for the purchase of
					 uniforms. (For example, for a contract of four years duration, the state agency
					 purchases uniforms for each civil service employee at a cost of $200.00 during
					 the first year of the contract, and $200.00 during the third year of the
					 contract, for a total of $400.00 during the four year contract term. The state
					 agency can claim $100.00 per employee, per year, in uniform costs.) In those
					 instances where the civil service employee receives an annual uniform
					 allowance, the annual uniform allowance shall be allowed as a direct overhead
					 cost. The state agency shall disclose the basis for, and methodology utilized,
					 in arriving at its conclusions as to the annual cost for each uniform cost
					 identified as a direct overhead cost.
(iv) Any other costs incurred by the state
					 agency when employing civil service employees to perform the contracted-for
					 services, and claimed by the state agency as a direct overhead cost, including,
					 but not limited to, the cost of background investigations, medical
					 examinations, drug testing, license procurement, certificate procurement, or
					 training, shall be calculated by establishing the cost incurred each year by
					 the contracting agency for each cost claimed. (For example, for a contract of
					 four years duration, the state agency conducts drug testing for each civil
					 service employee at a cost of $200.00 during the first year of the contract,
					 and $200.00 during the third year of the contract, for a total of $400.00
					 during the four year contract term. The state agency can claim $100.00 per
					 employee, per year, in drug testing costs.) The state agency shall disclose the
					 basis for, and methodology utilized, in arriving at its conclusions as to the
					 annual cost for each expense identified as a direct overhead
					 cost.
(F) The hourly cost
					 of indirect overhead costs the state agency would incur if civil service
					 employees were to perform those services to be rendered under the contract.
					 Indirect costs shall not be included unless the cost can be attributed solely
					 to the function in question and would not exist if that function were not
					 performed in state service.
(i) For purposes
					 of this section, indirect overhead costs shall be itemized and include, but not
					 be limited to, the following: the pro rata share of existing administrative
					 salaries and benefits (including managers who do not directly supervise the
					 civil service employees performing those services to be rendered under the
					 contract, human resources staff who process the recruitment, hiring, and
					 separation of the civil service employees performing those services to be
					 rendered under the contract, and executive management staff who have oversight
					 of the program(s) impacted by the contract), rent, utilities, equipment costs
					 and materials. For purposes of this section, hourly indirect overhead costs
					 shall be derived by calculating the annual pro rata cost per employee for each
					 specified indirect overhead cost incurred as a result of the agency performing
					 those services to be rendered under the contract, divided by the number of
					 hours each employee is employed on an annual basis. The state agency shall also
					 disclose the basis for, and methodology utilized, in arriving at its
					 conclusions as to the annual cost for each specified indirect overhead
					 cost;
(G) The total
					 hourly cost, based on those costs set forth in subdivisions (C) through (F),
					 the state agency would incur for each civil service employee, if civil service
					 employees were to perform those services to be rendered under the
					 contract.
(H) A statement
					 explaining why existing civil service employees cannot be re-directed or
					 otherwise utilized to perform those services to be rendered under the
					 contract.
(3) The
					 following information with respect to the contract employees who are to perform
					 the services to be rendered under the contract:
(A) The number of employees required to
					 perform each of the services to be rendered under the contract;
(B) The number of hours each employee shall
					 perform services under the contract;
(C) The base hourly wage that will be paid to
					 each contract employee performing a function under the contract that would
					 otherwise be performed by the civil service.
(i) The contractor shall verify that the cost
					 of any employee benefits, as set forth in section (b)(3)(D), direct overhead
					 costs, as set forth in section (b)(3)(E), or any other costs incurred by the
					 contractor, shall not be included in the base hourly wage calculation, unless
					 specifically authorized by this section. The contractor shall also verify that
					 it is in compliance with all applicable state and federal labor laws;
(ii) The cost of any recruitment or retention
					 pay bonus or differential, or any geographic pay bonus or differential, that
					 the contractor is required to pay to employ private employees to perform those
					 services to be rendered under the contract, shall be calculated as part of the
					 base hourly wage. If the bonus or differential is disbursed as a lump payment,
					 the cost of the bonus or differential shall be amortized over the term of the
					 proposed contract. The cost of any remuneration paid to an employee due to the
					 employee possessing specialized skills or abilities (e.g., bilingual verbal and
					 written skills), shall not be included as part of the base hourly wage, unless
					 the specialized skill or ability is a prerequisite to perform those services to
					 be rendered under the contract. The state agency shall provide detailed,
					 factual information concerning its assertion that the contractor is required to
					 pay any recruitment or retention pay bonus or differential, or any geographic
					 pay bonus or differential, or that the contractor incurs any additional costs
					 to compensate individuals with specialized skills or abilities, in order to
					 employ private employees to perform those services to be rendered under the
					 contract.
(D) The hourly
					 cost of employee benefits that will be provided to each contract employee.
(i) For those proposed contracts not subject
					 to the provisions of Government Code section
					 19134,
					 employee benefits shall be itemized and limited as set forth in section
					 (b)(2)(D)(i), supra;
(ii) For those
					 proposed contracts subject to the provisions of Government Code section
					 19134,
					 hourly benefit costs shall be established as set forth in Section
					 (b)(2)(D)(ii), supra;
(iii)
					 Pursuant to Government Code section
					 19134,
					 subdivision (d), if, in lieu of providing actual benefits as listed in
					 subdivision (b)(3)(D)(i) of this section, the private contractor intends to
					 provide a cash equivalent, the amount of the cash equivalent shall be equal to
					 the applicable determination under subdivision (b)(3)(D)(ii) of this
					 section;
(E) The hourly
					 cost of direct overhead costs the private contractor will incur for each
					 employee employed under the contract.
(i) For
					 purposes of this section, direct overhead costs shall be itemized and include,
					 but not be limited to, those items set forth in Section (b)(2)(E)(i)
					 and
(ii), supra;
(F) The total hourly amount the private
					 contractor will charge the state agency for each contract employee to perform
					 those services to be rendered under the contract.
(G) The annual costs the state agency will
					 incur for activities related to inspection, supervision and monitoring
					 activities to ensure proper administration of the contract. Inspection,
					 supervision, and monitoring costs shall include, but not be limited to, the pro
					 rata share of existing administrative salaries and benefits necessary for
					 supervising and monitoring the contract, including costs associated with
					 personnel supervision, invoice review, and the contract bidding process.
					 Inspection, supervision and monitoring costs shall also include additional
					 security or other risk costs incurred by the agency as a result of the
					 contract. The state agency shall disclose the basis for, and methodology
					 utilized, in arriving at its conclusions as to the annual contract inspection,
					 supervision and monitoring costs, and specify the number of hours expended
					 annually by agency staff, on a position-by-position basis, on contract
					 inspection, supervision and monitoring duties. If no costs are claimed for
					 oversight, the state agency shall provide the factual basis for its
					 assertion;
(4) The
					 industry level hourly wage for those services to be rendered under the
					 contract. The term "industry level hourly wage" as used in this section means
					 the prevailing hourly rate of pay for the type of work in question in the local
					 area where the contract would be let, as measured by reliable and statistically
					 representative wage surveys such as those conducted by the Department of
					 Industrial Relations or the Bureau of Labor Statistics. In the event that the
					 most recent relevant wage survey data published by the Department of Industrial
					 Relations differs from the wage survey data published by the Bureau of Labor
					 Statistics, the board shall rely upon the wage survey data published by the
					 Department of Industrial Relations, unless the wage survey data published by
					 the Bureau of Labor Statistics is based on more recent information. The state
					 agency shall identify the wage survey utilized and the date it was issued, and
					 shall specify whether the wage is calculated in terms of mean or median
					 wage.
(5) That the contract will
					 not result in the displacement of civil service employees.
(A) For purposes of this section,
					 displacement shall be limited to: layoff; involuntary demotion; involuntary
					 transfer to a new class; involuntary transfer to a new location requiring a
					 change of residence, and as defined in Department of Personnel dministration
					 regulations; and time base reductions. Displacement does not include: changes
					 in shifts or days off; reassignment to other positions within the same class
					 and general geographic location;
(6) That the contract will not have an
					 adverse impact on State Equal Employment Opportunity efforts, as set forth in
					 Section 547.74;
(7) That the contract was awarded through a
					 publicized, competitive bidding process;
(8) That the contract includes specific
					 provisions pertaining to the qualifications of the staff who will perform each
					 aspect of the work under the contract, as well as assurances that the
					 contractor's hiring practices meet applicable nondiscrimination
					 standards;
(9) That the potential
					 for future economic risk to the state from potential contractor rate increases
					 is minimal.
(10) That the contract
					 is with a firm.
(A) A firm means a
					 corporation, partnership, nonprofit organization, or sole proprietorship;
					 and
(11) That the
					 potential economic advantage of contracting is not outweighed by the public's
					 interest in having a particular function performed directly by the state
					 government.
(12) The state agency
					 shall submit documentary evidence and/or declarations in support of the
					 information provided by the state agency in accordance with the requirements of
					 subsections (2) through (11).