Last review: 03/24/2009

Frequently Asked Questions

Competitive Contracting

1) Is competitive contracting a done deal?

The Personnel Systems Reform Act of 2002 became effective in July 1, 2005. General Administration adopted rules around the competitive contracting process (see WAC 236-51 Competitive Contracting), completed a Competitive Contracting Manual, and has made available process training for agency staff that would be making decisions on competitive contracting and those representing fiscal and contracting leads as well as those responsible for developing CC procedure. The Department of Personnel’s rules on Employee Business Units (see adopted rule WAC 357-43; Employee Business Units.

2) What is meant by "competitive contracting"?

"Competitive contracting" means the process by which classified employees of a department, agency, or institution of higher education compete with businesses, individuals, nonprofit organizations, or other entities for contracts. This process is closely aligned with the common term “managed competition”

3) How is competitive contracting or managed competition different from contracting out?

Under managed competition, the state departments/employees and private firms compete to determine who is the most economic and efficient service provider. With contracting out (also called outsourcing and/or privatization), only private entities are allowed to compete by submitting a proposal or bid.

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Identification of Services, Sources, and Competitive Marketplace

1) What services are subject to competitive contracting?

Any exemptions from competitive contracting are noted in RCW 41.06.070. Services not exempted may be considered for competitive contracting. Services will undergo a "yellow pages test;" if a service is commercial in nature and available from existing businesses, it will likely be eligible for competition.

2) Who will determine what functions are subject to competitive contracting?

The agency has the ability to identify functions. In other governmental examples functions are identified as part of the budget process or have a corporate level review process to identify commercial functions, which as such would be subject to contracting. 

3) What determines if a job will be competitively contracted?

When engaging in contracting today, agencies determine if the service being solicited has been customarily and historically provided by state employees of the classified service. If the service has been performed by state employees, the agency is not permitted by law to contract for those services with outside service providers. RCW 41.06.142 removes this restriction but the basic question of whether a service has been performed by state employees remain. Post July 1, 2005, a determination by the agency that a service under consideration was performed by state employees will require that the solicitation be conducted as required by RCW 41.06.142, WAC 236-51 and, WAC 357-43. Whether a service is a good candidate for competitive contracting may depend on an agency’s assessment using GA’s Competitive Contracting Manual or other resources. It is anticipated that these assessments will likely be part of the larger strategic planning and budgeting effort for state agencies.

4) Who defines the existence of a competitive market?

The contracting agency will define the existence of a competitive market in its notification to potentially displaced employees. The specific definition of a competitive market is located in GA’s adopted rule section WAC 236-51-100. For additional information please go to Chapter 1 of GA’s Competitive Contracting Manual.

5) Will this process inhibit an agency’s ability to contract out in an emergency? (i.e. remote areas)

Adopted rule section WAC 236-51-005 provides an exemption for the case of an emergency purchase.

6) If we are expanding work capabilities, not replacing existing employees what statute will this contracting follow? As an example, can I hire a programmer to work on a specific project although I also have internal resources that do coding?

Rules, WAC 236-51-005 & 006, cover this specific case. In the case where no state employees are displaced, RCW 41.06.142 (1) (a), (d) and (e), and applicable laws and rules governing the purchase of such services would apply.

7) Many firms have sent jobs offshore -- should they be able to compete?

Nothing in the law prevents firms that have overseas suppliers or employees from competing therefore, GA did not created a rule. 

8) To what extent does a competitive market have to be readily available or developed?

WAC 236-51-100 (2) states that a competitive market exists when there are two or more separate businesses, individuals, nonprofit organizations, or other entities capable of providing the services being considered for competitive contracting. In each case an agency will need to evaluate the market relative to risk and capability and articulate its rationale in the notification to employees pursuant to WAC 236-51-110 (2).

9) Are there any provisions to allow external firms to petition to bid for work?

No

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Government Precedence

1) Is Washington the only public agency doing this?

Many cities, counties, states and the federal government are turning to the use of managed competition as the means of choosing service providers. Managed competition has the potential to produce the best services at the least cost. Cities including Philadelphia, Indianapolis, Charlotte, New York, San Mateo and Long Beach have all implemented some form of public-private competition for service delivery

2) Where might I find more information on what others are doing?

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Presenting Alternatives to Competitive Contracting

1) Do state employees have a chance to respond to what is being proposed? When? Where? How?

RCW 41.06.146.2.a requires that “At least ninety days prior to the date the contracting agency requests bids from private entities for a contract for services provided by classified employees, the contracting agency shall notify the classified employees whose positions or work would be displaced by the contract. The employees shall have sixty days from the date of notification to offer alternatives to purchasing services by contract, and the agency shall consider the alternatives before requesting bids.”

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Legal/Ethics

1) With regard to competitive contracting, what about legal issues and lawsuits against the contractors? Is the state liable for costs?

Liability is something that is determined in court. The state competitively bids for billions of dollars worth of goods and services today. On July 1, 2005 RCW 41.06.142 will expand the scope of what services may be bid and existing risk management policies and guidelines will apply to competitive contracting awards as they do to all other contracts. As is the case in today’s contracts, competitive contracting award terms and conditions will address which risks are assumed by whom and in some cases how those risks will be mitigated and managed. These terms and conditions will vary from contract to contract. GA’s http://www.ga.wa.gov/competitivecontracting/CCmanual.htm Chapter 4 provides specific risk assessment guidance for agencies to consider along with additional resources.

2) Who, if anyone, monitors the Agency/Institutions compliance to RCW 41.06.142?

RCW 41.06.142 Subsection (6) calls for the joint legislative audit and review committee to conduct a performance audit and report back to the legislature by January 1, 2007. In addition, RCW 41.06.142 Subsection 4 (d) provides for an appeal of agency actions.

3) Once a bid process is completed and the contract is awarded to other than the Employees Business Unit (EBU) under what statute or authority is the contract then re-bid? Does the service revert back to what is currently the authority of the Department of Information Services (DIS), OFM and GA?

In the case above a re-bid is handled the same as any other purchased or personal service.

4) Under what statute or process will Competitive Contracting take place for personal services, technology, and purchased services? Currently these take place under existing statutes under OFM, GA & DIS.

Competitive contracting will be governed by WAC 236-51 & 357-43 developed by GA and DOP respectively and as authorized in the statute RCW 41.06.142. The distinction between existing statute and rules and competitive contracting, is that the services have been customarily and historically done by employees of the classified service. A detailed discussion on how the state’s contracting authorities interact with competitive contracting is contained in http://www.ga.wa.gov/competitivecontracting/CCmanual.htm  Chapter 1.

5) If an employee leaves state service, is there any time period during which he or she cannot submit a bid for a contract for service currently performed by state employees?

The restrictions on former state employees from bidding on competitive contracting as an outside bidder are the same as they are for bidding on any other contract today (reference RCW 42.52 and WA State Purchasing Manual 6.14.c through 6.14.g).

6) When we ask private companies to bid for jobs currently done by state classified staff, will we be specifying basic benefits that need to be included (such as healthcare, and retirement)? Or will we not consider what benefits they provide their employees?

No, we will not require nor consider what private bidders provide in benefits to their employees other than what is required by law today.

7) Will there be a consideration, by rule, for functions that are subject to Federal limitations to what functions can be outsourced?

No

8) Who would be liable for a contract awarding decision and any resulting lawsuits?

Liability is something that is determined in court. It is not anticipated that the risk would be any different than what is assumed in contracting the state does today.

9) Does each state entity perform the evaluation for their contract? Does this create a conflict of interest?

The law prohibits employees who prepared the employee business unit’s bid or who perform any of the services to be contracted from participating in the evaluation (RCW 41-06.142(d) (i)). In addition, RCW 41.06.142 (4) (f) states, “A department, agency, or institution of higher education may contract with the Department of General Administration to conduct the bidding process.” WAC 236-51-410 outlines specifically who can be involved in evaluating bids

10) Who pays for AG Coverage and the Administrative Law Judge (ALJ) for the Appeal Process? Who does the AG represent? The agency? The employee? Both?

WAC 236-51-735 states, “All costs incurred by the office of administrative hearings in conducting the hearing shall be borne by the agency, and the office of administrative hearings shall bill the agency for the hearing costs incurred. Each party is responsible for its own costs of representation.” 

11) Public Disclosure – How to ensure the bid process is fair and objective and provides timely access to information?

Agency responses during the alternatives phase may include information that should be available to all bidders to understand what decisions management has made relative to continuing the competitive contracting process. GA will not create any specific “protection” of information that is currently available under the public disclosure laws. Alternatively, documents created by a bidder in response to or prepared during the bid process are not disclosable until after notice of intent to award (WAC 236-51-405).

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Calculating Costs/Savings/Efficiency

1) Do members of an EBU have to compute benefits into their bids?

RCW 41.06.146.4 (e) states; “An employee business unit's bid must include the fully allocated costs of the service, including the cost of the employees' salaries and benefits, space, equipment, materials, and other costs necessary to perform the function. An employee business unit's cost shall not include the state's indirect overhead costs unless those costs can be attributed directly to the function in question and would not exist if that function were not performed in state service.”

2)  What processes will be developed to manage the realization of any expected cost savings or efficiency from the awarded contract? Will it be monitored by anyone other than the agency? What are the consequences of not delivering?

Agencies are required to have in place a contract monitoring process to measure contract performance, costs, service delivery quality, and other contract standards, and to cancel contracts that do not meet those standards. GA has developed guidance to help agencies with contract management and monitoring considerations in Chapter 7 of the Competitive Contracting Manual http://www.ga.wa.gov/competitivecontracting/CCmanual.htm. In addition, RCW 41.06.142 Subsection (6) calls for the joint legislative audit and review committee to conduct a performance audit and report back to the legislature by January 1, 2007.

3) What is meant by “Efficiency Improvements” as described in RCW 41.06.142 (1) (e)?

The term is defined in WAC 236-51-010 (11) as, “The enhanced value and/or quality that an agency achieves as a result of a change to a service or the ways a service is provided. This enhancement may come at a higher cost but its relative value offsets it. Such improvements may include, but are not limited to:

  1. Reduced preparation or process time;
  2. Greater accessibility or availability of service; or
  3. Improved data quality and timeliness”

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Quality of Service

When a private contractor does work for the state, who inspects it to see that the work was done to the highest standards?

The state law says that, “the department, agency, or institution of higher education that hired the contractor is responsible for monitoring contract performance, costs, service delivery quality, and other contract standards, and canceling contracts that do not meet those standards;” 

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Competitive Contracting Guidance/Training

1) Will guidance be available to agencies in advance of July 2005?

Interested parties can go to the link provided (see http://www.ga.wa.gov/competitivecontracting/CCmanual.htm).

2) Will GA or anyone have an advisory role to the process?

Per RCW 41.06.142 Subsection 4 (f), “A department, agency, or institution of higher education may contract with the department of general administration to conduct the bidding process.” As your essential operations partner, GA stands ready to help agencies with successful execution.

3) Will there be recommended financial models available?

Yes, the “Cost of Government Services Guide” (Chapter 3 of the Competitive Contracting Manual) and the accompanying Evaluation Model provides schedules and practical advice to agencies and employees.

4) What kind of training is (or will be) available on this topic? What is meant by statutory training?

Statutory training refers to “on-demand” training for EBU’s on the bid process and general bid preparation which has been developed by DOP. This training is intended to be available to EBU’s once they have formed.

5) Will there be small business support and training? Who will pay? How will it be delivered?

The state provides support and help to small businesses today. Competitive Contracting is creating new opportunities for the small business not available before (see http://www.ga.wa.gov/Business/index.html). 

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Employee Business Units

1) If you do not have an entire business unit from which to submit a bid, but a portion of a unit, can you, as an EBU, bid on a portion of the service?

EBU’s may bid whatever combination of work they will do internally and work they will contract out provided they comply with the terms of the solicitation (i.e. legal requirements, performance of work, etc.). In the instance above, the EBU may propose contracting with an external source for the balance of the service not provided as part of their bid.

2) If the Employee Business Unit (EBU) loses the bid are they able to do business with other agencies?

No, those employees are subject to their agency’s layoff policy.

3) If you have an EBU that loses the bid can the EBU bid again after the contract expires or terminates?

No.

4) In the EBU where is the division between Management & Employee?

It will be up to each EBU to designate a leader (see WAC 236-51-010 (14) and WAC 236-51-200 (b)). The EBU Leader may identify a designate for contract administration (bid process representative for the EBU).

5) If you are a member of an EBU, are you a state employee?

Yes

6) Who determines the membership of an EBU?

Each EBU will determine its membership from among potentially displaced employees based on how best to respond to the solicitation with a competitive bid.

7) How do EBU’s incorporate the state required benefits?

Adopted EBU Rules by DOP (WAC 357-43) state that EBU’s will need to adhere to the agency’s affirmative action plan, comply with all federal & state statutes, administer vacation leave, accrue sick leave, observe the same legal holidays, participate in shared and military leave as the rest of state government. Beyond that EBU’s can allow for opportunities to develop management structures, work processes, compensation, work rules, etc. that they believe will best support their success.

8) Can an EBU compete for services outside of their current scope?

Prior to award during the bidding process, EBU’s will, at a minimum, bid on the performance work statement and solicitation content that the agency puts forth. In doing so the EBU is deemed “a responsive bidder”. Additional scope beyond the minimum may also be proposed provided the minimum is met. After award, an employee business unit awarded a contract by an agency shall not bid on solicitations for performance of services not contained in their contract unless their agency approves in writing (WAC 236-51-225).

9) Operationally how does an EBU function?

It is a unit within its own parent agency whose relationship is governed by a performance agreement (contract).

10) Is it ok to permit the use of state time and resources in bid development by EBU’s?

Yes; but prior to the use of state time and resources the EBU must submit a resource plan to the agency (WAC 236-51-200 (1) (c)). The agency then either approves the plan in its entirety or modifies it based on available state resources and the needs of the agency to meet its mission (WAC 236-51-205 (1)).

11) What if equipment needs to be purchased for the EBU to be competitive? Does an EBU’s include the use of state equipment as part of their bid/proposal?

The cost of any equipment needing to be purchased by an EBU will be included in their bid (WAC 236-51-215(1) (d)). In addition, an EBU must include all fully allocated costs of delivering a service in their bid. If the use of the equipment is part of service delivery then it must be included.

12) What is the transition process and time frame in the event the EBU is not awarded the contract?

The process is the agency’s layoff procedure. The timeframe is dependent on the agency’s transition plan and will vary depending on the service.

13) Can any bidder including an EBU provide more than one or alternative bid?

Yes, provided that it is allowed in the agency’s solicitation.

14) Who determines who is “potentially displaced”?

Per the law, prior to requesting bids, agencies are required to provide notice to the classified employees who may be displaced by the contract. Therefore the responsibility to identify those employees potentially displaced lies with the agency. WAC 236-51-010 (11) defines a displaced employee as a classified employee whose position or work would eliminated, resulting in the employee being laid-off or assigned to a different job classification, as a result of an award via the competitive contracting process. 

15) What happens to an employee's retirement if: (a) The EBU is successful or (b) the EBU's bid is unsuccessful and the employee is RIF'ed?

Members of an EBU will continue to be state employees. Public employee retirement systems will operate as they do for all state employees including members of an EBU. For specific questions contact your Human Resources Team and/or DRS for specific questions about retirement http://www.drs.wa.gov/. 

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