The Taxpayer Protection Act (Chapter 296 of the Acts of 1993) requires that privatization contracts entered into by state agencies must first be approved by the State Auditor (OSA). The OSA must certify that the cost of performing the service by the private vendor is less costly than having the work done by state employees and that the quality of services will be equal or better. The law (Chapter 7, sections 52 through 55, MGLs) applies to contracts that have an aggregate value of $678,044.08* or more.
Entities Covered by the Law
The law applies to all executive agencies, as well as the MBTA, the Massachusetts Port Authority, the Massachusetts Department of Transportation, and the Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority.
Responsibilities of the State Auditor
It is the responsibility of the State Auditor to:
- independently determine whether the process followed by the agency seeking to privatize a state service meets the requirements of the law;
- certify that the proposal will be less costly for taxpayers;
- certify that the proposal is of at least equal quality to that of present services;
- certify that the designated bidder has a satisfactory record of regulatory compliance;
- certify that the proposal is in compliance with the law; and
- evaluate agency initiative for compliance with the law.
Under the privatization law, the State Auditor has 30 business days (and 30 additional days if deemed necessary) from the date of receipt of all necessary agency documents to approve or reject the contract. The law also authorizes the State Auditor to adopt regulations and prescribe forms to carry out statute provisions. The OSA, in response, issued "Guidelines for Implementing the Commonwealth's Privatization Law," outlining the process and prescribing forms agencies must use in preparing and submitting certification data.
The OSA routinely responds to many requests from agencies, the Legislature, and the public to clarify or investigate specific privatization compliance issues. OSA responsibilities have included meetings with concerned parties, correspondence, document requests and reviews, and final determinations relative to these inquiries.
Responsibilities of entities seeking to privatize state services
Pursuant to this law, the privatization process includes preparing a detailed statement of services to be used in soliciting competitive bids, estimating the most cost-efficient method of providing those services with agency employees, and, finally, comparing the in-house cost with the cost of contract performance. Additionally, the agency is responsible for ensuring that the private bids and private contracts, if ultimately awarded, contain all Chapter 296 provisions regarding wages, benefits, and personnel.
*Last updated in February 2023