(1) Contracts for personal services that create an independent contractor relationship and that are not authorized under the provisions of section 24-50-504 are nevertheless permissible under this section to achieve increased efficiency in the delivery of government services when the state personnel director determines that all of the following conditions are met: (a) The contracting agency clearly demonstrates that the proposed contract will result in overall cost savings to the state and that the estimated savings will not be eliminated by contractor rate increases during the term of the contract, subject to the following: (I) In comparing costs, there shall be included the state's cost of providing the same service as proposed by a contractor. The state's costs shall include the salaries and benefits of staff that would be needed and the cost of space, equipment, and material needed to perform the function. (II) In comparing costs, there shall not be included the state's indirect overhead costs unless the costs can be attributed solely to the function in question and would not exist if that function were not performed in state service. For such purpose, "Indirect overhead costs" means the pro rata share of existing administrative salaries and benefits, rent, equipment costs, utilities, and materials. (III) In comparing costs, there shall be included in the cost of a contractor providing a service any continuing state costs that would be directly associated with the contracted function. These continuing state costs shall include, but need not be limited to, those for inspection, supervision, and monitoring. (IV) In comparing costs, there shall not be included any savings to the state attributable to lower health insurance benefits provided by the contractor. (b) The contracting agency clearly demonstrates that the proposed contract will provide at least the same quality of services as that offered by the contracting agency. (c) The contract includes specific provisions pertaining to the qualifications of the staff that will perform the work under the contract. (d) The contract contains nondiscrimination provisions required by law to be included in state contracts. (e) The contract contains provisions for termination by the state for breach of the contract by the contractor. (f) The potential economic advantage of contracting is not outweighed by the public's interest in having a particular function performed directly by state government. In assessing the public's interest, the state personnel director shall take into account: (I) The consequences and potential mitigation of improper or failed performance by the contractor; (II) Whether performance of the contract involves the improper delegation of a policy- making function; (III) The extent to which the contracting preserves the principles of competence in government and the avoidance of political patronage. For such purpose, there shall be considered the applicability of other laws, including those as enumerated in section 24-50-506, that aid in safeguarding the fundamental principles underlying the state personnel system. (2) The state personnel director shall not approve a personal services contract under this section if the contract would result directly or indirectly in the separation of certified employees from state service. However, nothing contained in this section shall be construed to prevent the separation of certified employees from state service pursuant to any other provision of law, including but not limited to the provisions of section 24-50-124, for reasons other than privatization. (3) Repealed.
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