HOUSE BILL NO. 515

INTRODUCED BY L. GRINDE

A BILL FOR AN ACT ENTITLED: "AN ACT CREATING A FREEDOM FROM GOVERNMENT COMPETITION ACT; PROVIDING FOR REVIEWING AUTHORITIES TO DETERMINE IF AN ACTIVITY OF A GOVERNMENT ENTITY VIOLATES NONCOMPETE PROVISIONS; PROVIDING A HEARING PROCEDURE TO REVIEW COMPLAINTS OF ACTIONS BY GOVERNMENT ENTITIES IN VIOLATION OF NONCOMPETE PROVISIONS; PROVIDING JUDICIAL REMEDIES FOR ALLEGATIONS OF VIOLATIONS BY GOVERNMENT ENTITIES OF NONCOMPETE PROVISIONS; REQUIRING STATE AGENCIES TO GIVE A PREFERENCE TO RESIDENT BIDDERS; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE."

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

NEW SECTION. Section 1. Short title. [Sections 1 through 6] may be cited as the "Montana Freedom From Government Competition Act".

NEW SECTION. Section 2. Purpose. The purpose of [sections 1 through 6] is to provide additional economic opportunities to private industry and to regulate competition by state and local government entities, including institutions of higher education, and to ensure that a state or local government entity does not use facilities or equipment purchased or provided with public funds to provide goods or services to the public for a fee when that provision of goods or services is in competition with private companies that provide similar goods or services. The provision of services includes but is not limited to manufacturing, construction, and maintenance or repair.

NEW SECTION. Section 3. Definitions. As used in [sections 1 through 6], the following definitions apply:

(1) (a) "Government entity" means a department, office, commission, institution, board, or other agency of the state or of a county, consolidated city-county, or municipality and includes school districts and institutions of higher education.

(b) The term does not include K through 12 public schools, law enforcement services provided under Title 7, chapter 32, fire services provided under Title 7, chapter 33, the state historical society, any local government public health or safety agency, any public facility that provides medical services, or a public library or library district.

(2) "Reviewing authority" means:

(a) the office of the governor, if the government entity being reviewed operates or has authority to operate on a statewide basis;

(b) the board of county commissioners or the governing body of a consolidated city-county, if the government entity being reviewed operates or has authority to operate on a countywide basis;

(c) the governing body of a municipality, if the government entity being reviewed operates or has authority to operate on a citywide or townwide basis; or

(d) the governing body of a school district or institution of higher education, if the government entity being reviewed is a school district or institution of higher education.

NEW SECTION. Section 4. Government competition with private enterprise prohibited -- exceptions. (1) Except as provided in [section 5] or subsections (3) and (4) of this section or unless specifically authorized or required by law, a government entity may not:

(a) engage in the processing, sale, offering for sale, rental, leasing, delivery, dispensing, distributing, or advertising of goods or services to the public that are also offered by private enterprise; or

(b) engage in manufacturing, construction, or maintenance or repair if the manufacturing, construction, or maintenance or repair may be adequately accomplished by private enterprise.

(2) Except as provided in [section 5] and subsections (3) and (4) of this section or unless specifically authorized or required by law, a government entity may not sell goods or services or provide manufacturing, construction, or maintenance or repair services to another government entity if the goods or services are offered by private enterprise or if the manufacturing, construction, or maintenance or repair may be adequately accomplished by private enterprise. This section does not apply to the renting, leasing, or subleasing of real property or personal property by one government entity to another government entity if the property has been rented or leased from private enterprise.

(3) The restrictions on competition with private enterprise contained in this section do not apply to:

(a) printing, distributing, or copying public records or other material relating to a government entity's public business if the costs of the printing, distributing, or copying are recovered through fees or charges; or

(b) goods or services produced or provided by persons incarcerated by the department of corrections.

(4) (a) If a government entity is engaged or intends to engage in manufacturing, construction, or maintenance or repair activity and a private enterprise entity indicates a willingness to perform that activity, the government entity shall seek bids or proposals, as provided by state public contract or bidding laws, from the general public for the performance of that activity.

(b) If a government entity is subject to this subsection (4) and is a public agency, as defined in 18-1-101, it is also subject to the resident bidder preference requirements of Title 18, chapter 1, part 1.

(c) If, after receiving all valid bids or proposals, the government entity in good faith finds that none of the applicants has the capability of adequately performing the manufacturing, construction, or maintenance or repair activity, the government entity may continue to engage in or undertake that activity. A decision by a government entity to continue to engage in or to undertake an activity is subject to the complaint procedures provided in [section 6].

NEW SECTION. Section 5. Competition with private enterprise by institutions of higher education. (1) Institutions of higher education may not, unless specifically authorized by statute:

(a) provide to persons other than students, faculty, staff, and invited guests, through competitive bidding, goods, services, or facilities that are available from private enterprise unless the provision of the goods, the services, or a facility offers a valuable educational or research experience for students as a part of their education or fulfills the public service mission of the institution of higher education. However, institutions of higher education may sponsor or provide facilities for recreational, cultural, and athletic events or facilities for food services and sales. If the institution of higher education enters into competitive bidding, the bid request must include all direct and indirect costs of providing the good or service unless the entity receiving the bid is required to use a specific procedure or formula.

(b) provide goods, services, or facilities for or through another government entity, including by intergovernmental or interagency agreement, that, if provided directly by the institution of higher education, would be in violation of this section.

(2) In determining whether the provision of goods or services offers a valuable teaching, educational, or research experience, the following criteria must be considered:

(a) whether the provision of the goods, the services, or a facility is substantially and directly related to the instructional, research, or public service mission of the institution of higher education;

(b) whether the provision of the goods, the services, or a facility is necessary or convenient for the campus community;

(c) whether there is a demand in the public for the goods, the services, or a facility;

(d) whether the price charged for the goods, the services, or a facility reflects the direct and indirect costs and overhead cost of providing the goods, the services, or a facility and the price in the private marketplace; and

(e) whether measures have been taken to ensure that the provision of the goods, the services, or a facility is only for students, faculty, staff, or invited guests and not for the general public.

(3) The governing body for each institution of higher education shall develop, after consultation with the governing bodies of other institutions of higher education and Montana business organizations, guidelines for the provision of goods, services, and facilities to students, faculty, and staff of institutions of higher education and to the invited guests of the students, faculty, and staff.

(4) The governing body of each institution of higher education shall adopt, in accordance with guidelines established pursuant to subsections (1) and (2), procedures for the hearing of complaints by privately owned businesses. If a privately owned business makes a complaint of unfair competition in relation to the activities of an institution of higher education, the business must have an opportunity for a hearing regarding the complaint. The complaint must first be heard by the chief executive officer of the institution, or the chief executive officer's designee, and appeal may be made by the privately owned business to the governing board of the particular institution involved in the complaint.

NEW SECTION. Section 6. Complaint procedure -- appeal. (1) (a) A person directly affected by a violation of any provision of [sections 1 through 6] or by an adverse decision under [section 4(4)(c)] by a government entity may file a written complaint with the appropriate reviewing authority and with the head of the government entity, stating the grounds for the complaint.

(b) The government entity named in the complaint shall respond in writing to the reviewing authority and to the complaining party within 45 days of receipt of the complaint. The government entity shall either admit or deny the allegations made in the complaint, and it shall indicate if any remedial action will be taken. If the head of the government entity does not resolve the complaint to the satisfaction of the complainant within 75 days of receipt of the complaint, the complainant may demand a hearing before the reviewing authority.

(c) Within 75 days of the government entity's response to the complaint, the reviewing authority shall issue a report of its findings to the complainant and the government entity.

(d) At any time within 2 years after receipt of the reviewing authority's report, the complainant may bring an action in the district court for Lewis and Clark County or in the district court in the county where the complainant's business is located, for a violation of a provision of [sections 1 through 6] or appealing an adverse decision under [section 4(4)(c)] by the government entity. In addition to any other remedy, including a temporary or permanent injunction, the district court may award reasonable attorney fees and costs to the prevailing party.

(2) (a) Each reviewing authority that has received a complaint during the previous year shall transmit an annual report of its activities, pursuant to the provisions of [sections 1 through 6], in January of each year to the legislative audit committee.

(b) The report must include, at a minimum, copies of all complaints received, responses of government entities, evidence received and findings made by the reviewing authority, reports issued by the reviewing authority, and records, if any, of the final disposition of all complaints.

NEW SECTION. Section 7. Codification instruction. [Sections 1 through 6] are intended to be codified as an integral part of Title 2, chapter 8, and the provisions of Title 2, chapter 8, apply to [sections 1 through 6].

NEW SECTION. Section 8. Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.

NEW SECTION. Section 9. Saving clause. [This act] does not affect rights and duties that matured, penalties that were incurred, or proceedings that were begun before [the effective date of this act].

NEW SECTION. Section 10. Effective date. [This act] is effective on passage and approval.

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