S.F. 518 Section 1. NEW SECTION . 8A.531 Disability work center 1 procurement program. 2 1. Definitions. For the purposes of this section, unless 3 the context otherwise requires: 4 a. “Agency” means a department, board, bureau, or commission 5 of this state. 6 b. “Direct labor” means all labor or work involved in 7 producing or supplying materials, supplies, or equipment 8 or performing contractual services including preparation, 9 processing, and packing, but excluding supervision, 10 administration, inspection, and shipping. 11 c. “Disabled individual” means an individual who has 12 a physical, mental, or emotional disability which is a 13 substantial handicap to employment and prevents the individual 14 from engaging in normal competitive employment. 15 d. “Work center” means a nonprofit corporation organized 16 under chapter 504 or a political subdivision, which is licensed 17 under section 84A.12, and which is operated for the purpose 18 of carrying out a program of rehabilitation for disabled 19 individuals and for providing the individuals with remunerative 20 employment or other occupational rehabilitating activity of 21 an educational or therapeutic nature, and which is engaged in 22 the production of materials, supplies, or equipment or the 23 performance of contractual services in connection with which 24 not less than seventy-five percent of the total hours of direct 25 labor are performed by disabled individuals. 26 2. Duties of the department. The department shall do all 27 of the following: 28 a. Aid in the identification of materials, supplies, 29 equipment, and contractual services which agencies can procure 30 from work centers. 31 b. Establish eligibility criteria for work centers 32 participating in the program established under this section. 33 c. Annually establish and review fair market prices for 34 materials, supplies, equipment, and contractual services which 35 -1- LSB 2012SS (3) 84 je/rj 1/ 11

S.F. 518 can be purchased from work centers. 1 d. By October 1 each year, prepare and submit to the 2 director an annual report concerning the activities of the 3 program, including all of the following: 4 (1) A summary of materials, supplies, equipment, and 5 contractual services purchased by agencies from work centers. 6 (2) The name of each work center participating in the 7 program established under this section. 8 (3) The impact of the program established under this 9 section upon production, work stabilization, and program 10 development of, and the number of disabled individuals served 11 by, participating work centers. 12 e. Annually conduct a review of the prices paid by agencies 13 for the materials, supplies, equipment, and contractual 14 services provided by work centers and make any adjustments 15 necessary to establish a fair market price for all such 16 materials, supplies, equipment, and contractual services. 17 f. Adopt procedures regarding specifications, time of 18 delivery, and designation of materials, supplies, equipment, 19 and contractual services to be supplied by work centers. The 20 department shall maintain a list of each material, supply, 21 piece of equipment, or contractual service to be supplied 22 by work centers, and shall assign a number to each item 23 on the list. Specifications of the department shall be 24 consistent with specifications prescribed by agencies for which 25 procurements are made. 26 (1) The department may change specifications contained 27 in the list maintained under this paragraph “f” . Each list 28 shall contain a basic specification and the date of the latest 29 revision. 30 (2) If an agency makes a substantial change in a 31 specification on the list maintained under this paragraph 32 “f” , the department shall assign a new item number. The 33 agency shall notify the department of the change prior to the 34 effective date of the change. 35 -2- LSB 2012SS (3) 84 je/rj 2/ 11

S.F. 518 g. Review each order and contract for the impact that 1 the requirements of subsection 3 have on each supplier or 2 contractor, and assure that the requirements do not affect more 3 than fifteen percent of the supplier’s or contractor’s current 4 yearly sales or production. 5 h. Prescribe a surcharge to be paid by each ordering agency, 6 which shall be payable to the department within a time and in 7 accordance with a procedure specified by the department. 8 i. Adopt rules pursuant to chapter 17A to administer the 9 provisions of this section. 10 3. Qualification of work centers. To qualify for 11 participation under the program established under this section, 12 a work center must submit to the department a copy of its 13 license issued under section 84A.12 together with the following 14 documents, transmitted by a letter signed by an officer of the 15 work center: 16 a. In the case of a nonprofit corporation organized under 17 chapter 504, all of the following: 18 (1) A legible copy of the articles of incorporation of the 19 organization showing the date of filing with the secretary of 20 state. 21 (2) A copy of the bylaws of the organization certified by 22 an officer. 23 (3) A copy of a letter from the federal internal revenue 24 service indicating that the organization qualifies as a 25 tax-exempt organization. 26 b. In the case of a political subdivision, a copy of the 27 ordinance, resolution, or motion authorizing or directing the 28 establishment of the work center. 29 4. Responsibilities of work centers. Each work center 30 participating in the program established under this section 31 shall do all of the following: 32 a. Furnish materials, supplies, equipment, and services in 33 accordance with orders issued by agencies. 34 b. Make its records available for public inspection at any 35 -3- LSB 2012SS (3) 84 je/rj 3/ 11

S.F. 518 reasonable time. 1 c. Maintain records of direct labor hours performed in the 2 work center by each worker. 3 d. Annually submit to the department a certification that 4 the work center is qualified to participate in the program 5 established under this section. 6 e. Comply with applicable occupational health and safety 7 standards prescribed by the United States secretary of 8 labor, the United States occupational health and safety 9 administration, or the department of workforce development. 10 f. Maintain an ongoing placement program for disabled 11 individuals that includes staff assigned to perform personal 12 evaluations and to maintain liaisons with appropriate community 13 service organizations. 14 g. Maintain a record for each disabled individual employed 15 by the work center which includes a written report prepared 16 by a licensed physician or psychiatrist, or a qualified 17 psychologist, reflecting the nature and extent of the 18 disability that causes the individual to qualify as disabled. 19 5. Purchase of raw materials. A work center shall seek 20 broad competition in the purchase of raw materials and 21 components used in the materials, supplies, equipment, or 22 services provided to agencies under this section. A work 23 center shall inform the department before entering into a 24 multiyear contract for raw materials and components. 25 6. Violations. An alleged violation of this section by 26 a work center shall be investigated by the department. The 27 department shall determine whether a violation has occurred. 28 If the department determines that a violation has occurred, 29 the department may terminate an assignment to the work center 30 or suspend an assignment until the department determines the 31 violation has been corrected. 32 7. Procurement requirements and procedures. 33 a. Except as provided this subsection and subsection 8, an 34 agency purchasing a material, supply, piece of equipment, or 35 -4- LSB 2012SS (3) 84 je/rj 4/ 11

S.F. 518 services which is on the list maintained under subsection 2, 1 paragraph “f” , shall purchase the material, supply, piece of 2 equipment, or service from a work center. 3 b. Purchase orders shall contain the following: 4 (1) The name, material, supply, or equipment number 5 assigned by the department, most recent specification, 6 quantity, unit price, and place and time of delivery. 7 (2) The type of work and location of service required, most 8 recent specification, work to be performed, estimated volume, 9 and time for completion. 10 c. An agency shall issue purchase orders with sufficient 11 time for the appropriate work center to produce the materials, 12 supplies, or equipment, or provide the services required. 13 d. If any commodity on the list maintained under subsection 14 2, paragraph “f” , is also produced at an institution of the 15 state and the commodity conforms to the specifications on the 16 list, the ordering agency shall purchase the commodity from the 17 institution. 18 e. If a specific material, supply, or piece of equipment 19 on the list maintained under subsection 2, paragraph “f” , also 20 appears in the price lists prepared pursuant to section 904.807 21 for products supplied by Iowa state industries, the ordering 22 agency shall notify and provide Iowa state industries with the 23 opportunity to fill the order prior to placing an order. 24 f. (1) Paragraph “a” does not apply to purchases of 25 printing or stationery. 26 (2) Paragraph “a” does not apply to procurements by 27 the department relating to information technology or 28 telecommunications. 29 8. Exceptions. The department shall do all of the 30 following: 31 a. Grant written authorization to an ordering agency to 32 procure materials, supplies, equipment, or services on the list 33 maintained under subsection 2, paragraph “f” , from commercial 34 sources when all of the following conditions are met: 35 -5- LSB 2012SS (3) 84 je/rj 5/ 11

S.F. 518 (1) The work center to which the order is assigned cannot 1 furnish a material, supply, piece of equipment, or service 2 within the period specified in the order. 3 (2) The material, supply, equipment, or service is 4 available from commercial sources in the same quantity and at 5 an earlier time than it is available from the work center to 6 which the order is assigned. 7 b. Issue an authorization to an ordering agency to procure 8 materials, supplies, equipment, or services from commercial 9 sources when the quantity involved is not sufficient for the 10 economical production or provision by the work center to which 11 the order is assigned. 12 c. Issue an authorization under paragraph “a” or “b” 13 promptly upon request by an ordering agency. The authorization 14 shall be in the form of a certificate which shall specify the 15 quantity and delivery period covered by the authorization. 16 9. Prices. 17 a. All prices included in the list maintained under 18 subsection 2, paragraph “f” , shall be determined by the 19 department on the basis of fair market prices for materials, 20 supplies, equipment, or services similar to those supplied by 21 work centers. 22 b. Prices for materials, supplies, or equipment shall 23 include delivery and packaging, packing, and marketing costs. 24 c. Price changes for materials, supplies, or equipment shall 25 apply to all orders placed on or after the effective date of 26 the change. 27 d. Delivery of an order shall be deemed accomplished when a 28 shipment is received and accepted by the purchasing agency. 29 10. Adjustment and cancellation of orders. If a work center 30 fails to comply with the terms of an order from an agency, 31 the ordering agency shall make every effort to negotiate 32 adjustments before canceling the order. 33 11. Quality control. 34 a. Materials, supplies, and equipment furnished by work 35 -6- LSB 2012SS (3) 84 je/rj 6/ 11

S.F. 518 centers under specifications issued by an agency shall 1 be manufactured by work centers in accordance with the 2 specifications. 3 b. Services provided by work centers under specifications 4 issued by an agency shall be performed by work centers in 5 accordance with the specifications. If no specifications 6 exist, the services shall be performed by work centers in 7 accordance with reasonable commercial standards of practice in 8 the applicable industry. 9 c. If the quality of a material, supply, piece of equipment, 10 or service received from a work center is not satisfactory to 11 the contracting agency, the agency shall advise the department 12 and, if the department determines that the quality of the 13 material, supply, equipment, or service is unsatisfactory, the 14 department shall suspend the eligibility of the work center 15 which provided the material, supply, or equipment, or which 16 performed the service to participate in the program established 17 under this section. 18 12. Research and development periods. 19 a. No more than once during a two-year period, a work center 20 may apply to the department for authorization to begin a period 21 of research and development to explore the capability of the 22 work center to provide a material, supply, piece of equipment, 23 or service to the state that the work center does not currently 24 provide. A period shall not last for more than ninety days. 25 The department shall not authorize a period for a work center 26 for a particular material, supply, piece of equipment, or 27 service if such a period has been authorized for another work 28 center for the same material, supply, piece of equipment, or 29 service, and the period has not yet elapsed. The department 30 may approve one additional ninety-day period for a work center 31 if the work center reports satisfactory progress for an initial 32 period. 33 b. At the time of authorization of an initial period for a 34 work center, the department shall provide the work center with 35 -7- LSB 2012SS (3) 84 je/rj 7/ 11

S.F. 518 any available data on annual state purchases; the most recent 1 contract specifications, terms and conditions; prices; and, 2 when available, samples for the particular material, supply, 3 piece of equipment, or service which is to be the subject of 4 research and development for the period. 5 Sec. 2. NEW SECTION . 84A.12 Licenses for employment of 6 workers with disabilities by work centers. 7 The department shall issue a license to a nonprofit 8 corporation organized under chapter 504 or to a political 9 subdivision to operate a work center for the employment of 10 workers with a disability who are unable to earn a wage that 11 is commensurate with their ability and productivity. The 12 department shall adopt rules pursuant to chapter 17A to 13 administer this section. 14 EXPLANATION 15 This bill provides for a program for state agencies to 16 procure products from work centers for disabled individuals. 17 Such products would consist of materials, supplies, equipment, 18 or contractual services. The bill requires a state agency 19 which is making a purchase of a product which is on the list of 20 products available pursuant to the bill to purchase the product 21 from a work center, with certain exceptions. 22 The bill provides that the program will be administered by 23 the department of administrative services. The bill provides 24 definitions for “disabled individual” and “work center”. The 25 bill sets out duties of the department, including identifying 26 products which agencies can procure from work centers, 27 establishing eligibility criteria for participating work 28 centers, establishing fair market prices for products purchased 29 from work centers, reporting on the activities of the program, 30 adopting procedures for ordering products from work centers, 31 maintaining a list of products available through the program, 32 establishing a surcharge for agencies ordering products, and 33 adopting other rules as necessary pursuant to Code chapter 17A. 34 The bill specifies that a nonprofit corporation organized 35 -8- LSB 2012SS (3) 84 je/rj 8/ 11

S.F. 518 under Code chapter 504 or a political subdivision may operate 1 work centers. The bill requires a nonprofit corporation or 2 political subdivision to submit verifying documentation to the 3 department to qualify as a work center, including a license to 4 operate issued by the department of workforce development. 5 The bill sets out responsibilities of work centers, 6 including furnishing products ordered by agencies, maintaining 7 records of hours worked, submitting annual certification 8 of qualification to participate in the program, compliance 9 with applicable health and safety standards, maintaining a 10 placement program for participants, and maintaining records 11 for participants, including a written report by a licensed 12 physician or psychiatrist, or a qualified psychologist. 13 The bill directs work centers to seek broad competition 14 in the purchase of raw materials and components used in the 15 products provided to agencies. The bill provides that a work 16 center must inform the department before entering into a 17 multiyear contract for raw materials and components. 18 The bill directs the department to investigate any alleged 19 violation of the provisions of the bill. The bill provides 20 that the department shall determine if a violation has 21 occurred, and may terminate an assignment to a work center 22 or suspend an assignment until the department determines the 23 violation has been corrected. 24 The bill provides that a state agency which is making 25 a purchase of a product which is on the list of products 26 available pursuant to the bill must purchase the product 27 from a work center. The bill provides exceptions from this 28 requirement, including purchases of printing or information 29 technology, purchases of products also produced by state 30 institutions, purchases of products also produced by the state 31 prison industries program, purchase orders that cannot be 32 satisfied in the necessary time frame, and purchase orders of a 33 quantity which a work center cannot economically produce. 34 The bill sets out requirements for the contents of purchase 35 -9- LSB 2012SS (3) 84 je/rj 9/ 11

S.F. 518 orders. The bill requires an ordering agency to issue a 1 purchase order with sufficient time for the appropriate work 2 center to produce the products required. 3 The bill provides that prices for the products offered 4 through the program must be based on fair market prices and 5 will include delivery and packaging, packing, and marketing 6 costs. The bill specifies that delivery of an order is 7 accomplished when a shipment is received and accepted by the 8 purchasing agency. The bill provides that if a work center 9 fails to comply with the terms of an order from an agency, the 10 ordering agency must make every effort to negotiate adjustments 11 before canceling the order. 12 The bill provides that products furnished by work centers 13 must meet the specifications of the ordering agency. The 14 bill provides that if the quality of a product received from 15 a work center is not satisfactory to the contracting agency, 16 the agency must advise the department and, if the department 17 determines that the quality of the product is unsatisfactory, 18 the department must suspend the work center which provided the 19 product from the program. 20 The bill provides that no more than once during a two-year 21 period, a work center may apply to the department for 22 authorization to begin a period of research and development 23 to explore the capability of the work center to provide a 24 product to the state that the work center does not currently 25 provide. The bill provides that a period will not last 26 more than 90 days. The bill prohibits the department from 27 authorizing a period for a work center for a particular product 28 if such a period has been authorized for another work center 29 for the same product, and the period has not elapsed. The 30 bill provides that the department may approve one additional 31 90-day period for a work center if the work center reports 32 satisfactory progress for an initial period. The bill directs 33 the department, at the time of authorization of an initial 34 period, to provide the work center with any available data on 35 -10- LSB 2012SS (3) 84 je/rj 10/ 11

S.F. 518 annual state purchases; most recent contract specifications, 1 terms and conditions; prices; and, when available, samples for 2 the particular product which is to be the subject of research 3 and development for the period. 4 The bill directs the department of workforce development to 5 adopt rules pursuant to Code chapter 17A for issuing a license 6 to a nonprofit corporation or political subdivision to operate 7 a work center for the employment of workers with a disability 8 who are unable to earn a wage that is commensurate with their 9 ability and productivity. 10 The bill may cause a political subdivision to offer for sale 11 to the public a service or product that competes with private 12 enterprise. 13 -11- LSB 2012SS (3) 84 je/rj 11/ 11