In 1993, after Massachusetts government privatized 36 operations in the previous 3 years, the legislature passed what came to be called the Pacheco Law over then-Governor William F. Weld’s veto. The law imposes the strictest series of tests in the nation before a service can be privatized.
1. Agencies seeking to contract out a service must prove not only that the move would save money, but that it would save money even if state employees were to work in the “most cost-efficient manner.”
2. Firms cannot win business if they’ll pay less than the lowest amount the state pays its employees for similar services.
3. Every privatization contract must contain provisions requiring the contractor to offer positions to qualified regular employees of the agency whose state employment is terminated because of the privatization contract.
4. The contractor must add lost tax revenues to the cost of the bid if any work is to be performed outside Massachusetts.
5. Private bids must also include estimated costs of monitoring contractor performance.
6. Public employees have the opportunity to submit bids to keep the work in-house and “the agency shall provide adequate resources for the purpose of encouraging and assisting present agency employees to organize and submit a bid to provide the subject services.”