Outsourcing for Covered Services Generally Prohibited

UC policy protects against outsourcing of services that can be provided by university employees.

A University of California policy implemented in November 2019 protects against excessive outsourcing.

The University of California is committed to maintaining a strong in-house workforce and supporting living wages and benefits for employees, as is evidenced in Article 5 of the University Collective Bargaining Agreement. To reinforce this commitment, in November 2019, the UC Board of Regents approved Regents Policy 5402, which generally prohibits contracting for services and ensures equitable treatment for any allowable contract workers.

Policy Summary/Guiding Values and Principles
There shall be a general prohibition on contracting out for services and functions that can be performed by University staff. Under exigent and limited circumstances when an outside contract is a solution of last resort, the following shall apply:

UC MUST VALUE AND PROTECT ITS EMPLOYEES The University shall prioritize the use of its employees to perform functions and services whenever possible and the use of outside contractors will not cause or facilitate the displacement of university employees.

EQUAL PAY FOR EQUAL WORK The labor conditions of contract workers shall be protected by ensuring they receive wages and benefits equivalent to what the University provides to its employees, and providing those who have performed services to the University on a long-term and continuous basis the opportunity to become University employees.

UC MUST BE A MODEL EMPLOYER Requirements governing state agencies and departments under California Government Code Section 19130 shall serve as minimum standards and, whenever reasonable, shall be exceeded.

Since its founding, the University's public mission has always been to unlock the doors of economic opportunity, uplift the human condition, and serve as an antidote to poverty. This begins from within.

UC's employment and contracting practices for all individuals working on its campuses, medical centers, and laboratories must model what it demands of other employers. In particular, this means the University must remain vigilant in ensuring its use of contract workers does not contribute to the rise of poverty-level jobs, thereby exacerbating growing economic inequality and reliance on taxpayer-funded "safety-net" services. Contracting out should be used sparingly and treated as an option of last resort to address temporary needs, not as a means to replace employees with lower-wage contractors.

As a public trust and one of the largest employers in California, the University is committed to protecting and valuing the lives of those it serves, educates, and employs.
UC Davis contracting out process workgroup
In January 2020, the Chancellor convened the UC Davis Contracting Out Process Workgroup, composed of 17 members, representing a broad range of Davis campus and Health staff in Human Resources, Procurement, Dean's and Vice Chancellor Offices, Finance, Operations, and Administration (FOA), and Student Affairs. The workgroup was charged with identifying ways to bring in-house all covered services identified by Regents Policy 5402; developing a process to analyze, review and document decisions regarding requests to continue contracting out for services; and developing a communications strategy for sharing the final approved process with the university community.

The workgroup submitted its final report in July 2020.
Carve outs to the policy
Exemptions to the policy will be rarely granted. Reduced cost is not an acceptable justification. By requiring wage and benefit parity in any contract for covered services, there will be no cost advantage to using contracted services in lieu of services provided by a UC Davis employee.

Article 5 of the Collective Bargaining Agreement provided guidance for the Regents Policy 5402 that explains that contracting for covered services is only permitted when:

--Required by law, grants and/or court decisions.
--Needed to address an emergency.
--Not available at the location in sufficient quantity or expertise level.
--Incidental to a leased property.
--Urgent, temporary or occasional.
--Securing equipment, material or services the campus cannot feasibly provide, this can include work beyond 10 miles of campus.
--Performed in clinical operations to address short-term needs.
Request a carve out
The University of California is committed to maintaining a strong in-house workforce and supporting living wages and benefits for employees, as is evidenced in Article 5 of the Collective Bargaining Agreement. To reinforce this commitment, in November 2019, the UC Board of Regents approved Regents Policy 5402, which generally prohibits contracting for services and ensures equitable treatment for any allowable contract workers.

The limited allowances for contracting out for covered services are outlined in Article 5. If you believe the service you are requesting falls under one or more of those allowances, and have exhausted all other options to utilize or create career UC positions, you may request a carve out.
Transitioning or amending current contracts
UC is committed to protecting employees by insourcing functions and services whenever possible. In support of that goal, UC Davis has identified a number of services that will be insourced. All outside supplier contracts authorized to continue must be amended to include the policy’s wage and benefit parity provisions. Parity is defined as the cost equivalent of the following:

--Annual and hourly salary at Step 1 of the salary range for the entry level of the comparable UC classification (or if not entry, the most junior classification)

--UC benefits for health, dental, vision, life insurance, disability insurance, and retirement that a UC employee performing the same duties would receive (applied as a percentage of salary)
Employment standards must be applied to contractors
If departments are given authority to contract for covered services, then the contractor must provide its employees with wages and benefits equivalent to those provided by the university.

Frequently Asked Questions

What is the scope of the policy?
The scope of Regents Policy 5402: Regents Policy Generally Prohibiting Contracting for Services applies to all existing and new contracts for covered services.
What has been done to ensure compliance?
The Contracting Out Process Workgroup spent considerable time developing a process to ensure carve outs to Article 5 of the University Collective Bargaining Agreement and Regents Policy 5402 will be rarely made, and only after justification has been documented, reviewed and approved up to the level of Vice Chancellor-FOA or UCDH Chief Financial Officer (UCDH-CFO). The Dean or Vice Chancellor for the unit requesting the services must also endorse the requested carve out justification.
What has UC Davis done to in-source labor?
UC Davis and UC Davis Health already have taken significant steps to in-source labor over the past decade, eliminating a number of service contracts. Examples include:

• Student Housing and Dining Services insourced all dining service employees in January 2009. Approximately 250 staff transitioned from working for a third-party contractor to becoming UC employees. The majority of these positions are food service workers.
• Student Housing and Dining Services assumed responsibility for cleaning dining facilities in January 2016. The work previously done by a contracted vendor created 12 Senior Custodian UC career positions.
• Between 2016 and 2017, campus transitioned 57 custodial positions (Custodians and Senior Custodian) from contracted work to UC career positions.
• The College of Agricultural and Environmental Sciences transitioned from multiple, part-time contract farm labor positions to 19 full-time UC Farm Laborer career positions. CAES has worked to cross-train employees to further minimize the need for contract work.
What is considered a "covered service"?
This is work customarily performed by SX (service) and EX (patient care technical) bargaining unit employees at the university. A list of SX and EX job titles can be found here. Visit the Title Code Search (TCS page) for information on pay.
What are some commonly used covered services that can be provided in house?
Several of the university service providers include:

• Print, copy, design and promotional needs can be met through Repro Graphics.
• Custodial services are provided by Facilities Management.
• Catering is available through Olive & Vine.

The policy establishes standards for contracts for services for cleaning, custodial, janitorial or housekeeping services; food services; laundry services; groundskeeping; building maintenance; transportation and parking services; security services; billing and coding services; sterile processing; hospital or nursing assistant services; and medical imaging or other medical technician services.
What is Senate Bill 820?
SB 820 prohibits contracting out for covered services in General Fund-Supported facilities.
How is catering defined?
Catering is defined as food and/or beverage service that includes service or food preparation, provided at a university facility (a facility owned, leased, or otherwise operated by the University of California).

What are the requirements for catering at a university facility?
For full-service catered meals at a university facility, students, faculty, and staff are required to utilize the UC Davis caterer, Olive & Vine. If Olive & Vine is unable to support the request, a carve-out must be requested and include documentation from Olive & Vine indicating that it was unable to provide the service.

What about food delivery or pick up?
If a restaurant or catering service is simply dropping food off on campus and will not have staff on site to set up, serve or prepare food or beverages, or clean-up afterwards, it is not considered a covered service. Similarly, when students, faculty and staff pick up food from a restaurant and bring it to campus, that is not a covered service.

What about food trucks?
If the food trucks are being scheduled to show up at a certain location and date and time, it’s considered a covered service. The food truck agreements for those that are regularly located on core campus are under revenue agreements and excluded from article 5/policy 5402 for contracting out covered services.

What about events held at off-campus restaurants?
Seated service in an off-campus restaurant is not considered a covered service.
What about concessions?
"Concessions" are defined as the sale of food and/or beverages at a function where said products are sold directly to the guests by a commercial provider. On the UC Davis campus, UC Davis Dining Services has the first right of refusal for ALL concessionary service. Please direct your request for concessions to events@ucdavis.edu. Requests will be reviewed by Conference and Event Services and routed to UC Davis Dining Services for final approval.
Are promotional items, like T-shirts, mugs, keychains and bags, considered a covered service?
Repro Graphics currently does not print promotional items, so these are not considered a covered service. However, you can still take advantage of their relationship and contracts with thousands of suppliers by ordering promotional items through Repro Graphics. Please note: If you intend to use a UC Davis trademark and decide not to partner with Repro Graphics to use their vendors, you are still required to choose a licensed vendor.
What if I need to print something while traveling?
While a university employee is traveling away on business, any printing needs that take place on that trip are considered incidental to the travel and not viewed as a covered service. Therefore, a carve out is not needed.
What about chartered bus service?
If the requested bus service is not going to be on an existing route already served by a bus service, such as Unitrans, it is not considered a covered service.
What about putting up tents for an on-campus event?
The size of the tent drives whether or not this is considered a "covered service." Always check with AggieSurplus and Services first. If the size of the tents is larger than what they are able to provide and install, the tent rental and installation is not considered a covered service.
How can I request a carve out?
Information on the process for requesting to hire an outside contractor can be found on the Requesting a Carve Out page.
What are the noticing requirements related to covered services contracts?
As outlined in Article 5, Section D of the Collective Bargaining Agreement, the university will provide notice to AFSCME 3299 before entering into, extending or renewing a contract that includes covered services valued at more than $100,000. The notice must specify the duration, scope of work, wage/benefit parity information, dollar value and work location(s), if known.
What are the employment standards for Wage and Benefit Parity?
In general, contracts for covered services exceeding $100,000 and 90 days require the contractor to provide its employees working at university locations wages and benefits equivalent to those provided to university employees performing the same work. "Benefits" includes health, dental, vision, and retirement as well as vacation, sick leave, and holiday pay. More details can be found in Regents Policy 5402, Section C: Employment Standards.
What if a contract is authorized to continue, but the service provider won’t agree to wage/benefit provisions?
Contact coveredservices@ucdavis.edu to discuss available options.
If my request for an exception to outsource services is denied, what is the escalation path?
The Vice Chancellor – FOA (UC Davis campus/School of Medicine/School of Nursing) and the UC Davis Health-CFO (UCDH) will have final approval authority for all requests as a delegate of the Chancellor.
Where can I learn more?
Access the Sept. 1, 2020 "Bringing Services In-House" webinar recording or download the presentation slides.