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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. 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.

  • 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, largely related to custodial, pest control and security.  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)
  • Significant steps to insource labor
  • UC Davis and UC Davis Health already have taken significant steps to insource 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 14 full-time UC Farm Laborer career positions. CAES has worked to cross-train employees to further minimize the need for contract work.

  • 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.

    Regents Policy 5402 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.
    --Performed more than 10 miles from the Davis and Sacramento campuses.
    --Performed in clinical operations to address short-term needs.

  • Proposed carve-outs for exceptional circumstance
  • There are two categorical activities that affect multiple campus units and for which the campus either does not have facilities, or the services are at a location that are remote and would not have appropriate supervision for career positions.

    The workgroup recommends that an exception be approved for these categories as a group, as the benefit from each individual unit accessing the services would be the same, including:

    --Coach bus services
    --Clinical registry personnel to address very short-term needs.

  • 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.
  • Proposed process for outsourcing requests
  • The use of new contracts for covered services is expected to be used sparingly and only as a solution of last resort. To request a carve out, a department must submit a justification for consideration.
    View the process flowchart below:

    Outside Services Carve Out Exception Process

    Hiring an Outside Contractor for Davis Campus and academic units on the Sacramento campus (School of Medicine, School of Nursing)

    1.  Department initiates request for services either through KFS or by emailing coveredservices@ucdavis.edu with a brief description of request.
    2.  Department completes required justification form if a covered service cannot be brought in-house.
    3.  Dean/Vice Chancellor of requesting department reviews and authorizes request. Assistant Vice Chancellor of Finance, Operations and Administration will review for FOA units.
    4.  Request is reviewed by Supply Chain Management for completion.
    5.  Employee and Labor Relations verifies as covered or non-covered service and notices union when necessary.
    6.  Chief Procurement Officer assesses request in regards to policy and reasonableness and ensures Labor Relations and Vice Chancellor signatures have been received; routes documentation for approval and facilitates contracting if approved.
    7.  FOA Vice Chancellor approves or denies request. (This step is not required for contracts less than $2,500).


    Hiring an Outside Contractor for UC Davis Health

    For information on requesting a carve out for UC Davis health units, please contact Danielle Kehler, UC Davis Health Employee Relations, at dlkehler@ucdavis.edu.
  • Frequently Asked Questions
  • Q: What is the scope of the new policy?

    A:  The scope of Regents Policy 5402 applies to all existing and new contracts for covered services.


    Q: What has been done to date?

    A:  The workgroup has spent considerable time developing a process to ensure carve outs to Regents Policy 5402 will be rarely made, and only after justification has been documented, reviewed and approved up to the level of Vice Chancellor or Chief Financial Officer (CFO) . 


    Q:  What if the contract is authorized to continue, but the service provider won’t agree to wage/benefit provisions?

    A: If the contractor refuses to meet the requirements of the policy, then the contract must be amended to end by the Jan. 30, 2021 deadline.


    Q:  If my request for an exception to outsource services is denied, what is the escalation path?

    A:  The Vice Chancellor – Finance, Operations and Administration will have final approval authority for all requests as a delegate of the Chancellor.