Gov. Dannel P. Malloy will ask legislators today to suspend a linchpin of the state’s “clean contracting” law as he seeks to privatize state services in the face of nearly 5,500 recommended state employee layoffs.

As part of a proposal to fill the $1.6 billion two-year budget gap created when state employee unions rejected a concession deal, Malloy is seeking to suspend for two years the state contracting standards board, which was created in response to the scandals that drove Gov. John G. Rowland from office. The law that governs the board is based on the presumption that a “core governmental function should not be privatized.”

Malloy’s senior adviser, Roy Occhiogrosso, said Wednesday that “the rationale is that these are unusually challenging times,” adding that removing the privatization rules would allow the administration to move quickly if opportunities to save money arise. “This is not the path the governor wanted to go down.”

But a state employee union spokesman warned that the standards board is an important safeguard and predicted that the governor’s proposal would have “costly long-term consequences for the people of Connecticut.”

The contracting standards board was the centerpiece of a 2007 compromise between then-Gov. M. Jodi Rell, a Republican, and the Democrat-controlled General Assembly to counter the contracting scandals that drove Rowland from office amid an impeachment inquiry in July 2004. Rowland served 10 months in federal prison after admitting he accepted about $100,000 in gifts from state contractors and from his staff.

The so-called “clean contracting” statute established a 14-member panel and professional staff.

The law mandates that agencies seeking to privatize significant services must demonstrate to the panel at least a 10 percent cost savings and no loss in quality of service.

But nearly $2.4 million in funding designated for the agency since 2009 was either canceled or stripped away by Rell and the legislature to close budget deficits.

“For all practical purposes, the Contracting Standards Board has not been able to function since its inception,” Chairman Gale Mattison of West Hartford said. “The CSB has really been rendered moot.”

As a candidate for governor last summer, Malloy decried the decision by Rell and the legislature to reduce the board’s 2010-11 allocation from $950,100 to a token $10,001 — effectively a fiscal placeholder to keep the line item active in the state budget, but to do little else.

“This decision was short-sighted, and it was wrong,” Malloy said at the time. “Everyone understands that Connecticut is facing dire financial circumstances, but we need to realize the difference between fat in the budget that can be trimmed, and necessary programs that actually save money when properly funded.”

But the $20.14 billion budget approved by Malloy and the legislature for the fiscal year that begins Friday included just $175,000 for the agency, less than one-fifth the level it originally sought last year, and according to Mattison, still too little to effectively perform the board’s watchdog duties.

“We should be strengthening, not weakening, the board in order to protect Connecticut from waste, fraud, and abuse,” State Employees Bargaining Agent Coalition spokesman Matt O’Connor said Wednesday.”It’s how we prevent more privatization debacles that cost our state hundreds of millions in taxpayer dollars — debacles like the I-84 drains to nowhere or the failed COLLECT criminal justice database upgrade.”

O’Connor added that the labor concession deal negotiated by the Malloy administration and union leaders had included a renewed commitment to the standards board and its mission. “It’s an important part of transforming state government to be more efficient and effective,” the union spokesman said.

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Keith M. PhaneufState Budget Reporter

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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