Personal Services Contracts

The review and approval process of personal services contracts supports the business needs of the State, while maintaining the integrity of the state personnel system. Work commonly and historically performed by state personnel can be outsourced, provided it meets the standards set forth in C.R.S. 24-50-501 through 514 and Chapter 10 of the Director's Rules.

The Division of Human Resources provides guidance on the statutes and procedures that govern the process for review and approval of personal services contracts. Our cost comparison worksheet and instructions provide information on contract types and object codes to assist State HR professionals in ensuring the necessary forms and documentation are obtained to conduct personal services reviews.

The Division of Human Resources provides guidance and training on independent contractors and establishes waivers on specified State price agreements where individual personal services review is not required. These technical documents were created to help the State HR community to better understand the personnel system, rules, procedures, and programs.

Contract Type Designation Descriptions and Personal Services Reference Guide

Updated October 31, 2000

All contract types that are prefaced with the letter “A” are classified as personal services agreements and include: contracts, purchase orders, purchase requisitions and invoices. The definition of “Personal services” is broad and essentially includes all work performed by a human being. As such, these contract types are statutorily required to be reviewed by the Department of Personnel Privatization Program and reported on the annual report.

Personal Services - Professional/Technical Category (A1)

This category is used for services that are specialized, require certification and/or training, or the individuals(s) are experts in a particular field(s). Some examples of the types of services included in this category are: training, consulting, temporary services that are professional in nature as computer programmers and accountants, etc.

Personal Services - Non-Professional/Support Category (A2)

This category is for services that do not require special certification in order to perform a job. Some examples of the types of services included in this category are: janitorial, laundry, trash removal, temporary services that are not professional in nature, moving, advertising and printing services that does not involve design work, film processing, copying, courier, repairs to items other than equipment, press clipping, mailing services to include bulk or mass mailings (do not include postage costs, freight charges, and shipping fees – UPS, FedEx), etc.

Personal Services - Purchased Services Category (A3)

Purchased services are services that directly benefit individuals or groups of individuals in the public at large.  Some examples of the types of services included in this category are: HIV Prevention; Traffic Safety Education; Alcohol/Drug Abuse Prevention; Breast Cancer Screening; any types of services that benefit Medicaid clients, disabled clients; translator/interpreter services; employment services for displaced workers; etc. In addition, Higher Education agencies should include any types of services provided to students, i.e., guest lecturers, instructors, officials, speakers, models, entertainment, medical/dental services, etc. Note: Services that benefit a specific state agency and services that benefit individuals who are incarcerated are not considered purchased services.

Personal Services - Architect/Engineer/Construction Services or Trade Category (A4)

This category is used for all capital construction and controlled maintenance contracts.

Personal Services - Equipment Maintenance/Repair Category (A5)

This category is used for all types of equipment maintenance and repair and includes security alarm and fire monitoring services. Note: Please do not list these types of services in any other categories.

Personal Services - Exempt Category (A6)

This category is used for services that are: 1) Exempt from the state classified system such as attorneys, professors and employees of the judicial and legislative branches of government, and 2) Non-recurring services lasting six months or less where the need for the services (not the vendor) is not expected to recur on a regular basis. The term “regular basis” refers to using the same type of service(s) year after year, month after month, week after week, or day after day. Note: This category is seldom used because of the second requirement. An example of a service that would not meet the second criteria would be the use of temporary services. Services that meet either criteria are exempt from the Department of Personnel review process unless the need for the services recurs. All agencies are required to self certify for items that meet the second criteria and documentation should be placed in agency files.

Personal Services - Grants Category (A7)

This category is used for grants made to non-political subdivisions with other than federal funds.

Personal Services - Pass Through Grants Category (A8)

This category is used for grants made to non-political subdivisions using federal funds.

Object Codes

History of Privatization Program

Prior to HB 1212, Section 24-50-128, which was adopted in 1963, addressed the area of personal services contracting. Although the director had review and approval authority, very few agreements were sent by agencies to the department. We estimate that only 300
contracts were sent annually.

To attempt to provide more guidance and direction to state entities in the area of privatization, the director adopted administrative procedures, which became effective January 1, 1990, to define independent contracts and provide the criteria for reviewing said agreements. As state agencies began the practice of replacing merit system employees with contractors, lawsuits were filed. From 1991 until passage of HB 1212, the department began getting approximately 650 agreements annually for review.

In the spring of 1991 and summer of 1992, state courts including the Supreme Court as well as District Courts invalidated the use of both Section 24-50-128 and the existing Directors Procedures as the legal basis for allowing state agencies to contract for personal
services. In the case of CAPE v. Department of Highways, the Supreme Court invalidated the contract Highways had with a private vendor to provide custodial, maintenance and utility services that had previously been performed by personnel system employees. The court found that this contract violated the integrity of the state personnel system and without legislation or administrative rules, which set the criteria to govern the propriety of such contracts, this type of contracting, cannot occur. The result was that Section
24-50-28 could not be used as the basis for privatization.

Thereafter, in the district court case of CAPE v. Department of Personnel in an order issued June 6, 1992, all state personal service agreements authorized by the Director’s procedures were rendered invalid. These decisions found that existing statutes and
corresponding administrative rules did not authorize contracting for the performance of services presently or historically provided by personnel system employees and that an appropriate statute and/or rules were needed to set out the criteria to govern the propriety
of contracting.

During the 1993 session, the legislature addressed this issue by passing HB 1212 effective on April 7, 1993. To implement the new enactment, the Director adopted administrative rules, which became effective on September 1, 1993. This statute and Director’s Procedures set the parameters for which personal service agreements are measured and provided an approval basis for these agreements in limited circumstances but not if the agreements will cause the separation of personnel system employees.