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H 7316Procurement & Contracts

Public Property and Works - State Purchases - Review of Contracted Services

State agencies spending over $5 million on contracts must review costs annually and reduce spending by 2% over five years.

Introduced
Population
Affected
35
Email Legislator
Introduced Jan 23, 2026Committee House Finance

Plain-English Summary

This legislation mandates that directors of any state agency spending more than $5 million on contracted services must conduct an annual review of those expenditures starting July 1, 2027. The purpose of this review is to identify areas where spending can be reduced. Additionally, starting with the 2027-2028 fiscal year, these agencies are required to implement a two percent reduction in their contracted service spending over the course of five fiscal years.

For younger readers

This bill creates a new rule for leaders of large government departments. If a department spends a lot of money—over five million dollars—hiring outside companies to do work for them, the leader must check that spending every year starting in 2027. They have to look for ways to spend less money. Also, these departments must lower the amount they spend on these outside companies by a small amount over the next five years.

Who & Where It Applies

Impacted groups
State Agency DirectorsGovernment ContractorsState EmployeesTaxpayersNon-profit Service Providers
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
None
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Reduces the privatization of government functions by discouraging excessive spending on outside contractors, potentially favoring the use of public employees.
  • Increases fiscal oversight and accountability for large state agencies, ensuring that public funds are not being wasted on unnecessary external contracts.
  • Potentially frees up budget resources that were tied up in administrative contracts, allowing those funds to be redirected toward direct public services or social programs.
  • Mandates arbitrary budget cuts (austerity) without considering the actual needs of the agency, which could negatively impact the delivery of essential services.
  • Could inadvertently harm non-profit organizations and social justice groups that rely on state service contracts to assist vulnerable populations.
  • Focuses on cost-cutting rather than the quality of service, risking the degradation of programs that support the poor and disadvantaged if funding is slashed to meet the quota.
For Conservatives
  • Promotes fiscal responsibility by mandating specific reductions in government spending and forcing agencies to operate more efficiently.
  • Limits the growth and sprawl of the administrative state by placing a check on the ballooning costs of government contracts.
  • Encourages a review process that identifies waste and redundancy within state agencies, respecting the taxpayer's dollar.
  • Negatively impacts private sector businesses and job creators that contract with the state by forcibly reducing their revenue streams.
  • The reduction target of only two percent over five years may be viewed as too insignificant to make a meaningful dent in the state budget.
  • Could lead to government agencies hiring more full-time state employees (expanding the bureaucracy) to replace the work previously done by private contractors.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 7 additions

SECTION 1. Chapter 37-2 of the General Laws entitled "State Purchases" is hereby amended by adding thereto the following section: 37-2-58.1. Review of contracted services.

(a) The director of any state agency with contracted service expenditures of more than five million dollars ($5,000,000) shall, on an annual basis, commencing July 1, 2027, conduct a review of all contracted services spending to identify where reductions in contracted spending can be made.

(b) Commencing in the fiscal year 2027-2028, any department that has contracted spending of more than five million dollars ($5,000,000) shall provide a two percent (2%) reduction in said expenditures within a period of five (5) fiscal years.

SECTION 2. This act shall take effect upon passage.