BILL NUMBER: AB 1829 ENROLLED
BILL TEXT
PASSED THE ASSEMBLY AUGUST 26, 2004
PASSED THE SENATE AUGUST 23, 2004
AMENDED IN SENATE AUGUST 9, 2004
AMENDED IN SENATE JULY 20, 2004
AMENDED IN SENATE JUNE 17, 2004
AMENDED IN ASSEMBLY MAY 20, 2004
AMENDED IN ASSEMBLY APRIL 26, 2004
AMENDED IN ASSEMBLY MARCH 18, 2004
INTRODUCED BY Assembly Member Liu
(Principal coauthors: Assembly Members Jackson, Koretz, and
Lieber)
(Coauthors: Assembly Members Chavez, Hancock, Longville,
Montanez, Mullin, and Pavley)
(Coauthor: Senator Romero)
JANUARY 20, 2004
An act to amend Section 5703 of the Government Code, and to add
Chapter 3.55 (commencing with Section 12140) to Part 2 of Division 2
of the Public Contract Code, relating to public contracts.
LEGISLATIVE COUNSEL'S DIGEST
AB 1829, Liu. Public contracts: services: domestic workers.
Existing law requires a state agency to comply with specified
procedures in awarding agency contracts. Existing law authorizes a
state agency to prohibit a person that is convicted of committing
specified crimes from bidding on or being awarded agency contracts,
as specified.
This bill would prohibit a state agency or local government, as
defined, from allocating or expending state funds for employment
training for employees located in foreign countries. This bill would
also prohibit a state agency, or a local government in expending
funds provided by a state agency, from contracting for services with
a contractor or subcontractor unless that contractor or subcontractor
certifies under penalty of perjury in his or her bid for the
contract that the contract, and any subcontract performed under that
contract, will be performed solely with workers within the United
States. This bill would authorize a state agency or local government
to waive this requirement, with the consent of the Controller, if
certain conditions are met. This bill would also require the
contract to include a clause for termination for noncompliance and
specified penalties, if the contractor or subcontractor performs the
contract or the subcontract with workers outside the United States
during the life of the contract. This bill would specify that these
provisions do not apply to seismic retrofit work, as defined,
performed pursuant to a contract that is entered into on or before
January 1, 2006 or agreements entered into by the Treasurer in
connection with the sale of any evidence of indebtedness. This bill
would also specify that these provisions do not apply to a contract,
if refusing to award that contract would violate the specific terms
of federal trade treaties, as specified.
By requiring contractors and subcontractors to make certifications
under penalty of perjury, this bill would create a new crime and
thereby impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) The United States has lost nearly 3 million jobs over the last
three years, with at least 15 percent of these jobs outsourced to a
foreign country.
(b) Outsourcing by the state and local government technology
sector is a growing trend, with an estimated $10 billion in net
contract value subject to outsourcing to foreign countries in 2003.
By 2008, an estimated $23 billion in net contract value will be
subject to outsourcing by the state and local government technology
sector.
(c) Contractors and subcontractors are using taxpayer dollars to
create jobs in foreign countries. State taxpayer funds should be
used to create jobs in the United States and in California.
SEC. 2. Section 5703 of the Government Code is amended to read:
5703. (a) Except as provided in subdivisions (b), (c), and (d),
the Treasurer, in exercising the duties of agent for offering and
selling bonds, whose duties include, among others, establishing the
timing of a sale, preparation or approval of the documentation for
the sale, sole authority to select the underwriters for negotiating
the sale, and executing the bond purchase agreement on behalf of the
state or the state's agencies, is responsible for developing and
implementing a competitive process for selection of underwriters for
negotiated offerings of bonds. The competitive process may be
conducted on an issue-by-issue basis or to establish one or more
pools of underwriters for various types of issues. The competitive
process shall have at least all of the following features:
(1) Solicitation of written qualifications from at least 20
underwriting firms.
(2) Consideration of the goals for minority and women business
enterprise participation in professional bond services contracts.
(3) The written submissions shall be available for inspection at
the office of the Treasurer for a period of at least six months.
(4) If a pool of underwriters is established, the competitive
process shall be repeated at least every 24 months to reestablish the
pool of underwriters.
(b) For negotiated offerings of bonds by state financing
authorities that act as conduits to provide financing to other
public, nonprofit, or private organizations, the Treasurer shall use
the competitive process described in subdivision (a) to establish one
or more pools of underwriters for each financing authority. The
Treasurer may make additions to a pool without competitive
solicitation, on a case-by-case determination upon the recommendation
of a project applicant, where the Treasurer finds that the
underwriter to be added has provided significant services to the
project applicant with the expectation of compensation for those
services from underwriting the revenue bonds which will fund the
applicant's project.
(c) The Treasurer may select underwriters for a negotiated sale of
bonds by means other than as described in subdivision (a) if the
Treasurer makes a written finding that extraordinary market
conditions do not allow enough time to comply with subdivision (a)
without risking financial detriment to the state.
(d) Subdivisions (a), (b), and (c) shall not apply to the issuance
of state bonds for which the Treasurer is precluded by statute from
selecting underwriters.
(e) For negotiated sales, the Treasurer shall maintain records of
all cost information pertinent to the initial offering of all state
bonds, except that in the case of bonds issued by a state financing
authority, as described in subdivision (b), the issuing state
financing authority shall instead be responsible for maintaining the
same cost information on bonds it has issued. The information shall
include, but not be limited to, all of the following:
(1) All amounts paid out of bond proceeds to the underwriter,
detailed by management fee, takedown, risk, and underwriter's
expenses.
(2) All costs paid out of bond proceeds to rating agencies for
rating of the bonds.
(3) All fees paid out of bond proceeds to bond counsels, trustees,
or financial advisers relating to the initial offering of the bonds.
(4) The interest rate to be paid on the bonds.
(f) For competitive sales, the Treasurer shall maintain records of
all bids submitted and the documentation of bid verifications
including the terms of sale and the calculation of net interest cost
or true interest cost.
(g) The State Auditor shall audit the cost records required to be
maintained pursuant to subdivision (e) and conduct a review of the
records required to be maintained pursuant to subdivision (f).
(h) The State Auditor shall report whether this section is being
fully implemented. The State Auditor shall make cost and interest
rate comparisons with similar initial bond offerings of other states
where possible. The State Auditor shall submit a report to the
Legislature on March 1, 1993, and March 1, 1995, for bonds sold
during the two calendar years immediately preceding the year in which
the report is due.
(i) The following provisions of the Public Contract Code do not
apply to agreements entered into by the Treasurer in connection with
the sale of any evidence of indebtedness:
(1) Section 10295.
(2) Article 4 (commencing with Section 10335) of Chapter 2 of Part
2 of Division 2.
(3) Chapter 3.55 (commencing with Section 12140) of Part 2 of
Division 2.
SEC. 3. Chapter 3.55 (commencing with Section 12140) is added to
Part 2 of Division 2 of the Public Contract Code, to read:
CHAPTER 3.55. OFFSHORING STATE SERVICE CONTRACTS
12140. (a) Notwithstanding any other provision of law, neither a
state agency in expending funds from a fund in the State Treasury nor
a local government in expending funds provided by a state agency may
contract for services with a contractor or subcontractor unless that
contractor or subcontractor certifies under penalty of perjury in
his or her bid for the contact that the contract, and any subcontract
performed under that contract, will be performed solely with workers
within the United States.
(b) Notwithstanding any other provision of law, state funds for
employment training may not be allocated or expended to train
employees located in foreign countries.
(c) The contract shall provide that in the event a contractor or
subcontractor performs the contract or the subcontract with workers
outside the United States during the life of the contract, the
contract shall be terminated for noncompliance and the contractor or
subcontractor shall forfeit penalties to the state agency or local
government in an amount equal to the amount paid by the state agency
or local government for the percentage of work that was performed
with workers outside the United States.
(d) (1) A state agency or local government may waive the
requirements of subdivision (a) for a particular contract, for a
period not to exceed one year per waiver, if that state agency or
local government submits a written finding to the Controller, and the
Controller does not reject that finding within 30 days of receipt,
that either of the following are true:
(A) The contract is necessary to respond to an emergency, as
determined by the state agency or local government, for all of the
following reasons:
(i) The ability of the state agency or local government to provide
essential services would be adversely affected if the contract is
not performed.
(ii) The public health, safety, and welfare would be endangered if
the contract is not performed.
(iii) A contractor or subcontractor that has the ability to
perform the contract solely with workers within the United States is
not immediately available to perform the contract.
(B) The contract is necessary to provide a unique service, as
determined by the state agency or local government, for both of the
following reasons:
(i) The state agency or local government deems as mandatory the
particular service to be performed under the contract.
(ii) Domestic workers cannot adequately perform the unique service
to be performed under the contract.
(2) A state agency or local government that seeks a waiver under
paragraph (1) shall, at the same time that the entity provides the
written finding to the Controller, provide a copy of that written
finding to the Assembly Committee on Business and Professions, the
Assembly Committee on Budget, the Senate Committee on Governmental
Organization, and the Senate Committee on Budget and Fiscal Review.
(3) If the Controller rejects a written finding while the contract
is being performed or after the contract has been performed, the
contractor or subcontractor shall forfeit penalties to the state
agency or local government in an amount equal to the amount paid by
the state agency or local government for the percentage of work that
was performed with workers outside the United States.
(e) This section shall not apply to a contract if refusing to
award that contract, on the basis that the contractor or
subcontractor does not certify under penalty of perjury that the
contract, and any subcontract performed under that contract, will be
performed solely with workers within the United States, would violate
the specific terms of the Agreement on Government Procurement of the
World Trade Organization or any other bilateral or regional free
trade agreement that California has consented to.
(f) As used in this section, the following definitions apply:
(1) "Local government" means any county, city, city and county,
including a charter city or county, any special district, or any
other local or regional government entity.
(2) "State agency" means any state office, officer, department,
division, bureau, board, commission, agency, or any subdivision
thereof, that is part of state government, but does not include the
Board of Administration of the Public Employees' Retirement System,
as described in Section 20090 of the Government Code, or the Teachers'
Retirement Board, as described in Section 22200 of the Education
Code.
(g) This section shall not apply to seismic retrofit work for
state highway projects, as defined in Section 180 of the Streets and
Highways Code, that is performed pursuant to a contract that is
entered into on or before January 1, 2006.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.