BILL NUMBER: AB 2120	CHAPTERED  09/27/04

	CHAPTER  802
	FILED WITH SECRETARY OF STATE  SEPTEMBER 27, 2004
	APPROVED BY GOVERNOR  SEPTEMBER 27, 2004
	PASSED THE ASSEMBLY  AUGUST 27, 2004
	PASSED THE SENATE  AUGUST 25, 2004
	AMENDED IN SENATE  AUGUST 23, 2004
	AMENDED IN SENATE  JULY 27, 2004

INTRODUCED BY   Committee on Budget (Steinberg (Chair), Bermudez,
Chan, Diaz, Dymally, Goldberg, Hancock, Jackson, Levine, Liu,
Montanez, Nakano, Pavley, Reyes, Simitian, and Wolk)

                        FEBRUARY 18, 2004

   An act to amend Section 12101.5 of the Public Contract Code,
relating to state contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2120, Committee on Budget.   Information technology grants.
   Existing law generally sets forth the requirements governing state
contracts for information technology goods and services.
   This bill would additionally provide that, for contracts related
to information technology integration or development projects that
generate revenues or achieve savings over a quantifiable baseline of
existing costs, state agencies would be required to consider, and
would be authorized to incorporate, performance-based or
share-in-savings contract terms to manage risks and create incentives
for successful contract performance.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 12101.5 of the Public Contract Code is amended
to read:
   12101.5.  (a) It is the intent of the Legislature that agencies of
the state use an acquisition method that is compatible with their
short- and long-term fiscal needs in contracts relating to
commodities and information technology goods and services.  State
agencies should be able to specify their anticipated life cycle
requirements that would become one of the criteria for contractor
selection.  These agencies should be given the choice of suppliers to
meet statewide standardization needs, unique service requirements,
application requirements, and long-term satisfaction criteria.  There
is a need for the state to enter into long-term contracts with
annual cancellation and fund-out clauses, as required, to protect the
state's interests as well as provide the option for multiyear
renewals to encourage suppliers to develop higher levels of service
and support throughout the contracts.
   (b) The state may utilize multiple awards, including federal
General Service Administration Multiple Awards Schedules and master
agreements or contracts for goods, information technology, services,
or consulting services.  For purposes of this subdivision, a multiple
award is an award of an indefinite quantity contract for one or more
similar goods, information technology, or services to more than one
supplier.  Except for possible multiple awards as permitted by this
subdivision, and except as described in subdivision (d), all the
requirements of this chapter pertaining to other types of information
technology acquisitions shall be followed.  The department shall
ensure that multiple award schedules are in compliance with all other
applicable statutes.
   (c) Notwithstanding any other provision of law, state agencies, in
exercising their contracting authority delegated by the department,
may contract with suppliers who have multiple award schedules with
the General Services Administration of the United States on the same
terms, conditions, and prices if the supplier is willing to do so.
The department may also develop multiple award schedules or
agreements for use by state agencies in the same manner.  The
department shall determine the delegation contracting authority for
agencies wishing to use multiple award schedules.
   (d) For contracts related to information technology integration or
development projects that generate revenues or achieve savings over
a quantifiable baseline of existing costs, state agencies shall
consider and may incorporate performance-based or share-in-savings
contract terms to manage risks and create incentives for successful
contract performance.  Performance-based or share-in-savings
contracts may have the following characteristics, among others:
   (1) Contract terms that specify business outcomes to be achieved,
not the solution to be provided.
   (2) Contract terms that structure the contract to maintain maximum
vendor commitment to project success and minimize risk to the state
by sharing risk with the private sector.
   (3) Utilization of "best value" evaluation methods, which means to
select the solution that will achieve the best result based on
business performance measures, not necessarily the lowest price.
   (4) Contract terms that base payments to the vendor primarily on
achieving predefined performance measures.