BILL ANALYSIS Bill No: AB 2031 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2009-2010 Regular Session Staff Analysis AB 2031 Author: Evans As Amended: June 22, 2010 Hearing Date: June 29, 2010 Consultant: Art Terzakis SUBJECT Public Contracts: acquisition of new vehicles DESCRIPTION AB 2031 prohibits the Department of General Services (DGS) from approving a contract for the purchase of new vehicles that would result in the expenditure of funds unless the secretary or director of an agency or department that has requested the acquisition certifies that the purchase of new vehicles is vital and mission critical for the agency or department. EXISTING LAW Existing law (Government Code 13332.09) provides that no purchase order or other form of documentation for the acquisition or replacement of motor vehicles shall be issued against any appropriation; and, no State agency may acquire surplus mobile equipment from any source for program support until DGS has investigated and established the need. On January 1, 2005, new legislation [SB 1757 (Denham) Chapter 926, 2004] became effective that requires that all State agencies within the Executive Branch of government, including each campus of the California State University, adhere to this rule. The only exemption from this rule, the University of California, is requested and encouraged to have DGS perform this task with respect to their fleet AB 2031 (Evans) continued Page 2 acquisitions as well. BACKGROUND DGS serves as the state's fleet manager. Except for those state departments with delegated vehicle purchase authority, departments must request purchases through DGS. In October 2009, the DGS deputy director overseeing the state fleet resigned over the controversy that DGS and Caltrans spent $5.5 million on new vehicles left idle during a time of severe state budget deficits. In response, the Assembly Committee on Accountability and Administrative Review held an oversight hearing in February 2010 on state expenditures for vehicle purchases. AB 2031 is the result of that hearing as well as a "broadcast" from DGS, dated February 18, 2010, to agency secretaries, department directors, procurement and contracting officers and purchasing authority contacts pertaining to "certification requirement." That certification requirement (dated February 18, 2010) states: This is to inform agencies and departments that effective February 11, 2010, no work will be initiated, no document will be reviewed, and no contracts will be approved by the Department of General Services (DGS) that would result in the expenditure of funds unless the following certification is received in writing and signed by the Agency's Secretary or Department's Director, or their designees. "I certify that this purchase is vital and mission critical for this agency or department." The author's office emphasizes that this measure would simply codify the certification requirement referenced above. Governor's Executive Order S-14-09: Prohibits all state agencies and departments from ordering or purchasing new vehicles for non-emergency use. Exemptions could still be approved by DGS, subject to review by the Consumer Services Agency Secretary, and only when the purchase is necessary to protect public health and safety, provide critical services and functions, utilize federal stimulus funding, or achieve cost savings. Fleet Administration: Generally, DGS maintains state fleet AB 2031 (Evans) continued Page 3 vehicles which are then allocated to departments. DGS has established a rule that fleet vehicles need to be replaced once they have turned 125,000 miles (or 100,000 for CHP). Agencies are required to report under-utilized vehicles to DGS every six months. Historically, DGS orders between 4,000 and 5,000 replacement vehicles every year. Though in the last couple of years they have ordered fewer, in 2008 they ordered 3,500 and in 2009 they ordered 1,300. (Corrections and Parole are two of the departments that pull from DGS fleet and maintain operating expenses on their budget, so purchase shows-up at DGS but maintenance costs are reflected in department budgets.) Staff Comments: Caltrans, DGS, and the Department of Finance (DOF) opposed the March 24th version of this measure on the basis that AB 2031 required additional review and approval of vehicle purchases which would lead to additional costs at a time of significant budget and staffing reductions. The June 22nd amendments delete any necessary approval on the part of DOF and simply require, prior to approval, that state entities submit certification to DGS that any acquisition of new vehicles is vital and mission critical. The Administration recently reported that vehicle purchases have been reduced by 67% over the previous year, and that the state's vehicle fleet has been cut by more than 18%. SUPPORT: None on file as of June 25, 2010. OPPOSE: None on file as of June 25, 2010. FISCAL COMMITTEE: Senate Appropriations Committee **********