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
                                   **********