BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2181| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 2181 Author: Hagman (R) Amended: 5/10/10 in Assembly Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE : 7-0, 6/22/10 AYES: Wright, Harman, Calderon, Florez, Padilla, Price, Yee NO VOTE RECORDED: Denham, Negrete McLeod, Oropeza, Wyland SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 61-3, 5/17/10 - See last page for vote SUBJECT : State Contract Act: contracting by state agencies SOURCE : California Department of Corrections and Rehabilitation DIGEST : This bill increases the dollar limit for state agency minor capital outlay projects from $400,000 to $600,000. ANALYSIS : The State Contract Act governs contracting between state agencies and private contractors, and sets forth requirements for the bidding, awarding, and overseeing of contracts for projects, which it defines to include the construction or other improvement to a state structure or building with a total cost threshold equal to CONTINUED AB 2181 Page 2 $250,000 for calendar year 2010, as adjusted upward or downward every two years by the Director of Finance (DOF) to reflect the percentage change in the annual California Construction Index (CCI) as used by the Department of General Services (DGS). Under the existing State Contract Act, where the nature of the work in the opinion of the Department of Water Resources (DWR), DGS, Department of Boating and Waterways (DBW), California Department of Corrections and Rehabilitation (CDCR), the Military Department or the Department of Transportation (CalTrans) is such that its services in connection with the work are not required, the applicable department may authorize the carrying out of the project directly by the state agency concerned if the estimated cost does not exceed $400,000, except that this limitation does not apply to a project of a district agricultural association or the State Lands Commission. This bill: 1. Increases the dollar limit of specified capital outlay projects from $400,000 to $600,000 and allows state agencies to budget those projects as a minor capital outlay project and carry them out without DGS's approval. 2. Requires DOF to adjust the minor capital outlay budget limit every two years to reflect the percentage change in the annual California Construction Index (CCI) used by DGS. 3. Requires that whenever statute provides for any project that does not fall under the jurisdiction of DWR, Caltrans, DBW, CDCR, or the Military Department, the project shall be under the sole charge and direct control of DGS, instead of Caltrans. Background State capital outlay projects are budgeted as either major or minor projects. Major capital outlay projects are those with a total cost exceeding $400,000. Each major capital outlay project is budgeted to an agency as a separate line AB 2181 Page 3 item and in one or more phases (e.g., land acquisition, preliminary plans, working drawings, construction, and equipment). With the exception of some state agencies that have delegated authority, major capital outlay projects are administered by DGS on behalf of the various state agencies. Minor capital outlay projects are those with total costs of $400,000 or less, and are typically budgeted in a lump sum appropriation to the state agency. In general, state departments can contract directly for minor capital outlay projects without using the DGS's management services. The threshold was last raised in 2000 (from $250,000 to $400,000). Prior/Related Legislation AB 31 (Price) Chapter 212, Statutes of 2009, Among other things, establishes for the calendar year 2010 a cost threshold of $250,000 for projects covered under the State Contract Act that would be adjusted every two years to reflect the percentage change in the annual California Construction Index as used by DGS. AB 3020 (Salas) Chapter 106, Statutes of 2008, adds the Military Department to the list of state departments authorized to enter into contracts for public works projects pursuant to the State Contract Act. AB 2369 (Keeley) Chapter 528, Statutes of 2000, among other things, increases the minor capital outlay threshold from $250,000 to $400,000 for which DGS may delegate public works project management duties to agencies with demonstrated competence. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 8/2/10) California Department of Corrections and Rehabilitation (source) Associated Builders and Contractors of California California Chapter of the American Fence Association California Fence Contractors' Association California Military Department AB 2181 Page 4 Engineering Contractors' Association Flasher/Barricade Association Marin Builders' Association OPPOSITION : (Verified 8/2/10) California Association of Professional Scientists ARGUMENTS IN SUPPORT : According to a CDCR analysis, due to the rising costs of construction materials and projects at correctional facilities, construction costs for many projects exceed the current minor capital outlay limit. In 2008-09, approximately 28 proposals considered for minor capital outlay projects exceeded the existing limit due to the added costs associated with correctional facility construction. This bill increases the minor capital outlay limit to $600,000, and direct DOF to henceforth adjust the limit biennially based on construction cost inflation. ARGUMENTS IN OPPOSITION : Writing in opposition, the California Association of Professional Scientists argues that, "Increasing these cost limits at a time when the state needs to scrutinize every contract entered into to save as much money as possible is, in our opinion, irresponsible." ASSEMBLY FLOOR : AYES: Adams, Anderson, Arambula, Beall, Bill Berryhill, Blakeslee, Block, Bradford, Buchanan, Carter, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Emmerson, Eng, Feuer, Fletcher, Fuentes, Fuller, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Knight, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Nestande, Niello, Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Skinner, Smyth, Solorio, Audra Strickland, Torres, Torrico, Tran, Villines, John A. Perez NOES: Blumenfield, Chesbro, Swanson NO VOTE RECORDED: Ammiano, Bass, Tom Berryhill, Brownley, Caballero, Charles Calderon, Evans, Fong, Furutani, Jones, Monning, Nava, Silva, Torlakson, Yamada, Vacancy AB 2181 Page 5 TSM:do 8/2/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****