BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: SB 1122
AUTHOR: Wright
AMENDED: March 22, 2010
FISCAL COMM: Yes HEARING DATE: April 14, 2010
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : University of California (UC) Public Contracting
KEY POLICY ISSUES
Should the threshold for requiring the UC to competitively
bid contracts for materials, goods and services be
increased from $50,000 to $100,000?
Should students employed by the UC be exempt from conflict
of interest provisions that prohibit university employees
from receiving additional university compensation for
employment activity which is outside the scope of their
regular university employment?
SUMMARY
This bill increases the threshold above which the
University of California (UC) is required to competitively
bid contracts for materials, goods and services from
$50,000 to $100,000, and expands an exemption from conflict
of interest provisions to include student employees engaged
in multiple campus employment positions.
BACKGROUND
Current law establishes UC competitive bidding law within
the Public Contract Code and outlines specific procurement
priority, methods and exceptions, with regards to
contracting for materials, goods, and services. The Public
Contract Code also establishes various conflict of interest
provisions and requirements regarding UC contracting.
Current law requires the UC to annually competitively bid
all contracts for goods and materials to be sold to the
University if the expenditure is greater than fifty
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thousand dollars ($50,000) and to award the contract to the
lowest responsible bidder, as specified. If the successful
bidder refuses or fails to execute a tendered contract,
current law authorizes the UC, when it deems it in the
University's best interest, to award the contract to the
second lowest responsible bidder, or third lowest
responsible bidder meeting specifications. (Public
Contract Code 10507.7)
Current law also prohibits officers/employees of the UC
from engaging in any employment, activity, or enterprise
from which they receive compensation or in which they have
a financial interest if it is sponsored and/or funded, by
any university department via a university contract if such
is outside the course and scope of their regular university
employment. Officers/employees are also prohibited from
contracting on their own behalf as independent contractors
with any university department to provide services or
goods. Officers/ employees of the university with teaching
or research responsibilities are specifically exempted from
these prohibitions. (Public Contract Code 10516)
ANALYSIS
This bill :
1) Increases the threshold above which the UC is required
to competitively bid contracts for materials, goods
and services from $50,000 to $100,000.
2) Exempts student employees receiving payment for campus
activities or engagements outside the scope of their
primary UC employment from prohibitions against their
contracting for employment sponsored and/or funded by
another university department.
STAFF COMMENTS
1) Need for the bill . According to the author, the cost
of goods and services has more than doubled since the
$50,000 competitive bid threshold was put in place in
1985, with no adjustment since then to reflect
inflation or the erosion of the value of the dollar.
In addition, the author contends that compelling a
formal bid process on relatively small contracts adds
significantly to costs and the complexity can serve as
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a barrier to small businesses.
Current law prohibits university employees, including
student employees from being an independent contractor
with any university department to provide services or
goods. According to the UC, these provisions
continually raise issues for student employees
employed by campus departments but receiving payment
for other campus activities as well. Though these
students eventually get paid, this requires issuance
of an exception, review and research by campus
purchasing and human resource directors, then manual
keying of each check by staff processors, resulting in
delayed payment to students and increased
administrative costs.
2) What's affected ? According to the UC, the change in
the bid threshold proposed by this bill affects
contracts for goods, materials and services that can
include items such as laboratory instruments and
supplies, chemical reagents, computer software
licenses and updates, janitorial supplies, commercial
kitchen supplies, furniture, consultant services, and
equipment repair, among other things. This bill does
not affect UC contracts for labor and materials
related to construction projects, which, under current
law, are subject to a $50,000 competitive bid
threshold. (Public Contract Code 10500)
3) Fiscal impact . According to the UC, administrative
costs related to the management of a competitive bid
proposal would be reduced by $780,000 annually as the
result of the reduced number of bids which would be
issued with the increase in the bid threshold
authorized by this bill. The UC also reports that
approximately 500 students a year are affected by the
conflict of interest provisions. The UC estimates
that this bill would result in administrative cost
savings of $175,000 as a result of the student
exemption.
SUPPORT
University of California
OPPOSITION
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None received.