BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  SB 1122|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
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                                    CONSENT


          Bill No:  SB 1122
          Author:   Wright (D)
          Amended:  3/22/10
          Vote:     21

           
           SENATE EDUCATION COMMITTEE  :  8-0, 4/14/10
          AYES:  Romero, Huff, Alquist, Hancock, Liu, Price,  
            Simitian, Wyland
          NO VOTE RECORDED:  Maldonado

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8


           SUBJECT  :    University of California public contracting

           SOURCE  :     Author


           DIGEST  :    This bill increases the threshold above which  
          the University of California 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.

           ANALYSIS  :    Current law establishes University of  
          California (UC) competitive bidding laws 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.
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          Current law also prohibits officers/employees of the UC  
          from engaging in any employment, activity, or enterprise  
          form 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 regularly  
          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.'

          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.

           Comments

          Need for the Bill  .  According to the author's office, 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's office contends that compelling a formal bid  
          process on relatively small contracts adds significantly to  
          costs and the complexity can serve as 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  







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          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 delaying payment to students and increased  
          administrative costs.

           What is 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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the UC, administrative costs related to the  
          management of a competitive bid proposal will be reduced by  
          $780,000 annually as the result of the reduced number of  
          bids which will 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 will result in administrative cost savings of  
          $175,000 as a result of the student exemption.

           SUPPORT  :   (Verified  4/26/10)

          University of California


          CPM:cm  4/27/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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