BILL ANALYSIS SB 1122 Page 1 Date of Hearing: June 22, 2010 ASSEMBLY COMMITTEE ON HIGHER EDUCATION Marty Block, Chair SB 1122 (Wright) - As Amended: March 22, 2010 SENATE VOTE : 33-0 SUBJECT : University of California: competitive bidding and employment. SUMMARY : 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. FISCAL EFFECT : According to 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. UC also reports that approximately 500 students a year are affected by the conflict of interest provisions. UC estimates that this bill will result in administrative cost savings of $175,000 as a result of the student exemption. COMMENTS : Double-referral : This bill was approved by the Assembly Business, Professions and Consumer Protection Committee on June 15, 2010, by a vote of 11-0. Need for this bill : According to the author and UC, this bill will help UC expend its resources more efficiently by reducing some of the expenses associated with formal competitive bidding for goods and services and by eliminating the need to review, approximately 475-500 times per year on a case-by-case basis, all payments to any student who receives payment from multiple campus departments to determine if it is allowed by law. Contracting threshold increase : Existing law establishes a competitive bid threshold for goods and services purchases by UC of $50,000. Contracts under $50,000 can be awarded directly to a vendor or can be informally bid by soliciting bids from several venders. For purchases in excess of $50,000, UC must SB 1122 Page 2 competitively bid the goods and services. Increasing the bid threshold to $100,000 creates greater efficiencies and reduces costs because it takes anywhere from two to 12 months to run a bid process depending upon the complexity, number of bids, and the origin of the bid. 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. According to UC, this bill would affect 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. Student conflict-of-interest exemption : Current law prohibits university employees, including student employees, from being an independent contractor with any UC department to provide services or goods. According to 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 delaying payment to students and increased administrative costs. Related legislation : AB 2448 (Furutani), pending in the Senate Education Committee, would authorize a California Community College district to award contracts for supplies and materials over $50,000 to the bidder offering the best value at the lowest cost. REGISTERED SUPPORT / OPPOSITION : Support University of California Opposition SB 1122 Page 3 None on file. Analysis Prepared by : Sandra Fried / HIGHER ED. / (916) 319-3960