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  








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          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
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          None on file.


           Analysis Prepared by  :    Sandra Fried / HIGHER ED. / (916)  
          319-3960