BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1231| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 1231 Author: Corbett (D), et al Amended: 5/17/10 Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE : 7-1, 4/13/10 AYES: Wright, Calderon, Florez, Oropeza, Padilla, Price, Yee NOES: Denham NO VOTE RECORDED: Harman, Negrete McLeod, Wyland SENATE APPROPRIATIONS COMMITTEE : 7-3, 05/27/10 AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee NOES: Denham, Walters, Wyland NO VOTE RECORDED: Cox SUBJECT : Public contracts: sweatshop labor: slave and sweat free code of conduct SOURCE : Author DIGEST : This bill makes various substantive and clarifying changes to existing provisions of the Public Contract Code (Section 6108) related to sweatfree" procurement policy and code of conduct. ANALYSIS : Existing law CONTINUED SB 1231 Page 2 1. Provides the Department of General Services (DGS) with the governing authority related to state procurement activities, including acquisition of materials, supplies and services. 2. Requires every contract entered into by a state agency for the procurement of equipment, materials, supplies, apparel, garments, and accessories and the laundering thereof, excluding public works contracts, to require a contractor to certify that no equipment, materials, supplies, apparel, garments, or accessories provided under the contract are produced by sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor. The law provides for misdemeanor liability in the case of a knowing false certification. 3. Provides that if a contractor knew or should have known the specified products furnished to the state were laundered or produced by the specified types of prohibited labor, the contractor may be removed from the bidder's list for 360 days. 4. Requires the Department of Industrial Relations to establish a contractor responsibility program, on or before February 1, 2004, including a Sweatfree Code of Conduct. 5. Requires the appropriate procurement agency, in consultation with the Director of Industrial Relations, to employ an approach to implement the Sweatfree This bill: 1. Renames the Sweat Free Code of Conduct as the Slave and Sweat Free Code of Conduct. 2. Requires every contract entered nto by a state agency for the procurement of equipment, materials, supplies, apparel, garments and accessories and the laundering thereof, excluding public works contracts, to require a contractor to certify that no equipment, materials, SB 1231 Page 3 supplies, apparel, garments, or accessories provided under the contract are produced by abusive forms of labor performed by all persons. 3. Extends the period that the contractor is removed from the bidder's list from 360 days to tow years, if the contractor knew or should have known the specified products were laundered or produced by the specified prohibited labor. 4. Requires the Department of Industrial Relations to establish a contractor responsibility program by January 1, 2012 and requires actions by DIR and DGS with regard to the code of conduct. 5. Requires contractors whose manufacturing and assembly locations are outside the United State to comply with international laws or treaties binding on their countries. Note: Please refer to the Senate Governmental Organization Committee analysis for further information on this subject. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee analysis: Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Contractor responsibility $30 $60 $60 General program (DIR/DGS) administration/enforcement -regulations Up to $150 -update contracting terms Up to $150 -revise Web posing processes (Bidsync) $40 - $200 Oversight of contracts Minor to major increase in General/ SB 1231 Page 4 Oversight costs, depending on Bond the state entity; potentially Special* significant increase in significant contract costs if vendors increase prices to cover additional compliance costs *Service Revolving Account SUPPORT : (Verified 5/27/10) Alliance to Stop Slavery and End Trafficking California Conference Board of the Amalgamated Transit Union California Conference of Machinists California Employment Lawyers Association California Labor Federation California Teamsters Public Affairs Council Coalition to Abolish Slavery & Trafficking Engineers and Scientists of California, IFPTE Local 20 International Longshore and Warehouse Union Professional and Technical Engineers, IFPTE Local 21 United Food and Commercial Workers Western States Council UNITE-HERE OPPOSITION : (Verified 5/27/10) California Chamber of Commerce American Council of Engineering Companies - Companies Associated Builders and Contractors of California California Business Properties Association California Chapter of the American Fence Association California Fence Contractors Association California Independent Grocers Association California Manufacturers and Technology Association California Retailers Association Engineerng Contractors Association Flasher Barricade Association Marin Builders Association SB 1231 Page 5 Western Electrical Contractors Association ARGUMENTS IN SUPPORT : According to the author's office, this bill expands the scope of the Sweatfree Code of Conduct to prohibit the abusive labor of all persons, not just children. It is modified to include slavery and sweatshop labor, and the procurement of all raw materials used in the supply chain. The author's office has chosen to include such materials and supplies because bricks, glass and other such materials used in public works projects appear on the U.S. Department of Labor's list of tainted goods (goods produced through child labor). The author's office emphasizes that businesses have asserted in the past that it is too burdensome and difficult to monitor supply chains. However, the author's office contends that there are a number of businesses which already monitor supply chains in order to promote good labor practices with their subcontractors. ARGUMENTS IN OPPOSITION : Opponents believe that this bill results in new and expensive compliance burdens for small business, create new opportunities for protesting and delaying construction project awards and encourage more litigation against contractors. TSM:do 5/28/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****