BILL ANALYSIS Ó Bill No: AB 633 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2011-2012 Regular Session Bill Analysis AB 633 Author: Olsen As Amended: June 23, 2011 Hearing Date: June 28, 2011 Consultant: Paul Donahue SUBJECT : California State University; Acquisition of motor vehicles SUMMARY : Authorizes the California State University (CSU) to acquire motor vehicles and surplus mobile equipment without first having the Department of General Services (DGS) investigate and establish the necessity for the acquisition. Existing law : 1) Specifies that no state agency purchase order for the acquisition or replacement of motor vehicles shall be issued until DGS has investigated and established that the vehicle purchase is necessary. (Gov. Code § 13332.09) 2) Prohibits a state agency, including DGS, from purchasing new vehicles without the approval of the Department of Finance (DOF) and the secretary or director of the agency or department requesting the purchase. 3) Authorizes CSU to enter into contracts with any public or private entity for the furnishing of goods, services or equipment. 4) Defines "state agency" to include every state office, officer, department, division, bureau, board, and commission, and, effective July 1, 2012, would again include each campus of the CSU within the definition. (Gov. Code §§ 11000, 13332.09) AB 633 (Olsen) continued PageB 5) Requires CSU, by June 30th of each year until July 1, 2012, to report to the Legislature on its motor vehicle procurement, including the following: a) An inventory of motor vehicles by campus and type b) The number of vehicles purchased during the prior fiscal year (FY), by campus and type; c) The average time taken to complete procurement of each motor vehicle purchased during the prior FY; d) Any changes in policies or procedures made during the prior FY relative to motor vehicle procurement and contracts, and the identification of any vehicles procured pursuant to the new policy or procedure; and, e) The estimated cost savings associated with management by CSU of motor vehicle procurement, including average time to complete procurements, reduced administrative costs, reduced charges paid to DGS, and competitive or reduced market prices obtained for vehicles. This bill : 1) Effective July 1, 2012, eliminates each campus of the California State University from the definition of a "state agency," thus authorizing CSU to manage and approve its own acquisitions of motor vehicles and mobile equipment. 2) Provides that the Trustees of the CSU shall, to the greatest extent feasible, purchase vehicles using statewide commodity contracts. 3) Directs the CSU to report to the Legislature on or before June 30 of each year through June 30, 2017, on their motor vehicle procurement, including the following: a) An inventory, by campus, of motor vehicles that includes the type of vehicle, consistent with the fleet asset management system reports (maintained by DGS). b) The number of motor vehicles purchase during the AB 633 (Olsen) continued PageC prior year, disaggregated by campus and type of vehicle, if the passenger vehicle or truck was purchased through statewide commodity contracts, and the purchase price. COMMENTS : 1) Purpose of the bill : According to the author's office, in 2004, SB 1757 (Denham) inadvertently included CSU under a new and duplicative process for purchasing vehicles. For several years, this legislation cost CSU over $240,000 per year to support the DGS Fleet Management Program despite the fact that CSU is less than two percent of DGS's total purchases statewide. The author also notes that AB 262 (Coto) of 2007 suspended provisions related to DGS approval of vehicle purchasing and required the CSU Board of Trustees to report annually to the Legislature until June 30, 2012, certain information regarding motor vehicle procurement. The author states that these reports show how CSU was able to procure their vehicles in a more timely and cost-saving manner, and that this bill will allow CSU to continue to procure vehicles cost effectively under its long standing Education Code authority. 2) Background : In 1994, the Legislature passed AB 1191 (Aguiar), which authorized the CSU to (1) lease any real property for use by CSU, and (2) procure goods and services, including telecommunications goods and services, without going through the State Department of General Services approval process. In 2004, however, the Legislature passed SB 1757 (Denham), which specifies that CSU must receive approval from DGS before acquiring motor vehicles or general use mobile equipment.<1> In response to this enactment, CSU sponsored AB 262 (Coto) in 2007, which suspended temporarily the requirement that DGS approve motor vehicle purchases made by CSU, instead requiring that CSU prepare an annual report ------------------------- <1> Gov. Code § 13332.09 (f) additionally states that the "University of California is requested and encouraged to have the ÝDGS] perform the tasks identified in this section with respect to the acquisition or replacement of motor vehicles by the University of California." AB 633 (Olsen) continued PageD to the Legislature on its motor vehicle inventory, purchases, estimated cost savings, and the like. On July 1, 2012, the reporting requirement expires, and DGS would also resume its oversight and approval of CSU motor vehicle purchases. 3) Recent amendments to AB 633 : As amended on June 23, 2011, AB 633 would exempt CSU from DGS oversight and approval of CSU motor vehicle purchasing. It would require only that CSU continue to report to the Legislature on its motor vehicle purchases. The reporting requirement would expire on June 30, 2017. The policy question raised by the bill is whether the Legislature considers it appropriate or desirable for DGS to resume oversight of CSU motor vehicle purchases. 4) Gubernatorial Executive Orders on fleet-related issues : Executive Order S-14-09, issued in July 2009, prohibits all state agencies and departments from ordering or purchasing new vehicles for non-emergency use. The Director of DGS could still approve a purchase, subject to review by the Consumer Services Agency Secretary, but only when the purchase was necessary to protect public health and safety, provide critical services and functions, utilize federal stimulus funding, or achieve cost savings. On January 27, 2011, Governor Brown issued Executive Order B-2-11, which requires agencies and departments to review home-storage permits and fleet usage and submit a plan to DGS to withdraw vehicles that are non-essential or cost-ineffective to be later sold. Like its predecessor, EO B-2-11 also prohibits the purchase of non-emergency vehicles, unless the vehicle is essential for health and safety purposes or realizes cost savings. 5) Related legislation : AB 2031 (Evans), Stats. 2010, ch. 247 prohibits a state agency or department, including DGS, from purchasing new vehicles without the approval of the Department of Finance and the secretary or director of the agency or department requesting the purchase. AB 262 (Coto) Stats. 2007, ch. 679 requires CSU to purchase cars through DGS and be subject to DGS oversight as part of AB 633 (Olsen) continued PageE the state fleet by redefining "state agency" to include each campus of the CSU for vehicle purchases, starting in 2012. AB 262 also deleted mandatory annual fleet reporting requirements from CSU to DGS. AB 236 (Lieu) Stats. 2007, ch. 593 changed state policies regarding the purchase of vehicles for state vehicle fleets in order to increase fuel efficiency and the use of alternative fuels, and expanded the nature and extent of information on which DGS is required to report to the Governor and the Legislature. SB 1757 (Denham) Stats. 2004, ch. 926 establishes requirements for CSU for the acquisition of motor vehicles under the supervision of DGS, and encouraged the University of California to follow these requirements. AB 1191 (Aguiar) Stats. 1994, ch. 1097 authorized the CSU Board of Trustees to lease any real property for use by CSU, and procure goods and services, including telecommunications goods and services, without going through the DGS approval process. SUPPORT: California State University (source) OPPOSE: None on file FISCAL COMMITTEE: Senate Appropriations Committee **********