BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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                                 THIRD READING


          Bill No:  AB 633
          Author:   Olsen (R), et al.
          Amended:  8/14/12 in Senate
          Vote:     27 - Urgency

           
           SENATE GOVERNMENTAL ORGANIZATION COMM.  :  11-1, 6/28/11
          AYES:  Wright, Anderson, Berryhill, Calderon, Cannella, 
            Corbett, De León, Hernandez, Padilla, Strickland, Wyland
          NOES:  Yee
          NO VOTE RECORDED:  Evans

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :  28-4, 6/4/12
          AYES:  Anderson, Berryhill, Blakeslee, Cannella, Corbett, 
            Correa, De León, Dutton, Emmerson, Fuller, Gaines, 
            Hancock, Harman, Huff, Kehoe, La Malfa, Leno, Lieu, Liu, 
            Negrete McLeod, Padilla, Pavley, Rubio, Steinberg, 
            Vargas, Walters, Wolk, Wright
          NOES:  Alquist, DeSaulnier, Evans, Yee
          NO VOTE RECORDED:  Calderon, Hernandez, Lowenthal, Price, 
            Runner, Simitian, Strickland, Wyland
           
          ASSEMBLY FLOOR  :  60-0, 4/14/11 (Consent) - See last page 
            for vote


           SUBJECT  :    California State University:  acquisition of 
          motor vehicles

           SOURCE  :     California State University

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           DIGEST  :    This bill removes the California State 
          University (CSU) from the definition of state agency for 
          the purposes of state fleet purchasing requirements and 
          oversight by the Department of General Services (DGS).  
          This bill also requires the CSU Trustees to make an interim 
          report to the Governor and the Legislature on January 1, 
          2014, and a final report on January 1, 2015, on their motor 
          vehicle procurement, to include specified information, 
          including some information required under existing law.  
          This bill also requires the Trustees, to the greatest 
          extent feasible, to purchase vehicles using statewide 
          commodity contracts.  Sunsets on July 1, 2015.

           Senate Floor Amendments  of 8/14/12 impose further reporting 
          requirements on the CSU concerning costs associated with 
          motor vehicle purchases.  Specifically, the amendments (1) 
          add the Governor as a recipient of a motor vehicle 
          procurement report, and change the period within which the 
          report must be issued from on or before June 30 of each 
          year up to an including June 30, 2017, instead requiring a 
          report on January 1, 2014, and a final report on January 1, 
          2015; (2) add additional items to be contained in the motor 
          vehicle purchase report; (3) sunset the reporting 
          requirements on July 1, 2105; and (4) make technical and 
          conforming changes.

           Senate Floor Amendments  of 5/22/12 added an urgency clause.

           ANALYSIS  :    

          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. 

          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 the CSU to enter into contracts with any 

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             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. 

          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.
              
             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 removes CSU from the definition of "state agency" 
          for the purposes of state fleet purchasing requirements and 
          oversight by DGS.  This bill also requires the CSU Trustees 
          to make an interim report to the Governor and the 
          Legislature on January 1, 2014, and a final report on 
          January 1, 2015, on their motor vehicle procurement, to 
          include specified information, including some information 
          required under existing law.  This bill also requires the 
          Trustees, to the greatest extent feasible, to purchase 
          vehicles using statewide commodity contracts.  Sunsets on 
          July 1, 2015.


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          The additional items to be contained in the motor vehicle 
          purchase report are as follows:

           Any change to a policy or procedure made during the prior 
            fiscal year related to motor vehicle procurement and 
            contracts for procurement and identifying any vehicle 
            procured using the new policy or procedure.

           The average time to complete procurements, average 
            administrative costs, reduced charges paid to DGS, and 
            competitive or reduced market prices obtained for the 
            vehicles.

           Background  

           History  .  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 DGS 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.  In response to this enactment, CSU sponsored AB 
          262 (Coto, 2007) which suspended temporarily the 
          requirement that DGS approve motor vehicle purchases made 
          by CSU, instead requiring that CSU prepare an annual report 
          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.  

          If this bill passes, CSU motor vehicle purchasing 
          activities would be exempt from DGS oversight and approval, 
          and in addition, CSU would no longer be required to report 
          to the Legislature on its motor vehicle purchases. 

           Should DGS exercise oversight of CSU motor vehicle 
          purchases  ?  Insofar as CSU is concerned, SB 1757 (Denham) 
          "inadvertently included CSU under a new and duplicative 
          process for the purchasing of vehicles."  In fact, there 
          was no inadvertence, but a conscious decision of the 

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          Legislature.  The provisions specifically requiring DGS 
          approval of CSU motor vehicle purchases were included in 
          the bill from very early on in the legislative process.  

          Nevertheless, three years later, the Legislature suspended 
          that law for five years.  The five-year suspension of the 
          law requiring DGS to exercise oversight of CSU motor 
          vehicle purchases expires on July 1, 2012.  During the 
          five-year suspension period CSU is required to annually 
          report its motor vehicle purchases to the Legislature.  
          Without additional legislation, CSU will be subject to DGS 
          oversight and approval of its vehicle purchases on and 
          after July 1, 2012. 

          The policy question is whether the Legislature considers it 
          appropriate or desirable for DGS to exercise oversight of 
          CSU motor vehicle purchases.  Regardless of the answer to 
          that question, the debate raises an issue regarding 
          allocation of fees among state agencies to pay for control 
          agency services and oversight.

          Several years ago, DGS became a fee for service agency.  
          For each service or oversight function provided by DGS, the 
          client agency is billed.  It is probably an understatement 
          to say that this has caused friction between DGS and some 
          of the agencies and departments it serves.  

          It is relevant in this discussion because a chief complaint 
          of CSU is that DGS overcharged for services rendered during 
          the three years it was subject to direct DGS oversight.  
          For example, CSU states that it was charged approximately 
          $153,000 in DGS Fleet Administration fees during each of 
          the three years.  DGS does not dispute this charge.  It 
          states that it charges $81 per vehicle, and that CSU owns 
          4456 motor vehicles.

          DGS states that the per-vehicle fee is a Fleet Asset 
          Management System (FAMS) data management fee that is 
          charged to all state agencies.  DGS states that FAMS is 
          used to manage various data that are required to be 
          reported to state and federal entities, and that analysis 
          of FAMS data has been useful in reducing the number of 
          state vehicles in the state fleet.  DGS states that the 
          instant availability of FAMS data has enabled DGS to reduce 

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          statewide fleet numbers and drive the state toward more 
          efficient use of vehicle assets.  

          CSU submits data to DGS for use in FAMS, but DGS does not 
          charge and CSU does not pay any per vehicle fees, which has 
          been the case since enactment of AB 262 (Coto) in 2007, 
          which enacted the five-year suspension of DGS oversight of 
          CSU vehicle purchases.  The fees that would otherwise be 
          charged to CSU are spread out among other state agencies.

          CSU states in support of this bill that it also paid 
          approximately $10,400 in DGS procurement fees for the 22 
          vehicles for which CSU obtained approval from DGS during 
          the three-year period of DGS oversight.  DGS reports that 
          it routinely charges 1.29 percent of the purchase price of 
          the motor vehicle to any state or local entity that 
          purchases a vehicle using the blanket DGS contract.  DGS 
          contends that this fee is more than offset by the savings 
          that accrue to those who utilize the contract, because DGS 
          is able to command a steeply discounted cost for vehicles 
          by virtue of the size of the contract. 

           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, 
          Executive Order 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.  The 
          provisions of this bill that delete CSU from the definition 
          of state agency, would remove CSU from the requirements of 
          Executive Order B-2-11, and would also delete its reporting 

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          requirements to the Legislature.

           Related Legislation  

          AB 2031 (Evans), Chapter 247, Statutes of 2010, 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), Chapter 679, Statutes of 2007, requires CSU 
          to purchase cars through DGS and be subject to DGS 
          oversight as part of the state fleet by redefining "state 
          agency" to include each campus of the CSU for vehicle 
          purchases, starting in 2012.  The bill also deleted 
          mandatory annual fleet reporting requirements from CSU to 
          DGS.

          AB 236 (Lieu), Chapter 593, Statutes of 2007, 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), Chapter 926, Statutes of 2004, 
          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), Chapter 1097, Statutes of 1994, 
          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.
          
           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

           SUPPORT  :   (Verified  8/14/12)

          California State University (source)

           OPPOSITION  :    (Verified  8/14/12)

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          Department of Finance (prior version of bill)

           ARGUMENTS IN SUPPORT  :    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's office also notes that AB 262 (Coto, 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's office 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.


           ASSEMBLY FLOOR :  60-0, 4/14/11
          AYES:  Achadjian, Allen, Ammiano, Atkins, Beall, Bill 
            Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Campos, Carter, Cedillo, Chesbro, 
            Cook, Davis, Dickinson, Donnelly, Eng, Fletcher, Fong, 
            Fuentes, Furutani, Gatto, Gordon, Hagman, Halderman, 
            Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, 
            Huffman, Jeffries, Lara, Bonnie Lowenthal, Ma, Miller, 
            Mitchell, Monning, Nestande, Nielsen, Norby, Pan, Perea, 
            V. Manuel Pérez, Portantino, Silva, Skinner, Smyth, 
            Solorio, Swanson, Torres, Valadao, Wieckowski, Yamada, 
            John A. Pérez
          NO VOTE RECORDED:  Alejo, Butler, Charles Calderon, Conway, 
            Feuer, Galgiani, Garrick, Gorell, Grove, Harkey, Jones, 
            Knight, Logue, Mansoor, Mendoza, Morrell, Olsen, Wagner, 
            Williams, Vacancy


          DLW:m  8/20/12   Senate Floor Analyses 


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                         SUPPORT/OPPOSITION:  SEE ABOVE

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