BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          SB 118 (Yee)
          
          Hearing Date: 5/9/2011          Amended: 4/28/2011
          Consultant: Bob Franzoia        Policy Vote: G O 8-4
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          BILL SUMMARY: SB 118 would require a public agency, prior to 
          awarding or entering into an agreement or lease, to publish a 
          request for information, qualification, or proposal pursuant to 
          a public process determined by the public agency, and would 
          provide that the contract be awarded based on best value.  By 
          imposing new duties on public agencies, this bill would impose a 
          state mandated local program.
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                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           State mandated         $500       $1,000      $1,000    General
          local program                                               
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          STAFF COMMENTS: This bill meets the criteria for referral to the 
          suspense File.
          
          An energy service contract means a contract entered into by a 
          public agency with any person for electrical or thermal energy 
          or conservation services to a public agency from an energy 
          conservation facility that provides alternative energy 
          equipment, cogeneration equipment, or conservation measures 
          located in public buildings or on land owned by public agencies.

          Existing law allows a public agency to avoid the formal bidding 
          requirements if it is proven that the energy service project 
          will result in savings.  This is generally accomplished by the 
          energy service company conducting an analysis which is submitted 
          to the public agency.  If the analysis indicates a savings, the 
          public agency may award the contract to that company.

          While this bill promotes a more competitive bidding process, it 
          does so at a cost that is borne by the state.  By requiring the 
          public agency to publish a request for information, 








          SB 118 (Yee)
          Page 1


          qualification, or proposals pursuant to a public process, this 
          bill increases the cost of the contract process by imposing a 
          reimbursable state mandate.  Also, those public agencies which 
          voluntarily incur costs to send out a Request for Qualification 
          (RFQ) and a Request for Proposal (RFP) in order to attract 
          greater competition would be able to claim those costs for 
          reimbursement.  

          The winning bid may not always be the lowest priced.  Public 
          agencies take into consideration a number of factors when making 
          their selection.  For example, a public agency will consider 
          ongoing maintenance costs, material life cycle costs, upfront 
          costs, type of installation, etc.  Each of these cost 
          considerations carries a different value to individual public 
          agencies.  Collectively, with the proposed cost savings, a 
          public agency will make a selection that provides the best 
          overall value.  This makes a comparison of contracts between 
          public agencies difficult.
          Actual mandate costs are unknown.  Pursuant to Government Code 
          17564 (a), local entities must have costs of $1,000 or more in 
          order to seek reimbursement for mandate costs.  However, cities, 
          counties (and school district through county offices of 
          education) can aggregate claims in order to meet that threshold.

          If each of the approximately 1,000 school districts in the state 
          incurred costs of $1,000 to implement the bidding process 
          required by this bill, costs would be $1,000,000.  Costs to 
          cities, counties, special districts, etc. are likely similar.