BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 118 ()
Hearing Date: 5/26/2011 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: 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 and open 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, qualification, or proposals pursuant to a public
SB 118 (Yee)
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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 and a Request for Proposal 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.
Because some school districts have implemented this process,
mandate costs could accrue immediately.
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.