BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 224| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 224 Author: Pavley (D) Amended: 9/1/11 Vote: 21 SENATE NATURAL RES. AND WATER COMMITTEE : 9-0, 4/26/11 AYES: Pavley, La Malfa, Cannella, Evans, Fuller, Kehoe, Padilla, Simitian, Wolk SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SENATE FLOOR : 37-0, 5/16/11 AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon, Cannella, Corbett, Correa, De León, DeSaulnier, Dutton, Emmerson, Evans, Fuller, Gaines, Hancock, Harman, Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio, Runner, Simitian, Steinberg, Vargas, Wolk, Wright, Yee NO VOTE RECORDED: Strickland, Walters, Wyland ASSEMBLY FLOOR : 76-0, 9/6/11 - See last page for vote SUBJECT : Public contracts: Department of Water Resources SOURCE : Author DIGEST : This bill exempts specified Department of Water Resources (DWR) contracts from competitive bidding requirements and Department of General Services (DGS) CONTINUED SB 224 Page 2 approval. Assembly Amendments (1) exempt DWR contracts over $25,000 for the acquisition of specialized equipment for State Water Resources Development System (SWRDS) facilities from competitive bidding requirements, (2) require DWR to collaborate with the DGS to establish conditions where competitive bidding exemptions apply in order to expedite operations and maintenance work to reduce the risk of the loss of water or power to the SWRDS, (3) exempt from approval by DGS, contracts for the acquisition, sale, or transmission of power, or for services to facilitate such activities under the Central Valley Project (CVP) or the California Resources Development Bond Act, (4) exempt service contracts for the operation, maintenance, repair, or replacement of specialized equipment at SWRDS facilities under the CVP or California Water Plan from competitive bidding requirements and DGS approval, (5) delete provisions exempting DWR goods and services contracts from DGS approval if they are authorized to be entered into under the Water Code or if they are federally or locally funded, and (6) make technical and clarifying changes. ANALYSIS : Existing law: 1. Provides that all contracts entered into by any state agency for goods, services, or other specified activities are void unless and until approved by the DGS. 2. Exempts certain transactions and contracts from that law, as specified. This bill: 1. Exempts DWR contracts over $25,000 for the acquisition of specialized equipment for SWRDS facilities from competitive bidding requirements. 2. Requires DWR to collaborate with DGS to establish conditions where competitive bidding exemptions apply in order to expedite operations and maintenance work to reduce the risk of the loss of water or power to the SWRDS. CONTINUED SB 224 Page 3 3. Exempts from approval by DGS, contracts for the acquisition, sale, or transmission of power, or for services to facilitate such activities under the CVP or the California Resources Development Bond Act. 4. Exempts service contracts for the operation, maintenance, repair, or replacement of specialized equipment at SWRDS facilities under the CVP or California Water Plan from competitive bidding requirements and DGS approval. 5. Makes technical and clarifying changes. Background Under current law, all state contracts must be reviewed and approved by DGS, with some notable exceptions. For example, all of the Department of Transportation's (CalTrans) contracts are exempt from the DGS review. DGS tries to get back to the contracting department within 10 working days as to whether or not DGS has issues with the contract. If they do, there will be additional time required to work out the details of the contract issues - sometimes just days, sometimes over a month, depending on the issue with the contract. DGS also charges the contracting department for DGS's time - the DGS fee for contracts for last fiscal year was 1.6 percent of the value of the contract. Some of the DWR contracts are exempt from DGS review. They are: Construction Contracts Architecture and Engineering Contracts State Water Project Contracts While those contracts cover a large part of DWR's contract activity, it still leaves a significant number of contracts subject to DGS review. These include contracts for procurement, energy, subscription services, bond funded CONTINUED SB 224 Page 4 grant programs, and miscellaneous service contracts. Last fiscal year, DWR spend about $ 21.7 million for non-construction contracting. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Assembly Appropriations Committee, minor administrative cost savings to DGS and DWR, and potential contract cost savings. SUPPORT : (Verified 9/7/11) Alameda County Flood Control and Water Conservation District Zone 7 Alameda County Water District Association of California Water Agencies Burbank Water and Power California Municipal Utilities Association Calleguas Municipal Water District Castaic Lake Water Agency Central Coast Water Authority Cucamonga Valley Water District Desert Water Agency East Valley Water District Eastern Municipal Water District Glendale Water and Power Irvine Ranch Water District Kern County Water Agency Las Virgenes Municipal Water District Metropolitan Water District of Southern California Mojave Water Agency Municipal Water District of Orange County Newhall County Water District Orchard Dale Water District Rancho California Water District Rowland Water District San Bernardino Valley Municipal Water District Santa Clara Valley Water District Solano County Water Agency Southern California Water Committee State Water Contractors Three Valleys Municipal Water District Tulare Lake Basin Water Storage District CONTINUED SB 224 Page 5 Upper San Gabriel Valley Municipal Water District Valley Ag Water Coalition ARGUMENTS IN SUPPORT : According to the author: "Each year, the Department of Water Resources (DWR) enters into hundreds of contracts, often valued in the millions. Despite having an extensive contracting operation staffed by dozens of experienced attorneys and contract specialists, DWR must still have many of its contracts reviewed and approved by the Department of General Services (DGS). This additional level of review delays the execution of contracts and adds unnecessary costs to each contract. "SB 224 will provide DWR the same exception to DGS's contract review that has been given to CalTrans. In doing so, SB 224 will eliminate costly contract delays and unnecessary bureaucratic review." ASSEMBLY FLOOR : 76-0, 9/6/11 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Cook, Davis, Dickinson, Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Conway, Gorell, Mendoza, Silva CTW:kc 9/7/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED SB 224 Page 6 CONTINUED