BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 224|
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                              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) 
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          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. 

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          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 

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          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

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          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

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