BILL ANALYSIS Ó
SB 252
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Date of Hearing: July 5, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 252 (Vargas) - As Amended: May 31, 2011
SENATE VOTE : 25-15
SUBJECT : Public contracts: personal services.
SUMMARY : Establishes the Government Oversight and Fiscal
Accountability Review Act (GOFA Act) of 2011 and requires
specified financial accounting on personal services contracts to
be made available online and subject to the California Public
Records Act (CPRA). Specifically, this bill :
1)Establishes the GOFA Act of 2011.
2)Requires a private contractor employed by a state agency, to
file with the state agency, a copy or each subcontract or
subcontract amendment as a public record and subject to CPRA.
3)Requires a private contract to include language that provides
for public access to the completed contract.
4)Requires a state agency, as part of the budgetary process, to
provide an addendum to its budget request that includes all of
the following information:
a) The name of the contractor or subcontract, the length of
the contract, and the services provided;
b) Total cost of the contract for the prior year;
c) Projected number of private contracts and the estimated
contract costs for the current and upcoming year; and,
d) The number of employees and consultants, reflected as
full-time equivalent positions, and their hourly wage wages
for the current and previous fiscal year.
5)Creates the following definitions:
a) "Agency" includes any state agency or department;
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b) "Person" includes an individual, institution, federal,
state, or local government entity, or any other public or
private entity;
c) "Privatization contract" means an agreement or
combination or series of agreements executed pursuant to
Government Code (GC) Section 19130, by which a
privatization contractor agrees with an agency to provide
services valued at $500,000 or more, that are substantially
similar to, and in lieu of, services provided, in whole or
in part, by civil service employees of the agency;
d) "Privatization contractor" means any contractor,
consultant, subcontractor, independent contractor, or
private business owner that contracts with an agency to
perform services that are substantially similar to, and in
lieu of, services provided, in whole or in part, by civil
service employees of the agency'
e) "Privatization contractor employee" includes a worker
directly employed by a privatization contractor, as well as
an employee of a subcontractor or an independent contractor
that provides supplies or services to a privatization
contractor; and,
f) "Services" includes, with respect to a privatization
contractor, all aspects of the provision of services
provided by a privatization contractor pursuant to a
privatization contract, or any services provided by a
subcontractor of a privatization contractor under the
privatization contract.
EXISTING LAW :
1)Establishes standards for state agencies for the use of
personal services contracts.
2)Requires the contracting agency to clearly demonstrate that
the proposed contract will result in actual overall cost
savings to the state.
3)Provides that the contract cannot cause the displacement of
civil service employees.
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4)Requires that personal services contracts entered into by
state agencies with private parties in an amount of $5,000 or
more, unless exempt, are required to be submitted to the
Department of General Services (DGS) for approval.
5)Establishes the CPRA, which governs the disclosure of
governmental records to the public upon request. Generally,
all public records are open to the public upon request unless
the record requested is exempt from public disclosure.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office,
"According to DGS, in FY 2009-10, California spent $35 billion
on private contracts. However, much of this multi-billion
dollar expenditure occurs without substantive government
oversight, which results in billions of wasted taxpayer dollars.
SB 252 will ensure increased accountability, oversight, and
public transparency."
Background . GC Section 19130 establishes standards for the use
of personal services contracts. State agencies are permitted to
enter into personal services contracts when certain conditions
are met, including but not limited to, when: the state can
achieve cost savings, the contract does not displace civil
service employees, and that the contract is awarded through a
publicized, competitive bidding process. Personal services
contracts over $50,000 are subject to review by DGS. This bill
would not apply to state public works or goods contracts.
Currently, state personal services contracts that are put out to
bid are awarded based on the overall contract price. State
agencies pay the prime contractor and do not pay the
subcontractors; therefore, individual employee salaries and
wages are not reviewed or collected.
Executive Order (EO) S-08-09 issued in June 2009, requires DGS
and the Office of the Chief Information Officer to ensure that
all awarded contracts valued at $5,000 or more, dating to March
2009, shall be placed on the Reporting Government Transparency
Web site. EO S-08-09 also required that all new contracts be
posted within five working days of signing by all parties.
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Previous Legislation . AB 400 (De Leon), Chapter 440, Statutes
of 2009, required the Financial Information System for
California to list State General Fund and federal fund
expenditures in the amount of $5,000 or greater on a public Web
site.
AB 2603 (Eng) of 2008, would have required state agencies to
prepare an annual report for the Department of Finance listing
personal services and consulting services contracts, entered
into by the agency in the previous fiscal year. This bill was
held in the Senate Appropriations Committee.
SB 1331 (Oropeza) of 2008, would have required the Governor to
submit with the annual State Budget a report that contains
specified information regarding current and proposed contracts
for services in the amount of $5,001 or more. This bill was
held in Senate Rules.
SB 786 (Oropeza) of 2007, is identical to SB 1331 (Oropeza) of
2008. This bill was held in the Senate Appropriations
Committee.
Support . According to the sponsor, the American Federation of
State, County and Municipal Employees, "According to DGS,
California spent $25.4 billion on private contracts in FY
2009-10. Much of this money went to services identical to or
substantially similar to those provided by civil service
employees, and was therefore a waste of taxpayer dollars. A
2009 study by the Service Employees International Union, Local
1000, found that the state could save $350 million annually by
using civil service employees instead of wasteful privatization
contracts, but these savings are impossible without increased
transparency and government oversight.
"SB 252 increases legislative oversight and public transparency
by requiring state agencies to report the cost and duration of
goods and services contracts. Specifically, this bill provides
public access to all privatization contracts of $500,000 or
more. This bill ensures fiscal accountability by the
Legislature by including the cost of privatization contracts in
the same manner as other expenditure data in order to allow a
comparison and analysis of privatization costs versus the cost
of utilizing civil service employees."
Opposition . According to the coalition of opponents, "SB 252
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goes too far by seeking to make details about private
subcontracting arrangements and private employee wage
information available to the public at large. Further, it is
not clear how public access to this sensitive internal
employment and subcontracting information would improve state
contracting practices. In general, state agencies are not
permitted to contract out for state services unless they
establish that the work cannot be done more affordably in-house?
"There are significant concerns for private employers with
having subcontractor information made available to the public at
large, especially when that information has little to do with
determining whether a state agency negotiated the best deal it
could for the services it received. Furthermore, since the
agreements between employers and their subcontractors and
employees often involve more than one job, the documents sought
would not necessarily be solely related to the state contracts
that SB 252 seeks to shine light on. Mandating this information
be turned over to state agencies (and in turn, the public) would
undermine competition among these parties, drive many companies
from the market, and ultimately increase the cost of doing
business with the state, which would then be passed onto
taxpayers."
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(sponsor)
Association of California State Supervisors
California Labor Federation
California Nurses Association
California State Employees Association
Glendale City Employees Association
Organization of Sacramento Municipal Utility District Employees
Professional Engineers in California Government
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
Opposition
American Council of Engineering Companies
California Chamber of Commerce
SB 252
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TechAmerica
TechNet
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301