BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 650
                                                                  Page  1

          Date of Hearing:   May 8, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                    AB 650 (Nazarian) - As Amended:  May 1, 2013 

          Policy Committee:                               
          AccountabilityVote:12-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill provides statutory authority and parameters for the  
          Department of General Services' (DGS') Natural Gas Services  
          Program (NGSP), which the department has operated for 25 years.  
          Specifically, this bill:

          1)Requires the state's executive branch agencies to use the NGSP  
            for non-core natural gas purchases.

          2)Requires the Director of DGS to make the program available to  
            any local government entity and any nonprofit hospital or  
            educational institution that expends public funds.

          3)Authorizes DGS to hire and appoint employees as required for  
            the program at competitive salaries, and requires the  
            director, prior to hiring someone at a salary in excess of a  
            salary approved by the Department of Human Resources, to  
            submit the salary to the Department of Finance for submission  
            to the Legislature consistent with the annual Budget Act.

          4)Establishes the Natural Gas Services Program Account, and  
            continuously appropriates moneys in the account, and prohibits  
            the shifting from or borrowing of funds in the account.

           FISCAL EFFECT  

          The consolidated purchasing program provides significant ongoing  
          savings (General Fund, numerous special funds, and to local  
          agency funds) of at least several million dollars annually in  
          reduced natural gas contract costs and streamlined  
          administrative costs. In addition, providing continuous  








                                                                  AB 650
                                                                  Page  2

          appropriation authority for the funds used to pay natural gas  
          purchasing contracts provides more certainty to vendors and help  
          to minimize contract costs.

           COMMENTS  


           Background and Purpose  . DGS currently provides natural gas  
          delivery to nine executive agency departments, eight University  
          of California campuses, 21 California State University campuses,  
          13 community college districts, 15 counties, 11 cities, and 16  
          special districts. Total gas delivered through the program in  
          2012-13 was valued at more than $180 million. While the NGS  
          program has operated under DGS' general purchasing authority for  
          more than two decades, the department is seeking to clarify  
          program authority and parameters within the Public Contract  
          Code. According to DGS, this will add credibility and stability  
          as NGS seeks future contracts to purchase and sell natural gas.


           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081