BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 650
                                                                  Page  1

          AB 650 (Nazarian)
          As Amended  August 26, 2013
          2/3 vote
          |ASSEMBLY:  |72-0 |(May 16, 2013)  |SENATE: |37-0 |(September 3,  |
          |           |     |                |        |     |2013)          |
           Original Committee Reference:    A. & A.R.

          SUMMARY  :  Sets parameters for the Department of General  
          Services' (DGS) Natural Gas Services (NGS) program.

           The Senate amendments  :  

           1)Exempt the Department of Water Resources (DWR) from purchasing  
            noncore gas from the NGS program.

          2)Remove the section exempting the NGS program from the Disabled  
            Veteran Business Enterprises (DVBEs) contracting requirements.

          3)Specify that DGS' costs to administer the program shall be  
            provided in the annual Budget Act.

          4)Remove language which would allow DWR to appoint employees as  
            required for the NGS program.

          5)Make non-substantive changes.

           EXISTING LAW  authorizes DGS to contract with suppliers for the  
          purchase of goods and services.  This is the general authority  
          under which the NGS program has been operating.

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, no new costs or savings are expected, as this bill  
          codifies an existing procurement program operated by DGS.  DGS  
          indicates that this bill ensures continued annual savings of  
          approximately $7.5 million for numerous state and local entities  
          that participate in the program (General Fund, various special  
          funds, local funds).  These savings are primarily derived from  
          bulk purchase opportunities as well as consolidated bidding and  
          contract administration through DGS.


                                                                  AB 650
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           COMMENTS  :  The Senate made two amendments related to NGS program  
          participants and suppliers.  One amendment exempts DWR from the  
          requirement that it purchase noncore gas from the NGS program.   
          The author explains that since DWR currently has its own gas  
          program, the department asked to be removed from the  
          According to DGS, all but one executive branch agency (DWR) that  
          are noncore gas purchasers currently buy through the NGS  
          program.  Prior to the amendment, the Director of DGS would have  
          the authority under this bill to exempt executive branch  
          agencies from the requirement.  However, the amendment  
          explicitly removed DWR from the requirement.

          The other amendment involves the NGS program's contracting  
          requirements.  Prior to the Senate amendment, this bill would  
          have allowed the NGS program to not follow DVBE contracting  
          requirements when purchasing gas and related services.  Under  
          the DVBE Participation Program, there is a goal to use DVBEs in  
          at least 3% of the state's overall annual contract dollars.

          The Senate amendment removes the section exempting the NGS  
          program from the DVBE contracting requirements.  According to  
          the author, this section was removed in order to give DVBEs the  
          opportunity to compete for NGS contracts.

          Additionally, two other amendments were made.  One specified  
          that DGS's administrative costs would be provided for in the  
          annual Budget Act.  This amendment was made for clarification  
          and does not impact the program's funding source.  The other  
          amendment removes language related to hiring staff to be in line  
          with the state's hiring process.  

           Analysis Prepared by :    Scott Herbstman / A. & A.R. / (916)  

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