Amended in Assembly May 24, 2013

Amended in Assembly April 25, 2013

Amended in Assembly April 18, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 906


Introduced by Assembly Member Pan

February 22, 2013


An act to amendbegin delete Section 19130end deletebegin insert Sections 19130, 19131, and 19132end insert of the Government Code, relating to personal services contracts.

LEGISLATIVE COUNSEL’S DIGEST

AB 906, as amended, Pan. Personal services contracts: independent contractors.

The State Civil Service Act authorizes state agencies to use personal services contracts if prescribed conditions are metbegin insert, including requiring the agency to notify the State Personnel Board of its intention to enter into such a contract and requiring the board to contact all organizations that represent state employees who perform the type of work to be contractedend insert.begin insert Existing law also requires the board, at the request of an employee organization that represents state employees, to review the adequacy of aend insertbegin insert proposed or executed personal services contract, as specified.end insert

This bill would limit the term of certain personal services contracts to 2 yearsbegin delete, with a single extension or renewal with a term not to exceed 2 yearsend delete. begin deleteThe bill would, upon expiration of such a contract and any extension or renewal thereof, prohibit the contracting agency from entering into additional contracts for the same or substantially similar personal services.end delete

begin insert

This bill would prohibit a contracting agency from executing certain proposed personal services contracts until the State Personnel Board has contacted all organizations that represent state employees who perform the type of work to be contracted.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 19130 of the Government Code is
2amended to read:

3

19130.  

The purpose of this article is to establish standards for
4the use of personal services contracts.

5(a) Personal services contracting is permissible to achieve cost
6savings when all the following conditions are met:

7(1) The contracting agency clearly demonstrates that the
8proposed contract will result in actual overall cost savings to the
9state, provided that:

10(A) In comparing costs, there shall be included the state’s
11additional cost of providing the same service as proposed by a
12contractor. These additional costs shall include the salaries and
13benefits of additional staff that would be needed and the cost of
14additional space, equipment, and materials needed to perform the
15function.

16(B) In comparing costs, there shall not be included the state’s
17indirect overhead costs unless these costs can be attributed solely
18to the function in question and would not exist if that function was
19not performed in state service. Indirect overhead costs shall mean
20the pro rata share of existing administrative salaries and benefits,
21rent, equipment costs, utilities, and materials.

22(C) In comparing costs, there shall be included in the cost of a
23contractor providing a service any continuing state costs that would
24be directly associated with the contracted function. These
25continuing state costs shall include, but not be limited to, those
26for inspection, supervision, and monitoring.

27(2) Proposals to contract out work shall not be approved solely
28on the basis that savings will result from lower contractor pay rates
29or benefits. Proposals to contract out work shall be eligible for
30approval if the contractor’s wages are at the industry’s level and
31do not significantly undercut state pay rates.

P3    1(3) The contract does not cause the displacement of civil service
2employees. The term “displacement” includes layoff, demotion,
3involuntary transfer to a new class, involuntary transfer to a new
4location requiring a change of residence, and time base reductions.
5Displacement does not include changes in shifts or days off, nor
6does it include reassignment to other positions within the same
7class and general location.

8(4) The contract does not adversely affect the state’s affirmative
9action efforts.

10(5) The savings shall be large enough to ensure that they will
11not be eliminated by private sector and state cost fluctuations that
12could normally be expected during the contracting period.

13(6) The amount of savings clearly justify the size and duration
14of the contracting agreement.

15(7) The contract is awarded through a publicized, competitive
16bidding process.

17(8) The contract includes specific provisions pertaining to the
18qualifications of the staff that will perform the work under the
19contract, as well as assurance that the contractor’s hiring practices
20meet applicable nondiscrimination, affirmative action standards.

21(9) The potential for future economic risk to the state from
22potential contractor rate increases is minimal.

23(10) The contract is with a firm. A “firm” means a corporation,
24limited liability company, partnership, nonprofit organization, or
25sole proprietorship.

26(11) The potential economic advantage of contracting is not
27outweighed by the public’s interest in having a particular function
28performed directly by state government.

29(b) Personal services contracting also shall be permissible when
30any of the following conditions can be met:

31(1) The functions contracted are exempted from civil service
32by Section 4 of Article VII of the California Constitution, which
33describes exempt appointments.

34(2) The contract is for a new state function and the Legislature
35has specifically mandated or authorized the performance of the
36work by independent contractors.

37(3) The services contracted are not available within civil service,
38cannot be performed satisfactorily by civil service employees, or
39are of such a highly specialized or technical nature that the
P4    1necessary expert knowledge, experience, and ability are not
2available through the civil service system.

3(4) The services are incidental to a contract for the purchase or
4lease of real or personal property. Contracts under this criterion,
5known as “service agreements,” shall include, but not be limited
6to, agreements to service or maintain office equipment or
7computers that are leased or rented.

8(5) The legislative, administrative, or legal goals and purposes
9cannot be accomplished through the utilization of persons selected
10pursuant to the regular civil service system. Contracts are
11permissible under this criterion to protect against a conflict of
12interest or to ensure independent and unbiased findings in cases
13where there is a clear need for a different, outside perspective.
14These contracts shall include, but not be limited to, obtaining expert
15witnesses in litigation.

16(6) The nature of the work is such that the Government Code
17standards for emergency appointments apply. These contracts shall
18conform to Article 8 (commencing with Section 19888) of Chapter
192.5 of Part 2.6.

20(7) State agencies need private counsel because a conflict of
21interest on the part of the Attorney General’s office prevents it
22from representing the agency without compromising its position.
23These contracts shall require the written consent of the Attorney
24General, pursuant to Section 11040.

25(8) The contractor will provide equipment, materials, facilities,
26or support services that could not feasibly be provided by the state
27in the location where the services are to be performed.

28(9) The contractor will conduct training courses for which
29appropriately qualified civil service instructors are not available,
30provided that permanent instructor positions in academies or similar
31settings shall be filled through civil service appointment.

32(10) The services are of such an urgent, temporary, or occasional
33nature that the delay incumbent in their implementation under civil
34service would frustrate their very purpose.

35(c) All persons who provide services to the state under
36conditions the board determines constitute an employment
37 relationship, unless exempted from civil service by Section 4 of
38Article VII of the California Constitution, shall be retained under
39an appropriate civil service appointment.

P5    1(d) A personal services contract authorized underbegin delete subdivision
2(a) or paragraph (2)end delete
begin insert paragraph (6) or paragraph (10)end insert of
3subdivision (b) shall not have a term in excess of two yearsbegin delete, subject
4to the right of the contracting agency to enter into a single extension
5or renewal of the contract for a term of up to two yearsend delete
. begin delete Upon
6expiration of a personal services contract and any extension or
7renewal thereof, the contracting agency shall not enter into
8additional contracts for the same or substantially similar personal
9services.end delete

10begin insert

begin insertSEC. 2end insertbegin insert.end insert  

end insert

begin insertSection 19131 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
11read:end insert

12

19131.  

begin insert(a)end insertbegin insertend insert Any state agency proposing to execute a contract
13pursuant to subdivision (a) of Section 19130 shall notify the State
14Personnel Board of its intention. All organizations that represent
15state employees who perform the type of work to be contracted,
16and any person or organization which has filed with the board a
17request for notice, shall be contacted immediately by the State
18Personnel Board upon receipt of this notice so that they may be
19given a reasonable opportunity to comment on the proposed
20contract. Departments or agencies submitting proposed contracts
21shall retain and provide all data and other information relevant to
22the contracts and necessary for a specific application of the
23standards set forth in subdivision (a) of Section 19130. Any
24employee organization may request, within 10 days of notification,
25the State Personnel Board to review any contract proposed or
26executed pursuant to subdivision (a) of Section 19130. The review
27shall be conducted in accordance with subdivision (b) of Section
2810337 of the Public Contract Code. Upon such a request, the State
29Personnel Board shall review the contract for compliance with the
30standards specified in subdivision (a) of Section 19130.

begin insert

31(b) No state agency shall execute a proposed contract pursuant
32to subdivision (a) of Section 19130 until the State Personnel Board
33has contacted all of the organizations that represent state
34employees who perform the type of work to be contracted.

end insert
35begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 19132 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
36read:end insert

37

19132.  

begin insert(a)end insertbegin insertend insert The State Personnel Board, at the request of an
38employee organization that represents state employees, shall review
39the adequacy of any proposed or executed contract which is of a
40type enumerated in subdivision (b) of Section 19130. The review
P6    1shall be conducted in accordance with subdivision (c) of Section
210337 of the Public Contract Code. However, a contract that was
3reviewed at the request of an employee organization when it was
4proposed need not be reviewed again after its execution.

begin insert

5(b) No state agency shall execute a proposed contract pursuant
6to subdivision (b) of Section 19130 until the State Personnel Board
7has contacted all of the organizations that represent state
8employees who perform the type of work to be contracted.

end insert


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