Amended in Senate July 3, 2013

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 Bill No. 906

Introduced by Assembly Member Pan

February 22, 2013

An act to amend Sections 19130, 19131, and 19132 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 met, 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 contracted. Existing law also requires the board, at the request of an employee organization that represents state employees, to review the adequacy of a proposed or executed personal services contract, as specified.

This bill would begin insert authorize state agencies to use personal services contracts when the services are of irregular, impredictable, or occasional duration and are necessary to carry out instructional activities related to peace officer standards and training. The bill would also end insert limit the term of certain personal services contracts to 2 years begin insert , with specified exceptions end 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.

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

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

SECTION 1.  

Section 19130 of the Government Code is
amended to read:

19130.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

begin insert

(11) The services are of irregular, unpredictable, or occasional
duration and are necessary to carry out instructional activities in
compliance with Chapter 1 (commencing with Section 13500) of
Title 4 of Part 4 of the Penal Code.

end insert

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

(d)  begin insert (1) end insert begin insert   end insert A personal services contract authorized under paragraph
(6) or paragraph (10) of subdivision (b) shall not have a term in
excess of two years.

begin insert

(2) This subdivision does not apply if the contract is a personal
services contract developed pursuant to rehabilitation programs
in accordance with Sections 19403 and 19404 of the Welfare and
Institutions Code, or by habilitation programs in accordance with
Chapter 13 (commencing with Section 4850) of Division 4.5 of the
Welfare and Institutions Code, or by a program vendored or
contracted through a regional center or the State Department of
Developmental Services pursuant to the Lanterman Developmental
Disabilities Services Act (Division 4.5 (commencing with Section
4500) of the Welfare and Institutions Code), and the contract will
not cause an existing state employee to incur a loss of his or her
employment or employment seniority, a reduction in wages,
benefits, or hours, or an involuntary transfer to a new location
requiring a change in residence.

end insert

SEC. 2.  

Section 19131 of the Government Code is amended
to read:

19131.  

(a) Any state agency proposing to execute a contract
pursuant to subdivision (a) of Section 19130 shall notify the State
Personnel Board of its intention. All organizations that represent
state employees who perform the type of work to be contracted,
and any person or organization which has filed with the board a
request for notice, shall be contacted immediately by the State
Personnel Board upon receipt of this notice so that they may be
given a reasonable opportunity to comment on the proposed
contract. Departments or agencies submitting proposed contracts
shall retain and provide all data and other information relevant to
the contracts and necessary for a specific application of the
standards set forth in subdivision (a) of Section 19130. Any
employee organization may request, within 10 days of notification,
the State Personnel Board to review any contract proposed or
executed pursuant to subdivision (a) of Section 19130. The review
shall be conducted in accordance with subdivision (b) of Section
10337 of the Public Contract Code. Upon such a request, the State
Personnel Board shall review the contract for compliance with the
standards specified in subdivision (a) of Section 19130.

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

SEC. 3.  

Section 19132 of the Government Code is amended
to read:

19132.  

(a) The State Personnel Board, at the request of an
employee organization that represents state employees, shall review
the adequacy of any proposed or executed contract which is of a
type enumerated in subdivision (b) of Section 19130. The review
shall be conducted in accordance with subdivision (c) of Section
10337 of the Public Contract Code. However, a contract that was
reviewed at the request of an employee organization when it was
proposed need not be reviewed again after its execution.

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