BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 906
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          ASSEMBLY THIRD READING
          AB 906 (Pan)
          As Amended May 24, 2013
          Majority vote 

           PUBLIC EMPLOYEES    5-2         APPROPRIATIONS      12-5        
           
           ----------------------------------------------------------------- 
          |Ayes:|Bonta, Jones-Sawyer,      |Ayes:|Gatto, Bocanegra,         |
          |     |Mullin, Rendon,           |     |Bradford,                 |
          |     |Wieckowski                |     |Ian Calderon, Campos,     |
          |     |                          |     |Eggman, Gomez, Hall,      |
          |     |                          |     |Ammiano, Pan, Quirk,      |
          |     |                          |     |Weber                     |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Allen, Harkey             |Nays:|Harkey, Bigelow,          |
          |     |                          |     |Donnelly, Linder, Wagner  |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Imposes restrictions on specified personal service  
          contracts.  Specifically,  this bill  :

          1)Prohibits a state agency from entering into a contract for  
            work that meets the standards for emergency appointments or  
            for services that are of an urgent, temporary, or occasional  
            nature, as specified, from having a term exceeding two years,  
            subject to the right of the contracting agency to enter into a  
            single extension or renewal for a term of up to two years.

          2)Prohibits a state agency from entering into a personal  
            services contract until the State Personnel Board has  
            contacted all of the organizations that represent state  
            employees who perform the type of work to be contracted.
           
          EXISTING LAW  :

          1)Requires, based on provisions in the California Constitution,  
            that services provided by state agencies generally be  
            performed by state civil service employees.    

          2)Requires that proposals for contracting for cost saving  
            purposes must, at a minimum, meet the following criteria: 









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             a)   Contracts must result in cost savings to the state. 

             b)   Contractors' wages are at the industry's level and do  
               not significantly under-cut state pay rates. 

             c)   Contracts cannot cause the displacement of civil service  
               employees.

             d)   Contracts cannot adversely affect the state's  
               affirmative action efforts.

             e)   Contract savings must be large enough to ensure that the  
               savings will not be eliminated by cost fluctuations that  
               could normally be expected during the contract period.

             f)   Contract savings clearly justify the size and duration  
               of the contract.

             g)   The contract is awarded through a publicized,  
               competitive bidding procedure.
             h)   The contract includes specific provisions pertaining to  
               the qualifications of the staff who will perform the work.

          3)Additionally permits personal service contracting when any of  
            the following conditions can be met:

             a)   The functions to be performed are exempt from civil  
               service.

             b)   The contract is for a new state function and the  
               Legislature has specifically mandated or authorized that  
               the work be performed by an independent contractor.

             c)   The services contracted are not available within the  
               civil service.

             d)   The services are incidental to a contract for the  
               purchase or lease of real or personal property.

             e)   The contract is needed to protect against a conflict of  
               interest or to ensure independent and unbiased finding, as  
               specified.

             f)   The nature of the work is such that the standards for  








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               emergency appointments apply.

             g)   Private counsel is needed because a conflict of interest  
               on the part of the Attorney General's Office prevents it  
               from representing the state agency.

             h)   The contractor will provide equipment, materials,  
               facilities, or support services that cannot be provided by  
               the state in the location where the services are to be  
               performed.

             i)   The contractor will conduct training courses for which  
               appropriately qualified civil service instructors are not  
               available.

             j)   The services are of such an urgent, temporary, or  
               occasional nature, as specified. 

           FISCAL EFFECT  :   According to the Assembly Appropriations  
          Committee, minor and absorbable costs for state government.

           COMMENTS  :   According to the author, "Under existing law, state  
          agencies and departments are undermining the Legislature's  
          appropriation authority and the state civil service system by  
          abusing their ability to enter into personal services contracts.  
           The Department of General Services charged with reviewing and  
          approving state departments' requests to contract out personal  
          services.  Unfortunately, DGS is failing to thoroughly review  
          request to ensure the request makes good business sense and the  
          cost is reasonable.

          "According to the Assembly Budget Subcommittee 4 Agenda for its  
          February 21, 2012 hearing, the state currently has over 14,000  
          personal service contracts worth $11.8 billion.  These  
          expenditures occur with no substantive legislative oversight."

          The author concludes that this bill is a first step in ensuring  
          that state agencies and departments are working in conjunction  
          with the Legislature to build and maintain a strong civil  
          service system, as envisioned in the State Constitution.
          Supporters, including the American Federation of State, County  
          and Municipal Employees (AFSCME), argue that California spends  
          millions of dollars paying for contracts and temporary employees  
          at state institutions when it could hire state employees at a  








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          lower cost.  They state privatization contracts are often  
          unnecessary and violate state constitutional and statutory  
          prohibitions against overspending on service contracts.   
          According to supporters, a March 2009 study conducted by the  
          Service Employees International Union, Local 1000 found that the  
          state could save approximately $350 million annually by using  
          civil service employees instead of unnecessary and wasteful  
          privatization contracts.


           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)  
          319-3957 


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