BILL ANALYSIS Ó AB 906 Page 1 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: AB 906 Page 2 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 AB 906 Page 3 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 AB 906 Page 4 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 FN: 0000919