BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 906 (Pan) - Personal Services Contracts Amended: August 22, 2013 Policy Vote: PE&R 3-1, GO 7-0 Urgency: No Mandate: No Hearing Date: August 26, 2013 Consultant: Maureen Ortiz This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 906 prohibits state agency personal services contracts of an emergency, urgent, temporary, or occasional nature from having a term greater than two years, and makes several other changes relating to state personal services contracts. Fiscal Impact: State Personnel Board indicates annual costs of $359,568 for 3 staff attorney positions (General) Background: Existing law requires a state agency that proposes to execute a personal services contract (PSC) under the "cost savings" authorization in Government Code 19130(a), to notify the State Personnel Board (SPB) of its intention. Upon notification, SPB must immediately contact all organizations that represent state employees who perform the type of work to be contracted as well as anyone else who has filed a request to be similarly noticed so that they may be given a reasonable opportunity to comment on the proposed contract. Departments or agencies submitting proposed contracts must retain all data and information relevant to the contracts. Any employee organization may request, within 10 days of notification, that the State Personnel Board review any contract that is proposed or executed under the cost savings provisions in statute. In Professional Engineers in California Government v. Kempton (2007) 40 Cal.4th 1016, the California Supreme Court held that Proposition 35, passed by the electorate in 2000, authorizes public agencies to contract out for architectural and engineering services without legislative restrictions. AB 906 (Pan) Page 1 Proposed Law: AB 906 contains the following provisions: a) Provides that any contract that is authorized on an emergency basis, or is of an urgent, temporary or occasional nature must be limited to a term of two years, but makes an exception for personal services contracts developed pursuant to specified rehabilitation programs and for contracts for architectural and engineering services. b) Adds limited liability companies among the entities eligible to bid on a state contract award. c) Adds a new provision to the list of eligible personal services contract to include when the services are of irregular, unpredictable or occasional duration and are necessary to carry out certain instructional training by the Commission on Peace Officer Standards and Training (POST). d) Provides that no state agency shall execute any type of proposed 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. e) Requires the State Personnel Board to contract all organizations that represent state employees who perform the type of work under any type of proposed contract. Staff Comments: The cost estimate from the State Personnel Board is based on the requirement to contact employee organizations for approximately 4,000 state contracts each year. This bill will require SPB to notify impacted employee organizations of all PSCs, not only cost savings PSCs. Based on the State Contract and Procurement Registration System (SCPRS), state agencies entered into approximately 4,000 PSCs in 2013. Therefore, if this bill becomes law, SPB may reasonably expect that it will be required to notify employee organizations of 4,000 PSCs annually. In 2012, SPB sent notification of 21 contracts to employee organizations. The drastic increase from 21 PSCs to 4,000 PSCs requiring notification to employee organizations would necessitate additional staff at the State Personnel Board. In addition, the extension of the notice requirement to all PSCs AB 906 (Pan) Page 2 may well increase the number of PSC challenges employee organizations file with the SPB. As a consequence, SPB will likely need additional staff to handle the increased workload.