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. 









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          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  








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          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.