BILL ANALYSIS Ó
SB 263
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 263 (Monning) - As Amended: January 21, 2014
Policy Committee: Labor Vote:5-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill extends a 10% bid preference to all public transit
contracts awarded by the State of California for bidders who
agree to retain the employees of the prior contractor or
subcontractor for a period of at least 90 days.
FISCAL EFFECT
Costs from this measure are unknown, but potentially
significant, to the extent state contracts are awarded to other
than the lowest bidder due to the preference.
The only transit contract currently awarded by the state appears
to be the transit operation at Hearst San Simeon State
Historical Monument (Hearst Castle). Hearst Castle's current
transit contract is valued at roughly $22 million and is up for
renewal in 2023. For illustration, assuming the subsequent
contract is for the same amount and duration, the 10% bid
preference could lead to increased costs to the Department of
Parks and Recreation of $2.2 million, or an average of $220,000
annually (special funds).
COMMENTS
1)Purpose . Existing law requires a local government agency to
give a 10% preference to any bidder on a service contract to
provide public transit service if they agree to retain
employees of the prior contractor or subcontractor for not
less than 90 days. This law does not currently apply to state
contracts. Supporters of the bill, including California
Teamsters Public Affairs Council, believe this law should be
extended to state transit contracts and cite an incident at
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Hearst Castle where the lowest bidder terminated the
employment of existing drivers as an example of the need for
this bid preference.
2)Background . In July 2012, the Department of Parks and
Recreation signed a new transit contract to provide shuttle
service at Hearst Castle. The contractor was selected through
an open, competitive bid process. The incumbent contractor
submitted a bid but the bid was nonresponsive to requirements;
the contractor failed to fulfill a requirement for disabled
veteran business enterprise (DVBE) participation in the
contract. According to the Department of Parks and
Recreation, the new transit contractor provided 30 days'
notice before the change of contractors, invited applications
and had an on-site representative answer questions from
drivers interested in applying to work for the new contractor.
About half the drivers were hired by the new transit
contractor.
3)Additional cost considerations . Existing law is ambiguous with
respect to how the 10% preference is evaluated and scored.
Local agencies appear to be calculating the 10% bid preference
in different ways. Local agencies also have considerably more
discretion than the state in how they structure and award a
request for application. The ambiguity in law could also mean
the evaluation criteria chosen by the state would be
susceptible to challenge through the protest process, leading
to delayed contract awards and resulting in additional costs.
4)Prior legislation .
a) SB 232 (Monning) of 2013, as introduced, is identical to
this bill. SB 232 was subsequently amended to address
issues related to the California Central Coast State
Veterans Cemetery at Fort Ord Endowment Fund.
b) SB 158 (Alarcon), Chapter 103, Statutes of 2003 created
the 10% bid preference for contracted transit services for
local government agencies.
Analysis Prepared by : Misty Feusahrens / APPR. / (916)
319-2081
SB 263
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