BILL ANALYSIS                                                                                                                                                                                                    Ó

                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair

          SB 335 (Yee) - Governor's Budget: report on state agency  
          contracts for services.
          Amended: As Introduced          Policy Vote: GO 9-2
          Urgency: No                     Mandate: No
          Hearing Date: May 23, 2013      Consultant: Mark McKenzie

          Bill Summary: SB 335 would require the Governor to submit an  
          annual report that includes specified information regarding  
          current and proposed state agency contracts for services with a  
          value of over $5,000, upon implementation of the FI$Cal Project.

          Fiscal Impact: 
              Unknown contract costs, estimated in the hundreds of  
              thousands, to build requirements into the FI$Cal Project to  
              ensure the system has capacity to report specified  
              information on contracting (General/Special Funds).

              Likely minor costs to various state agencies to compile and  
              report specified information to the Governor's Office,  
              assuming the FI$Cal Project has the built in capacity to  
              report contracting information upon implementation  
              (General/Special Funds).

              Unknown costs to the Department of Finance (DOF) to develop  
              and establish new accounting rules governing the reporting  
              of service contract information. (General)

              One-time costs of approximately $50,000 to the Department  
              of General Services (DGS) to develop and publish revisions  
              to the State Contracting Manual (General).
              Ongoing costs to DGS of $100,000 to $200,000 annually to  
              provide training and assistance to buyers and  
              budgeting/accounting personnel for state agencies (General).
          Background: Existing law requires the Governor to submit to the  
          Legislature within the first 10 days of each calendar year, a  
          proposed budget for the next fiscal year, as specified.  The  


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          Page 1

          Governor's proposed budget must contain itemized statements for  
          recommended state expenditures and estimated state revenues.

          Proposed Law: SB 335 would require the Governor to submit a  
          report to the Legislature with the Budget that contains the  
          following information on current and proposed contracts for  
          services exceeding $5,000, organized by agency or budget  
                 A description of the contract and services being  
                 The name of the agency contracting for services.
                 The effective date and expiration date of the contract.
                 Annual amounts paid under the contract, by funding  
               source, to the contractor in the current and past fiscal  
               years, as well as amounts proposed for payment to the  
               contractor in the Governor's Budget, and future fiscal  
                 The total projected cost of the contract, by funding  
               source, for all fiscal years during which the contract will  
               be in effect.
                 Whether the contract was sole source procurement.
          The report would also provide the total cost of subcontracting  
          for services for each fund and agency or comparable budget  
          category, and all information must be made available to the  
          public on the state's website in a searchable and sortable  

          Related Legislation: Numerous bills have been introduced over  
          the past 10 years that were intended to enhance reporting on  
          state contracting activities, none of which were ultimately  
          enacted.  Of particular note are the following bills that were  
          substantially similar to this bill: SB 786 (Oropeza) 2007-08  
          Session; SB 1331 (Oropeza) 2007-08 Session; AB 983 (Ma) 2007-08  
          Session; AB 239 (Horton) 2005-06 Session; and SB 1638 (Romero)  
          2003-04 Session.  

          Staff Comments: The Department of General Services (DGS)  
          indicates that state agencies reported information to DGS in the  
          State Contract and Procurement Registration System (SCPRS) in  
          2011-12 regarding 10,329 service contracts valued at over  
          $5,000.  This system does not capture any contracting  
          information from the state universities, the Lottery Commission,  
          the Public Employee Retirement System, and the State Teacher's  
          Retirement System.  Contracting data that is reported to the  


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          SCPRS includes department names, contractor names, contract  
          amounts, and contract descriptions.  Staff notes that  
          information on proposed contracts is not reported because the  
          data entry happens after contracts are awarded.
          Staff notes that it would not be feasible to provide all of the  
          information specified in the bill, particularly with respect to  
          proposed contracts.  For instance, identification of a  
          contractor and subcontractors, timelines for the contract,  
          funding sources for a project, and annual amounts paid would not  
          be known for proposed contracts included prior to the approval  
          of the Budget and the awarding of a contract.  As such, any  
          reporting related to proposed contracts would be incomplete.

          The Department of Finance (DOF) was unable to provide a fiscal  
          estimate for its costs to comply with SB 335, but state  
          departments will incur significant costs, likely in excess of  
          $500,000 annually in the aggregate, to compile and report the  
          required information to DOF.  In addition, DOF would need to  
          develop and maintain a database to store information received  
          from departments, and these costs will likely exceed $500,000. 

          PROPOSED AMENDMENTS would delete the requirement that a report  
          on state contracting be included in the Governor's Budget, and  
          instead require the Governor to submit an annual report on  
          current and proposed contracts for services upon implementation  
          of the FI$Cal Project.