BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 335|
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THIRD READING
Bill No: SB 335
Author: Yee (D)
Amended: 5/28/13
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 9-2, 4/9/13
AYES: Wright, Calderon, Cannella, Correa, De León, Galgiani,
Hernandez, Lieu, Padilla
NOES: Nielsen, Berryhill
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/23/13
AYES: De León, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
SUBJECT : Governor's Budget: services contracts
SOURCE : Author
DIGEST : This bill requires the Governor to submit to the
Legislature an annual report regarding current contracts for
services in the amount of $5,001 or more, upon full
implementation of the Financial Information System for
California (FI$Cal) Project.
ANALYSIS :
Existing law:
1.Requires the Governor to submit to the Legislature within the
first 10 days of each calendar year, a proposed budget for the
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next fiscal year, as specified. The Governor's proposed
budget must contain itemized statements for recommended state
expenditures and estimated state revenue income, as specified.
2.Requires the Department of General Services to publish, or
cause to be published, the California State Contracts
Register, describing contracts proposed by the state, for
construction or alteration of state-owned real property.
This bill:
1.Requires the Governor to submit to the Legislature an annual
report regarding current contracts for services in the amount
of $5,001 or more, upon full implementation of the FI$Cal
Project. Requires that the report contain all of the
following: (1) a description of the contract and services
being purchased; (2) the name of the agency contracting for
the services; (3) the name of the contractor and any
subcontractors; (4) the effective and expiration dates of the
contract; (5) the annual amounts paid under the contract, by
funding source, to the contractor in past fiscal years and in
the current fiscal year; (6) the annual amount, by funding
source, proposed to be paid to the contractor under the
Governor's Budget; (7) the amount by funding source, projected
to be paid to the contractor in the fiscal years covered by
the contract beyond the fiscal year addressed in the
Governor's budget during which the contract will be in effect;
(8) the total projected cost of the contract, by funding
source, for all fiscal years during which the contract will be
in effect; and (9) whether the contract was a sole
procurement.
2.Requires the report to provide the total cost of contracting
for services for each fund and agency or comparable budget
category.
3.Provides that the report be made available to the public by
posting it on the FI$Cal Project's Internet Web site in a
format that allows for searching and sorting by the categories
listed above.
Comments
According to the author's office, currently, lawmakers and the
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public cannot easily access information to determine how much
the state spends on contracting out services or what services
are received for the money spent. The author's office contends
that such information is lumped together with "Other Operating
Expenses" in the annual budget report. Information on state
employees (position and salary), however, is clearly outlined
under "Salary and Wage Supplement." The contracting of services
is often promoted as a way to cut costs, especially during
fiscally strained times, yet public officials and taxpayers
rarely know how much is being spent on contracts, and thus,
unable to determine if such contracted services are being
provided at a lower cost to the state. The author's office
states that when budget dollars remain scarce and insufficient
to meet California's pressing needs, it becomes vital that
information on all spending including spending on service
contracts, be made transparent.
The author's office notes that the State Contracting and
Procurement and Registration System (SCPRS) already collects
contract information, as the Governor pointed out in his veto
message of AB 172 (Eng, 2011). However, the author's office
believes that the SCPRS suffers significant shortcomings which
make it inadequate to inform decision-makers. Specific examples
include (1) expenditure data cannot be computed by fiscal year;
(2) the names of agencies and contractor names are not recorded
uniformly throughout the database, making calculations of
contract spending by agency or vendor impossible; and (3) key
data such as contact identification numbers are often missing.
The author's office emphasizes that this bill remedies the
current information gap by requiring a service contract
expenditure report, as outlined above.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
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
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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).
SUPPORT : (Verified 5/28/13)
AFSCME
ARGUMENTS IN SUPPORT : The proponent stresses the importance
of gaining control over spending on service contracts, temporary
employees and consultants - such contracts to outsource work
totals in the billions of dollars. They argue that this bill
simply requires the Administration to provide relevant and
usable information on spending decisions involving services
contracts.
Further, they claim that in 2009, the State of California had
13,600 personal service and consultant contracts in effect that
cost the state $34.7 billion ($28.7 million a day). This breaks
down to 748 Architectural and Engineering contracts (cost $2.4
billion); 2,345 Information Technology (IT) contracts (cost $4.1
billion); and 10,507 non-IT contracts (cost $28.2 billion).
Proponents estimate that California could save millions annually
by utilizing state workers to cut unnecessary and wasteful
outsourcing. They believe the public has the right to hold
state officials responsible for how the state spends taxpayer
dollars and that access to the information outlined in this bill
is absolutely essential.
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MW:ej 5/28/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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