Amended in Senate April 22, 2014

Amended in Senate March 24, 2014

Senate Bill No. 943

Introduced by Senator Beall

February 4, 2014

An act to add Part 1.5 (commencing with Section 18300) to Division 5 of Title 2 of the Government Code, relating to the California State University.

LEGISLATIVE COUNSEL’S DIGEST

SB 943, as amended, Beall. California State University: personal services contracting.

Existing provisions of the State Civil Service Act establish standards for the use of personal services contracts by state agencies. An existing provision of the California Constitution excludes the officers and employees of the California State University from the state civil service.

Existing law authorizes the Trustees of the California State University to enter into agreements with public or private agencies, persons, officers, institutions, corporations, associations, or foundations for the performance of acts or for the furnishing of services, facilities, materials, goods, supplies, or equipment by or for the trustees or for the joint performance of an act or function or the joint furnishing of services and facilities by the trustees and the other party to the agreement.

This bill would establish standards for personal services contracts, similar to those of the State Civil Service Act, that would be applicable to the California State University. The bill would require the begin delete Public Employment Relations end delete begin insert State Personnel end insert Board to be notified of any proposed or executed personal services contract, and would require the board, upon request of an employee organization, to review and disapprove a contract that does not meet those standards.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Part 1.5 (commencing with Section 18300) is
added to Division 5 of Title 2 of the Government Code, to read:

 

PART 1.5.  Personal Services Contracts for
California State University

 

18300.  

(a) For purposes of this part, the following definitions
apply:

(1) “Board” means the begin delete Public Employment Relations end delete begin insert State
Personnel end insert Board.

(2) “Trustees” means the Trustees of the California State
University.

(3) “University” means an institution of higher education that
is part of the California State University.

(b) If any provision of this part conflicts with Section 89036 of
the Education Code, the provisions of this part shall prevail.

18301.  

(a) The purpose of this part is to establish standards
for the use of personal services contracts by the California State
University.

(b) Personal services contracting is permissible to achieve cost
savings when all the following conditions are met:

(1) The university clearly demonstrates that the proposed
contract will result in actual overall cost savings to the California
State University. In comparing costs, the following shall apply:

(A) There shall be included the California State University’s
additional cost of providing the same service as proposed by a
contractor. These additional costs shall include the salaries and
benefits of additional staff that would be needed and the cost of
additional space, equipment, and materials needed to perform the
function.

(B) The California State University’s indirect overhead costs
shall not be included unless these costs can be attributed solely to
the function in question and would not exist if that function was
not performed in regular university employment service. Indirect
overhead costs shall mean the pro rata share of existing
administrative salaries and benefits, rent, equipment costs, utilities,
and materials.

(C) There shall be included in the cost of a contractor providing
a service any continuing costs to the California State University
that would be directly associated with the contracted function.
These continuing costs shall include, but not be limited to, those
for inspection, supervision, and monitoring.

(2) Proposals to contract out work shall not be approved solely
on the basis that savings will result from lower contractor pay rates
or benefits. Proposals to contract out work shall be eligible for
approval if the contractor’s wages are at the industry’s level and
do not significantly undercut university pay rates.

(3) The contract does not cause the displacement of university
employees. The term “displacement” includes layoff, demotion,
involuntary transfer to a new classification, involuntary transfer
to a new location requiring a change of residence, and time base
reductions. Displacement does not include changes in shifts or
days off, or reassignment to other positions within the same
classification and general location.

(4) The contract does not adversely affect the trustees’
nondiscrimination efforts.

(5) The savings shall be large enough to ensure that the savings
will not be eliminated by private sector and state cost fluctuations
that could normally be expected during the contracting period.

(6) The amount of savings clearly justify the size and duration
of the contracting agreement.

(7) The contract is awarded through a publicized, competitive
bidding process.

(8) The contract includes specific provisions pertaining to the
qualifications of the staff that will perform the work under the
contract, as well as assurance that the contractor’s hiring practices
meet applicable nondiscrimination standards.

(9) The potential for future economic risk to the trustees from
potential contractor rate increases is minimal.

(10) The contract is with a firm. A “firm” means a corporation,
partnership, nonprofit organization, or sole proprietorship.

(11) The potential economic advantage of contracting is not
outweighed by the public’s interest in having a particular function
performed directly by university employees.

(c) Personal services contracting also shall be permissible when
any of the following conditions are met:

(1) The contract is for a new university function and the
Legislature has specifically mandated or authorized the
performance of the work by independent contractors.

(2) The services contracted are not available through regular
university employment procedures, cannot be performed
satisfactorily by university employees, or are of such a highly
specialized or technical nature that the necessary expert knowledge,
experience, and ability are not available through the pool of
university employees.

(3) The services are incidental to a contract for the purchase or
lease of real or personal property. Contracts under this criterion,
known as “service agreements,” shall include, but not be limited
to, agreements to service or maintain office equipment or
computers that are leased or rented.

(4) The legislative, administrative, or legal goals and purposes
cannot be accomplished through the utilization of persons selected
pursuant to the regular university employment process. Contracts
are permissible under this criterion to protect against a conflict of
interest or to ensure independent and unbiased findings in cases
where there is a clear need for a different, outside perspective.
These contracts shall include, but not be limited to, obtaining expert
witnesses in litigation.

(5) The contractor will provide equipment, materials, facilities,
or support services that could not feasibly be provided by university
employees in the location where the services are to be performed.

(6) The contractor will conduct employee training courses for
which appropriately qualified university employee instructors are
not available, provided that permanent instructor positions in
academies or similar settings shall be filled through the regular
university employment process.

(7) The services are of such an urgent, temporary, or occasional
nature that the delay incumbent in their implementation through
regular university employment procedures would frustrate their
very purpose.

(d) All persons who provide services to the California State
University under conditions the board determines constitute an
employment relationship shall be retained pursuant to regular
university employment procedures.

18302.  

(a) A university that proposes to execute a personal
services contract pursuant to this part shall notify the board of that
intention. All organizations that represent university employees
who perform the type of work to be contracted, and any person or
organization that has filed with the board a request for notice, shall
be contacted immediately by the board upon receipt of this notice
so that they may be given a reasonable opportunity to comment
on the proposed contract.

(b) When a university submits a proposed contract, the university
shall retain and provide all data and other information relevant to
the contract and necessary for a specific application of the standards
for personal services contracts established in Section 18301.

(c) An employee organization may request, within 10 days of
notification, the board to review a contract proposed or executed
pursuant to this part. Upon a request, the board shall review the
contract for compliance with the standards for personal services
established in Section 18301. The board shall disapprove a contract
that does not comply with the standards.

(d) The board may adopt regulations to administer the provisions
of this part relating to the review of personal service contracts.

18303.  

(a) Upon the request of an employee organization that
represents employees of the California State University, the board
shall review the adequacy of a personal services contract proposed
or executed pursuant to this part. A contract that was reviewed at
the request of an employee organization when it was proposed
need not be reviewed again after its execution.

(b) (1) Unless a personal services contract is necessary due to
a sudden and unexpected occurrence that poses a clear and
imminent danger, requiring immediate action to prevent or mitigate
the loss or impairment of life, health, property, or essential public
services, the contract shall not be executed until the university
proposing to execute the contract has notified all organizations
that represent university employees who perform the type of work
to be contracted.

(2) At a minimum, the notice shall include a full copy of the
proposed contract. The university may redact specific confidential
or proprietary information from the notice.

(3) The board shall establish a process to certify the notification
in paragraph (1).

18304.  

(a) If a contract is disapproved by action of the board,
the university shall immediately discontinue that contract, unless
ordered otherwise by the board. The university shall not circumvent
or disregard the board’s action by entering into another contract
for the same or similar services or to continue the services that
were the subject of the contract disapproved by the board.

(b) If a university is ordered to discontinue a contract, the
university shall serve notice of the discontinuation of the contract
to the vendor within 15 days from the board’s final action unless
a different notice period is specified. A copy of the notice also
shall be served on the board and the employee organization that
filed the contract challenge. Failure to serve this notice may be
grounds for rejection of future contracts for the same or similar
services that were discontinued.