BILL ANALYSIS Ó AB 1200 Page 1 Date of Hearing: May 27, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 1200 (Gordon) - As Amended May 19, 2015 ----------------------------------------------------------------- |Policy |Elections and Redistricting |Vote:|4 - 1 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill amends the Political Reform Act (PRA) such that communicating with state governmental officials in order to influence state governmental procurement contracts exceeding AB 1200 Page 2 $250,000 can result in a person being considered a "lobbyist" under the PRA. Specifically, this bill: 1)Defines "government procurement" as: a) Preparing the terms, specifications, bid documents, request for proposals, or evaluation criteria for a procurement contract; or b) Soliciting for, evaluating, approving, or denying or disapproving a procurement contract; or c) Approving or denying an assignment, amendment, other than an amendment authorized and payable under the terms of a procurement contract as the procurement contract was finally awarded or approved, renewal, or extension of a procurement contract, or any other material change in a procurement contract resulting in financial benefit to the offeror. 2)Stipulates that "government procurement" does not include: a) Submitting a bid on a procurement contract or testifying at a hearing regarding a contract. b) Any activity undertaken by a "bona fide salesperson," as defined, who does not engage in any other activity that would qualify him or her as a lobbyist. 3)Stipulates that a lobbyist may be compensated on a commission basis only with respect to lobbying activities related to AB 1200 Page 3 influencing administrative action for government procurement. FISCAL EFFECT: The Fair Political Practices Commission (FPPC) will incur one-time costs to conduct a major new rulemaking, prepare compliance materials, and modify lobbying manuals and forms; and ongoing costs to receive and respond to a large increase in requests for advice, and to conduct additional investigations. One-time costs would be around $500,000. Ongoing costs would be somewhat larger and would be determined, based on workload demands, through the budget process. COMMENTS: 1)Background. Under current law, individuals and entities that make or receive specified levels of payments for the purpose of influencing legislative or administrative actions may be required to comply with the state's lobbying rules, including requirements to register with the SOS and to file periodic reports. The term "administrative action" is defined primarily to include rule- and rate-making, the adoption of regulations, and quasi-legislative proceedings. Contracting decisions by state agencies are not included within the definition of the term "administrative action," so individuals and entities that attempt to influence state contracting decisions are not required to comply with lobbying rules as a result of their efforts with respect to contracting decisions. For example, in its Lobbying Information Disclosure Manual, the FPPC states that an entity bidding on a contract with the Department of Housing and Community Development (Department) to provide low and moderate-income housing units would not be engaged in lobbying as a result of submitting a bid, because although the Department is an administrative agency, the awarding of a contract is not considered an administrative AB 1200 Page 4 action. 2)Purpose. According to the author, "The State of California authorized over $11 billion in procurement contracts in 2014. In light of this substantial spending, the public should have the ability to see who, if anyone is attempting to influence the procurement process and expenditure of taxpayer dollars?For the same reasons that the state currently imposes registration and reporting requirements on legislative and regulatory lobbying, and in light of the amount of taxpayer money spent on procurement, this bill would impose necessary reporting requirements on procurement lobbying. By adding procurement to the definition of "administrative action," this bill brings contracting within the types of state governmental decisions that are covered by the state's lobbying rules. For individuals and entities that frequently attempt to influence state agency contracting decisions, but that do not regularly attempt to influence other actions by state agencies, this bill could require those individuals and entities to comply with the state's lobbying rules, including registering with the SOS and filing periodic disclosure reports. Many individuals and entities that attempt to influence contracting decisions, however, may already be registered as lobbyists, lobbying firms, or lobbyist employers because those individuals and entities are involved in attempting to influence other actions by the Legislature or state agencies. For those entities and individuals, this bill will require them to disclose details about their procurement lobbying on the periodic disclosure reports that they already file. Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081 AB 1200 Page 5