BILL ANALYSIS                                                                                                                                                                                                    



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          ASSEMBLY THIRD READING


          AB  
          1200 (Gordon)


          As Amended  May 19, 2015


          2/3 vote


           ------------------------------------------------------------------ 
          |Committee       |Votes |Ayes                   |Noes              |
          |                |      |                       |                  |
          |                |      |                       |                  |
          |----------------+------+-----------------------+------------------|
          |Elections       |4-1   |Gatto, Gordon, Mullin, |Ridley-Thomas     |
          |                |      |Perea                  |                  |
          |                |      |                       |                  |
          |----------------+------+-----------------------+------------------|
          |Appropriations  |15-0  |Gomez, Bigelow, Bonta, |                  |
          |                |      |Calderon, Chang, Daly, |                  |
          |                |      |Eggman, Gallagher,     |                  |
          |                |      |Eduardo Garcia,        |                  |
          |                |      |Gordon, Holden, Quirk, |                  |
          |                |      |Rendon, Weber, Wood    |                  |
          |                |      |                       |                  |
          |                |      |                       |                  |
           ------------------------------------------------------------------ 


          SUMMARY:  Provides that communicating with state governmental  
          officials in order to influence state governmental procurement, as  
          defined, can result in a person being considered a "lobbyist"  
          under the Political Reform Act (PRA).  Specifically, this bill:  










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          1)Defines "governmental procurement," to mean any of the following  
            with respect to a state procurement contract for which the total  
            estimated cost exceeds $250,000:


             a)   Preparing the terms, specifications, bid documents,  
               request for proposals, or evaluation criteria for the  
               procurement contract;


             b)   Soliciting for, evaluating, awarding, approving, denying,  
               or disapproving the 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)Provides that "governmental procurement" does not include the  
            following:


             a)   Submitting a bid on a state procurement contract, or  
               testifying at a public hearing regarding a state procurement  
               contract; 


             b)   Any activity undertaken by a "bona fide salesperson" of an  
               article of procurement.  Provides that a person is a "bona  
               fide salesperson" if each of the following conditions is  
               satisfied:


               i)     The primary purpose of the person's employment is to  
                 cause or promote the sale of, or to influence or induce  








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                 another to make a purchase of, an article of procurement;


               ii)    The primary purpose of the persons' employment is not  
                 to influence the actions of a public officer or state  
                 agency in regards to selecting vendors to supply articles  
                 of procurement under a state procurement contract; and,


               iii)   The person does not engage in any other activity that  
                 would qualify him or her as a lobbyist.


          3)Permits a lobbyist to be compensated on a commission basis only  
            with respect to lobbying activities related to influencing  
            administrative action for governmental procurement.


          4)Provides that the term "administrative action," for the purposes  
            of the PRA, includes governmental procurement, as defined.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, 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:  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.   
          California voters enacted the [PRA], in part, to ensure that state  








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          and local government 'serve the needs and respond to the wishes of  
          all citizens equally' and 'perform their duties in an impartial  
          manner.' To serve these goals, the [PRA] requires lobbying firms  
          and parties employing lobbying firms to report their legislative  
          and regulatory activities.  Lobbying of procurement contracts does  
          not fall under the purview of the [PRA].  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."


          Under existing 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 Secretary of State (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 action.


          By adding governmental procurement to the definition of  
          "administrative action," this bill brings contracting within the  
          types of governmental decisions that are covered by the state's  
          lobbying rules.  For individuals and entities that frequently  








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          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. 


          California voters passed an initiative, Proposition 9, in 1974  
          that created the FPPC and codified significant restrictions and  
          prohibitions on candidates, officeholders and lobbyists. That  
          initiative is commonly known as the PRA.  Amendments to the PRA  
          that are not submitted to the voters, such as those contained in  
          this bill, must further the purposes of the initiative and require  
          a two-thirds vote of both houses of the Legislature.


          Please see the policy committee analysis for a full discussion of  
          this bill.




          Analysis Prepared by:                                               
                          Ethan Jones / E. & R. / (916) 319-2094  FN:  
          0000642












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