BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON
          ELECTIONS AND CONSTITUTIONAL AMENDMENTS
                              Senator Ben Allen, Chair
                                2015 - 2016  Regular 

          Bill No:             AB 1200        Hearing Date:    7/7/15    
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          |Author:    |Gordon                                               |
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          |Version:   |6/30/15                                              |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Darren Chesin                                        |
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            Subject:  Political Reform Act of 1974: lobbying: procurement  
                                      contracts

           DIGEST
           
          This bill 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).  

           ANALYSIS
           
           Existing law  :  

          1)Creates the Fair Political Practices Commission (FPPC), and  
            makes it responsible for the impartial, effective  
            administration and implementation of the PRA.

          2)Defines a "lobbyist" as an individual who receives $2,000 or  
            more in a calendar month or whose principal duties as an  
            employee are to communicate directly or through his or her  
            agents with an elective state official, agency official, or  
            legislative official for the purpose of influencing  
            legislative or administrative action.

          3)Defines a "lobbying firm" as any business entity, except as  
            specified, including an individual contract lobbyist, which  
            meets either of the following criteria: 

             a)   The business entity receives or becomes entitled to  







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               receive any compensation, other than reimbursement for  
               reasonable travel expenses, for the purpose of influencing  
               legislative or administrative action on behalf of any other  
               person, and any partner, owner, officer, or employee of the  
               business entity is a lobbyist; or,

             b)   The business entity receives or becomes entitled to  
               receive any compensation, other than reimbursement for  
               reasonable travel expenses, to communicate directly with  
               any elective state official, agency official, or  
               legislative official for the purpose of influencing  
               legislative or administrative action on behalf of any other  
               person, if a substantial or regular portion of the  
               activities for which the business entity receives  
               compensation is for the purpose of influencing legislative  
               or administrative action.

          4)Defines a "lobbyist employer" as any person, other than a  
            lobbying firm, who: 

             a)   Employs one or more lobbyists for economic  
               consideration, other than reimbursement for reasonable  
               travel expenses, for the purpose of influencing legislative  
               or administrative action; or 

             b)   Contracts for the services of a lobbying firm for  
               economic consideration, other than reimbursement for  
               reasonable travel expenses, for the purpose of influencing  
               legislative or administrative action.

          5)Defines "legislative action," for the purposes of the PRA, as  
            either of the following:

             a)   The drafting, introduction, consideration, modification,  
               enactment or defeat of any bill, resolution, amendment,  
               report, nomination or other matter by the Legislature or by  
               either house or any committee, subcommittee, joint or  
               select committee thereof, or by a member or employee of the  
               Legislature acting in his official capacity; or,

             b)   The action of the Governor in approving or vetoing any  
               bill.

          6)Defines "administrative action," for the purposes of the PRA,  








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            as either of the following:

             a)   The proposal, drafting, development, consideration,  
               amendment, enactment, or defeat by any state agency of any  
               rule, regulation, or other action in any ratemaking  
               proceeding or a quasi-legislative proceeding, as specified;  
               or,

             b)   With regard only to placement agents, as defined, the  
               decision by any state agency to enter into a contract to  
               invest state public retirement system assets on behalf of a  
               state public retirement system.

          7)Defines "agency official," for the purposes of the PRA, as any  
            member, officer, employee or consultant of any state agency  
            who as part of his official responsibilities participates in  
            any administrative action in other than a purely clerical,  
            secretarial or ministerial capacity.

          8)Requires an individual who is considered a lobbyist, as  
            defined, to register as a lobbyist and to comply with various  
            ethics and reporting rules.

          9)Requires lobbyists to complete a biennial orientation course  
            on the relevant ethical issues and laws relating to lobbying.

           10)Prohibits lobbyists from receiving any payment that is in  
             any way contingent upon   defeat, enactment, or outcome of  
             any proposed legislative or administrative action.

           11)Prohibits a lobbyist from making gifts aggregating more than  
             $10 in a calendar month to any state candidate, elected state  
             officer, legislative official, or an agency official of any  
             agency required to be listed on the registration statement of  
             the lobbying firm or the lobbyist employer of the lobbyist.

           12)Prohibits a lobbyist from doing anything with the purpose of  
             placing any elected state officer, legislative official,  
             agency official, or state candidate under personal obligation  
             to the lobbyist or the lobbyist's employer.

            13) Prohibits a lobbyist from deceiving or attempting to  
              deceive any elected state officer, legislative official,  
              agency official, or state candidate with regard to any  








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              material fact pertinent to any pending administrative  
              action.

            14) Prohibits a lobbyist from making a contribution to an  
              elected state officer or candidate for elected state office  
              if the lobbyist is registered to lobby the governmental  
              agency for which the candidate is seeking election or the  
              governmental agency of the elected state officer.

            15) Requires lobbying firms and lobbyist employers to register  
              with the Secretary of State (SOS) and to file periodic  
              disclosure reports that contain information about the firms'  
              and employers' lobbying interests and agencies lobbied.

            16) Makes violations of the PRA subject to administrative,  
              civil, and criminal penalties.

           This bill  :

          1)Provides that the term "administrative action," for the  
            purposes of the PRA, includes governmental procurement, as  
            defined, thereby making the above-described lobbying  
            requirements applicable to actions that attempt to influence  
            governmental procurement.

          2)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, disapproving, or scoring criteria for the  
               procurement contract; or, 

             c)   Approving or denying an assignment, amendment, other  
               than an amendment authorized and payable under the terms of  
               the procurement contract as the procurement contract was  
               finally awarded or approved, renewal, or extension of the  
               procurement contract, or any other material change in the  
               procurement contract resulting in financial benefit to the  
               offeror.








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          3)Provides that "governmental procurement" does not include the  
            following:

             a)   Submitting a bid or fee proposal on a state procurement  
               contract that does not involve any of the above activity,  
               including attending a bidders' conference or responding to  
               requests for information; or responding to a competitive  
               selection process based on qualifications.

             b)   Testifying at a public hearing regarding a state  
               procurement contract; 

             c)   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 individual's  
                    employment is the sale of an article of procurement.

                  ii.       The primary purpose of the individual's  
                    employment is not to influence the actions of a public  
                    officer or state agency.

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

             a)   Any activity undertaken by a placement agent, as  
               defined.

             b)   Any activity relating to a contract awarded by the state  
               through the California Multiple Award Schedule (CMAS) or a  
               contract awarded through government multi-jurisdiction  
               purchasing schedules.

          1)Permits a lobbyist, other than a placement agent, to be  
            compensated on a commission basis only with respect to  
            lobbying activities related to influencing administrative  
            action for governmental procurement.

           BACKGROUND
           
           Lobbying Regulation & Contracts  .  Under existing law,  








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          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.  

          As detailed above, 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  
          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. 

           COMMENTS








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           1)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 Political Reform Act, in part,  
            to ensure that state 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 Political Reform Act 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 Political Reform Act.  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.   

                               RELATED/PRIOR LEGISLATION
           
          AB 707 (Hancock) of 2005-06, would have required contractors and  
          their agents and consultants, as specified, who entered into  
          specified contracts with state agencies to publicly disclose to  
          the SOS certain communications with the state agency during the  
          oneyear period preceding the award of the contract.  These  
          provisions of AB 707 were added to the bill in the Senate, and  
          were never considered by the Assembly.  AB 707 subsequently was  
          gutted-and-amended and used for another purpose, and the version  
          of the bill dealing with state contracts was never heard by a  
          policy committee.

          AB 13 (Florez) of 2001-02, would have required lobbyists,  
          lobbying firms, and lobbyist employers to disclose information  
          on services relating to the solicitation, proposal, negotiation,  
          drafting, amendment, awarding, or rescission of a nonrestrictive  
          contract for goods or services, as specified.  These provisions  
          of AB 13 were added to the bill in the Senate, and were never  
          considered by the Assembly.  AB 13 was never heard by a policy  
          committee.

           PRIOR ACTION
           








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          |Assembly Floor:                       |79 - 0                     |
          |--------------------------------------+---------------------------|
          |Assembly Appropriations Committee:    |15 - 0                     |
          |--------------------------------------+---------------------------|
          |Assembly Elections and Redistricting  |  4 - 1                    |
          |Committee:                            |                           |
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          POSITIONS
           
          Sponsor: Author

           Support: California Common Cause
                    California Public Interest Research Group
                    Legislative and Public Policy Clinic of the University  
                   of the Pacific,
                      McGeorge School of Law

           Oppose:  American Council of Engineering Companies
                                          
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