BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1200 (Gordon) - Political Reform Act of 1974: lobbying: procurement contracts. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 30, 2015 |Policy Vote: E. & C.A. 4 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 1200 would provide 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). Fiscal Impact: The Fair Political Practices Commission (FPPC) would incur costs of $1.3 million in each of the first two years, and $1.1 million ongoing (General Fund). The Secretary of State's Office (SOS) indicates that the AB 1200 (Gordon) Page 1 of ? bill would not impact its costs. To the extent that contractors would have to file with SOS pursuant to the bill, there would be an increase in fee revenue, which would be split evenly between the General Fund and the Political Disclosure, Accountability, Transparency and Access Fund. The amount is unknown, but would likely range in the low hundreds of thousands of dollars annually. 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. Current law describes "administrative action," for the purposes of the PRA, as either of the following: 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, 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. Thus, 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 currently 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. AB 1200 (Gordon) Page 2 of ? Proposed Law: This bill would do all of the following: Provide that the term "administrative action," for the purposes of the PRA, includes governmental procurement, as defined, thus making the above-described lobbying requirements applicable to actions that attempt to influence governmental procurement. Define "governmental procurement," to mean any of the following with respect to a state procurement contract for which the total estimated cost exceeds $250,000: o Preparing the terms, specifications, bid documents, request for proposals, or evaluation criteria for the procurement contract. o Soliciting for, evaluating, awarding, approving, denying, disapproving, or scoring criteria for the procurement contract. o 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. Provide that "governmental procurement" does not include the following: AB 1200 (Gordon) Page 3 of ? o 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. o Testifying at a public hearing regarding a state procurement contract; o 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: § The primary purpose of the individual's employment is the sale of an article of procurement. § The primary purpose of the individual's employment is not to influence the actions of a public officer or state agency. § The individual does not engage in any other activity that would qualify him or her as a lobbyist. o Any activity undertaken by a placement agent, as defined. o 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. AB 1200 (Gordon) Page 4 of ? Permit 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. Staff Comments: By bringing governmental procurement within the definition of "administrative action," this bill would bring 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. FPPC workload associated with the bill includes major rulemaking, increased legal advice, preparing compliance materials, enforcement, modifying forms and manuals and outreach. FPPC indicates that the increased workload would require 11 new positions, nine of which would be permanent. The Department of General Services indicates that about 6,000 state contracts have a value that exceeds the bill's threshold of $250,000. The number of related contractors that would be required to file with SOS pursuant to the bill is not known. Filing with SOS includes paying a fee of $50 per year, which is deposited evenly between the General Fund and the Political Disclosure, Accountability, Transparency and Access Fund. Thus, the bill would likely result in increase in fee in the low AB 1200 (Gordon) Page 5 of ? hundreds of thousands of dollars annually. The precise amount would depend on (1) the actual number of contracts that exceed $250,000 in value, and (2) the number of contractors not already registering with SOS for other reasons. Any local government costs resulting from the mandate in this measure are not state-reimbursable because the mandate only involves the definition of a crime or the penalty for conviction of a crime. -- END --