BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1200 (Gordon) - Political Reform Act of 1974: lobbying:  
          procurement contracts.
          
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          |Version: June 30, 2015          |Policy Vote: E. & C.A. 4 - 0    |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: August 17, 2015   |Consultant: Robert Ingenito     |
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          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  







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               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.  










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          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:









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                  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.










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                 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  








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          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.





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