BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1200| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1200 Author: Gordon (D) Amended: 8/26/15 in Senate Vote: 27 SENATE ELECTIONS & C.A. COMMITTEE: 4-0, 7/7/15 AYES: Allen, Hancock, Hertzberg, Liu NO VOTE RECORDED: Anderson SENATE APPROPRIATIONS COMMITTEE: 5-0, 8/27/15 AYES: Lara, Beall, Hill, Leyva, Mendoza NO VOTE RECORDED: Bates, Nielsen ASSEMBLY FLOOR: 79-0, 6/3/15 - See last page for vote SUBJECT: Political Reform Act of 1974: lobbying: procurement contracts SOURCE: Author 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 AB 1200 Page 2 administration and implementation of the PRA. 2) Defines a "lobbyist" as either of the following: a) Any 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 any elective state official, agency official, or legislative official for the purpose of influencing legislative or administrative action. b) A placement agent, as defined. 1) 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 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. 2) 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 AB 1200 Page 3 economic consideration, other than reimbursement for reasonable travel expenses, for the purpose of influencing legislative or administrative action. 3) 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. 4) Defines "administrative action," for the purposes of the PRA, 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. 5) 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. 6) Requires an individual who is considered a lobbyist, as defined, to register as a lobbyist and to comply with various ethics and reporting rules. 7) Requires lobbyists to complete a biennial orientation course on the relevant ethical issues and laws relating to lobbying. AB 1200 Page 4 8) Prohibits lobbyists from receiving any payment that is in any way contingent upon defeat, enactment, or outcome of any proposed legislative or administrative action. 9) 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. 10)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. 11)Prohibits a lobbyist from deceiving or attempting to deceive any elected state officer, legislative official, agency official, or state candidate with regard to any material fact pertinent to any pending administrative action. 12)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. 13)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. 14)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 AB 1200 Page 5 following with respect to influencing 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. 3) Provides that "governmental procurement" does not include any activity undertaken by a placement agent, as defined. 4) Includes within the definition of "lobbyist" any individual who receives $2,000 or more in a calendar month to communicate directly or through his or her agents on behalf of any person other than his or her employer with any elective state official, agency official, or legislative official for the purpose of influencing administrative action that is governmental procurement. Background Lobbying Regulation & Contracts. 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 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 AB 1200 Page 6 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 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 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 AB 1200 Page 7 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 imposes necessary reporting requirements on procurement lobbying. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes According to the Senate Appropriations Committee: The FPPC could potentially incur costs in the hundreds of thousands of dollars annually (General Fund). The SOS indicates that this bill would not impact its costs. To the extent that contractors would have to file with SOS pursuant to this 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. SUPPORT: (Verified8/27/15) California Common Cause California Public Interest Research Group Legislative and Public Policy Clinic of the University of the Pacific, McGeorge School of Law OPPOSITION: (Verified8/31/15) American Council of Engineering Companies Department of Finance AB 1200 Page 8 ASSEMBLY FLOOR: 79-0, 6/3/15 AYES: Achadjian, Alejo, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Travis Allen Prepared by:Darren Chesin / E. & C.A. / (916) 651-4106 8/31/15 20:01:57 **** END ****