BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1200|
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                                   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  








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             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  







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                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.







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           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  







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             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  







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          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  







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          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:   (Verified9/1/15)


           Secretary of State Alex Padilla
           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

          ASSEMBLY FLOOR:  79-0, 6/3/15
          AYES:  Achadjian, Alejo, Baker, Bigelow, Bloom, Bonilla, Bonta,  







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            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
          9/1/15 11:24:22


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