BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1200


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          GOVERNOR'S VETO


          AB  
          1200 (Gordon)


          As Enrolled  May 5, 2016


          2/3 vote


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          |ASSEMBLY:  |79-0  |(June 3, 2015) |SENATE: |38-1  |(March 3, 2016)  |
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          Original Committee Reference:  E. & R.




          SUMMARY:  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).  Specifically, this bill:   










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          1)Defines "governmental procurement," to mean any of the  
            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, scoring criteria for,  
               awarding, approving, denying, or disapproving the  
               procurement contract; or,


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


          2)Provides that "governmental procurement" does not include  
            activity undertaken by a placement agent, as defined.


          The Senate amendments:


          1)Make the provisions of this bill applicable only to an  
            individual who receives $2,000 or more in economic  
            consideration in a calendar month, other than reimbursement  
            for reasonable travel expenses, to communicate directly or  
            through his or her agents on behalf of any person other than  
            his or her employer with state governmental officials for the  
            purpose of influencing governmental procurement. 









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          2)Make related changes by repealing provisions that would have  
            specified certain conduct that was not considered  
            "governmental procurement" for the purposes of this bill,  
            including submitting bids on a contract, testifying at a  
            public hearing regarding a state procurement contract, and  
            activity undertaken by bona fide salespeople of articles of  
            procurement.


          3)Delete a provision that would have permitted a lobbyist to be  
            compensated on a commission basis with respect to lobbying  
            activities related to governmental procurement.


          4)Provide that the penalties in the PRA are the exclusive remedy  
            for a violation of this bill with respect to governmental  
            procurement lobbying.


          5)Add an urgency clause, but delay the operative date of this  
            bill to January 1, 2017.  The urgency clause will ensure that  
            the Fair Political Practices Commission (FPPC) has the  
            authority and time to adopt regulations before this bill's  
            operative date.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, the FPPC could potentially incur costs in the  
          hundreds of thousands of dollars annually (General Fund).  The  
          Secretary of State's Office (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.


          COMMENTS:  According to the author, "The State of California  








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          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 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 would impose necessary  
          reporting requirements on procurement lobbying."


          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 Secretary of State and to file  
          periodic reports.  This bill brings contracting within the types  
          of governmental decisions that are covered by the state's  
          lobbying rules. 


          Existing state lobbying rules contain different tests for  
          determining whether an individual is considered a lobbyist  
          depending on whether that individual is engaging in  
          communication with public officials on behalf of the  
          individual's employer (commonly referred to as an "in-house  
          lobbyist"), or on behalf of persons other than the individual's  
          employer (commonly referred to as a "contract lobbyist").  A  
          person is considered to be an in-house lobbyist if he or she  
          spends one-third or more of his or her compensated time in a  
          calendar month engaging in direct communication with qualifying  
          officials for the purposes of influencing legislative or  








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          administrative action on behalf of that person's employer.  A  
          person is considered to be a contract lobbyist if he or she  
          receives $2,000 or more in compensation in a calendar month for  
          engaging in direct communication with qualifying officials for  
          the purposes of influencing legislative or administrative action  
          on behalf of anyone other than that person's employer.


          The Senate amendments to this bill exempt in-house employees  
          from the potential of being considered lobbyists by virtue of  
          communications made on behalf of their employers to influence  
          state governmental procurement.  Only the "contract lobbyist"  
          test would apply when determining whether an individual would be  
          considered a "lobbyist" under this bill.  The Senate amendments  
          additionally provide that the penalties in the PRA are the  
          exclusive remedy for a violation of this bill and make related  
          changes.


          California voters passed an initiative, Proposition 9, in 1974  
          that created the FPPC and codified significant restrictions and  
          prohibitions on candidates, officeholders and lobbyists.  That  
          initiative is commonly known as the PRA.  Amendments to the PRA  
          that are not submitted to the voters, such as those contained in  
          this bill, must further the purposes of the initiative and  
          require a two-thirds vote of both houses of the Legislature.


          GOVERNOR'S VETO MESSAGE:


          This bill would revise the definition of "lobbyist" in the  
          Political Reform Act of 1974 to include specified conduct by  
          third-party consultants who work to influence governmental  
          procurement.


          Given that the laws regulating state procurement are voluminous  
          and already contain ample opportunity for public scrutiny, I  








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          don't believe this bill is necessary.




          Analysis Prepared by:                                             
                          Ethan Jones / E. & R. / (916) 319-2094  FN:  
          0002981