BILL ANALYSIS Ó AB 1651 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1651 (Obernolte) As Amended August 19, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |80-0 |(May 31, 2016) |SENATE: |39-0 |(August 23, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: U. & C. SUMMARY: Requires the California Public Utilities Commission (CPUC) to post information related to contracts and audits on its Internet Web site. The Senate amendments: 1)Delete the requirement on the CPUC to post a copy of each contract that it enters into on its Internet Web site. 2)Change the timeline for the CPUC to post specified contract information on its Internet Web site from once a month to once a year. 3)Delete the provision specifying that the posting requirements AB 1651 Page 2 apply to contracts entered into at the direction of the CPUC, whether or not the CPUC is a party to the contract. EXISTING LAW: 1)Requires public contracts to be awarded by competitive bidding, subject to certain exceptions, as specified. (Public Contract Code Section 10295 et seq.) 2)Authorizes any state agency that receives delegated authority to acquire goods to and make certain types of acquisitions, as specified. (Public Contract Code Section 10332) 3)Requires the Department of General Services (DGS) to conduct an audit of each state agency to which purchasing authority has been delegated at least once in each three-year period to ensure compliance with statutory requirements related to specific contracting procedures. (Public Contract Code Section 10333) 4)Prohibits certain consultants from participating in decisions or participating in making contracts if they have a financial interest. (Government Code Section 1090 et seq.) FISCAL EFFECT: According to the Senate Appropriations Committee, this bill would have unknown, likely minor savings, to the CPUC to post contract information on its Web site. The CPUC estimated approximately $150,000 annually to meet monthly reporting requirements. COMMENTS: 1)Author's Statement: According to the author, "One of the AB 1651 Page 3 CPUC's core functions is to foster a fair contracting process that ensures public utilities are providing ratepayers with reliable service at reasonable rates. Given the concerns that have been raised, my hope is that AB 1651 will shine a light on these contracting practices and provide the public with the tools needed to keep the CPUC accountable." 2)Background: In 2000, the State Auditor published a report on the CPUC's contracting process and found that the CPUC "does not always adequately develop and manage its contracts. ?As a result, the [CPUC] has paid hundreds of thousands of dollars on invoices that include improper charges or lacked sufficient detail." Since then, it is still unclear whether or not the CPUC is consistently using the state contracting process for the awarding of contracts. 3)CPUC Contracting Practices: Unless the work is of a highly specialized nature, state agencies typically issue a request for bids from qualified contractors and award a contract based on the bid that demonstrates knowledge, skills, and abilities to perform the work at the least cost. However, it is difficult to obtain documents indicating if the CPUC-directed regulated entities to enter into a contract because for the most part, such contracts are either confidential or heavily redacted. This makes it difficult for the public to determine whether the award was made in the best interest of ratepayers and the state. 4)August 2015 Oversight Hearing: In August 2015, the Assembly Utilities and Commerce Committee held an oversight hearing on the CPUC's contracting practices and examined whether or not the CPUC is sufficiently using competitive solicitation practices and adhering to the state's contracting rules. Subsequently, in January 2016, the Joint Legislative Audit Committee approved an audit to examine whether the CPUC solicits competitive bids for contacts whenever possible and uses the state's contracting process for all contracts. The audit also seeks to examine whether or not the CPUC directs regulated entities to expend ratepayer funds to certain entities. AB 1651 Page 4 This bill requires the CPUC to make the specified information about each contract that the CPUC enters into available on its Internet Web site at least once a year. This bill also requires the CPUC to post any audits conducted by DGS on the CPUC's contracting practices. Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083 FN: 0004870