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