BILL ANALYSIS Ó
AB 1991
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Cristina Garcia, Chair
AB 1991
(Jones) - As Amended March 17, 2016
SUBJECT: State agencies: award of contracts: noncompetitive
bid basis
SUMMARY: Requires state agencies to notify the Legislature when
seeking a noncompetitive bid contract for $1 million or more and
delays contract adoption until 90 days after the notification.
Specifically, this bill:
1)Applies to every state agency, office, department, division,
bureau, board, or commission, the California State University
(CSU), and the University of California (UC).
2)Specifies what information must be included in the
notifications to the Legislature.
3)Creates an exception process to the 90-day delay for
emergencies.
EXISTING LAW:
AB 1991
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1)Generally sets limits for Non Competitively Bid (NCB)
contracts at no more than $25,000, with several exceptions.
2)Specifies different requirements and thresholds for
information technology (IT) contracts and non-IT contracts.
3)Sets different contracting requirements for CSU and UC than
for other state entities, depending on the type of contract.
FISCAL EFFECT: Unknown
COMMENTS: This bill requires state entities to notify the
appropriate policy and fiscal committees of both houses of the
Legislature when they seek to award a contract on a
noncompetitive bid basis. The notification must include
information explaining why it is necessary to contract using a
noncompetitive basis and an explanation of what the entity has
done to ascertain that there is only one source capable of
fulfilling the contract.
The state entity would be prohibited from awarding the contract
until 90 days after Legislative notification. This bill makes
an exception to this prohibition in the case of a bona fide
emergency. Under that scenario, the Legislature could waive the
waiting period.
According to the Department of General Services (DGS), there
were 62 contracts (15 original contracts and 47 contract
amendments) for $1 million or more that DGS considered NCB and
another 12 that DGS defined as Special Category NCB contracts
adopted in 2015. To enter into these types of contracts, state
entities must complete forms that specify the need for the NCB,
how the purchase conforms to Public Contract Code, the
AB 1991
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consequences of not making the purchase, how the price offered
was determined to be fair and reasonable, and other information.
The NCB contract justification forms require the signoff of
heads (or designees) of the requesting department and agency,
and DGS.
NCB contracts are used when one supplier or entity is the only
one that can provide a product or service. Also, they are
sometimes used when additional work is needed under an already
executed contract. The original contract could either have been
competitively bid or noncompetitively bid, according to DGS.
Also, NCBs have been used if contract terms need to be extended
due to a bid protest or other legal challenge.
By applying to "a contract on a noncompetitive bid basis," this
bill would likely encompass more than those DGS considers to be
NCB and Special Category NCB contracts since various other types
of contracts are also authorized under current law to be let
noncompetitively. For example, contracts for community based
rehabilitation programs, interagency agreements, and for legal
services are exempt from competitive bidding by law. Other
areas are exempt by policy. This bill does not distinguish
between these categories and other types of contracts.
To demonstrate the need for this bill, the author points to an
example in which some state contracts awarded to a large IT
company were awarded competitively and others were not. The
author states "Fair and vigorous competitive bidding is the best
method for keeping costs of goods and services as low as
possible without significantly affecting quality. It eliminates
favoritism, fraud and corruption and allows more businesses to
provide improved goods and services to California government.
Competitive bidding is the preferred method for acquiring goods
and services and should be encouraged and promoted whenever
possible."
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While Public Contract Code, in most cases, directs state
entities to engage in the competitive bidding process, this bill
does not consider the need for certain instances in which
noncompetitive contracts are necessary and appropriate.
This bill's provision to delay contracts for three months could
harm the state's business needs by creating unnecessary delays
to state projects and programs. The author has not provided a
compelling public policy reason to justify this approach.
Additionally, the impact of such delays could be especially
problematic during emergencies.
While this bill allows for an exception to the 90-day delay for
a "bona fide emergency," the mechanism it employs is problematic
because it requires the Legislature to adopt a concurrent
resolution to waive the delay. A concurrent resolution is a
measure that can be introduced in either house, and must be
approved by both houses and filed with the Secretary of State to
take effect. This process, even if expedited due to an
emergency, could take several days, and is complicated by the
fact that the Legislature does not generally meet on weekends
and is in recess for several weeks during the year.
Additionally, searchable information about state contracts is
currently available online at the Cal eProcure website, which is
administered by the state. The search function allows for
searches by acquisition method, including NCB and other methods.
REGISTERED SUPPORT / OPPOSITION:
Support
AB 1991
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None on file
Opposition
None on file
Analysis Prepared by:Scott Herbstman / A. & A.R. / (916)
319-3600