BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Senator Carol Liu, Chair
2015 - 2016 Regular
Bill No: SB 376
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|Author: |Lara |
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|Version: |April 6, 2015 Hearing |
| |Date: April 22, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Kathleen Chavira |
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Subject: Public contracts: University of California
SUMMARY
This bill modifies the requirements for qualifying as a lowest
responsible bidder or best value awardee for contracts for
materials, goods, and services at the University of California
(UC) in that it; 1) require a bidder to certify in writing that
its employees are compensated at a level that does not
materially undercut the average per-employee total compensation
for UC employees who perform comparable work, 2) eliminates the
exception to the $100,000 threshold for competitive bidding of
contracts for personal services, and 3) makes existing law and
the provisions of the bill applicable to any renewal or
extension of an existing contract if it involves an expenditure
of $100,000 or more annually.
BACKGROUND
Existing law outlines the requirements and procedures for
competitive bidding at the University of California. Existing
law outlines requirements and procedures, specifically for the
acquisition of materials, goods and services.
(Public Contract Code § 10500, et. seq.)
Current law requires the UC to let any contract involving an
expenditure of $100,000 or more annually for goods and
materials, or for services to be performed (other than personal
or professional services) to the lowest responsible bidder.
(PCC § 10507.7)
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Current law authorizes the UC, when it determines that it can
expect long-term savings, as specified, to select the lowest
responsible bidder on the basis of the best value to the
university. (PCC §10507.8)
Current law declares the intent of the Legislature to facilitate
the participation of small businesses, particularly small
disadvantaged or minority business enterprises, women business
enterprises and disabled veteran business enterprises in
business contracting with the UC. (PCC § 10500.5)
ANALYSIS
This bill modifies the requirements for qualifying as a lowest
responsible bidder or best value awardee for contracts for
materials, goods, and services at the University of California
(UC). Specifically it:
1. Requires a bidder to certify in writing to the University
of California (UC) that the bid includes a total employee
compensation package, including fringe benefits, that is
valued at a basis that does not materially undercut the
average per-employee value of total compensation for
employees at the UC who perform comparable work at the
relevant campus, medical center, or laboratory, where the
proposed work will be performed.
2. Requires the UC to:
A. Include in its request for proposals a
calculation which considers the criteria outlined in
#1.
B. Use all known cost escalators in the
calculation to project the future rate of growth of
average per-employee total compensation costs.
3. Eliminates the exception to the $100,000 threshold for
competitive bidding of contracts for personal services.
4. Expands the requirements of existing law and the provisions
of the bill to include any renewal or extension of an
existing contract if it involves an expenditure of $100,000
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or more annually.
5. Makes findings and declarations that the UC has squandered
public resources via contracting out to for-profit private
contractors that charge significant administrative
overhead.
6. Makes technical and clarifying changes.
STAFF COMMENTS
1. Need for the bill. According to the author, this bill
seeks to address the growing challenge to California of the
use of contingent workers to replace employees and the
consequential effect it has on wages and worker
protections. This bill would require the UC, when
evaluating bids for contract work, to evaluate the total
employee compensation package and ensure that it does not
undercut wages and benefits of existing university
employees. According to the author, the UC serves as an
anchor institution in the markets in which it operates, and
as a public institution, and the third-largest California
employer, should adopt and promote policies that respect
its employees and protect workers' rights.
2. Related Study. According to a 2012 study by the UC
Berkeley Labor Center, Temporary Workers in California are
Twice as Likely as Non-Temps to Live in Poverty: Problems
with Temporary and Subcontracted Work in California, almost
one-quarter of a million people worked in the temporary
help services industry in California in 2010. These
workers were slightly younger, more likely to be female,
less likely to be white non-Hispanic, and less likely to
have a high school diploma or GED than the average non-temp
worker. These workers were also more susceptible to
workplace illness and injury, earned less than their
non-temp counterparts, and were less likely to get
benefits. The report notes that lowered wages mean that
these workers rely more on the state safety net than their
direct-hire counterparts and that these employment
arrangements undermine worker protections by allowing
employers to avoid certain provisions of worker protection
and making it difficult to enforce other protections. The
report also notes that these employment relationships
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create downward pressure on wages.
3. Related Contract Provisions. According to the University
of California (UC), Article 5 of its contract with
employees represented by American Federation of State,
County and Municipal Employees (AFSCME) addresses the issue
of contracting out. These provisions specifically prohibit
the UC from contracting out services solely on the basis
that savings will result from lower contractor pay rates
and benefits for services customarily performed by
bargaining unit employees. The UC is permitted to contract
out for special services and equipment unavailable
internally, to obtain special expertise or efficiencies
better provided through an outside contractor, for
short-term temporary staffing needs, financial necessity,
and for remote facilities. The bargaining contract also
provides that when the UC contracts for services
customarily provided by AFSCME unit employees, it must
provide a copy of any request for proposals within 10
business days of issuance, requires the UC to provide all
relevant non-confidential written information used in the
making of the contracting out decision, requires
accommodation of any meeting request by AFSCME, and
establishes a complaint process through the Office of the
President, Office of Labor Relations. The Office of the
President is required to make the final determination
whether conditions were met and the decision is not
grievable or arbitrable. The contract also requires that,
for bargaining unit employees laid off or released because
of a contract, the UC make available another bargaining
unit position for which the employee is qualified at the
same location.
Staff was not provided with any documentation of formal
complaints to the UC for failure to comply with these
contract provisions.
4. Elimination of exception for personal services contracts.
According to the UC, the current exemption for these
contracts from the $100,000 threshold allows the UC to
contract directly with individuals and groups to contract
for services such as classroom and special event sign
language translation services, and for speaker, concert,
dance, symphony, orchestra and sports venue performances.
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These contracts, to the extent they exceed $100,000 in
value, would now be subject to competitive bidding.
5. Will it work? This bill requires bidders to certify to
meeting the specified requirements regarding compensation.
While it is clear that the cost of the contracts will
increase to reflect the increased compensation levels, it
is unclear whether the benefits to contingent workers
envisioned by the bill will be achieved. There does not
appear to be any mechanism in this bill which will ensure
that employers will adhere to the compensation practices
which they certify to in their bid.
The University of California (UC) is not in a position to
monitor or enforce ongoing compliance with these
requirements. It is unclear who will be responsible for
the oversight necessary to hold contractors accountable for
compliance with their certifications.
6. Consequences? Ultimately this bill would result in
increasing UC's costs for procuring services and could
potentially limit the pool of qualified bidders. The
Committee may wish to consider:
What would be the impact on smaller businesses
(particularly those which are disadvantaged or minority
business enterprises, women business enterprises and
disabled veteran business enterprises) wishing to contract
with the UC?
Should/how will these restrictions apply to contracts for
materials and goods?
How would these provisions affect the efforts of the
University to respond to recent directives that the UC
minimize its administrative costs and operate more
efficiently in order to more cost effectively meet the
state's teaching and research needs?
SUPPORT
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American Federation of State, County and Municipal Employees,
AFL-CIO
California Teamsters Public Affairs Council
In the Public Interest
OPPOSITION
University of California
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