BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 376|
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THIRD READING
Bill No: SB 376
Author: Lara (D)
Amended: 6/1/15
Vote: 21
SENATE EDUCATION COMMITTEE: 7-2, 4/22/15
AYES: Liu, Block, Hancock, Leyva, Mendoza, Monning, Pan
NOES: Runner, Vidak
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Public contracts: University of California
SOURCE: Author
DIGEST: This bill modifies the requirements for qualifying as
a lowest responsible bidder or best value awardee for contracts
for specified services at the University of California (UC) by
(1) requiring a bidder to certify in writing, for specified
types of service contracts, 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, and (2) eliminating the exception to the
$100,000 threshold for competitive bidding of contracts for
personal services, and makes the threshold applicable to any
renewal or extension of an existing contract if it involves an
expenditure of $100,000 or more annually.
ANALYSIS:
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Existing law:
1)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.)
2)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)
3)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)
4)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)
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 UC. Specifically it:
1)Requires a bidder to certify in writing to the 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. In addition it:
a) Applies these requirements specifically to contracts
for building maintenance, cleaning, or custodial, call
center, dining, grounds keeping, laborer, mail room,
parking or transportation, security or patient care
technical employee, or nursing assistant services.
b) Exempts the application of these requirements to
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employees who are mentally or physically handicapped, or
both, who have been issued a license for employment for
employment at less than minimum wage by the Industrial
Welfare Commission.
c) Exempts public works projects conducted by public
agencies from these requirements.
d) Requires the UC to:
i) Include in its request for proposals a
calculation which considers the criteria outlined in 1)
above.
ii) Use all known cost escalators in the
calculation to project the future rate of growth of
average per-employee total compensation costs.
2)Eliminates the exception to the $100,000 threshold for
competitive bidding of contracts for personal services.
3)Makes the threshold applicable to any renewal or extension of an
existing contract if it involves an expenditure of $100,000 or
more annually.
4)Makes findings and declarations that the UC has squandered public
resources via contracting out to for-profit private
contractors that charge significant administrative overhead.
5)Makes technical and clarifying changes.
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
requires the UC, when evaluating bids for contract work for
specified services, 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
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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 create downward pressure on wages.
3)Related Contract Provisions. According to the 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
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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.
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.
These contracts, to the extent they exceed $100,000 in value,
would now be subject to competitive bidding.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
Costs to UC are estimated to be below $66 million. Costs are
primarily due to the requirement that bidders certify total
compensation packages for their employees are comparable to
those of UC employees. Actual costs are unknown and would
depend upon a number of factors, including the impacts this
bill would have on future contracting behavior by UC, the
number of contracts entered into in the future, and any
increases in bid prices to reflect the required compensation
parity.
UC administrative costs of $350,000 for bid renegotiation.
SUPPORT: (Verified 5/28/15)
American Federation of State, County and Municipal Employees,
AFL-CIO
OPPOSITION: (Verified5/30/15)
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University of California
Prepared by:Kathleen Chavira / ED. / (916) 651-4105
6/1/15 16:58:13
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