BILL ANALYSIS Ó
SB 376
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Date of Hearing: July 15, 2015
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Rudy Salas, Chair
SB
376 (Lara) - As Amended June 29, 2015
SENATE VOTE: 24-14
SUBJECT: Public contracts: University of California
SUMMARY: requires contractors with the University of California
(UC) to meet specified employee compensation requirements for
certain types of contracts. Specifically, this bill:
1)Requires a contractor with UC to qualify as a lowest
responsible bidder or best value awardee on any contract for
specified services to certify that the contractor's employees
receive a total employee compensation package that does not
materially undercut the average per-employee value of total
compensation if UC was to pay its employees to do comparable
work.
2)Exempts 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 from the requirements of this bill.
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3)Requires UC to include average costs of UC employees' total
compensation for conducting similar work in requests for
proposals (RFPs) used during the contracting process.
4)Eliminates the exception in current law to the $100,000
threshold for competitive bidding of contracts for personal
services.
5)Makes the threshold applicable to any renewal or extension of
an existing contract if it involves an expenditure of $100,000
or more annually.
EXISTING LAW:
1)Outlines the requirements and procedures for competitive
bidding at UC, including for the acquisition of materials,
goods, and services.
2)Requires 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.
3)Authorizes 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.
FISCAL EFFECT: The current version of this bill has not yet
been analyzed by a fiscal committee.
COMMENTS: This bill requires a contractor with UC, in order to
qualify as a lowest responsible bidder or best value awardee on
any contract for specified services, to certify in writing that
the contractor's employees receive a total employee compensation
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package that does not materially undercut the average
per-employee value of total compensation if UC was to pay its
employees to do comparable work. Total employee compensation
includes both the value of wages and benefits.
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." The author further states that "these
arrangements are bad for workers, who receive lower wages and
less workplace protections, bad for taxpayers as government
shoulders the burden of providing benefits and support to these
employees, and bad for conscientious employers who are placed at
a competitive disadvantage in the market."
UC, in opposition to this bill, states that this bill will
increase costs by more than $60 million per year, create
administrative burdens, and undercut efforts to streamline UC's
operations and contracting processes. UC contends that it
currently has protections that minimize the impact on current
employees when contracting for services. Specifically, some of
UC's collective bargaining agreements state that UC will not
contract out for services based solely on cost savings. UC
states that it outsources for services for specialized
expertise, short-term or temporary needs, special services or
equipment that's not available internally and services at leased
facilities when those services are provided by the building
owner.
The requirements in this bill would apply to contracts for
building maintenance, cleaning, or custodial services, call
center services, clerical services, dining and food services,
gardening, grounds keeping and plant nursery services, laborer
services, mailroom services, parking, shuttle bus, truck
driving, or transportation services, security services,
storekeeper services, patient care technical employee services,
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patient billing services, medical transcribing services, patient
escort services, or nursing assistant services.
This bill also requires UC to include compensation information
in RFPs for potential contracts. Specifically, it requires RFPs
to include a calculation of the average per-employee value of
total compensation for employees of UC who perform comparable
work at the relevant campus, medical center, or laboratory.
Calculations must include known cost escalators to project the
future growth of total compensation.
This bill also eliminates the exception to the $100,000
threshold for competitive bidding of contracts for personal
services and instead makes the threshold applicable to any
renewal or extension of an existing contract if it involves an
expenditure of $100,000 or more annually.
UC interprets that changing the rules governing personal
services contracts would broaden the application of this bill
beyond contracts for the specified service contracts. When the
bill was heard in the Assembly Committee on Higher Education,
the author stated that the intent was to add the contracting
requirements regarding compensation to the specified list only.
SUGGESTED AMMENDMENTS :
The committee staff is suggesting amendments to clarify the
types of contracts this bill would apply to regarding
compensation requirements. The amendments specify that the
compensation requirements would not apply to all personal
services contracts, and would instead apply only to those stated
in this bill: contracts for building maintenance, cleaning, or
custodial services, call center services, clerical services,
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dining and food services, gardening, grounds keeping and plant
nursery services, laborer services, mailroom services, parking,
shuttle bus, truck driving, or transportation services, security
services, storekeeper services, patient care technical employee
services, patient billing services, medical transcribing
services, patient escort services, or nursing assistant
services. Suggested amendments are in line with the author's
stated intent of this bill.
Suggested amendments are in bold:
Section 10507.7 of the Public Contract Code
(a) Except as provided for in this article, the Regents of
the University of California shall let all contracts involving
an expenditure of more than one hundred thousand dollars
($100,000) annually for goods and materials to be sold to the
University of California to the lowest responsible bidder
meeting specifications, or else reject all bids. Contracts for
services to be performed, other than personal or professional
services, involving an expenditure of one hundred thousand
dollars ($100,000) or more annually shall be made or entered
into with the lowest responsible bidder meeting
specifications, or else all bids shall be rejected. If the
regents deem it to be for the best interest of the university,
the regents may, on the refusal or failure of the successful
bidder for materials, goods, or services to execute a tendered
contract, may award it to the second lowest responsible bidder
meeting specifications. If the second lowest responsible
bidder fails or refuses to execute the contract, the regents
may likewise award it to the third lowest responsible bidder
meeting specifications.
(b) For the purposes of this section, contracts for services
involving an expenditure of one hundred thousand dollars
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($100,000) or more annually shall include any renewal or
extension of an existing contract, if the renewal or extension
involves an expenditure of one hundred thousand dollars
($100,000) or more annually.
DOUBLE REFFERAL : This bill is double-referred. It passed out
of the Assembly Committee on Higher Education on July 7, 2015
with a vote of 9-3.
REGISTERED SUPPORT / OPPOSITION:
Support
American Federation of State, County and Municipal Employees,
AFL-CIO (sponsor)
California Labor Federation
Central Labor Council of Contra Costa County, AFL-CIO
Opposition
UC
SB 376
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Analysis Prepared by:Scott Herbstman / A. & A.R. / (916)
319-3600