BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 376|
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VETO
Bill No: SB 376
Author: Lara (D), et al.
Amended: 8/18/15
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
SENATE FLOOR: 24-14, 6/2/15
AYES: Beall, Block, Cannella, De León, Galgiani, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara,
Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan,
Pavley, Roth, Wieckowski
NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Glazer,
Huff, Moorlach, Morrell, Nguyen, Nielsen, Runner, Stone, Vidak
NO VOTE RECORDED: Allen, Wolk
SENATE FLOOR: 24-15, 9/11/15
AYES: Beall, Block, Cannella, De León, Galgiani, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara,
Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan,
Pavley, Roth, Wieckowski
NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Glazer,
Huff, Moorlach, Morrell, Nguyen, Nielsen, Runner, Stone,
Vidak, Wolk
NO VOTE RECORDED: Allen
ASSEMBLY FLOOR: 51-27, 9/10/15 - See last page for vote
SUBJECT: Public contracts: University of California
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Page 2
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, as specified, and (2) making the $100,000
threshold for competitive bidding applicable to any renewal or
extension of an existing contract for goods, materials and
services to be performed if it involves an expenditure of
$100,000 or more annually.
ANALYSIS:
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)
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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 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, patient billing services,
medical transcribing services, patient escort services, or
nursing assistant services.
b) Exempts the application of these requirements to
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)Makes the $100,000 threshold for competitive bidding of
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Page 4
contracts for goods, materials and services to be performed
applicable to any renewal or extension of an existing contract
if it involves an expenditure of $100,000 or more annually.
3)Makes findings and declarations that the UC has squandered
public resources via contracting out to for-profit private
contractors that charge significant administrative overhead.
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
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
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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
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee, the UC
estimates $36 million in costs related to providing parity in
benefits and $12 million to $24 million to provide wage parity.
Fund sources for this purpose would include the State General
Fund, federal funds, auxiliary funds, and enterprise funds, such
as from the medical centers. This impact should diminish over
time due to implementation of UC's Fair Wage/Fair Work plan,
which will be applied to new contracts and as existing contracts
are renewed/extended.
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SUPPORT: (Verified 11/9/15)
None received
OPPOSITION: (Verified11/9/15)
None received
GOVERNOR'S VETO MESSAGE:
I am returning Senate Bill 376 without my signature.
Senate Bill 376 seeks to bring wage and benefit parity to
the University of California's contracted workers in
specific job categories, such as custodial, clerical and
food services, and other services associated with the
University's medical enterprises. The bill touches several
issues - from contracting out service industry work that
could be performed by employees, to the pay and working
conditions of contracted workers, to the need for more
vigorous oversight of contract employers.
Without a doubt, these are all serious matters to consider,
and they reflect the difficulty in balancing things we
commonly value, such as increasing the wages of low-income
workers and keeping operational costs down. It's worth
noting that the University of California recently responded
to criticisms of its wage and contracting practices with a
plan to incrementally increase its minimum wage for both
employees and contract workers, and a pledge to better
oversee contracts generally.
The effort to provide increased compensation to those who
work for UC - either directly or on a contract basis - is
well-intentioned, but I'm not prepared to embrace the
provisions of this bill.
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I would caution the University, however, to provide a
transparent accounting of its contracts and clearly
demonstrate how the interests of all its lower paid workers
are being protected.
ASSEMBLY FLOOR: 51-27, 9/10/15
AYES: Alejo, Bonilla, Bonta, Brown, Burke, Calderon, Campos,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dodd, Eggman,
Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gray, Roger Hernández, Holden, Irwin,
Jones-Sawyer, Levine, Linder, Lopez, Low, McCarty, Medina,
Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Weber, Williams, Wood, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Dahle, Beth Gaines, Gallagher, Gordon, Grove, Hadley,
Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes,
Melendez, Obernolte, Olsen, Patterson, Wagner, Waldron, Wilk
NO VOTE RECORDED: Bloom, Daly
Prepared by:Kathleen Chavira / ED. / (916) 651-4105
11/13/15 16:03:41
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