BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 599 (Mendoza) - Employment: public transit service contracts
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|Version: February 27, 2015 |Policy Vote: L. & I.R. 4 - 1 |
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|Urgency: No |Mandate: No |
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|Hearing Date: April 20, 2015 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 599 would extend to state agencies the
current-law 10 percent bid preference for local agency transit
contracts.
Fiscal Impact: Costs from this measure are unknown, but
potentially significant, to the extent that state contracts are
awarded to other than the lowest bidder due to the preference.
The State contracts out for relatively few transit services
compared to local agencies. Based on currently-available
information, the provisions of this bill appear only to affect
the transit operation at Hearst San Simeon State Historical
Monument (Hearst Castle). Hearst Castle's current transit
contract is valued at roughly $22 million over 10 years, and is
up for renewal in eight years. Assuming the subsequent contract
is for the same amount and duration, the 10 percent bid
preferential could lead to an increased costs to the Department
of Parks and Recreation of $2.2 million, or an average of
$220,000 annually (special funds).
Background: When public transit service contracts are up for
renewal, the current contractor can be underbid by a competitor.
SB 599 (Mendoza) Page 1 of
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The underbidding contractor can often do so based on lower wage
rates and other forms of compensation. Consequently, the new
low-bidding contractor can be awarded the contract and the
employees of the former contractor can be terminated. At the
same time, bid preferences can increase the costs of contracts
over what would have happened on the natural.
Proposed Law: This bill would extend the provisions of Chapter
4.6 of the Labor Code to state agencies, which include the
following:
When a public entity puts out to bid a public service contract
on public transit services, the bidding entity must state as
part of the bid for a service contract whether or not it will
retain the employees of the prior contractor or subcontractor
for a period of not less than 90 days.
An awarding authority, as defined, letting a service contract
out to bid for public transit services, as defined, shall give
a 10 percent preference to any bidder who agrees to retain the
employees of the prior contractor or subcontractor.
Related Legislation: AB 158 (Alarcon), Statutes of 2003 Chapter
103, created the 10 percent bid preference for contracted
transit services for local public agencies.