BILL ANALYSIS                                                                                                                                                                                                    



          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.