BILL ANALYSIS Ó
SB 599
Page 1
SENATE THIRD READING
SB
599 (Mendoza)
As Introduced February 27, 2015
Majority vote
SENATE VOTE: 23-14
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Labor |5-2 |Roger Hernández, Chu, |Harper, Patterson |
| | |Low, McCarty, | |
| | |Thurmond | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |12-5 |Gomez, Bloom, Bonta, |Bigelow, Chang, |
| | |Calderon, Nazarian, |Gallagher, Jones, |
| | |Eggman, Eduardo |Wagner |
| | |Garcia, Holden, | |
| | |Quirk, Rendon, Weber, | |
| | |Wood | |
| | | | |
| | | | |
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SUMMARY: Extends a 10% bid preference for bidders on public
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transit contracts who agree to retain the employees of the prior
contractor of subcontractor to all public transit contracts
awarded by the State of California.
EXISTING LAW:
1)Requires that when a public entity puts out to bid a public
service contract on public transit services, the bidder must
state as part of the bid for a service contract whether or not
he or she will retain the employees of the prior contractor or
subcontractor for a period of not less than 90 days.
2)Requires that an awarding authority letting a service contract
out to bid for public transit services shall give a 10%
preference to any bidder who agrees to retain the employees of
the prior contractor or subcontractor.
3)Requires a successor contractor or subcontractor for public
transit services who agrees to retain employees must retain
employees who have been employed by the prior contractor or
subcontractors, except for reasonable and substantiated cause,
which includes the particular employee's performance or
conduct while working under the prior contract, as well as or
the employee's failure of any controlled substances and
alcohol test.
4)Requires a successor contractor or subcontractor for public
transit services to make a written offer of employment to each
employee to be rehired. That offer shall state the time
within which the employee must accept that offer, which may
not be less than 10 days, and does not need to be at the same
level of wages or benefits as provided by the previous
contractor or subcontractor.
5)Provides that if the successor contractor or subcontractor for
public transit services determines that fewer employees are
required than were required under the prior contract or
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subcontract, the successor contractor must retain qualified
employees by seniority within the job classification. The
successor contractor is permitted to consider licensing
requirements when judging seniority.
6)Provides that an employee who was not offered employment or
who has been discharged in violation of this chapter, or his
or her agent, may bring an action against the successor
contractor or subcontractor in any superior court having
jurisdiction over the successor contractor or subcontractor.
Upon finding a violation of this, the court must order
reinstatement to employment with the successor contractor or
subcontractor and award back pay, including the value of
benefits, for each day of violation, as well as reasonable
attorney fees.
7)Provides that, upon its own motion or upon the request of any
member of the public, an awarding authority may terminate any
service contract if both of the following occur:
a) The contractor or subcontractor has substantially
breached the contract; and
b) The awarding authority holds a public hearing within 30
days of the receipt of the request or its announcement of
its intention to terminate.
8)Provides that a contractor or subcontractor terminated as
described above must be ineligible to bid on or be awarded a
service contract or subcontract with that awarding authority
for a period of not less than one year and not more than three
years, to be determined by the awarding authority.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, costs from this measure are unknown, but potentially
significant, to the extent state contracts are awarded to other
than the lowest bidder due to the preference. The only transit
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contract currently awarded by the state appears to be the
transit operation at Hearst San Simeon State Historical Monument
(Hearst Castle). Hearst Castle's current transit contract is
valued at roughly $22 million and is up for renewal in 2023.
For illustration, assuming the subsequent contract is for the
same amount and duration, the 10% bid preference could lead to
increased costs to the Department of Parks and Recreation of
$2.2 million, or an average of $220,000 annually (special
funds).
COMMENTS: SB 158 (Alarcon), Chapter 103, Statutes of 2003,
created the bid preference for contracted transit services for
public agencies.
The author notes that the current 10% bid preference for transit
contracts applies to all public entities, except to the State of
California. The author believes that this oversight deserves to
be revisited. The author notes that this oversight has already
led to the lowest bidder of the transit services at Hearst
Castle terminating the employment of the existing drivers,
leading to their unemployment and loss of benefits.
This bill seeks to address this concern by making the 10% bid
preference for transit contracts also applicable when the State
of California contracts out for transit services.
Supporters argue that the existing bid preference, which impacts
public agencies that contract out for transit services, has over
ten year history of success on the local level. Supporters note
that the law does not protect the wages or benefits of services,
allowing those who seek the contract to bid the service at any
price, but frequently all bidders decide to hire all of the
incumbent employees in order to compete with the other bidders
on a level playing field. Supporters believe that this bid
preference should be extended to state transit contracts, and
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they cite the loss of employment and benefits by drivers
formally employed at the Hearst Castle when the transit services
were contracted out.
This bill is identical to SB 263 (Monning) of the 2013-14
Regular Session. SB 263 was held under submission in the
Assembly Appropriations Committee. This bill is also identical
to the introduced version of SB 232 (Monning) from 2013.
However, SB 232 was subsequently substantially amended by the
author and used for a different purpose.
Analysis Prepared by:
Ben Ebbink / L. & E. / (916) 319-2091 FN:
0001633