Amended in Senate April 14, 2015

Senate Bill No. 669

Introduced by Senator Pan

February 27, 2015

An act to begin delete amend Section 19130 of the Government end delete begin insert add Section 89036.5 to the Education end insert Code, relating to personal begin delete service end delete begin insert services end insert contracts.

LEGISLATIVE COUNSEL’S DIGEST

SB 669, as amended, Pan. begin delete Civil service: personal end delete begin insert Personal end insert services contracts: California State begin delete Universities. end delete begin insert University. end insert

Existing begin delete law end delete begin insert law, the State Civil Service Act, end insert establishes standards for the use of personal services contracts by state agencies. begin delete Existing law end delete begin insert The act end insert provides that personal services contracting is permissible to achieve cost savings when certain conditions are met, including, but not limited to, that the contracting agency demonstrates that the proposed contract will result in actual overall cost savings to the state and that the contract will not cause the displacement of civil service employees. begin insert The act also end insert begin insert authorizes state agencies to enter into personal services contracts for functions exempted from civil service. The California Constitution excludes the officers and employees of the California State University from the state civil service. end insert

begin delete

This bill would make these provisions for the use of personal services contracts applicable to California State Universities.

end delete begin insert

Existing law authorizes the trustees of the California State University to enter into agreements with any public or private agency, person, or institution for the furnishing of services, facilities, goods, supplies, or equipment, among others, and requires the trustees to prescribe policies and procedures for the acquisition of those services, facilities, materials, goods, supplies, or equipment.

end insert begin insert

This bill would establish standards for the use of personal services contracts by the trustees of the California State University similar to those in the State Civil Service Act.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 89036.5 is added to the end insert begin insert Education Code end insert begin insert ,
to read: end insert

begin insert

begin insert 89036.5. end insert   

(a) The purpose of this section is to establish
standards for the use of personal services contracts.

(b) The trustees may enter into personal services contracts to
achieve cost savings when all the following conditions are met:

(1) The trustees clearly demonstrate that the proposed contract
will result in actual overall cost savings to the California State
University, provided that:

(A) In comparing costs, there shall be included the university’s
additional cost of providing the same service as proposed by a
contractor. These additional costs shall include the salaries and
benefits of additional staff that would be needed and the cost of
additional space, equipment, and materials needed to perform the
function.

(B) In comparing costs, there shall not be included the
university’s indirect overhead costs unless these costs can be
attributed solely to the function in question and would not exist if
that function was not performed by university employees. Indirect
overhead costs shall mean the pro rata share of existing
administrative salaries and benefits, rent, equipment costs, utilities,
and materials.

(C) In comparing costs, there shall be included in the cost of a
contractor providing a service any continuing university costs that
would be directly associated with the contracted function. These
continuing costs shall include, but not be limited to, those for
inspection, supervision, and monitoring.

(2) Proposals to contract out work shall not be approved solely
on the basis that savings will result from lower contractor pay
rates or benefits. Proposals to contract out work shall be eligible
for approval if the contractor’s wages are at the industry’s level
and do not significantly undercut university pay rates.

(3) The contract does not cause the displacement of university
employees. The term “displacement” includes layoff, demotion,
involuntary transfer to a new class, involuntary transfer to a new
location requiring a change of residence, and time base reductions.
Displacement does not include changes in shifts or days off, nor
does it include reassignment to other positions within the same
class and general location.

(4) The contract does not adversely affect the university’s
affirmative action efforts.

(5) The savings shall be large enough to ensure that they will
not be eliminated by private sector and university cost fluctuations
that could normally be expected during the contracting period.

(6) The amount of savings clearly justify the size and duration
of the contracting agreement.

(7) The contract is awarded through a publicized, competitive
bidding process.

(8) The contract includes specific provisions pertaining to the
qualifications of the staff that will perform the work under the
contract, as well as assurance that the contractor’s hiring practices
meet applicable nondiscrimination, affirmative action standards.

(9) The potential for future economic risk to the university from
potential contractor rate increases is minimal.

(10) The contract is with a firm. A “firm” means a corporation,
partnership, nonprofit organization, or sole proprietorship.

(11) The potential economic advantage of contracting is not
outweighed by the public’s interest in having a particular function
performed directly by university.

(c) The trustees may also enter into personal services contracts
when any of the following conditions can be met:

(1) The contract is for a new university function and the
Legislature has specifically mandated or authorized the
performance of the work by independent contractors.

(2) The services contracted are not available within the
university, cannot be performed satisfactorily by university
employees, or are of such a highly specialized or technical nature
that the necessary expert knowledge, experience, and ability are
not available from the university’s employees.

(3) The services are incidental to a contract for the purchase
or lease of real or personal property. Contracts under this
criterion, known as “service agreements,” shall include, but not
be limited to, agreements to service or maintain office equipment
or computers that are leased or rented.

(4) The legislative, administrative, or legal goals and purposes
cannot be accomplished through the utilization of university
employees because of the need to protect against a conflict of
interest or to insure independent and unbiased findings in cases
where there is a clear need for a different, outside perspective.
These contracts shall include, but not be limited to, obtaining
expert witnesses in litigation.

(5) Due to an emergency, a contract is necessary for the
immediate preservation of the public health, welfare, or safety.

(6) The contractor will provide equipment, materials, facilities,
or support services that could not feasibly be provided by the
university in the location where the services are to be performed.

(7) The contractor will conduct training courses for which
appropriately qualified university instructors are not available,
provided that permanent instructor positions in academies or
similar settings shall be filled through the process for hiring
university employees.

(8) The services are of such an urgent, temporary, or occasional
nature that the delay incumbent in their implementation through
the process for hiring university employees would frustrate their
very purpose.

end insert

begin delete

SECTION 1.  

Section 19130 of the Government Code is
amended to read:

19130.  

The purpose of this article is to establish standards for
the use of personal services contracts.

(a) Personal services contracting is permissible to achieve cost
savings when all the following conditions are met:

(1) The contracting agency clearly demonstrates that the
proposed contract will result in actual overall cost savings to the
state, provided that:

(A) In comparing costs, there shall be included the state’s
additional cost of providing the same service as proposed by a
contractor. These additional costs shall include the salaries and
benefits of additional staff that would be needed and the cost of
additional space, equipment, and materials needed to perform the
function.

(B) In comparing costs, there shall not be included the state’s
indirect overhead costs unless these costs can be attributed solely
to the function in question and would not exist if that function was
not performed in state service. Indirect overhead costs shall mean
the pro rata share of existing administrative salaries and benefits,
rent, equipment costs, utilities, and materials.

(C) In comparing costs, there shall be included in the cost of a
contractor providing a service any continuing state costs that would
be directly associated with the contracted function. These
continuing state costs shall include, but not be limited to, those
for inspection, supervision, and monitoring.

(2) Proposals to contract out work shall not be approved solely
on the basis that savings will result from lower contractor pay rates
or benefits. Proposals to contract out work shall be eligible for
approval if the contractor’s wages are at the industry’s level and
do not significantly undercut state pay rates.

(3) The contract does not cause the displacement of civil service
employees. The term “displacement” includes layoff, demotion,
involuntary transfer to a new class, involuntary transfer to a new
location requiring a change of residence, and time base reductions.
Displacement does not include changes in shifts or days off, nor
does it include reassignment to other positions within the same
class and general location.

(4) The contract does not adversely affect the state’s affirmative
action efforts.

(5) The savings shall be large enough to ensure that they will
not be eliminated by private sector and state cost fluctuations that
could normally be expected during the contracting period.

(6) The amount of savings clearly justify the size and duration
of the contracting agreement.

(7) The contract is awarded through a publicized, competitive
bidding process.

(8) The contract includes specific provisions pertaining to the
qualifications of the staff that will perform the work under the
contract, as well as assurance that the contractor’s hiring practices
meet applicable nondiscrimination, affirmative action standards.

(9) The potential for future economic risk to the state from
potential contractor rate increases is minimal.

(10) The contract is with a firm. A “firm” means a corporation,
partnership, nonprofit organization, or sole proprietorship.

(11) The potential economic advantage of contracting is not
outweighed by the public’s interest in having a particular function
performed directly by state government.

(b) Personal services contracting also shall be permissible when
any of the following conditions can be met:

(1) The functions contracted are exempted from civil service
by Section 4 of Article VII of the California Constitution, which
describes exempt appointments.

(2) The contract is for a new state function and the Legislature
has specifically mandated or authorized the performance of the
work by independent contractors.

(3) The services contracted are not available within civil service,
cannot be performed satisfactorily by civil service employees, or
are of such a highly specialized or technical nature that the
necessary expert knowledge, experience, and ability are not
available through the civil service system.

(4) The services are incidental to a contract for the purchase or
lease of real or personal property. Contracts under this criterion,
known as “service agreements,” shall include, but not be limited
to, agreements to service or maintain office equipment or
computers that are leased or rented.

(5) The legislative, administrative, or legal goals and purposes
cannot be accomplished through the utilization of persons selected
pursuant to the regular civil service system. Contracts are
permissible under this criterion to protect against a conflict of
interest or to insure independent and unbiased findings in cases
where there is a clear need for a different, outside perspective.
These contracts shall include, but not be limited to, obtaining expert
witnesses in litigation.

(6) The nature of the work is such that the Government Code
standards for emergency appointments apply. These contracts shall
conform with Article 8 (commencing with Section 19888) of
Chapter 2.5 of Part 2.6.

(7) State agencies need private counsel because a conflict of
interest on the part of the Attorney General’s office prevents it
from representing the agency without compromising its position.
These contracts shall require the written consent of the Attorney
General, pursuant to Section 11040.

(8) The contractor will provide equipment, materials, facilities,
or support services that could not feasibly be provided by the state
in the location where the services are to be performed.

(9) The contractor will conduct training courses for which
appropriately qualified civil service instructors are not available,
provided that permanent instructor positions in academies or similar
settings shall be filled through civil service appointment.

(10) The services are of such an urgent, temporary, or occasional
nature that the delay incumbent in their implementation under civil
service would frustrate their very purpose.

(c) All persons who provide services to the state under
conditions the board determines constitute an employment
relationship shall, unless exempted from civil service by Section
4 of Article VII of the California Constitution, be retained under
an appropriate civil service appointment.

(d) This article shall apply to the California State University.
Any reference in this article to a contracting agency or a state
agency shall include the California State University.

end delete