BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 703 (Leno) - Public contracts:  prohibitions:  discrimination
          
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          |Version: February 27, 2015      |Policy Vote: G.O. 7 - 3, JUD. 5 |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: May 4, 2015       |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File.







          Bill  
          Summary:  SB 703 would prohibit state agencies from entering  
          into a contract for goods or services in the amount of $100,000  
          or more with a contractor that, in the provision of benefits,  
          discriminates on the basis of actual or perceived gender  
          identity, with specified exceptions.  The bill would also  
          require the Department of General Services (DGS) to maintain a  
          list of contracts for goods and services in the amount of  
          $100,000 or more on its website.


          Fiscal  
          Impact:  
           Unknown, likely significant DGS administrative costs to  







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            investigate complaints and conduct enforcement activities  
            (General Fund).  DGS does not currently possess expertise in  
            health insurance regulation and has limited resources for  
            investigating employment issues at private contractors.  Costs  
            would depend upon the number and complexity of complaints  
            received.

           Minor costs to DGS to compile, update, and post a list of  
            contracts for goods and services valued at $100,000 or more.   
            This information is readily available on the FISCal website  
            (General Fund).

           Minor one-time administrative costs to DGS to update the State  
            Contracting Manual and update standard bid and contract  
            language to incorporate a certification of compliance (General  
            Fund).


          Background:  Existing law, the Unruh Civil Rights Act, generally prohibits  
          discrimination on the basis of sex, race, color, religion,  
          ancestry, national origin, disability, medical condition,  
          marital status, or sexual orientation, and provides civil  
          remedies for violations of its provisions. Existing law also  
          prohibits discrimination in the provision of health care and  
          insurance benefits on the basis of numerous factors, including  
          sex, domestic partner status, or gender, gender identity, and  
          gender expression.
          Existing law authorizes state agencies to enter into contracts  
          for the acquisition of goods or services upon approval by DGS,  
          and establishes rules governing the awarding of contracts by  
          state agencies, including general requirements for competitive  
          bidding.  Existing law prescribes various requirements and  
          prohibitions for those contracts, including, but not limited to,  
          a prohibition on entering into contracts for the acquisition of  
          goods or services of $100,000 or more with a contractor that  
          discriminates between spouses and domestic partners or same-sex  
          and different-sex couples in the provision of benefits.  A  
          contract that is in violation of those requirements and  
          prohibitions is void.  Existing law authorizes the state or any  
          person acting on behalf of the state to bring a civil action  
          seeking a determination that a contract is in violation and  
          therefore void.  A willful violation of these requirements and  
          prohibitions is a misdemeanor.









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          Proposed Law:  
            SB 703 would prohibit state agencies from contracting for  
          goods and services with entities that discriminate on the basis  
          of gender identity in the provision of benefits.  Specifically,  
          this bill would, among other things, do the following:
                 Prohibit state agencies from entering into contracts for  
               the acquisition of goods and services in an amount of  
               $100,000 or more with a contractor that, in the provision  
               of benefits, discriminates on the basis of an employee's or  
               dependent's actual or perceived gender identity, including  
               identification as transgender, as specified.


                 Authorize a state agency, after taking all reasonable  
               measures to find a compliant contractor, to waive these  
               requirements under the following circumstances: (1) there  
               is only one available contractor; (2) the contract is  
               necessary to respond to an emergency and compliant  
               contractors are unavailable; (3) the requirements would  
               violate conditions of a grant, subvention, or agreement;  
               and (4) the contract is for wholesale or bulk water, power,  
               or natural gas, as specified.


                 Requires every contract to contain a statement by which  
               the contractor self-certifies compliance with these  
               requirements.


                 Require DGS or other contracting agency to enforce these  
               provisions pursuant to its existing enforcement powers.


                 Authorize any person to file a complaint with DGS  
               alleging contractor violations, or alleging that a contract  
               or transaction has been entered into in violation of these  
               provisions.


                 Require DGS to investigate any complaints it receives  
               regarding these provisions.








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                 Require DGS to maintain an easily accessible list on its  
               website of contracts for the acquisition of goods and  
               services in the amount of $100,000 or more that are entered  
               into on or after January 1, 2016.




          Staff  
          Comments:  Although California prohibits discrimination on the  
          basis of gender or gender identity in the provision of employee  
          benefits, there could be circumstances in which an out-of-state  
          entity or an entity that self-insures under federal law is  
          contracting with the state for goods and services.  SB 703 would  
          ensure that contracting entities do not discriminate against  
          employees or their dependents on the basis of gender identity.  
          The prohibitions in this bill are similar to provisions in  
          existing law that prohibit contracting with entities that  
          discriminate in the provision of benefits to domestic partners. 


          DGS indicates that it would incur minor costs to update the  
          State Contracting Manual and to update standard bid and contract  
          language to incorporate a statement by which a contractor  
          certifies compliance.  


          SB 703 includes a provision to require DGS to maintain an  
          accessible list of goods and services contracts with a value of  
          $100,000 or more on its website.  Staff notes that the FISCal  
          Project will have functionality on its website that allows users  
          to generate sortable lists of state contracts for goods and  
          services.  As such, DGS indicates that any costs to pull the  
          data from FISCaL and post it on the DGS website would be minor.


          The bill also authorizes any person to file complaints with DGS  
          alleging violations of these provisions, and requires DGS to  
          investigate any complaints it receives.  These requirements  
          would result in unknown, but likely significant costs to DGS.   
          The department has not yet determined the full scope of duties  
          that would be necessary to investigate complaints, and DGS does  








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          not currently have expertise in health insurance regulation and  
          has only limited experience with investigating employment issues  
          with contractors.  Most of DGS' current investigative roles  
          pertain to procurement and construction contract performance  
          issues.  In addition, it is likely that a larger proportion of  
          complaints would involve out-of-state employers that are not  
          subject to California law, which would likely drive additional  
          costs and complications for travel and interpretation of  
          out-of-state insurance and benefit plans.  Costs related to  
          complaint-driven investigations are unquantifiable, but likely  
          significant, and would depend upon the number and complexity of  
          complaints received.




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