BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Senator Carol Liu, Chair
2015 - 2016 Regular
Bill No: SB 959
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|Author: |Lara |
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|Version: |February 8, 2016 Hearing |
| |Date: March 30, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Kathleen Chavira |
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Subject: University of California: contracts: bidding
SUMMARY
This bill modifies the requirements for qualifying as a lowest
responsible bidder or best value awardee for contracts for
specified types of service contracts at the University of
California (UC) by requiring a bidder to certify in writing that
its employees are compensated at a level that does not undercut,
by more than 5 percent, the average per-employee value of total
compensation for UC employees who perform comparable work, as
specified, and beginning January 1, 2018, makes these provisions
applicable to any renewal or extension of an existing contract
for goods, materials and services involving an expenditure of
$100,000 or more annually.
BACKGROUND
Existing law outlines the requirements and procedures for
competitive bidding at the University of California. Existing
law outlines requirements and procedures, specifically for the
acquisition of materials, goods and services.
(Public Contract Code § 10500, et seq.)
Existing law requires the UC to let any contract involving an
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expenditure of $100,000 or more annually for goods and
materials, or for services to be performed (other than personal
or professional services) to the lowest responsible bidder.
(PCC § 10507.7)
Existing law authorizes the UC, when it determines that it can
expect long-term savings, as specified, to select the lowest
responsible bidder on the basis of the best value to the
university. (PCC §10507.8)
Existing law declares the intent of the Legislature to
facilitate the participation of small businesses, particularly
small disadvantaged or minority business enterprises, women
business enterprises and disabled veteran business enterprises
in business contracting with the UC. (PCC § 10500.5)
ANALYSIS
This bill modifies the requirements for qualifying as a lowest
responsible bidder or best value awardee for contracts for
materials, goods, and services at the University of California
(UC). Specifically, it:
1) Establishes a number of new requirements for bidders.
Specifically it:
a) Requires a bidder to certify in writing
to the UC that the bid includes a total employee
compensation package, including fringe benefits, that
is valued at a per-employee basis that does not
undercut, by more than 5 percent, the average
per-employee value of total compensation for employees
at the UC who perform comparable work at the relevant
campus, medical center, or laboratory, where the
proposed work will be performed. In addition, it:
i) Applies these requirements
specifically to contracts for building
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maintenance, cleaning, or custodial services,
call center services, dining and food services,
gardening, grounds keeping and plant nursery
services, laborer services, mailroom services,
parking, shuttle bus, truck driving, or
transportation services, security services,
storekeeper services, patient care technical
employee services, patient billing services,
medical transcribing services, patient escort
services, or nursing assistant services.
ii) Exempts the application of these
requirements to employees who are mentally or
physically handicapped, or both, who have been
issued a license for employment at less than
minimum wage by the Industrial Welfare
Commission.
iii) Exempts public works projects conducted
by public agencies from these requirements.
b) Requires the UC to:
i) Include in its request for
proposals a calculation which considers the
criteria outlined in 1) above.
ii) Use all known cost escalators in the
calculation to project the future rate of growth
of average per-employee total compensation costs.
c) Requires a bidder to certify in writing
that the bidder has not been found liable for
violation of compensation, work hours, or working
conditions related provisions of the Penal Code, or
Labor Code, as specified, or any Wage Order Issued by
the Industrial Welfare Commission for specified
amounts, within the prior ten years.
d) Establishes the notification of the
University of California (UC) by the contractor of a
finding of liability for violation of compensation,
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work hours, or working conditions related provisions
of the Penal Code, or Labor Code, as specified, or any
Wage Order issued by the Industrial Welfare Commission
for specified amounts within the prior ten years as
grounds for termination of the contract.
e) Requires the bidder to provide the following to
the UC:
i) Spreadsheets showing all
applicable compensation and benefits, as
specified, for each position and employee
supplied to the University and the anticipated
hours to be worked on a daily and weekly basis.
ii) An organization chart showing the
bidder's supervisory structure.
iii) Any and all employee handbooks
applicable to the contracted employees.
iv) Projections of gross and net revenues
and itemized expenses for each of the first three
years of the proposed contract.
f) Requires a successful bidder , once
commencing work for the UC, to:
i) Notify the UC of any
changes to the information provided within 30
days of the change, as specified.
ii) Provide UC copies of notices provided
to employees in compliance with existing labor
code provisions outlining the obligations of the
employer prior to the employees beginning UC
campus work.
iii) By the 15th day of each month, provide
UC with a monthly certified payroll report, as
specified.
iv) Annually provide, by October 1, data
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showing compliance with wages, hours, and working
conditions requirements of the Labor Code for
each job classification working at any university
location.
v) Annually provide, by
October 1, an audited statement prepared and
signed by a Certified Public Accountant showing
work performed and gross and net revenues and
itemized expenses.
g) Declares the records provided by the
bidder/contractor to be subject to public records act
laws, as specified and authorizes the UC to redact any
confidential information, as specified, and to delay
response until after a bid process is complete, if
applicable.
2) Beginning January 1, 2018, makes the $100,000 threshold for
competitive bidding of contracts for goods, materials and
services to be performed applicable to any renewal or
extension of an existing contract if it involves an
expenditure of $100,000 or more annually.
3) Makes findings and declarations that the UC has squandered
public resources via contracting out to for-profit private
contractors that charge significant administrative
overhead.
STAFF COMMENTS
1) Need for the bill. According to the author, this bill
seeks to address the growing challenge to California of the
use of contingent workers to replace employees and the
consequential effect it has on wages and worker
protections. This bill would require the UC, when
evaluating bids for contract work, to evaluate the total
employee compensation package and ensure that it does not
undercut wages and benefits of existing university
employees. According to the author, the UC serves as an
anchor institution in the market in which it operates, and
as a public institution, and the third-largest California
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employer, should adopt and promote policies that respect
its employees and protect workers' rights.
2) Related Study. According to a 2012 study by the UC
Berkeley Labor Center, Temporary Workers in California are
Twice as Likely as Non-Temps to Live in Poverty: Problems
with Temporary and Subcontracted Work in California, almost
one-quarter of a million people worked in the temporary
help services industry in California in 2010. These
workers were slightly younger, more likely to be female,
less likely to be white non-Hispanic, and less likely to
have a high school diploma or GED than the average non-temp
worker. These workers were also more susceptible to
workplace illness and injury, earned less than their
non-temp counterparts, and were less likely to get
benefits. The report notes that lowered wages mean that
these workers rely more on the state safety net than their
direct-hire counterparts and that these employment
arrangements undermine worker protections by allowing
employers to avoid certain provisions of worker protection
and making it difficult to enforce other protections. The
report also notes that these employment relationships
create downward pressure on wages.
3) UC's Fair Wage/Fair Work plan. In July 2015, the UC
adopted a Fair Wage/Fair Work Plan. Under the Plan, the UC
has established a minimum level of pay for employees to
ensure that all UC workers are provided a fair wage with a
goal of reaching a minimum wage of $15 per hour on October
1, 2017. In addition, the UC reports that it is
implementing annual compensation audits and interim audits,
paid for by the contractor, to monitor wage and working
conditions as well as compliance with federal, state, and
UC workplace laws and policies for contracted employees
working pursuant to contracts entered into or renewed after
October 2015. The UC will also establish a phone hotline
and central online system to report complaints directly to
the Office of the President.
In light of the activities already planned as part of the
University of California's (UC) Fair Wage/Fair Work Plan, is
this bill necessary?
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4) Consequences? This bill would increase the complexity of
the bidding process for both the UC and potential bidders.
It would likely result in an increase in UC's costs for
procuring services and could potentially limit the pool of
qualified bidders. The Committee may wish to consider:
What would be the impact on smaller businesses
(particularly those which are disadvantaged or minority
business enterprises, women business enterprises and
disabled veteran business enterprises) wishing to contract
with the UC?
How would these provisions affect the efforts of the
University to respond to recent directives that the UC
minimize its administrative costs and operate more
efficiently in order to more cost effectively meet the
state's teaching and research needs?
5) Prior Legislation. This bill is substantively similar to
SB 376 (Lara, 2015) which was heard and passed by this
Committee in April 2015, by a vote of 7-2. SB 376 was
subsequently vetoed by the Governor, whose message read, in
pertinent part:
"It's worth noting that the University of California
recently
responded to criticisms of its wage and contracting
practices
with a plan to incrementally increase its minimum wage
for both employees and contract workers, and a pledge
to better oversee
contracts generally.
The effort to provide increased compensation to those
who work
for UC - either directly or on a contract basis - is
well-intentioned,
but I'm not prepared to embrace the provisions of this
bill.
I would caution the University, however, to provide a
transparent
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accounting of its contracts and clearly demonstrate
how the
interests of all its lower paid workers are being
protected."
It is unclear whether the new provisions of this bill
respond to the Governor's message.
SUPPORT
American Federation of State County and Municipal Employees
California Federation of Teachers
California Labor Federation
California Teamsters Public Affairs Council
OPPOSITION
California Chamber of Commerce
University of California
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