BILL ANALYSIS
AB 641
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Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 641 (Hagman) - As Introduced: February 25, 2009
SUBJECT : Approval of contracts.
SUMMARY : Requires all contracts executed by the Legislature to
be approved by the Department of General Services (DGS), and
establishes a "low-bid" contracting process for public works
contracts let by the Legislature. Specifically, this bill :
1)Requires all contracts executed by the Legislature to be
approved by the DGS, except in cases of emergency, as
specified.
2)Establishes a "low-bid" contracting process for public works
contracts executed by the Legislature that requires the time
and place for accepting bids to be advertised, and establishes
a process for the prequalification of bidders, the acceptance
of bids, and award of contracts to the lowest responsible
bidder.
EXISTING LAW :
1)Establishes the Legislative, Executive, and Judicial Branches
of state government as co-equal.
2)Exempts any contract let by the Legislature from the
requirement that all contracts entered into by any state
agency for specified purposes are void unless and until
approved by the DGS.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office:
"Current law stipulates that the Department of General Services
(DGS) is required to approve contracts for all state agencies
except for the State Legislature. AB 641 would simply change
current law in order to hold the Legislature to the same
standards as all other state agencies."
Unclear and questionable provisions . This bill would
AB 641
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subordinate the internal, administrative operations of the
Legislative Branch of state government to the discretion and
approval of the Executive Branch by requiring all Legislative
contracts to be approved by DGS. The author provides no
justification for this significant subordination of Legislative
independence to the Executive branch of government other than
the Legislature, a separate branch of government, should be
subject to the internal contract approval process of the
executive branch.
"Low-bid" contracting is the historical method of awarding
public works contracts, such as the construction of public
infrastructure in the form of buildings, transportation systems,
water and sewer systems, etc. However, in recent years low-bid
contracting has been increasingly replaced by "best value"
contracting that allows public agencies to consider the "value"
offered by a contractor in addition to price. In the realm of
public works projects, the current trend has been to allow
public agencies to use "design-build" contracting, which allows
public agencies to execute a single contract for construction
projects that would otherwise have been executed through
numerous contracts on a low-bid basis. With respect to Capitol
restoration projects, the use of low-bid contracting may not
produce the type of work that one needs for the construction,
renovation, and repair of the historic and socially significant
structure that is embodied by the State Capitol.
It is also noted that this bill would subject all contracts
executed by the Legislature to the scrutiny and discretionary
approval of the Executive branch of government, yet this bill
only provides a contract process for public works projects.
Existing state law provides for numerous unique contracting
processes for Executive Branch agencies based on the unique
needs of the agencies or in recognition of the unique
circumstances of specific market dynamics for different
products, such as information technology. Accordingly, it
appears that the low-bid contracting process proposed by this
bill is incomplete.
In summary, the Committee may wish to consider the ramifications
of subordinating the internal, administrative operations of the
Legislative Branch of government to the discretionary approval
of the Executive Branch, and this bill's lack of processes for
other types of contracts executed by the Legislature.
Support . The Associated Builders and Contractors of California
AB 641
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(ABC) writes in support, "AB 641 requires the Legislature to
abide by competitive bidding laws when undertaking Capitol-area
construction. ABC believes that AB 641 will save Californians
money by requiring the legislature to have an open bidding
process before issuing contracts. The bill also establishes
specific procedures for the Legislature to follow regarding
advertising for bids, accepting bids, and awarding contracts.
These procedures are similar to the competitive bidding process
followed today by all other state agencies and local government
agencies."
Related legislation . AB 1024 (Harkey) of 2009 provides, among
other things, that a contract let by the Legislature is exempt
from the requirement that it be approved by the DGS only in the
case of an emergency, as specified, or if the total amount
payable under the contract is less than $50,000.
Previous legislation . AB 1070 (Cook) of 2007 is a bill nearly
identical to AB 641 that died in the Assembly Business &
Professions Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Howard Jarvis Taxpayers Association (sponsor)
Alliance of Contra Costa Taxpayers
Associated Builders and Contractors of California
California Taxypayer Protection Committee
Opposition
None on file.
Analysis Prepared by : Whitney Clark / B. & P. / (916)
319-3301