BILL ANALYSIS
AB 746
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Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Anna Marie Caballero, Chair
AB 746 (Coto) - As Introduced: February 26, 2009
SUBJECT : Conflicts of interest.
SUMMARY : Requires an independent contractor not be deemed
interested in a contract executed on or after September 1, 2008,
as a result of the independent contractor's preparation,
at the request of a governmental entity, of a document that
serves a purpose independent of the contract or any bid-related
documents.
EXISTING LAW prohibits specified state and local officers and
employees from being financially interested in any contract made
by them in their official capacity, but deems an officer or
employee not to be interested in a contract if his or her
interest meets specified criteria.
FISCAL EFFECT : None
COMMENTS :
1)The author states that the general rule prohibiting conflicts
of interest in public contracts is vague as applied to
different factual situations and subject to differing
interpretations. For instance, Parsons Corporation (Parsons)
is an engineering and construction firm that works on major
projects worldwide. Local governments frequently ask Parsons
to comment on projects that are being planned. In the summer
of 2007, upon the request of the City of San Francisco,
Parsons reviewed work that was being done by another
consulting firm for a water construction project by the San
Francisco Public Utilities Commission (SFPUC). In 2008,
Parsons won a portion of the Request for Proposals (RFP) for
the same water project. RFP had been neither specific to nor
was it a consequence of the prior work done by Parsons for the
water project. The author, however, believes that an unfair
interpretation of the conflicts of interest provisions in
state law might make Parsons forfeit all of the profits it has
made to date on the water project because Parsons played a
minor role with RFP.
AB 746
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2)Section 1091.5 currently does not facially apply to an
independent contractor who prepared a document that serves a
purpose independent of the contract or any bid-related
documents. Parsons, in a letter, does not believe it
ultimately had any involvement in the creation of the scope
that eventually comprised RFP and subsequent contract Parson
won.
3)AB 746 is retroactive in scope, also known as an ex post facto
law. The bill has the Legislature reach back in time over a
year to clear Parsons of any potential wrongdoing that may or
may not have resulted from its involvement with RFP for the
water project. The federal government is prohibited from
passing ex post facto laws by Section 9 of Article I of the
U.S. Constitution and the states are prohibited from the same
by Clause 1 of Section 10 of Article I. In Landgraf v. Usi
Film Prods (1994)(511 U.S. 244), the U.S. Supreme Court wrote
that "the presumption against retroactive legislation is
deeply rooted in our jurisprudence, and embodies a legal
doctrine centuries older than our Republic" (Id. at 265).
As James Madison wrote in The Federalist Papers: "bills of
attainder, ex post facto laws, and laws impairing the
obligation of contracts" were "contrary to the first
principles of the social compact, and to every principle of
sound legislation," in part because such those measures
invited the "influential" to "speculate on public measures,"
to the detriment of the "more industrious and less informed
part of the community"(The Federalist No. 44, p. 301 (J. Cooke
ed. 1961). The benefits of retroactivity should be weighed
against the potential for disruption and unfairness (Landgraf
v. Usi Film Prods, 511 U.S. 244, 268).
4)The Committee may wish to consider whether the benefit of
absolving a particular independent contractor from a
speculative violation of the conflicts of interest provisions
outweighs the potential for disruption and the appearance of
unfairness.
REGISTERED SUPPORT / OPPOSITION :
Support
Willie L. Brown, Jr., Esq. [SPONSOR]
AB 746
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Opposition
None on file
Analysis Prepared by : Jennifer R. Klein / L. GOV. / (916)
319-3958