BILL ANALYSIS
AB 746
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ASSEMBLY THIRD READING
AB 746 (Coto)
As Introduced February 26, 2009
Majority vote
LOCAL GOVERNMENT 4-0
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|Ayes:|Knight, Davis, Duvall, | | |
| |Skinner | | |
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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 : 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. 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
AB 746
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because Parsons played a minor role with RFP.
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.
This bill is retroactive in scope. 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, which
apply to criminal statutes, 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).
The Legislature 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.
Analysis Prepared by : Jennifer R. Klein / L. GOV. / (916) 319
FN: 0000751
AB 746
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