BILL ANALYSIS
AB 756
Page 1
Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 756 (Eng) - As Amended: March 31, 2009
Policy Committee: Business and
Professions Vote: 7-4
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires every state agency to annually prepare and
provide on its website a report listing personal services and
consulting services contracts entered into during the previous
fiscal year. Specifically, this bill:
1)Requires the report to include specified information about
each contract, including the statutory authorization,
duration, total contract price, amount paid during the fiscal
year, and the number, cost, bill rate, and staffing levels for
each type of contract employee.
2)Requires the cost and relevant staffing information to be
organized into the following contract categories:
a) Architectural, engineering, and environmental services.
b) Information technology (IT) services.
c) One of 12 specified other types of services.
1)Requires the agency reports to be submitted electronically to
the Department of Finance (DOF) and the Legislature within 60
working days after the end of the prior fiscal year, and
requires that the report be made available to the public in an
electronic format similar to the format used for the Wages and
Salary Supplement Report
2)Requires every contractor to electronically provide to the
contracting state agency the information required in (1) and
(2).
3)Makes failure of the contractor to provide the information a
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material breach of the contract and makes that contractor
ineligible for future state contracts and for payments on any
ongoing contracts until the required information is provided.
FISCAL EFFECT
1)State agencies and departments would incur unknown costs to
obtain the specified information from contractors, to verify
the accuracy of the information provided, and to compile
information on all agency contracts for reporting to the DOF
and the Legislature. All of these costs could be absorbable
for most individual departments, but in aggregate would be
significant, particularly for the initial report and at a time
when many departments are challenged by budget limitations.
2)To the extent there is noncompliance by contractors, agencies
will incur additional administrative costs to enforce
compliance, suspend contract payments, and notify other state
agencies that the contractor is barred from further state
contracts pending receipt of the required report information.
Again, these costs could be significant in the aggregate.
3)Barring noncompliant contractors from future contracts would
tend to reduce competition for some contracts and therefore
increase contract costs to some extent.
4)Adding the reporting requirement to all state consulting and
service contracts could slightly increase the cost of each
contract.
COMMENTS
1.Purpose . According to the author's office, "This measure
would ensure transparency in state contracts involving
personnel by requiring departments to report monetary
expenditures and associated staffing levels related to the use
of all personal service contracts. Expenditures and staffing
levels associated with the use of civil service workers is
routinely reported to the Legislature and is readily available
to the public through the budget process each year. The same
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reporting requirements should apply for personal service and
consulting contracts. "
2.Background . In March 2008, the Assembly Committees on
Business and Professions and Public Employees, Retirement and
Social Security held a joint hearing regarding the state's use
of personal service contracts for IT technology services. The
purpose of this hearing was to evaluate whether state personal
service IT contracts obtain the best value for the state and
are in compliance with state contracting statutes.
Representatives of the State Personnel Board (SPB), Department
of Personnel Administration, Department of Technology
Services, Department of General Services (DGS), and the
sponsor of this bill-Service Employees International Union,
Local 1000 (SEIU 1000)-all testified. Private contractors
were also invited to the hearing but none testified. SEIU 1000
testimony included an estimate that the state could save $100
million by reducing its use of IT contracts in lieu of using
state IT workers.
3.Prior Legislation . Last year, AB 2603 (Eng), which was
substantially similar to this bill, was held on Suspense in
Senate Appropriations.
SB 786 (Oropeza), which required the governor to submit with
his or her annual budget proposal a report that containing
specified information regarding current and proposed service
contracts of $5,001 or more, was held on the Senate
Appropriations Suspense file.
In 2005, AB 239 (Jerome Horton), which was similar to SB 786,
was vetoed. The governor argued in part that the bill did not
include any funding to create a new reporting system or expand
upon the state's existing reporting system.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081