BILL ANALYSIS
AB 756
Page 1
ASSEMBLY THIRD READING
AB 756 (Eng and Lieu)
As Amended June 1, 2009
Majority vote
BUSINESS & PROFESSIONS 7-4 APPROPRIATIONS 12-5
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|Ayes:|Hayashi, Eng, Hernandez, |Ayes:|De Leon, Ammiano, |
| |Nava, | |Charles Calderon, Davis, |
| |John A. Perez, Price, | |Fuentes, |
| |Ruskin | |Hall, John A. Perez, |
| | | |Price, Skinner, |
| | | |Solorio, Torlakson, |
| | | |Krekorian |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Emmerson, Conway, Niello, |Nays:|Nielsen, Duvall, Harkey, |
| |Smyth | |Miller, |
| | | |Audra Strickland |
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SUMMARY : Requires state agencies to annually prepare a report,
available on each agency's Internet Web site, listing personal
services and consulting services contracts entered into in the
previous fiscal year (FY) and to electronically submit that
report to the Department of Finance (DOF) and the Legislature.
Specifically, this bill :
1)Requires each state agency to prepare an annual report on
personal services and consulting services contracts entered
into during the previous FY that includes all of the
following:
a) The name and identification number of each contractor;
b) The statutory basis for the authorization of each
contract, including, if relevant, any applicable condition
permitting personal services contracts provided by current
law, as specified;
c) The duration of each contract;
d) The number of amendments to each contract and the number
AB 756
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of renewals of each contract, where applicable;
e) The total amount of the contract price over the duration
of the contract, including all known amendments to the
contract, the total amount paid by the state agency during
the most recently completed fiscal year, and the number,
cost, bill rate, and staffing levels associated with each
type of contract employee retained during the most recently
completed fiscal year. Staffing levels shall also be
described or accounted for in personnel year or full-time
equivalent terms; and,
f) Costs and relevant staffing information shall be
organized and reported using the contract categories, as
specified.
2)Defines the following terms:
a) "Consulting services contracts" has the same meaning as
defined in current law; and,
b) "Personal services contracts" means any contract,
requisition, or purchase order, excluding public works
contracts, under which labor or personal services is a
significant, separately identifiable element.
3) Requires contractors to electronically provide staffing and
cost information for all personal services and consulting
services contracts to state agencies at the end of each FY,
and states that failure to report this information results in
the following (until that information is provided):
a) Ineligibility for additional personal services and
consulting services contracts; and,
b) Cease of payments for ongoing contracts.
4)Requires state agencies to electronically provide the annual
report to the DOF and the Legislature within 60 workings days
after the end of the previous FY.
5)Requires the report to be made available to the public in an
electronic format similar to that used by the agency in its
Wages and Salaries Supplement report.
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6)States that the section does not apply to confidential
contracts with attorney-client privilege.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
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)Adding the reporting requirement to all state consulting and
service contracts could slightly increase the cost of each
contract.
4)To the extent information obtained by the reports provides
useful comparative data for making decisions regarding state
contracting, the state could realize significant future
savings.
COMMENTS : 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
reporting requirements should apply for personal service and
consulting contracts."
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According to information provided by the sponsors of the bill,
the Services Employees International Union, Local 1000 (SEIU
1000), since January 2008, the state has entered into 15,116 new
contracts worth $5.5 billion. Overall, the state spends an
estimated $10.5 billion on services and consultant contracts in
a typical year or $28.7 million daily.
SEIU Local 1000 estimates that the state could save
approximately $350 million annually by utilizing state workers
to cut unnecessary and wasteful outsourcing in three areas:
$100 million or more annually in IT contracts, $144-205 million
or more annually in medical registry contracts, and $50 million
or more annually in architectural and engineering contracts.
SEIU Local 1000 estimates indicate the state persists in
renewing contracts that cost from 22% to 200% more than the cost
to perform the same service using state workers.
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301
FN: 0001327