BILL ANALYSIS
Bill No: AB
756
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 756 Author: Eng
As Amended: June 29, 2009
Hearing Date: July 8, 2009
Consultant: Art Terzakis
SUBJECT
Public Contracts: information: Internet Web site
DESCRIPTION
AB 756 requires every state agency, except as specified, to
provide a link to a centrally located and accessible
state-run Internet website that includes a listing of
personal services and consulting services contracts that it
entered into during the previous fiscal year.
Specifically, this measure:
1. Requires that all personal services and consulting
services contract listings be available in an electronic
format that is searchable and easy to use in order to
promote and support government transparency.
2. Requires that the listings include specified
information about each contract, including the statutory
authorization, duration, reason for noncompetitive
bidding, reason for not accepting low bid, total contract
price, amount paid during the fiscal year, and the
number, cost, bill rate, and staffing levels for each
type of contract employee.
3. Requires that the costs and relevant staffing
information be organized and reported using both broad
and detailed contract categories that are based on the
United Nations Standard Products and Services Code
(UNSPSC).
AB 756 (Eng) continued
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4. Requires contractors to electronically provide
specified staffing and cost information to the
contracting agency at the end of each fiscal year to
facilitate state agency reporting of information for the
listings.
5. Stipulates that contractors who fail to provide the
information shall be ineligible for future state
contracts and for payments on any ongoing contracts until
the required information is provided.
6. Stipulates that the provisions of this measure shall
not apply to information resulting from contracts for
confidential expert consulting services that constitutes
an attorney work product or is protected by the
attorney-client privilege.
7. Provides that state agencies that are not required to
report to the State Contract and Procurement Registration
System (SCPRS) shall be exempt from the above-mentioned
requirements, except as required under the California
Public Records Act (Government Code Section 6254 related
to exemption of particular records).
8. Defines "consulting services contracts," "personal
services contracts," "time and material contracts," and
"deliverables" for purposes of this measure.
EXISTING LAW
Existing law governing contracting between state agencies
and private contractors sets forth requirements for the
procurement of supplies, materials, equipment, and services
by state agencies and sets forth the various
responsibilities of the Department of General Services
(DGS) and other state agencies in overseeing and
implementing state contracting procedures and policies.
Existing law provides that contracting is permissible to
achieve cost savings when specified conditions are met, and
all efforts are made to use civil servants to provide
services. Existing law also provides that contracting is
permissible, after all efforts are made to use civil
servants to provide services, and when specified
requirements can be met.
AB 756 (Eng) continued
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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 the 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, 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.
According to information provided by SEIU 1000, the number
of private IT contracts has tripled from 1,800 in 2003-04
to 5,500 in the first eight months of FY 2007-08. While
the scope of contracting for personal services is massive,
information available to the public and the Legislature
about associated staffing levels and their relevant costs
is limited. Based on State Contract and Procurement
Registration Systems (SCPRS) data, the state spends
substantial sums each day on personal services and
consulting contracts. According to SEIU 1000, "the total
cost of personal service contracts jumped from $28 million
to $340 million in the first eight months of FY 2008-09.
Meanwhile, the value of consultant contracts increased from
$40 million to $120 million."
SEIU 1000 claims that SCPRS' data only provides a general
idea of the magnitude of spending on state contracts and
that it should be replaced with a system that is more
accurate, user-friendly, and discloses contract funding by
contractor and department for each fiscal year.
Purpose of AB 756: According to the author's office, this
measure is intended to ensure transparency in state
contracts by requiring that information concerning
contractors who supply consulting or personal services be
available on-line in an easily searchable data base. This
information would be centrally located with links from the
websites of departments and agencies. The author's office
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points out that 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 author, sponsor
and proponents believe that the same reporting requirements
should apply for personal service and consulting contracts.
Proponents contend that this measure would be consistent
with the current direction of transparency in federal
government spending. Proponents note that state worker
salaries are readily available on-line yet there is a
hidden workforce of contract employees and there is little
information available on actual contracts for these
services. Proponents point out that the Governor has
issued an Executive Order to make some of this information
more easily available; this measure seeks to expand on that
Executive Order and provide the public with more
information and data available on-line in an easily
accessible format. Proponents believe that withholding
such information precludes the public from viewing the true
administrative costs of government.
Arguments in Opposition: The American Council of
Engineering Companies of California (ACEC) is opposed to AB
756 on the basis that "it improperly requires state
agencies to list architectural, engineering, environmental
services and consulting services procured under the aegis
of article XXII of the California Constitution." ACEC
notes that "the California Supreme Court in Kempton v.
Department of Transportation (2007) 40 Cal.4th 1016 clearly
held that architectural and engineering services, which are
subject to article XXII, are not subject to the provisions
of personal service contracts such as those contained in
Government Code section 19130." ACEC points out that
"virtually any architectural and engineering contract must
be procured under California's Little Brooks Act (Gov. Code
Section 4525 et seq.) and must be procured on the basis of
reasonable cost. Thus, the staffing costs are negotiated
between the public agency and the contractor. The
contracting engineering firm then invoices the public
agency for the labor costs incurred on the project."
ACEC has suggested that the author accept an amendment
simply excluding any contracts procured under the authority
of article XXII of the California Constitution. "That
would avoid duplicative reporting but the information would
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still be available and the state agencies could make that
information available to the Legislature."
State Contract and Procurement Registration System (SCPRS):
In May of 2002, Governor Davis signed Executive Order
D-55-02, directing a three-member task force to review the
state's contracting and procurement procedures and
recommend any statutory, regulatory or administrative
changes necessary to "ensure that open and competitive
bidding is utilized to the greatest extent possible" by
state agencies. The Executive Order also directed the task
force to include recommendations regarding any statutory or
regulatory changes necessary to ensure adequate oversight
of the contracting and procurement authority utilized by
state agencies. The task force's Final Report released
August 30, 2002 explained the events that led to the
development of this new contracting system.
The purpose of the SCPRS is to identify, develop and
distribute a system to facilitate the registration of
contract information of state agencies for DGS. The
primary business objectives for the SCPRS include:
Collect information about contracting and
procurement activities that will allow the state to
more effectively manage the contracting and
procurement processes for which DGS is responsible.
Collect the appropriate type of contract and
procurement information to assist DGS to perform its
oversight functions.
Provide a single repository for key information
about state contracts which can be sorted to provide
information, which is timely, accurate and is of
interest to state decision-makers, frequently
requested in Public Records Act requests, and useful
in providing reports regarding contract-related
activities.
Collect information that will allow the state to
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demonstrate visibility and accountability over
contract activities.
The SCPRS allows authorized users to log-on using a
web-based interface and enter elements of information about
state contracts activities. After entering the
information, users are able to add amendment information
and later retrieve information about their contracts.
Authorized DGS users are able to retrieve various reports
of summary information about state agencies. Requests to
exempt specific contracts based on legally required
confidentiality or where necessary to protect the State's
interest must be submitted to DGS.
PRIOR/RELATED LEGISLATION
AB 2603 (Eng) 2007-08 Session. Would have required state
agencies to prepare an annual report for the Department of
Finance listing personal services and consulting services
contracts, entered into by the agency in the previous
fiscal year. (Held on Senate Appropriations Suspense File)
SB 1331 (Oropeza) 2007-08 Session. Would have required the
Governor to submit to the Legislature, as part of the state
budget, information regarding current and proposed service
contracts with a value of $5,001 or more. (Held in Senate
Rules Committee)
SB 1494 (McClintock and Florez) 2007-08 Session. Would
have required each state department and agency to publish a
Website that provides details on expenditures over $1,000
in a searchable format. (Held on Senate Appropriations
Suspense File)
SB 1596 (Yee) 2007-08 Session. Would have required the
Regents of the University of California to establish a
contractor responsibility program and to establish a
centralized contract information data warehouse and
required contractors to file a questionnaire with the
Regents regarding such information with civil penalties for
filing incorrect information. (Held on Senate
Appropriations Suspense File)
AB 239 (Jerome Horton) 2005-06 Session. Would have
required the Governor to submit to the Legislature, as part
of the state budget, information regarding current and
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proposed service contracts. (Vetoed by Governor on the
basis that the State already has an electronic reporting
system that tracks the purchase of goods, services and
information on contracts over $5,000.)
SUPPORT: As of July 3, 2009:
Service Employees International Union Local 1000 (sponsor)
American Federation of State, County and Municipal
Employees (AFSCME)
California Association of Professional Scientists
Professional Engineers in California Government
OPPOSE: As of July 3, 2009:
American Council of Engineering Companies of California
FISCAL COMMITTEE: Senate Appropriations Committee
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