BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           926 (Ruskin)
          
          Hearing Date:  7/13/2009        Amended: As Introduced
          Consultant:  Bob Franzoia       Policy Vote: G O 12-0
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          ____
          BILL SUMMARY: AB 926 would require a "loss leader" statement to  
          be specified in a solicitation for a state contract for goods, a  
          request for proposal for a contract for services that involves  
          the furnishing of equipment, materials, or supplies and a  
          request for proposal for a state contract for the acquisition of  
          information technology and goods and services.  
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          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2009-10      2010-11       2011-12     Fund
           Revision of state contracting     $70         Up to $60  
          annually, ongoing      General/
          provision                                               Special*

          * Service Revolving Fund (non governmental cost fund of working  
          capital and revolving funds used to record and report activities  
          from various sources; approximately 30 percent of the moneys in  
          this fund are federal with the remaining funds split by an  
          unknown percent between the General Fund and special funds)
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          ____

          STAFF COMMENTS: Under this bill, every solicitation shall  
          contain the following statement:

          It is unlawful for any person engaged in business within this  
          state to sell or use any article or product as a "loss leader"  
          as defined in Section 17030 of the Business and Professions  
          Code.

          Business and Professions Code 17030 states:
          "Loss leader" means any article or product sold at less than  
          cost:
          (a) Where the purpose is to induce, promote, or encourage the  
          purchase of other merchandise; or
          (b) Where the effect is a tendency or capacity to mislead or  










          deceive purchasers or prospective purchasers; or
          (c) Where the effect is to divert trade from or otherwise injure  
          competitors. 

          The Department of General Services estimates $30,000 in one time  
          costs to implement the clause into general terms and conditions  
          for the specified contract types and $40,000 in one time costs  
          to develop support policies in the State Administrative Manual.

          Other state entities which administer some contracts indicate  
          minor, absorbable costs.