BILL ANALYSIS
AB 2181
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Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 2181 (Hagman) - As Amended: April 12, 2010
SUBJECT : State Contract Act: contracting by state agencies.
SUMMARY : Authorizes specified state agencies to perform
specified projects without the approval of the Department of
General Services (DGS) if the cost estimate does not exceed
$800,000, and allows those agencies to budget those projects as
minor capital outlay projects. Specifically, this bill :
1)Increases the limit of specified capital outlay projects from
$400,000 to $800,000 and allows state agencies to budget those
projects as a minor capital outlay projects and carry them out
without DGS approval.
2)Requires the Department of Finance (DOF) to adjust the minor
capital outlay budget limit every two years to reflect the
percentage change in the annual California Construction Index
(CCI) used by DGS.
3)Defines "department" to mean any of the following:
a) Department of Water Resources (DWR);
b) Department of Transportation (DOT);
c) Department of Boating and Waterways (DBW);
d) Department of Corrections and Rehabilitation (CDCR);
e) Military Department (MD); or,
f) DGS for all other state agencies.
4)Requires that whenever statute provides for any project that
does not fall under the jurisdiction of DWR, DOT, DBW, CDCR,
or MD, the project shall be under the sole charge and direct
control of DGS, instead of DOT.
5)Makes technical and clarifying changes.
AB 2181
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EXISTING LAW establishes the State Contract Act, and authorizes
specified departments, where the nature of the work in the
opinion of the department is such that its services in
connection with a project are not required, to permit the
carrying out of the project directly by the state agency
concerned with the project, if the estimated project cost does
not exceed $400,000, except as provided.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "CDCR
conducts minor capital outlay projects under a cap of $400,000.
This limit was established in 2001 and has not been adjusted
since. The cost of construction materials, such as steel,
concrete, copper wiring and other essential materials along with
costs associated with projects at correctional facilities, such
as providing security, have increased over the years. This led
to a rise in the overall cost of implementing proposals which
previously fell into the category of minor capital outlay
projects.
"Proposals that exceed the $400,000 limit are added to the major
capital outlay project backlog. They are recommended by DOF to
be included in that year's budget and are placed into
competition with other critical construction projects?. AB 2181
will increase the minor capital outlay cap from $400,000 to
$800,000, reflecting the increase in construction costs and
adjusting the cap to the CCI."
Background . According to a CDCR analysis, due to the rising
costs of construction materials and projects at correctional
facilities, construction costs for many projects exceed the
existing minor capital outlay limit of $400,000 established in
2001. In Fiscal Year (FY) 2008-09, approximately 28 proposals
considered for minor capital outlay projects exceeded the
existing limit due to the added costs associated with
correctional facility construction. Those projects deemed
critical are added to the major capital outlay project list;
however, those projects are then subject to what DOF recommends
be included in that year's budget act, thus competing with other
critical construction project which may then be subject to a
court order, lawsuit, notice of violation, or a cease and desist
AB 2181
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order. Currently, CDCR's major capital outlay project priority
list consists of approximately 140 proposals projected through
FY 2013-14.
The CDCR analysis states that necessary upgrades to comply with
the State Fire Marshall's orders at the California Institute for
Men housing unit have shifted minor capital outlay projects to
major capital outlay projects due to rising inflation costs.
CDCR estimates the current cost of the latest phase of
individual housing unit upgrades to be approximately $500,000
per unit.
CDCR states that this legislation is necessary to keep up with
vital construction projects required for health and safety. The
CDCR analysis notes that if the CCI adjustment had been in
effect since 2001, that adjustment alone would have increased
the minor capital outlay limit to approximately $750,000. CDCR
notes that AB 2181 sets the minor capital outlay budget cap at
$800,000, using language provided by DOF. CDCR adds that this
proposal will not affect CDCR's total annual budget of $7.5
million for minor capital outlay projects.
CDCR notes that while the scope of the bill was originally
limited to CDCR, it was expanded to include other departments
using language provided by DOF.
CDCR also notes that the total cost estimates for correctional
facility projects include the salary of correctional officers,
even though the monies are paid through a different fund other
that the minor capital outlay budget.
The revision to provide DGS, instead of DOT, with direct control
of projects not under the jurisdiction of DWR, DOT, DBW, CDCR,
or MD is a technical cleanup provision.
Support . According to the sponsor, CDCR, "Construction costs
for many state projects routinely exceed the existing minor
capital outlay limit of $400,000, resulting in delays for
critical maintenance and repair or improvements required for
health and life safety, security, or compliance with external
mandates. Projects deemed critical, but exceeding the current
minor capital outlay limit of $400,000 are added to the major
capital outlay project list. Those projects are then subject to
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what DOF recommends be included in that year's budget act [in
the Governor's Budget Proposal], thus competing with other
critical construction projects which may be subject to a court
order, lawsuit, notice of violation, or a cease and desist
order. At CDCR, the major capital outlay project priority list
consists of approximately 140 proposals projected through FY
2013-14. Obviously, delays from one year to another add
additional construction costs relative to the rising costs of
materials and labor."
Oppose . According to the California Association of Professional
Scientists, "AB 2181 [increases the cost limit from $400,000 to
$800,000 on projects contracted for by the state. Increasing
these cost limits at a time when the state needs to scrutinize
every contract entered into to save as much money as possible
is, in our opinion, irresponsible."
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Corrections and Rehabilitation (CDCR)
(sponsor)
Opposition
California Association of Professional Scientists (CAPS)
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301