BILL ANALYSIS
Bill No: AB
2181
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 2181 Author: Hagman
As Amended: May 10, 2010
Hearing Date: June 22, 2010
Consultant: Art Terzakis
SUBJECT
State Contract Act
DESCRIPTION
AB 2181 increases the dollar limit for state agency minor
capital outlay projects from $400,000 to $600,000.
Specifically, this measure:
1)Increases the dollar limit of specified capital outlay
projects from $400,000 to $600,000 and allows state
agencies to budget those projects as a minor capital
outlay project and carry them out without Department of
General Services (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) Requires that whenever statute provides for any project
that does not fall under the jurisdiction of the
Department of Water Resources (DWR), the Department of
Transportation (Caltrans), the Department of Boating and
Waterways (DBW), the California Department of Corrections
and Rehabilitation (CDCR), or the Military Department,
the project shall be under the sole charge and direct
control of DGS, instead of Caltrans.
EXISTING LAW
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The State Contract Act governs contracting between state
agencies and private contractors, and sets forth
requirements for the bidding, awarding, and overseeing of
contracts for projects, which it defines to include the
construction or other improvement to a state structure or
building with a total cost threshold equal to $250,000 for
calendar year 2010, as adjusted upward or downward every
two years by the Director of Finance (DOF) to reflect the
percentage change in the annual California Construction
Index (CCI) as used by DGS.
Under the existing State Contract Act, where the nature of
the work in the opinion of the DWR, DGS, DBW, CDCR, the
Military Department or CalTrans is such that its services
in connection with the work are not required, the
applicable department may authorize the carrying out of the
project directly by the state agency concerned if the
estimated cost does not exceed $400,000, except that this
limitation does not apply to a project of a district
agricultural association or the State Lands Commission.
BACKGROUND
State capital outlay projects are budgeted as either major
or minor projects. Major capital outlay projects are those
with a total cost exceeding $400,000. Each major capital
outlay project is budgeted to an agency as a separate line
item and in one or more phases (e.g., land acquisition,
preliminary plans, working drawings, construction, and
equipment). With the exception of some state agencies that
have delegated authority, major capital outlay projects are
administered by DGS on behalf of the various state
agencies. Minor capital outlay projects are those with
total costs of $400,000 or less, and are typically budgeted
in a lump sum appropriation to the state agency. In
general, state departments can contract directly for minor
capital outlay projects without using the DGS's management
services. The threshold was last raised in 2000 (from
$250,000 to $400,000).
Purpose of AB 2181: This measure is sponsored by the
CDCR. 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 current minor capital outlay limit. In
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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.
This measure would increase the minor capital outlay limit
to $600,000, and direct DOF to henceforth adjust the limit
biennially based on construction cost inflation.
Arguments in Opposition: Writing in opposition, the
California Association of Professional Scientists argues
that, "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."
PRIOR/RELATED LEGISLATION
AB 31 (Price) Chapter 212, Statutes of 2009. Among other
things, established for the calendar year 2010 a cost
threshold of $250,000 for projects covered under the State
Contract Act that would be adjusted every two years to
reflect the percentage change in the annual California
Construction Index as used by DGS.
AB 3020 (Salas) Chapter 106, Statutes of 2008. Added the
Military Department to the list of state departments
authorized to enter into contracts for public works
projects pursuant to the State Contract Act.
AB 2369 (Keeley) Chapter 528, Statutes of 2000. Among
other things, increased the minor capital outlay threshold
from $250,000 to $400,000 for which DGS may delegate public
works project management duties to agencies with
demonstrated competence.
SUPPORT: As of June 18, 2010:
California Department of Corrections and Rehabilitation
(sponsor)
California Military Department
Associated Builders and Contractors of California
Engineering Contractors' Association
Marin Builders' Association
California Fence Contractors' Association
Flasher/Barricade Association
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California Chapter of the American Fence Association
OPPOSE: As of June 18, 2010:
California Association of Professional Scientists
FISCAL COMMITTEE: Senate Appropriations Committee
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