BILL ANALYSIS
AB 2494
Page 1
ASSEMBLY THIRD READING
AB 2494 (Blumenfield)
As Amended March 18, 2010
Majority vote
BUSINESS & PROFESSIONS 7-1 APPROPRIATIONS 12-5
-----------------------------------------------------------------
|Ayes:|Hayashi, Eng, Hernandez, |Ayes:|Fuentes, Ammiano, |
| |Hill, Ma, | |Bradford, |
| |Nava, Ruskin | |Charles Calderon, Coto, |
| | | |Davis, |
| | | |De Leon, Hall, Skinner, |
| | | |Solorio, Torlakson, |
| | | |Torrico |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Conway |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Norby |
| | | | |
-----------------------------------------------------------------
SUMMARY : Requires a state agency to immediately discontinue a
contract that has been disapproved by the State Personnel Board
(SPB), unless otherwise ordered. Specifically, this bill :
1)Requires a state agency to immediately discontinue a contract
that SPB or its delegate disapproves, unless otherwise ordered
by SPB or its delegate.
2)Prohibits the state agency from entering into another contract
for the same or similar services, or from continuing the
services that were the subject of the contract disapproved by
SPB or its delegate.
3)Requires a state agency ordered to discontinue a contract to
serve notice to the vendor within 15 days from SPB's final
action, unless another time period is specified, and requires
the state agency to provide a copy of the notice to SPB and
the employee organization that filed the contract challenge.
4)Declares that failure of the state agency to provide notice to
the vendor, SPB, and employee organizations may be grounds for
rejection of future contracts for the same or similar services
that were discontinued.
AB 2494
Page 2
EXISTING LAW :
1)Provides that contracting is permissible, after all efforts
are made to use civil servants to provide services, and when
any of the following can be met:
a) The services are exempt as defined by the State
Constitution;
b) The services are for new state functions and the
Legislature has specifically authorized contracting for the
services;
c) The work is of a highly technical nature and the skills
needed cannot be provided by civil servants;
d) The services are incidental to the purchase of goods;
e) The services are contracted to avoid a conflict of
interest;
f) Emergency services are being provided;
g) Legal services are provided to avoid a conflict of
interest;
h) It is infeasible for the state to provide the services;
i) Service providers are training civil servants on an
interim basis; or,
j) Services provided are temporary, urgent, or of an
occasional nature.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, other than minor administrative costs, there
will be little net fiscal impact, as the bill more explicitly
implements the requirements of current law per Government Code
(GC) Section 19130. The bill provides SPB with flexibility
regarding the timing of contract termination, so as not to
conflict with the specific terms of a contract. To the extent
implementation of the bill leads to a shift of state services
from contracts to civil servants, there could be costs or
AB 2494
Page 3
savings depending on the circumstances.
For example, in its report on this subject, the State Auditor
(Auditor) estimated that the Department of Health Care Services
(DHCS) saved more than $1.7 million when it converted
information technology (IT) contracts to state IT positions.
COMMENTS : According to the author's office, "Currently, the
state pays an estimated $34 billion for 13,600 personal services
and consulting contracts. AB 2494 would implement key
recommendations of the Auditor to correct major flaws in the
process for personal services contracts ordered terminated by
SPB? The [Auditor] found that state departments routinely
continue paying for private services even though SPB has
disapproved the contracts. The Auditor's review of contracting
practices by DHCS and Department of Public Health (DPH) found
the agencies were slow or failed completely, to act to cancel
contracts ordered terminated by SPB."
According to the Auditor, over the last five years, SPB has
disapproved 17 IT contracts because the departments, upon formal
challenges from a union, could not adequately justify
contracting under the GC Section 19130. Although the union
prevailed in 17 of its 23 IT contract challenges, many of SPB's
decisions were moot because the contracts had already expired
before SPB rendered its decisions. According to the Auditor,
because SPB lacks a mechanism for determining whether state
agencies comply with its decisions, the departments experienced
no repercussions for failing to terminate these contracts.
Although not prohibited by law from doing so, the departments
entered into numerous subsequent contracts for the same services
as those in the contracts previously disapproved by SPB. The
Auditor recommended that the Legislature specify that contracts
disapproved by SPB be terminated and require state agencies to
provide documentation to SPB and the applicable unions to
demonstrate to the satisfaction of SPB the termination of these
contracts.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301 FN:
0004219