BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2494|
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THIRD READING
Bill No: AB 2494
Author: Blumenfield (D), et al
Amended: 5/28/10 in Assembly
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 7-1, 6/29/10
AYES: Wright, Calderon, Florez, Negrete McLeod, Padilla,
Price, Yee
NOES: Harman
NO VOTE RECORDED: Denham, Oropeza, Wyland
SENATE APPROPRIATIONS COMMITTEE : 7-4, 8/12/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Ashburn, Emmerson, Walters, Wyland
ASSEMBLY FLOOR : 50-27, 6/1/10 - See last page for vote
SUBJECT : Personal services contracts
SOURCE : Service Employees International Union, Local
1000
DIGEST : This bill adds a new provision to the Government
Code pertaining to personal services contracts that
requires a state agency to immediately discontinue a
contract that has been disapproved by the State Personnel
Board, unless otherwise ordered.
ANALYSIS : Existing law authorizes state agencies to use
personal services contracts if specified standards are
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satisfied, including, among other things, the contract does
not cause the displacement of civil service employees and
the contract is awarded through a publicized, competitive
bidding process. The State Personnel Board (SPB) is
required to review a proposed contract upon the request of
an employee organization for compliance with those
standards.
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
disapproved contract.
3. Requires a state agency ordered to discontinue a
contract to notify 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. Stipulates that failure to provide the required notices
may be grounds for rejection of future contracts for the
same or similar services as those discontinued.
5. Makes various legislative findings regarding a September
2009 State Auditor report relating to personal services
contracts for private vendors and declares that
implementing the recommendation of the State Auditor
regarding contracts reviewed by the SPB would provide
greater accountability and transparency without reducing
the ability of state agencies to enter or continue valid
contracts.
Comments
A September 2009 report by the State Auditor on the use of
information technology (IT) personal services and
consulting contracts at the Department of Health Care
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Services and the Department of Public Health found that,
over the preceding five years, SPB had disapproved 17 IT
contracts because the departments, upon formal challenges
from a union, could not adequately justify contracting
under Section 19130 of the Government Code - the statute
providing conditions allowing for the use of contracting in
lieu of civil servants to perform state services. 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 State 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 State 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. This bill is intended
to implement this recommendation.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
SPB contract review Unknown, likely minor costs
annually General/
process to ensure state agencies
discontinueSpecial
contracts pursuant to board directives
Contract disapprovals Unknown savings or
short-term costs General/
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resulting from immediate terminations
of contracts
SUPPORT : (Verified 8/16/10)
Service Employees International Union, Local 1000 (source)
Association of California State Supervisors
California State Employees Association
California State University Employees Union
CSEA Retirees, Inc.
Professional Engineers in California Government
OPPOSITION : (Verified 8/16/10)
Department of Finance
ARGUMENTS IN SUPPORT : According to the bill's sponsor,
Service Employees International Union (SEIU) Local 1000,
"This bill improves government operations and saves money
in California?. After an investigation into certain IT
contracts in DHCS and DPH, the Auditor concluded that there
is no mechanism for knowing whether state agencies are
complying with SPB's decision to disapprove a contract and
made several legislative recommendations. The Auditor
estimates that changes made in contracting practices and
conversion of certain IT contracts to state positions saved
the state more than $1.7 million. This bill would codify
some of those key recommendations and ensure that when SPB
takes action on an abusive contract, that action is
complied with."
According to the Professional Engineers in California
Government, "SPB is the constitutionally created agency
responsible for overseeing state contracts in California.
One of SPB's responsibilities is to review challenges to
personal services contracts. It makes good sense to
provide for the authority to discontinue contracts once
they have determined they are illegal. The alternative of
allowing illegal contracts to continue while a court
challenge takes place is not in the public interest."
ARGUMENTS IN OPPOSITION : The Department of Finance (DOF)
is opposed to this bill because of the unknown fiscal and
operational
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consequences. DOF contends that the abrupt termination of
contracts that may be providing critical services could
leave departments unable to meet their programmatic
responsibilities. "We also note that personal service
contracts are generally for limited term projects;
recruiting qualified state civil service employees for
limited term assignments is often difficult. Additionally,
it is unclear if the immediate discontinuation of a
contract as
a result of this bill may conflict with the termination
language in the terms and conditions of that contract."
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De
Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani,
Galgiani, Hall, Hayashi, Hernandez, Hill, Huber, Huffman,
Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning,
Nava, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Skinner, Solorio, Swanson, Torlakson, Torres,
Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Blakeslee, Conway,
Cook, DeVore, Emmerson, Fletcher, Fuller, Gaines,
Garrick, Gilmore, Hagman, Harkey, Jeffries, Knight,
Logue, Miller, Nestande, Niello, Nielsen, Norby, Silva,
Smyth, Tran, Villines
NO VOTE RECORDED: Tom Berryhill, Audra Strickland, Vacancy
TSM:mw 8/16/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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