BILL ANALYSIS
SB 1122
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Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
SB 1122 (Wright) - As Amended: March 22, 2010
SENATE VOTE : 33-0
SUBJECT : University of California: competitive bidding and
employment.
SUMMARY : Increases the threshold above which the University of
California (UC) is required to competitively bid contracts for
materials, goods, and services from $50,000 to $100,000, and
expands an exemption from conflict-of-interest provisions to
include student employees engaged in multiple campus employment
positions.
FISCAL EFFECT : According to UC, administrative costs related
to the management of a competitive bid proposal will be reduced
by $780,000 annually as the result of the reduced number of bids
which will be issued with the increase in the bid threshold
authorized by this bill. UC also reports that approximately 500
students a year are affected by the conflict of interest
provisions. UC estimates that this bill will result in
administrative cost savings of $175,000 as a result of the
student exemption.
COMMENTS : Double-referral : This bill was approved by the
Assembly Business, Professions and Consumer Protection Committee
on June 15, 2010, by a vote of 11-0.
Need for this bill : According to the author and UC, this bill
will help UC expend its resources more efficiently by reducing
some of the expenses associated with formal competitive bidding
for goods and services and by eliminating the need to review,
approximately 475-500 times per year on a case-by-case basis,
all payments to any student who receives payment from multiple
campus departments to determine if it is allowed by law.
Contracting threshold increase : Existing law establishes a
competitive bid threshold for goods and services purchases by UC
of $50,000. Contracts under $50,000 can be awarded directly to
a vendor or can be informally bid by soliciting bids from
several venders. For purchases in excess of $50,000, UC must
SB 1122
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competitively bid the goods and services. Increasing the bid
threshold to $100,000 creates greater efficiencies and reduces
costs because it takes anywhere from two to 12 months to run a
bid process depending upon the complexity, number of bids, and
the origin of the bid. According to the author, the cost of
goods and services has more than doubled since the $50,000
competitive bid threshold was put in place in 1985, with no
adjustment since then to reflect inflation or the erosion of the
value of the dollar.
According to UC, this bill would affect contracts for goods,
materials and services that can include items such as laboratory
instruments and supplies, chemical reagents, computer software
licenses and updates, janitorial supplies, commercial kitchen
supplies, furniture, consultant services, and equipment repair,
among other things. This bill does not affect UC contracts for
labor and materials related to construction projects, which,
under current law, are subject to a $50,000 competitive bid
threshold.
Student conflict-of-interest exemption : Current law prohibits
university employees, including student employees, from being an
independent contractor with any UC department to provide
services or goods. According to UC, these provisions
continually raise issues for student employees employed by
campus departments but receiving payment for other campus
activities as well. Though these students eventually get paid,
this requires issuance of an exception, review and research by
campus purchasing and human resource directors, then manual
keying of each check by staff processors, resulting in delaying
payment to students and increased administrative costs.
Related legislation : AB 2448 (Furutani), pending in the Senate
Education Committee, would authorize a California Community
College district to award contracts for supplies and materials
over $50,000 to the bidder offering the best value at the lowest
cost.
REGISTERED SUPPORT / OPPOSITION :
Support
University of California
Opposition
SB 1122
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None on file.
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960