BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1122
                                                                  Page  1

          Date of Hearing:   August 4, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 1122 (Wright) - As Amended:  March 22, 2010 

          Policy Committee:                              Business and  
          Professions  Vote:                            11-0
                        Higher Education                        9-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill:

          1)Increases, from $50,000 to $100,000, the threshold above which  
            the University of California (UC) is required to competitively  
            bid contracts for goods, materials, and services.

          2)Expands an exemption from conflict of interest  
            provisions-regarding UC employees engaged for compensation in  
            outside activities that are funded by UC or in contracting  
            with UC to provide goods or services-to include student  
            employees for payment of campus activities outside the scope  
            of a student's primary scope of UC employment.

           FISCAL EFFECT  

          UC estimates increasing the bidding threshold, and thus reducing  
          the number of contractors requiring a formal competitive bidding  
          process will result in administrative cost savings of almost  
          $800,000 annually. Likewise, the University indicates that  
          providing the conflict of interest exemption for student  
          employees will provide administrative cost savings of around  
          $175,000 annually, based on the current need to review up to 500  
          payments each year to student employees for conformance with  
          conflict of interest requirements.

           COMMENTS  

           Purpose  . UC indicates that the $50,000 bid threshold dates to  
          1985, yet the since that time the cost of goods has more than  








                                                                  SB 1122
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          doubled. Formal bid processes are costly and can serve as a  
          barrier to small business participation. Increasing the bid  
          threshold will provide immediate cost savings for UC by reducing  
          the number of contracts subject to the bid process.   
          Additionally, UC states that this will bring UC procurement more  
          in line with the California State University, which has a less  
          rigorous process for bids between $50,000 and $100,000.

          SB 1122 also exempts student employees from an existing  
          provision prohibiting a university
          employee from being an independent contractor with any  
          university department to provide
          goods or services. UC indicates that current law, which already  
          includes an exemption for employees in teaching and research  
          positions, raises issues for many student employees not covered  
          by the exemption. Many of these student employees perform other  
          activities at the University to supplement their income, such as  
          performing arts. Because existing law does not provide a  
          specific exemption for student employees, the University must  
          review payments to these students on a case-by-case basis to  
          determine if it is allowed by law. SB 1122 will thus remove this  
          administrative burden.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081