BILL ANALYSIS
SB 1231
Page 1
SENATE THIRD READING
SB 1231 (Corbett)
As Amended May 17, 2010
Majority vote
SENATE VOTE :21-13
LABOR & EMPLOYMENT 4-1 APPROPRIATIONS 12-5
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|Ayes:|Swanson, Furutani, |Ayes:|Fuentes, Bradford, |
| |Monning, Yamada | |Huffman, Coto, Davis, De |
| | | |Leon, Gatto, Hall, |
| | | |Skinner, Solorio, |
| | | |Torlakson, Torrico |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Bill Berryhill |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Norby |
| | | | |
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SUMMARY : Makes various changes to existing provisions of the
Public Contract Code related to "sweat free" procurement policy
and a related code of conduct. Specifically, this bill :
1 Renames the "Sweat Free Code of Conduct" as the "Slave and
Sweat Free Code of Conduct" (Code) and makes conforming
changes.
2)Expands the scope of the code of conduct to include abusive
forms of labor performed by all persons, not just child labor.
3)Extends the period that a contractor may be removed from the
bidder's list for violations of these requirements from 360
days to two years, as specified.
4)Specifies that contractors must only exercise "due diligence"
(rather than "ensure") that their contractors comply with the
Code.
5)Provides that a contractor shall not be subject to sanctions
for violations of which the contractor had no knowledge that
were committed solely by a subcontractor. Sanctions shall
instead be imposed against the subcontractor that committed
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the violation.
6)Specifies that for contractors whose manufacturing or assembly
locations are located outside the United States (U.S.), those
contractors shall ensure that their subcontractors comply with
the appropriate laws of countries where the facilities are
located "or international laws or treaties binding upon those
countries."
7)Specifies that the Department of Industrial Relations (DIR)
shall establish a contractor responsibility program by January
1, 2012, as specified.
8)Authorizes the appropriate procurement agency and DIR to use
the U.S. Department of Labor's "List of Goods Produced by
Child Labor or Forced Labor" in identifying procurement
categories appropriate for phased implementation.
9)Requires DIR and the Department of General Services (DGS) to
post procedures and contact information for filing complaints
on their respective Web sites.
EXISTING LAW :
1 Provides DGS with the governing authority related to state
procurement activities, including acquisition of materials,
supplies and services.
2)Requires every contract entered into by a state agency for the
procurement of equipment, materials, supplies, apparel,
garments and accessories and the laundering thereof, excluding
public works contracts, to require a contractor to certify
that no such items provided under the contract are produced by
sweatshop labor, forced labor, convict labor, indentured labor
under penal sanction, abusive forms of child labor, or
exploitation of children in child labor. The law provides for
misdemeanor liability in the case of a knowing false
certification.
3)Provides that if a contractor knew or should have known the
specified products furnished to the state were laundered or
produced by the specified types of prohibited labor, the
contractor may be removed from the bidder's list for 360 days.
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4)Requires contractors to "ensure" that their subcontractors
comply with the Code, under penalty of perjury.
5)Requires the DIR to establish a contractor responsibility
program, including a Code, as specified.
6)Requires the appropriate procurement agency, in consultation
with DIR, to employ a phased and targeted approach to
implement the Code, as specified.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, one-time costs of $50,000 to $100,000 to DIR and DGS
to develop regulations, and increased enforcements and oversight
costs potentially exceeding $150,000 annually. Unknown,
potentially moderate increase in contracting costs, to the
extent that added administrative requirements and risks to
contractors and subcontractors are reflected in procurement
bids.
COMMENTS : This bill proposes to make several changes related
to state procurement policy regarding materials produced by
abusive forms of labor.
Supporters argue that, in a global economy, we have seen a race
to the bottom as free trade policies have allowed corporations
to jump from country to country in search of the cheapest labor
and the least regulations. As a result, products are produced
throughout the globe using forced labor, child labor, indentured
servitude and other abusive conditions. The current global
economic crisis has only exacerbated the problem by worsening
the degree of poverty that is often a precursor to slavery and
trafficking.
Supports contend that while the State of California cannot
always eradicate such labor conditions, it should not legitimate
them by doing business with those who engage in immoral
practices. They argue that as the eighth largest economy, and
one of the largest purchasers of goods in the world, California
bears a moral responsibility to be a leader in socially
responsible procurement and purchasing practices that insist on
humane and lawful labor standards. This bill would help further
ensure that human rights violations are not subsidized with
taxpayer dollars.
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Opponents argue that this bill will raise the cost for
businesses through increased litigation, either against
businesses or because businesses will believe they were
inappropriately targeted, and delay project and service
delivery. This in turn will raise the cost of state procurement
at a time when California is facing a cash and budget crisis.
To the extent that these projects are delayed by protests and
litigation, this bill would slow the state's economic recovery
at a time when unemployment continues to hover at high levels.
Opponents also state that, according to their discussions with
DIR, the current law has yet to be enforced. Therefore, this
bill would expand a section of law that has yet to be used, even
though there is no estimation of how effective the current law
is and whether it should be expanded. Opponents also contend
that the bill inappropriately allows state agencies to contract
with non-profit organizations and non-governmental
organizations. They express serious concerns about this type of
third-party enforcement of state law on private businesses.
Opponents conclude that, while the business community opposes
slavery and the abusive treatment of workers, this bill seeks to
use a one-size-fits-all approach on businesses of varying sizes
and industries. They contend that the bill will ultimately
increase costs to the state over a very difficult issue that is
best handled on federal and international levels.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0005924