BILL ANALYSIS �
Bill No: AB
633
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Bill Analysis
AB 633 Author: Olsen
As Introduced: February 16, 2011
Hearing Date: June 14, 2011
Consultant: Paul Donahue
SUBJECT : California State University; Acquisition of motor
vehicles
SUMMARY : Authorizes the California State University (CSU)
to acquire motor vehicles and surplus mobile equipment
without first having the Department of General Services
(DGS) investigate and establish the necessity for the
acquisition.
Existing law :
1) Specifies that no state agency purchase order for the
acquisition or replacement of motor vehicles shall be
issued until DGS has investigated and established that the
vehicle purchase is necessary. (Gov. Code � 13332.09)
2) Prohibits a state agency, including DGS, from purchasing
new vehicles without the approval of the Department of
Finance (DOF) and the secretary or director of the agency
or department requesting the purchase.
3) Authorizes CSU to enter into contracts with any public
or private entity for the furnishing of goods, services or
equipment.
4) Defines "state agency" to include every state office,
officer, department, division, bureau, board, and
commission, and, effective July 1, 2012, would again
include each campus of the CSU within the definition. (Gov.
Code �� 11000, 13332.09)
AB 633 (Olsen) continued
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5) Requires CSU, by June 30th of each year until July 1,
2012, to report to the Legislature on its motor vehicle
procurement, including the following:
a) An inventory of motor vehicles by campus and type
b) The number of vehicles purchased during the prior
fiscal year (FY), by campus and type;
c) The average time taken to complete procurement of
each motor vehicle purchased during the prior FY;
d) Any changes in policies or procedures made during
the prior FY relative to motor vehicle procurement and
contracts, and the identification of any vehicles
procured pursuant to the new policy or procedure; and,
e) The estimated cost savings associated with
management by CSU of motor vehicle procurement,
including average time to complete procurements,
reduced administrative costs, reduced charges paid to
DGS, and competitive or reduced market prices obtained
for vehicles.
This bill :
Effective July 1, 2012, eliminates each campus of the
California State University from the definition of a "state
agency," thus authorizing CSU to manage and approve its own
acquisitions of motor vehicles and mobile equipment.
COMMENTS :
1) Purpose of the bill : According to the author's office,
in 2004, SB 1757 (Denham) inadvertently included CSU under
a new and duplicative process for purchasing vehicles. For
several years, this legislation cost CSU over $240,000 per
year to support the DGS Fleet Management Program despite
the fact that CSU is less than two percent of DGS's total
purchases statewide.
The author also notes that AB 262 (Coto) of 2007 suspended
provisions related to DGS approval of vehicle purchasing
and required the CSU Board of Trustees to report annually
to the Legislature until June 30, 2012, certain information
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regarding motor vehicle procurement.
The author states that these reports show how CSU was able
to procure their vehicles in a more timely and cost-saving
manner, and that this bill will allow CSU to continue to
procure vehicles cost effectively under its long standing
Education Code authority.
2) History : In 1994, the Legislature passed AB 1191
(Aguiar), which authorized the CSU to (1) lease any real
property for use by CSU, and (2) procure goods and
services, including telecommunications goods and services,
without going through the State Department of General
Services approval process.
In 2004, however, the Legislature passed SB 1757 (Denham),
which specifies that CSU must receive approval from DGS
before acquiring motor vehicles or general use mobile
equipment.<1> In response to this enactment, CSU sponsored
AB 262 (Coto) in 2007, which suspended temporarily the
requirement that DGS approve motor vehicle purchases made
by CSU, instead requiring that CSU prepare an annual report
to the Legislature on its motor vehicle inventory,
purchases, estimated cost savings, and the like. On July
1, 2012, the reporting requirement expires, and DGS would
also resume its oversight and approval of CSU motor vehicle
purchases.
If this bill passes, CSU motor vehicle purchasing
activities would be exempt from DGS oversight and approval,
and in addition, CSU would no longer be required to report
to the Legislature on its motor vehicle purchases.
3) Should DGS exercise oversight of CSU motor vehicle
purchases ? Insofar as CSU is concerned, SB 1757 (Denham)
"inadvertently included CSU under a new and duplicative
process for the purchasing of vehicles." In fact, there
was no inadvertence, but a conscious decision of the
Legislature. The provisions specifically requiring DGS
approval of CSU motor vehicle purchases were included in
the bill from very early on in the legislative process.
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<1> Gov. Code � 13332.09 (f) additionally states that the
"University of California is requested and encouraged to
have the �DGS] perform the tasks identified in this section
with respect to the acquisition or replacement of motor
vehicles by the University of California."
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Nevertheless, three years later, the Legislature suspended
that law for 5 years. The 5-year suspension of the law
requiring DGS to exercise oversight of CSU motor vehicle
purchases expires on July 1, 2012. During the five-year
suspension period CSU is required to annually report its
motor vehicle purchases to the Legislature. Without
additional legislation, CSU will be subject to DGS
oversight and approval of its vehicle purchases on and
after July 1, 2012.
The policy question is whether the Legislature considers it
appropriate or desirable for DGS to exercise oversight of
CSU motor vehicle purchases. Regardless of the answer to
that question, the debate raises an issue regarding
allocation of fees among state agencies to pay for control
agency services and oversight.
Several years ago, DGS became a fee for service agency.
For each service or oversight function provided by DGS, the
client agency is billed. It is probably an understatement
to say that this has caused friction between DGS and some
of the agencies and departments it serves.
It is relevant in this discussion because a chief complaint
of CSU is that DGS overcharged for services rendered during
the 3 years it was subject to direct DGS oversight. For
example, CSU states that it was charged approximately
$153,000 in DGS Fleet Administration fees during each of
the 3 years. DGS does not dispute this charge. It states
that it charges $81 per vehicle, and that CSU owns 4456
motor vehicles.
DGS states that the per-vehicle fee is a FAMS<2> data
management fee that is charged to all state agencies. DGS
states that FAMS is used to manage various data that are
required to be reported to state and federal entities, and
that analysis of FAMS data has been useful in reducing the
number of state vehicles in the state fleet. DGS states
that the instant availability of FAMS data has enabled DGS
to reduce statewide fleet numbers and drive the state
toward more efficient use of vehicle assets.
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<2> FAMS is the Fleet Asset Management System that was
fully implemented at DGS in 2009 to manage and control the
state vehicle fleet.
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CSU submits data to DGS for use in FAMS, but DGS does not
charge and CSU does not pay any per vehicle fees, which has
been the case since enactment of AB 262 (Coto) in 2007,
which enacted the 5-year suspension of DGS oversight of CSU
vehicle purchases. The fees that would otherwise be
charged to CSU are spread out among other state agencies.
CSU states in support of this bill that it also paid
approximately $10,400 in DGS procurement fees for the 22
vehicles for which CSU obtained approval from DGS during
the 3-year period of DGS oversight. DGS reports that it
routinely charges 1.29% of the purchase price of the motor
vehicle to any state or local entity that purchases a
vehicle using the blanket DGS contract. DGS contends that
this fee is more than offset by the savings that accrue to
those who utilize the contract, because DGS is able to
command a steeply discounted cost for vehicles by virtue of
the size of the contract.
4) Gubernatorial Executive Orders on fleet-related issues :
Executive Order S-14-09, issued in July 2009, prohibits all
state agencies and departments from ordering or purchasing
new vehicles for non-emergency use. The Director of DGS
could still approve a purchase, subject to review by the
Consumer Services Agency Secretary, but only when the
purchase was necessary to protect public health and safety,
provide critical services and functions, utilize federal
stimulus funding, or achieve cost savings.
On January 27, 2011, Governor Brown issued Executive Order
B-2-11, which requires agencies and departments to review
home-storage permits and fleet usage and submit a plan to
DGS to withdraw vehicles that are non-essential or
cost-ineffective to be later sold. Like its predecessor,
EO B-2-11 also prohibits the purchase of non-emergency
vehicles, unless the vehicle is essential for health and
safety purposes or realizes cost savings. The provisions
of this bill that delete CSU from the definition of state
agency, would remove CSU from the requirements of EO
B-2-11, and would also delete its reporting requirements to
the Legislature.
5) Related legislation :
AB 2031 (Evans), Stats. 2010, ch. 247 prohibits a state
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agency or department, including DGS, from purchasing new
vehicles without the approval of the Department of Finance
and the secretary or director of the agency or department
requesting the purchase.
AB 262 (Coto) Stats. 2007, ch. 679 requires CSU to purchase
cars through DGS and be subject to DGS oversight as part of
the state fleet by redefining "state agency" to include
each campus of the CSU for vehicle purchases, starting in
2012. AB 262 also deleted mandatory annual fleet reporting
requirements from CSU to DGS.
AB 236 (Lieu) Stats. 2007, ch. 593 changed state policies
regarding the purchase of vehicles for state vehicle fleets
in order to increase fuel efficiency and the use of
alternative fuels, and expanded the nature and extent of
information on which DGS is required to report to the
Governor and the Legislature.
SB 1757 (Denham) Stats. 2004, ch. 926 establishes
requirements for CSU for the acquisition of motor vehicles
under the supervision of DGS, and encouraged the University
of California to follow these requirements.
AB 1191 (Aguiar) Stats. 1994, ch. 1097 authorized the CSU
Board of Trustees to lease any real property for use by
CSU, and procure goods and services, including
telecommunications goods and services, without going
through the DGS approval process.
SUPPORT:
California State University (source)
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
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