BILL ANALYSIS �
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THIRD READING
Bill No: AB 633
Author: Olsen (R), et al.
Amended: 6/23/11 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMM. : 11-1, 6/28/11
AYES: Wright, Anderson, Berryhill, Calderon, Cannella,
Corbett, De Le�n, Hernandez, Padilla, Strickland, Wyland
NOES: Yee
NO VOTE RECORDED: Evans
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 60-0, 4/14/11 (Consent) - See last page
for vote
SUBJECT : California State University: acquisition of
motor vehicles
SOURCE : California State University
DIGEST : This bill authorizes the California State
University (CSU) to acquire motor vehicles and surplus
mobile equipment without first having the Department of
General Services investigate and establish the necessity
for the acquisition. This bill, commencing July 1, 2012,
requires the Trustees of CSU to report to the Legislature
on their motor vehicle procurement, to include specified
information, including some information required under
existing law, on or before June 30 of each year, up to and
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including June 30, 2017. This bill also requires the
Trustees, to the greatest extent feasible, to purchase
vehicles using statewide commodity contracts.
ANALYSIS :
Existing law:
1. Specifies that no state agency purchase order for the
acquisition or replacement of motor vehicles shall be
issued until the Department of General Services (DGS)
has investigated and established that the vehicle
purchase is necessary.
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 the 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.
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.
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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:
1. Effective July 1, 2012, eliminates each campus of the
CSU from the definition of a "state agency," thus
authorizing CSU to manage and approve its own
acquisitions of motor vehicles and mobile equipment.
2. Commencing July 1, 2012, requires the Trustees to report
to the Legislature on their motor vehicle procurement,
to include specified information, including some
information required under existing law, on or before
June 30 of each year, up to and including June 30, 2017.
3. Requires the Trustees, to the greatest extent feasible,
to purchase vehicles using statewide commodity
contracts.
Background
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 DGS 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. In response to this enactment, CSU sponsored AB
262 (Coto, 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
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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.
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.
Nevertheless, three years later, the Legislature suspended
that law for five years. The five-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 three years it was subject to direct DGS oversight.
For example, CSU states that it was charged approximately
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$153,000 in DGS Fleet Administration fees during each of
the three 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 Fleet Asset
Management System (FAMS) 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.
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 five-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 three-year period of DGS oversight. DGS reports that
it routinely charges 1.29 percent 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.
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
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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,
Executive Order 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
Executive Order B-2-11, and would also delete its reporting
requirements to the Legislature.
Related Legislation
AB 2031 (Evans), Chapter 247, Statutes of 2010, prohibits a
state 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), Chapter 679, Statutes of 2007, 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. The bill also deleted
mandatory annual fleet reporting requirements from CSU to
DGS.
AB 236 (Lieu), Chapter 593, Statutes of 2007, 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), Chapter 926, Statutes of 2004,
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), Chapter 1097, Statutes of 1994,
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/15/11)
California State University (source)
OPPOSITION : (Verified 8/15/11)
Department of Finance
ARGUMENTS IN SUPPORT : 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's office also notes that AB 262 (Coto, 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 regarding motor vehicle procurement.
The author's office 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.
ARGUMENTS IN OPPOSITION : The Department of Finance is
opposed to this bill "because this measure would reduce DGS
oversight and
control over the state's fleet at a time when the state is
making significant efforts to reduce fleet expenses
statewide. In addition, any potential for cost savings may
be eroded by a higher cost for each vehicle purchase and
could result in increased costs overall."
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ASSEMBLY FLOOR : 60-0, 4/14/11
AYES: Achadjian, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Campos, Carter, Cedillo, Chesbro,
Cook, Davis, Dickinson, Donnelly, Eng, Fletcher, Fong,
Fuentes, Furutani, Gatto, Gordon, Hagman, Halderman,
Hall, Hayashi, Roger Hern�ndez, Hill, Huber, Hueso,
Huffman, Jeffries, Lara, Bonnie Lowenthal, Ma, Miller,
Mitchell, Monning, Nestande, Nielsen, Norby, Pan, Perea,
V. Manuel P�rez, Portantino, Silva, Skinner, Smyth,
Solorio, Swanson, Torres, Valadao, Wieckowski, Yamada,
John A. P�rez
NO VOTE RECORDED: Alejo, Butler, Charles Calderon, Conway,
Feuer, Galgiani, Garrick, Gorell, Grove, Harkey, Jones,
Knight, Logue, Mansoor, Mendoza, Morrell, Olsen, Wagner,
Williams, Vacancy
PQ:mw 8/16/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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