BILL ANALYSIS �
AB 1574
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ASSEMBLY THIRD READING
AB 1574 (Pan)
As Introduced January 30, 2014
Majority vote
ADMINISTRATIVE REVIEW 11-0
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|Ayes:|Frazier, Achadjian, | | |
| |Allen, Buchanan, Ian | | |
| |Calderon, Cooley, Medina, | | |
| |Olsen, Quirk-Silva, | | |
| |Salas, Wagner | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Prohibits a state agency from entering into a service
contract that guarantees payments for services not provided.
Specifically, this bill prohibits contracts that:
1)Provide for guaranteed occupancy rates for private prisons,
dormitories, or any other contracted facility;
2)Prohibit a state agency from maintaining, improving, or
building public infrastructure;
3)Penalize a state agency if a contractor loses revenue as a
result of natural or man-made emergencies;
4)Allow for an increase in fees or charges without approval by
the state agency; and,
5)Allow for an increase in fees or charges to be made in a
nonpublic manner.
EXISTING LAW :
1)Specifies the various responsibilities of the Department of
General Services (DGS) and other state agencies in overseeing
and implementing state contracting procedures and policies.
2)Prohibits, under the California Constitution, gifts of public
funds.
AB 1574
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FISCAL EFFECT : Unknown. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS : This bill would prohibit a state agency from entering
into a service contract that guarantees payments for services
not provided and bans specific practices. According to the
sponsor, the American Federation of State, County and Municipal
Employees (AFSCME), this bill "would protect state agencies from
being overcharged by contractors."
According to DGS, the state usually contracts only for services
that are provided. When the state enters into a service
contract, the required work of the contractor is specified in
the contract's "scope of work" section. Additionally, the
amounts specified in contracts are stated and these agreements
are usually available to the public. DGS indicates that the
state does not typically enter into agreements that guarantee
payments for services not provided because doing so could
potentially constitute a "gift of public funds." The California
Constitution prohibits the state from providing gifts of public
funds.
The sponsor is concerned that guaranteeing a minimum occupancy
rate for private prisons could incentivize keeping prisons full
instead of reducing prison populations. This type of language
was present in some past contracts between the California
Department of Corrections and Rehabilitation (CDCR) and private
prisons. However, according to CDCR, its recent contracts do
not include guaranteed minimum occupancy rates and CDCR does not
plan to agree to them in future contracts.
While it is unclear how often the practices that this bill would
prohibit actually occur, codifying these prohibitions could
provide the state protections from paying for services not
provided.
Analysis Prepared by : Scott Herbstman / A. & A.R. / (916)
319-3600
FN: 0003063
AB 1574
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