BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1574|
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THIRD READING
Bill No: AB 1574
Author: Pan (D)
Amended: 5/5/14 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 7-1, 5/13/14
AYES: Correa, Cannella, De Le�n, Galgiani, Lieu, Padilla,
Torres
NOES: Vidak
NO VOTE RECORDED: Berryhill, Hernandez, Vacancy
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 71-0, 3/17/14 - See last page for vote
SUBJECT : Personal services contracts: state agencies:
prohibitions
SOURCE : AFSCME
DIGEST : This bill prohibits state agencies from entering into
personal services contracts that contain guaranteed payments or
other specified provisions.
ANALYSIS :
Existing law:
1. Requires, under the California Constitution, a civil service
appointment to be made under a general system based on merit
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as determined by competitive examination; and generally
restricts contracting out by state agencies to those services
that cannot be performed by civil service employees, subject
to specified statutory exceptions.
2. Imposes various requirements with respect to contracts,
including amendments, entered into by any state agency for
services to be rendered to the state, whether or not the
services involve the furnishing or use of equipment,
materials, or supplies, or are performed by an independent
contractor.
This bill:
1. Prohibits a state agency from entering into a contract for
personal services that guarantees payments for services not
provided.
2. Declares that a personal services contract for the
acquisition of goods and services shall not unduly restrict a
state agency from taking actions in the public interest.
3. Specifies that a personal services contract shall not do any
of the following:
A. Provide for guaranteed occupancy rates for private
prisons, dormitories, or any other contracted facility.
B. Prohibit a state agency from maintaining, improving,
or building public infrastructure.
C. Penalize a state agency if a contractor loses revenue
as a result of natural or man-made emergencies, including
acts of terrorism or acts of nature.
D. Allow for an increase in fees or charges without
approval by the state agency.
E. Allow for an increase in fees or charges to be made in
a nonpublic manner.
Background
Each personal services contract entered into by a state agency
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must identify the parties to the contract, contain the length of
time for the performance or completion of the contract, and the
like.
Importantly, the contract must clearly express the maximum
amount to be paid and the basis on which payment is to be made -
e.g., a fixed amount regardless of time spent, billing based on
time spent at a specified rate plus actual expenses, or cost
recovery.
According to the Department of General Services (DGS), the state
generally 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 generally made available to the
public.
DGS reports 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, which is prohibited in the California Constitution.
The bill's sponsor is concerned that guaranteeing a minimum
occupancy rate for private prisons could create an incentive to
keep prisons full instead of reducing prison populations.
Minimum occupancy rate language did exist in some past contracts
between the 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 these terms in future contracts.
Comments
According to the author's office, existing law makes state
government agencies susceptible to entering into service
contracts that would legally obligate them to compensate
contractors for services which were never administered. This
bill prohibits state agencies from entering into contracts that
include profit guarantees, non-competition clauses, charges for
acts of nature, and increased fees, all without public approval.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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SUPPORT : (Verified 7/2/14)
AFSCME (source)
California Association of Professional Scientists
California Labor Federation, AFL-CIO
Professional Engineers in California Government
Service Employees International Union
ARGUMENTS IN SUPPORT : According to the bill's sponsor,
AFSCME, this bill "would protect state agencies from being
overcharged by contractors."
ASSEMBLY FLOOR : 71-0, 3/17/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chesbro, Conway, Cooley, Dababneh,
Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Beth
Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Grove,
Hagman, Hall, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Medina,
Melendez, Morrell, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Perea, V. Manuel P�rez, Quirk, Quirk-Silva,
Rendon, Rodriguez, Salas, Skinner, Stone, Wagner, Weber,
Wieckowski, Wilk, Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Ch�vez, Donnelly, Gorell, Logue, Mansoor,
Patterson, Ridley-Thomas, Ting, Waldron
MW:k 7/2/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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