BILL ANALYSIS �
AB 1575
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Date of Hearing: April 9, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1575 (Pan) - As Amended: March 20, 2014
Policy Committee:
AccountabilityVote:10-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill establishes statutory oversight requirements regarding
state service contracts. Specifically, this bill:
1)Requires service contracts to include performance criteria and
cost parameters, and requires the contractor to submit
quarterly reports to the contracting agency regarding the
contractor's compliance with the performance criteria and
amounts billed to the state.
2)Authorizes cancellation of a contract for failure to comply
with contract requirements and with any applicable laws and
regulations related to the contract.
FISCAL EFFECT
No significant cost impact. The bill is generally consistent
with current state contracting practices. Any costs to review
quarterly reports submitted by contractors would be minor and
absorbable, and could result in better contract management and
commensurate cost savings.
COMMENTS
1)Purpose . This bill sets additional requirements for service
contracts related to contract terms, reporting, and grounds
for cancellation. According to the sponsor, the American
Federation of State, County and Municipal Employees (AFSCME),
this bill "would hold outsourced public service providers
accountable for their actions" and protect state agencies.
AB 1575
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2)Background . According to DGS, elements such as performance
criteria and cost parameters are generally already included in
service contracts as they specify the "scope of work" as well
as the "maximum dollar amount" of the agreement. The State
Contracting Manual (SCM) notes the importance of clearly
defining the expected work and maximum amounts. Additionally,
these categories are part of the Standard Agreement form used
when state agencies and contractors enter into agreements.
This bill codifies these requirements in the Public Contract
Code.
This bill requires service contractors to report quarterly on
performance criteria and actual costs incurred. According to
DGS, requiring such reporting is currently at the discretion
of the state agencies on specific contracts. While some
quarterly reports may duplicate
information that is already included in contractors' invoices
to state agencies, these reports, particularly for high-cost
contracts, could allow better oversight of contractors.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081