Costly County Contractor Process Opposed by CalChamber, Coalition

A California Chamber of Commerce-opposed bill that imposes a cost to contractors with county contracts and subjects contractor and subcontractor employees’ private information to Public Records Act requests has been held in a Senate fiscal committee pending review of the bill’s financial impact on the state budget.

The CalChamber-led coalition is opposed to AB 1250 (Jones-Sawyer; D-South Los Angeles) because the bill seeks to severely limit options for county agencies to determine the most appropriate solution to providing efficient and effective public service by establishing significant and costly obstacles for agencies and for vendors contracting for personal services.

Must Justify Contracts

AB 1250 imposes not only onerous requirements on counties in order to justify the need for contracting out personal services, but also imposes costs on contractors. The bill requires the agency to conduct an audit of the contract to determine if anticipated cost savings of the contract have been realized. The contractors would be required to reimburse the agency for the cost of the analysis, and would be prohibited from factoring the cost of the audit into the contract costs, thereby imposing a fee on the contractor. If the onerous process for these agencies to follow when seeking to contract for personal services does not discourage the agency from attempting the process, the cost to the contractors will discourage many from engaging.

AB 1250 requires the contractor, on a monthly basis, to furnish the names and hourly rates of all contractor and subcontractor employees, as well as any independent contractor’s names and compensation. This private information would be provided to anyone who makes a request, per the Public Records Act. The public release of private information could be damaging to the individuals whose contact information is exposed. It is unclear why providing this personal information benefits the public.

Counties have a long history of addressing service delivery challenges with creativity, self-reliance and innovation in partnership with the private sector. Limited budgets create further challenges to local governments that can sometimes be addressed through using outside vendors to provide services. By establishing near-insurmountable barriers to contracting, AB 1250 seeks to eliminate even the consideration of contracting as a tool to meet the needs of these agencies. By limiting their choices, AB 1250 limits the options that counties rely upon to provide public services, and stay within their means.

If in fact a county makes it to this point and determines that contracting out these services has merit, there may not be any contractors to bid on these contracts because of the costs associated with reimbursing the contracting agencies for the required audit. AB 1250 will in effect leave agencies with limited choice, or lacking the ability to maintain and provide needed services altogether.

Department of Finance Opposed

During the Senate Appropriations Committee hearing on August 21, the state Department of Finance (DOF) announced that it opposes the bill because AB 1250 “would create unknown, but likely significant General Fund costs to the state.”

The DOF opposition rationale also aligns with the CalChamber-led coalition’s concerns about increased costs from AB 1250.

 Action Needed

September 1 is the deadline for all bills to be sent to the Senate and Assembly floors. CalChamber urges members to contact their senator and member of the Senate Appropriations Committee and recommend they oppose AB 1250 and hold the bill in the appropriations committee.

Staff Contact: Marti Fisher