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CC SR 20170502 D - AB 1250 Contracts for Personal ServicesRANCHO PALOS VERDES CITY COUNCIL AGENDA REPORT AGENDA DESCRIPTION: MEETING DATE: 05/02/2017 AGENDA HEADING: Consent Calendar Consideration and possible action to receive and file an update on Assembly Bill No. 1250 regarding contracts for personal services RECOMMENDED COUNCIL ACTION: (1) Received and file an update on Assembly Bill No. 1250 (AB 1250) regarding contracts for personal services. FISCAL IMPACT: None Amount Budgeted: N/A Additional Appropriation: N/A Account Number(s): N/A ORIGINATED BY: Kit Fox, AICP, Senior Administrative Analyst, REVIEWED BY: Gabriella Yap, Deputy City Manager; - APPROVED BY: Doug Willmore, City Managerly{ ATTACHED SUPPORTING DOCUMENTS: A. Letter in opposition to AB 1250 (page A-1) B. League of California Cities "Action Alert" and fact sheet for AB 1250 (page B-1) C. AB 1250 (page C-1) BACKGROUND AND DISCUSSION: On April 12, 2017, the League of California Cities (League) advised Staff that Assembly Bill No. 1250 (AB 1250) had been introduced on February 17, 2017, by Assemblymember Reggie Jones -Sawyer from Los Angeles. On April 14, 2017, the City Attorney's Office alerted Staff that AB 1250 was scheduled for hearing in the Assembly's Public Employees, Retirement and Social Security Committee on April 19, 2017. As currently proposed, AB 1250 would place substantial burdens on local agencies by adding onerous, over -prescriptive and unnecessary requirements that impede on local control and have significant impacts on local governance. The new reporting requirements, privacy concerns, increased costs, and potential for litigation created by this measure would place an overwhelming and significant burden on nearly every city department and would create a de facto ban on virtually all contracting services (Attachment C). The League opposes AB 1250 (Attachment B) and has asked cities to express their opposition to the bill as well. 1 In 2014, the State Assembly adopted House Resolution No. 29 (HR 29), which the League strongly opposed. HR 29 was a non-binding resolution that aimed to restrict local governments' ability to contract out for services. With HR 29 serving as its "blueprint," AB 1250 would: • Require a city, before entering a contract or renewing a contract, to perform a full economic analysis of the potential impacts of outsourcing, including the impact on local businesses if consumer spending power is reduced. • Mandate a city to conduct a full environmental impact analysis caused by contracting for the services. • Force a city to conduct an annual audit of each contract. • Eliminate local agency hiring discretion by limiting a local agencies' ability to utilize a contract for the sole purpose of cost savings through salaries and benefits. • Require that the agency provide an orientation to contract non -city employees. • Require a city to create a new, fully -searchable database that must be posted on the city website. Apart from the inherent cost drivers with this provision, there are significant privacy concerns about posting full names, job titles, and salaries of non -city employees. This database must include: o The names, job titles, salary of each contracted non -city employee and subcontractors. o The services of the contract, the name of the agency department or division of the city who manages the contract. o The amount paid to the contract including the total projected cost of the contract for all fiscal years and the funding source. o The total number of "full-time equivalent" employees being contracted out. Since the urgency to take a position on AB 1250 was brought to the City's attention after the agenda had already been posted for the April 19, 2017, City Council meeting, and since even amending the agenda and adding this item still would not have allowed sufficient time to make the City's position known before the hearing, Staff prepared a letter in opposition to the bill for the City Manager's signature on April 17, 2017 (Attachment A). As of the date that this report was completed, AB 1250 had failed passage in its first Committee hearing, but will be reconsidered by the Committee at some point. Staff will continue to monitor and provide periodic updates to the City Council regarding AB 1250. ALTERNATIVES: In addition to the Staff recommendation, the following alternative action is available for the City Council's consideration: Provide additional direction to Staff regarding the City's position on AB 1250. 2 April 17, 2017 C ITV OF RANCHO PALOS VERDES CITY MANAGER'S OFFICE ADMINISTRATION The Honorable Reginald Jones -Sawyer, Sr. California State Assembly, 59th District Via FAX: (916) 319-2159 State Capitol Building, Room 2117 Sacramento, CA 95814 SUBJECT: AB 1250 (Jones -Sawyer). Counties and Cities: Contracts for Personal Services. Notice of Opposition (as amended 04/07/17) Dear Assembly Member Jones -Sawyer: The City of Rancho Palos Verdes must respectfully oppose your Assembly Bill (AB) 1250, which effectively eliminates almost all contracting services for cities and counties. Local governments have a long history of addressing service delivery challenges with creativity, self-reliance and innovation. Unique local challenges and limited budgets continue to fuel innovative efforts to obtain expertise and provide high quality services. City employees provide many services, while others such as refuse collection and specialized services are provided on a contract basis. Law enforcement services may also be provided via contract with the sheriff, and fire and park services by a special district. As amended, AB 1250 places substantial burdens on local agencies by adding onerous, over - prescriptive and unnecessary requirements that impede on local control and have significant impacts on local governance. Specifically AB 1250: Creates Significant Cost and Workload Requirements: AB 1250 eliminates local agency hiring discretion by limiting a local agencies' ability to utilize a contract for the sole purpose of cost savings through salaries and benefits. This creates a significant hurdle as many local agencies continue to struggle financially and have not achieved the same level of economic prosperity compared to pre -2008 recession levels. Unemployment rates remain high in certain areas, agencies are at a near breaking point on their unfunded actuarial liability (UAL) and normal pension costs and some communities remain in significant financial difficulty. Moreover, AB 1250 requires that the agency provide an orientation to contracted employees. Last year, AB 2835 (Cooper) which mandated that public employers must provide an orientation to their own employees was tagged at $350 million in ongoing costs by the California department of Finance. Having a local agency provide an additional orientation to non -city employees create significant cost and logistical concerns. Additionally, there are real and significant privacy concerns about posting full names, job titles and salaries of non -city employees. AB 1250 would require a city to create a new, fully searchable database that must be posted on the city website which will include substantive and sensitive information including the names, job titles, salary of each contracted employee (and 30940 HAWTHORNE BLVD. / RANCHO PALOS VERDES, CA 90275-5391 / (310) 544-5207 / FAX (310) 544-5291 / www.RPVCA.GOV PRINTED ON RECYCLED PAPER A-1 The Honorable Reginald Jones -Sawyer, Sr. April 17, 2017 Page 2 subcontractors) and services of the contract, the name of the agency department or division of the city who manages the contract. Creates a series of new and burdensome reporting requirements prior to entering or renewing a contract: AB 1250 would require a city, before entering a contract or renewing a contract, to perform a full economic analysis of the potential impacts of outsourcing, including the impact on local businesses if consumer spending power is reduced (among other factors). AB 1250 mandates a city to conduct a full environmental impact analysis caused by contracting for the services. Further, the measure forces a city to conduct an annual audit of each contract and prohibits a city from renewing or granting a new contract before the report is released and considered by the council. Increased Litigation to Local Agencies: AB 1250 applies joint and several liability for employment law violations arising from performance of the contractor as well as torts committed by the contractor or any of its subcontractors in the course of providing services under the contract would place overly restrictive requirements on cities and potentially open that agency up to litigation. Cities continue to face difficult budget conditions, which have been compounded by recent state takeaways including the loss of redevelopment and expanding pension and retiree health care obligations. This measure compounds existing constitutional limitations on local agencies to raise additional revenue. Thus, local agencies are in no position to have their flexibility further curtailed. The workload, privacy concerns, costs and litigation created by this measure places an overwhelming and significant burden on nearly every city department and would create a de facto ban on virtually all contracting services. For these reasons, the City of Rancho Palos Verdes opposes Assembly Bill 1250. Sincerely, , MAJAO---� Doug Willmore City Manager cc: Mayor Brian Campbell and Rancho Palos Verdes City Council Senator Ben Allen, 26th State Senate District (via FAX (916) 651-4926) Assembly Member Al Muratsuchi, 66th State Assembly District (via FAX (916) 319-2166) Jeff Kiernan, League Regional Public Affairs Manager) Michael Bolden, Chief Consultant, Assembly Committee Public Employees, Retirement, & Social Security Joshua White, Consultant, Assembly Republican Caucus Camille Wagner, Legislative Secretary, Office of Governor Edmund G. Brown, Jr. Meg Desmond, League of California Cities A-2 From: Jeff Kiernan To: Jeff Kiernan Subject: ACTION ALERT: AB 1250 (Jones -Sawyer) De Facto Ban on Local Government Contracts Date: Wednesday, April 12, 2017 3:46:03 PM Attachments: AB 1250 (Jones -Sawyer) SAMPLE 0000se 4.12.17.docx AB 1250 Fact Sheet 041017.odf ab 1250 98 A bill.odf Good Afternoon City Managers, Below is an action alert for AB 1250 which should be a concern for any city which contracts for services. Please note this bill is up for hearing next Wednesday, April 19, the same day as the League's Legislative Action Day. Please let me know if you haven any questions. Jeff ACTION ALERT! ! AB 1250 (Jones -Sawyer) De Facto Ban on Local Government Contracts OPPOSE Background: Back in 2014, the California State Assembly adopted HR 29 (Gomez) which the League strongly opposed. HR 29 was a resolution that aimed to restrict local governments' ability to contract out for services. While HR 29 was the blueprint, AB 1250 could potentially be the legislative vehicle that will place substantial burdens on local agencies by adding onerous, over prescriptive and unnecessary requirements that impede on local control and have significant impacts on local governance. The new reporting requirements, privacy concerns, increased costs, and potential for litigation created by this measure would place an overwhelming and significant burden on nearly every city department and would create a de facto ban on virtually all contracting services. AB 1250 would: • Require a city, before entering a contract or renewing a contract, to perform a full economic analysis of the potential impacts of outsourcing, including the impact on local businesses if consumer spending power is reduced. • Mandate a city to conduct a full environmental impact analysis caused by contracting for the services. • Force a city to conduct an annual audit of each contract. As Eliminate local agency hiring discretion by limiting a local agencies' ability to utilize a contract for the sole purpose of cost savings through salaries and benefits. Require that the agency provide an orientation to contract non -city employees. Require a city to create a new, fully searchable database that must be posted on the city website. Apart from the inherent cost drivers with this provision, there are significant privacy concerns about posting full names, job titles, and salaries of non -city employees. This database must include: o The names, job titles, salary of each contracted non -city employee and subcontractors. o The services of the contract, the name of the agency department or division of the city who manages the contract. o The amount paid to the contract including the total projected cost of the contract for all fiscal years and the funding source. o The total number of "full time equivalent" employees being contracted out. ACTION: AB 1250 will be heard on April 19, 2017 at gam in Assembly Public Employees. Retirement and Social Security. If you have an Assembly Member on this committee, please consider sending your CITY LETTER OF OPPOSITION as soon as possible. A sample letter is attached or a letter may also be sent through the League's online Action Center. ASSEMBLY PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL SECURITY Member District Party Room Fax Allen. Travis (Vice -Chair) 72 R� 4208 916 319 2172 Brough, William 73 R� 3141 916 319 2173 Cervantes. Sabrina 60 D� 5164 916 319 2160 Cooley. Ken 8 0 3013 916 319 2108 Cooper, Jim 9 D� 6025 916 319 2109 O'Donnell, Patrick 70 D� 2196 916 319 2170 Rodriguez. Freddie (Chair) 52 D� 2188 916 319 2152 You can find your Legislator's contact information here: http://findyourre�legislature.ca.gov/. Talking Points: • AB 1250 threatens the mission of local governments to provide vital local services in an efficient and economical way. City of and all California cities need to retain flexibility in how we deliver quality services to residents. Less competition from innovative service providers will ultimately mean a decrease in the quality of services provided to residents. • Apart from the inherent cost drivers associated with developing and maintaining a database of contractors, there are significant privacy concerns about posting full names, job titles and salaries of non -city employees. • Many contracts for services are with other local agencies; other contracts deliver specific expertise that can assist a community. [Offer examples of how this flexibility benefits your community.] • Cities continue to face difficult budget conditions, which have been compounded by expanding pension and retiree health care obligations. This builds upon existing constitutional limitations on local agencies to raise additional revenue. Local agencies are in no position to have their flexibility further curtailed. • AB 1250 creates a series of new and burdensome reporting requirements prior to entering or renewing a contract, such as, performing a full economic analysis of the potential impacts of outsourcing, including the impact on local businesses, conducting a full environmental impact analysis caused by contracting for the services, and requiring an annual audit of each contract. Having a local agency provide an additional orientation to non -city employees creates significant cost and logistical concerns. For instance, AB 1250 requires that the agency provide an orientation to contracted employees. Last year, AB 2835 (Cooper) which mandated that public employers must provide an orientation to their own employees was tagged at $350 million in ongoing costs by the California department of Finance. This is a costly mandate on cities. Jeffrey Kiernan Regional Public Affairs Manager League of California Cities® 8581 Santa Monica Blvd. *325 West Hollywood, CA 90069 Cell: (310) 630-7505 AB 1250: City and County Outsourcing Summary: AB 1250 is a common sense measure that will ensure cities and counties adhere to due diligence standards when opting to outsource public services. Background: Current law authorizes county outsourcing when contracting out for "special services," such as: financial and accounting, engineering, legal, medical, architectural, therapeutic, airport or building security matters, and laundry services. A county may also outsource maintenance or custodial services if the site is remote from available county employee resources. In recent years, some cities and counties have sought to outsource critical public services under the guise of saving money. There have been many well-documented instances of how short-sighted decisions to outsource have had negative impacts on taxpayers.' While cheaper services and employee layoffs may appear to save dollars in the short term, the savings are often illusory with hidden costs that are not accounted for and diminished services or contractor failures that require cities and counties to ultimately re -hire and/or re-train staff to provide the outsourced service. Need for Legislation: In many sectors of government, California requires that due diligence standards be satisfied prior to outsourcing public services. Under current law for instance, state agencies are required to show how outsourcing will achieve savings, not cause the displacement of civil service employees and ensure that contracts are awarded through a publicized competitive bidding process. Cities and counties are currently exempt from these types of accountability measures. Given the scarcity of tax dollars and the right of the public to demand and receive quality public services, cities and counties should be held to meaningful standards of due diligence. This Bill: http: //www.j wj. org/new-report-uncovers-the-real-costs-of- outsourcing-public-services AB 1250 establishes specific standards for the use of personal services contracts by counties and cities. Specifically, this bill: Requires the city or county to clearly demonstrate that the proposed contract will: 1) result in actual overall costs savings to the city or county, and 2) show that the contract does not cause the displacement of county or city workers. Authorizes a city or county to terminate any outsourced contract upon material breach, if 30 days' notice is provided. Requires the city or county to provide an orientation to employees of the contractor who would perform services pursuant to the contract. Establishes liability provisions for employment law violations and torts committed in the course of providing services under contract. Imposes additional disclosure requirements for contracts exceeding $100,000 annually. Requires each city or county to maintain on its Internet Web site a searchable database of all of its contracts exceeding $100,000. Provides for various exceptions to the contracting restrictions, including when services are: for emergencies, temporary or occasional, or highly technical or specialized and cannot be obtained from the city's or county's own workforce. Support: Service Employees International Union — California (Sponsor) For More Information, Contact: Charles Harvey Office of Assembly Member Jones -Sawyer (916) 319-2059 charles.harvey(kasm. ca. gov Michelle Castro SEIU California State Council (916) 288-1455 mcastrokseiucal.org AMENDED IN ASSEMBLY APRIL 4, 2017 CALIFORNIA LEGISLATURE -2o17-18 REGULAR SESSION ASSEMBLY BILL No. 1250 Introduced by Assembly Member Jones -Sawyer February 17, 2017 An act to a --Mend Seet o 000 of Sections 31000.10, 31000.11, 37103.1, and 37103.2 to the Government Code, relating toffy earttraets. local government. LEGISLATIVE COUNSEL'S DIGEST AB 1250, as amended, Jones -Sawyer. mss. Counties and cities: contracts for personal services. Existing law authorizes the board of supervisors of a county to contract for special services on behalf of various public entities with persons who are specially trained, experienced, expert, and competent to perform the special services, as prescribed. These services include financial, economic, accounting, engineering, legal, and other specified services. Existing law also authorizes legislative bodies of cities to contract with any specially trained and experienced person, firm, or corporation for special services and advice in financial, economic, accounting, engineering, legal, or administrative matters. This bill would establish speck standards for the use of personal services contracts by counties and cities. Beginning January 1, 2018, the bill would allow a county or county agency, or a city, to contract for personal services currently or customarily performed by county employees, as applicable, when specified conditions are met. Among other things, the bill would require the county or city to clearly demonstrate that the proposed contract will result in actual overall costs savings to the county or city and also to show that the contract 98 C-1 AB 1250 —2— does 2— does not cause the displacement of county or city workers. The bill would require a contract entered into under these provisions to specify that it may be terminated upon material breach, if notice is provided, as specified. Additionally, the bill would require the county or city to provide an orientation to employees of the contractor who would perform services pursuant to the contract, and would establish liability provisions for employment law violations and torts committed in the course of providing services under contract, among other conditions. The bill would impose additional disclosure requirements for contracts exceeding $100, 000 annually, would exempt certain types of contracts from its provisions, and would require each county or city to maintain on its Internet Web site a searchable database of all of its contracts exceeding $100,000. By placing new duties on local government agencies, the bill would impose a state -mandated local program. The bill also would provide that its provisions are severable. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. Existing law authorizes a eounty board of supervisors to eofttraet fo This bill would ma-ke nottsttbstantive ehanges to that proViSiOtt Vote: majority. Appropriation: no. Fiscal committee: eyes. State -mandated local program: eyes. The people of the State of California do enact as follows: 1 SECTION 1. Section 31000.10 is added to the Government 2 Code, to read: 3 31000.10. The purpose of this section and Section 31000.11 4 is to establish standards for the use ofpersonal services contracts 5 by counties. 6 (a) If otherwise permitted by law, a county or county agency 7 may contract for personal services currently or customarily 8 performed by county employees when all the following conditions 9 are met: 9s C-2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 —3— AB 1250 (1) The board of supervisors or county agency clearly demonstrates that the proposed contract will result in actual overall cost savings to the county for the duration of the entire contract as compared with the county's actual costs of providing the same services, provided that: (A) In comparing costs, there shall be included the county's additional cost of providing the same service as proposed by a contractor. These additional costs shall include the salaries and benefits of additional staff that would be needed and the cost of additional space, equipment, and materials needed to perform the function. (B) In comparing costs, there shall not be included the county's indirect overhead costs unless these costs can be attributed solely to the function in question and would not exist if that function was not performed in county service. Indirect overhead costs shall mean the pro rata share of existing administrative salaries and benefits, rent, equipment costs, utilities, and materials. (C) In comparing costs, there shall be included in the cost of a contractor providing a service any continuing county costs that would be directly associated with the contracted function. These continuing county costs shall include, but not be limited to, those for inspection, supervision, and monitoring. (2) Proposals to contract outwork shall not be approved solely on the basis that savings will result from lower contractor pay rates or benefits. Proposals to contract out work shall be eligible for approval if the contractor's wages are at the industry's level and do not significantly undercut county pay rates. (3) The contract does not cause the displacement of county employees. "Displacement" includes layoff, demotion, involuntary transfer to a new class, involuntary transfer to a new location requiring a change of residence, and time base reductions. "Displacement" does not include changes in shifts or days off or reassignment to other positions within the same class and general location. (4) The contract does not cause vacant positions in county employment to remain unfilled. (5) The contract does not affirmative action efforts. adversely affect the county's 9s C-3 AB 1250 1 (6) The savings shall be large enough to ensure that they will 2 not be eliminated by private sector and county cost fluctuations 3 that could normally be expected during the contracting period. 4 (7) The amount of savings clearly justifies the size and duration 5 of the contracting agreement. 6 (8) The contract is awarded through a publicized, competitive 7 bidding process. The county shall reserve the right to reject any 8 and all bids or proposals. 9 (9) The contract includes specific provisions pertaining to the 10 qualifications of the staff that will perform the work under the 11 contract, as well as assurance that the contractor's hiringpractices 12 meet applicable nondiscrimination, affirmative action standards. 13 (10) The potential for future economic risk to the county from 14 potential contractor rate increases is minimal. 15 (11) The contract is with a firm. "Firm " means a corporation, 16 partnership, nonprofit organization, or sole proprietorship. 17 (12) The potential economic advantage of contracting is not 18 outweighed by the public's interest in having a particular function 19 performed directly by county government. Before executing a 20 contract for personal services under this section, the county shall 21 demonstrate that outsourcing the particular functions at issue is 22 in the public interest, addressing the cost of the contract, the cost 23 of administering the contract, the effect on the quality of services 24 provided to the public, and any other relevant circumstances. 25 (13) The contract shall provide that it maybe terminated at any 26 time by the county without penalty if there is a material breach of 27 the contract and notice is provided at least 30 days before 28 termination. 29 (14) The county shall provide an orientation to employees of 30 the contractor who will perform services pursuant to the contract. 31 The orientation shall include, but is not limited to, all of the 32 following: 33 (A) A description of the services to be provided pursuant to the 34 contract. 35 (B) A description of the function and goals of the public agency 36 responsible for providing the services in the absence of the 37 contract. 38 (C) Any applicable rules governing provision of the services 39 and how the employee may report violations of applicable rules 40 or contractual requirements. 9s C-4 — 5 — AB 1250 1 (1 S) The county shall be jointly and severally liable with the 2 contractor and any of its subcontractors for: 3 (A) Employment law violations arising from performance of the 4 contract, unless otherwise provided by a bona fide collective 5 bargaining agreement covering the affected employees. 6 (B) Torts committed by the contractor or its subcontractors in 7 the course of providing services under the contract. 8 (16) If the contract is for personal services in excess of one 9 hundred thousand dollars ($100, 000) annually, all of the following 10 shall occur: 11 (A) The county shall require the contractor to disclose all of 12 the following information as part of its bid, application, or answer 13 to a request for proposal: 14 (i) A description of all charges, claims, or complaints filed 15 against the contractor with any federal, state, or local 16 administrative agency during the prior 10 years. 17 (ii) A description of all civil complaints filed against the 18 contractor in any state or federal court during the prior 10 years. 19 (iii) A description of all state or federal criminal complaints or 20 indictments filed against the contractor, or any of its officers, 21 directors, or managers, at any time. 22 (iv) A description of any debarments of the contractor by any 23 public agency or licensing body at any time. 24 (v) The total compensation, including salaries and benefits, the 25 contractor provides to workers performing work similar to that to 26 be provided under the contract. 27 (vi) The total compensation, including salaries, benefits, options, 28 and any other form of compensation, provided to the five highest 29 compensated officers, directors, executives, or employees of the 30 contractor. 31 (vii) Any other information the county deems necessary to ensure 32 compliance with this section. 33 (B) Prior to entering into the contract, the county shall conduct, 34 and make public, a study of the potential impact of outsourcing 35 the work covered by the contract, including, but not limited to: 36 (i) The potential loss of employment opportunities within the 37 county and resultant loss of income to workers. 38 (ii) The economic impact on local businesses if consumer 39 spending power is reduced as a result of reduced wages under the 40 contract. 98 C-5 AB 1250 1 (iii) The impact on the county's ability to provide social services 2 and the effect of any reduction in social services on county 3 residents. 4 (iv) Any environmental impact caused by contracting for the 5 services at issue. 6 (C) The contract shall provide that the county is entitled to 7 receive a copy of any records related to the contractor's or any 8 subcontractor's performance of the contract, and that any of those 9 records shall be subject to the California Public Records Act 10 (Chapter 3.5 (commencing with Section 6250) of Division 7 of 11 Title 1). In furtherance of this subdivision, contractors and any 12 subcontractors shall maintain records related to performance of 13 the contract that ordinarily would be maintained by the county in 14 performing the same functions. 15 (D) The county shall include in the contract speck, measurable 16 performance standards and provisions for a performance audit 17 by the county, or an independent auditor approved by the county, 18 to determine whether the performance standards are being met 19 and whether the contractor is in compliance with applicable laws 20 and regulations. The county shall not renew or extend the contract 21 prior to receiving and considering the audit report. 22 (E) The contract shall include provisions for an audit by the 23 county, or an independent auditor approved by the county, to 24 determine whether and to what extent the anticipated cost savings 25 have actually been realized. The county shall not renew or extend 26 the contract before receiving and considering the audit report. 27 (b) This section does not preclude a county from adopting more 28 restrictive rules regarding the contracting of public services. 29 (c) When otherwise permitted by law, the absence of any 30 requirement of subdivision (a) shall not prevent personal services 31 contracting when any of the following conditions are met: 32 (1) The contract is for a new county function and the Legislature 33 has specifically mandated or authorized the performance of the 34 work by independent contractors. 35 (2) The services contracted cannot be performed satisfactorily 36 by county employees, or are of such a highly specialized or 37 technical nature that the necessary expert knowledge, experience, 38 and ability are not available among county employees. 39 (3) The services are incidental to a contract for the purchase 40 or lease of real or personal property. Contracts under this 98 C-6 — 7 — AB 1250 1 criterion, known as "service agreements," shall include, but not 2 be limited to, agreements to service or maintain office equipment 3 or computers that are leased or rented. 4 (4) The legislative, administrative, or legal goals and purposes 5 cannot be accomplished through the utilization of county 6 employees. Contracts are permissible under this criterion to protect 7 against a conflict of interest or to ensure independent and unbiased 8 findings in cases where there is a clear need for a different, outside 9 perspective. These contracts shall include, but not be limited to, 10 obtaining expert witnesses in litigation. 11 (5) The nature of the work is such that the standards of this part 12 for emergency appointments apply. These contracts shall conform 13 with Section 31000.4. 14 (6) Public entities or officials need private counsel because a 15 conflict of interest on the part of the county counsel's office 16 prevents it from representing the public entity or official without 17 compromising its position. These contracts shall require the written 18 consent of the county counsel. 19 (7) The contractor will provide equipment, materials, facilities, 20 or support services that could not feasibly be provided by the 21 county in the location where the services are to be performed. 22 (8) The contractor will conduct training courses for which 23 appropriately quaked county employee instructors are not 24 available, provided that permanent instructor positions in 25 academies or similar settings shall be filled by county employees. 26 (9) The services are of such an urgent, temporary, or occasional 27 nature that the delay incumbent in their implementation by county 28 employees would frustrate their very purpose. 29 (d) All persons who provide services to a county under 30 conditions constituting an employment relationship shall by 31 employed directly by the county. 32 (e) (1) Except as provided in paragraph (2), this section shall 33 apply to all counties, including counties that have adopted a merit 34 or civil service system. 35 (2) This section does not apply to a charter county formed 36 pursuant to Section 3 ofArticle XI of the California Constitution. 37 ()9 (1) This section does not apply to any contract for services 38 described in Section 4525 or 4529.10. 98 C-7 AB 1250 1 (2) This section does not apply to any contract that is subject 2 to Chapter I (commencing with Section 1720) of Part 7 of Division 3 2 of the Labor Code. 4 (3) This section does not apply to a contract for public transit 5 services, including paratransit services, if the county's transit 6 services are fully funded by Federal Transit Administration 7 assistance and the county is thereby subject to the guidelines 8 established in FTA Circular 4220. IF or any subsequent guidelines 9 or revisions issued by the Federal Transit Administration. 10 (g) This section shall apply to personal services contracts 11 entered into, renewed, or extended on or after January 1, 2018. 12 SEC. 2. Section 31000.11 is added to the Government Code, 13 to read: 14 31000.11. (a) Each county shall maintain on its Internet Web 15 site a searchable database of all contracts of an annual value in 16 excess of one hundred thousand dollars ($100, 000) entered into 17 pursuant to Section 31000.10. The database shall include, but is 18 not limited to, the following: 19 (1) A description of the services provided under the contract. 20 (2) The name of the agency, department, or division responsible 21 for providing the service in the absence of the contract. 22 (3) The name of the contractor and any subcontractors providing 23 services under the contract. 24 (4) The effective and expiration dates of the contract. 25 (5) The annual amount paid pursuant to the contract to the 26 contractor in the past three fiscal years and the currentfiscal year; 27 including the funding source for all amounts paid. 28 (6) The annual amount expected to be paid pursuant to the 29 contract to the contractor in the next three fiscal years. 30 (7) The total projected cost of the contract for all fiscal years 31 and the funding source for all amounts to be paid. 32 (8) The names of the employees of the contractor and any 33 subcontractors providing services pursuant to the contract and 34 their hourlypay rates, and the total number offull-time equivalent 35 positions involved in performing the services under the contract. 36 (9) The names of any workers providing services pursuant to 37 the contract as independent contractors and the compensation 38 rates for such workers. 39 (b) The information identified in subdivision (a) shall be 40 compiled in an annual service contractor expenditure budget 9s • — 9 — AB 1250 1 accompanying the county budget, reflecting all spending on 2 personal services contracts by the county. 3 SEC. 3. Section 37103.1 is added to the Government Code, to 4 read: 5 37103.1. The purpose of this section and Section 37103.2 is to 6 establish standards for the use of personal services contracts by 7 cities. 8 (a) If otherwise permitted by law, a city may contract for 9 personal services currently or customarily performed by city 10 employees when all the following conditions are met: 11 (1) The city council or city agency clearly demonstrates that 12 the proposed contract will result in actual overall cost savings to 13 the city for the duration of the entire contract as compared with 14 the city's actual costs of providing the same services, provided 15 that: 16 (A) In comparing costs, there shall be included the city's 17 additional cost of providing the same service as proposed by a 18 contractor. These additional costs shall include the salaries and 19 benefits of additional staff that would be needed and the cost of 20 additional space, equipment, and materials needed to perform the 21 function. 22 (B) In comparing costs, there shall not be included the city's 23 indirect overhead costs unless these costs can be attributed solely 24 to the function in question and would not exist if that function was 25 not performed in city service. Indirect overhead costs shall mean 26 the pro rata share of existing administrative salaries and benefits, 27 rent, equipment costs, utilities, and materials. 28 (C) In comparing costs, there shall be included in the cost of a 29 contractorproviding a service any continuing city costs that would 30 be directly associated with the contracted function. These 31 continuing city costs shall include, but not be limited to, those for 32 inspection, supervision, and monitoring. 33 (2) Proposals to contract outwork shall not be approved solely 34 on the basis that savings will result from lower contractor pay 35 rates or benefits. Proposals to contract out work shall be eligible 36 for approval if the contractor's wages are at the industry's level 37 and do not significantly undercut city pay rates. 38 (3) The contract does not cause the displacement of city 39 employees. "Displacement" includes layoff, demotion, involuntary 40 transfer to a new class, involuntary transfer to a new location 98 C-9 AB 1250 —10 — 1 requiring a change of residence, and time base reductions. 2 "Displacement" does not include changes in shifts or days off or 3 reassignment to other positions within the same class and general 4 location. 5 (4) The contract does not cause vacant positions in city 6 employment to remain unfilled. 7 (5) The contract does not adversely affect the city's affirmative 8 action efforts. 9 (6) The savings shall be large enough to ensure that they will 10 not be eliminated by private sector and city cost fluctuations that 11 could normally be expected during the contracting period. 12 (7) The amount ofsavings clearly justifies the size and duration 13 of the contracting agreement. 14 (8) The contract is awarded through a publicized, competitive 15 bidding process. The city shall reserve the right to reject any and 16 all bids or proposals. 17 (9) The contract includes specific provisions pertaining to the 18 qualifications of the staff that will perform the work under the 19 contract, as well as assurance that the contractor's hiringpractices 20 meet applicable nondiscrimination, affirmative action standards. 21 (10) The potential for future economic risk to the city from 22 potential contractor rate increases is minimal. 23 (11) The contract is with a firm. "Firm " means a corporation, 24 partnership, nonprofit organization, or sole proprietorship. 25 (12) The potential economic advantage of contracting is not 26 outweighed by the public's interest in having a particular function 27 performed directly by city government. Before executing a contract 28 for personal services under this section, the city shall demonstrate 29 that outsourcing the particular functions at issue is in the public 30 interest, addressing the cost of the contract, the cost of 31 administering the contract, the effect on the quality of services 32 provided to the public, and any other relevant circumstances. 33 (13) The contract shall provide that it maybe terminated at any 34 time by the city without penalty if there is a material breach of the 35 contract and notice is provided at least 30 days before termination. 36 (14) The city shall provide an orientation to employees of the 37 contractor who will perform services pursuant to the contract. The 38 orientation shall include, but is not limited to, all of the following: 39 (A) A description of the services to be provided pursuant to the 40 contract. 98 C-10 -11— AB 1250 1 (B) A description of the function and goals of the public agency 2 responsible for providing the services in the absence of the 3 contract. 4 (C) Any applicable rules governing provision of the services 5 and how the employee may report violations of applicable rules 6 or contractual requirements. 7 (1 S) The city shall be jointly and severally liable with the 8 contractor and any of its subcontractors for: 9 (A) Employment law violations arising from performance of the 10 contract, unless otherwise provided by a bona fide collective 11 bargaining agreement covering the affected employees. 12 (B) Torts committed by the contractor or any of its 13 subcontractors in the course of providing services under the 14 contract. 15 (16) If the contract is for personal services in excess of one 16 hundred thousand dollars ($100, 000) annually, all of the following 17 shall occur: 18 (A) The city shall require the contractor to disclose all of the 19 following information as part of its bid, application, or answer to 20 a request for proposal: 21 (i) A description of all charges, claims, or complaints filed 22 against the contractor with any federal, state, or local 23 administrative agency during the prior 10 years. 24 (ii) A description of all civil complaints filed against the 25 contractor in any state or federal court during the prior 10 years. 26 (iii) A description of all state or federal criminal complaints or 27 indictments filed against the contractor, or any of its officers, 28 directors, or managers, at any time. 29 (iv) A description of any debarments of the contractor by any 30 public agency or licensing body at any time. 31 (v) The total compensation, including salaries and benefits, the 32 contractor provides to workers performing work similar to that to 33 be provided under the contract. 34 (vi) The total compensation, including salaries, benefits, options, 35 and any other form of compensation, provided to five highest 36 compensated officers, directors, executives, or employees of the 37 contractor 38 (vii) Any other information the city deems necessary to ensure 39 compliance with this section. 98 C-11 AB 1250 1 (B) Prior to entering into the contract, the city shall conduct, 2 and make public, a study of the potential impact of outsourcing 3 the work covered by the contract, including, but not limited to: 4 (i) The potential loss of employment opportunities within the 5 city and resultant loss of income to workers. 6 (ii) The economic impact on local businesses if consumer 7 spending power is reduced as a result of reduced wages under the 8 contract. 9 (iii) The impact on the city's ability to provide social services 10 and the effect of any reduction in social services on city residents. 11 (iv) Any environmental impact caused by contracting for the 12 services at issue. 13 (C) The contract shall provide that the city is entitled to receive 14 a copy of any records related to the contractor's or any 15 subcontractor's performance of the contract, and that any such 16 records shall be subject to the California Public Records Act 17 (Chapter 5 (commencing with Section 6250) of Division 7 of Title 18 1). In furtherance of this subdivision, contractors and any 19 subcontractors shall maintain records related to performance of 20 the contract that ordinarily would be maintained by the city in 21 performing the same functions. 22 (D) The city shall include in the contract speck, measurable 23 performance standards and provisions for a performance audit 24 by the city, or an independent auditor approved by the city, to 25 determine whether the performance standards are being met and 26 whether the contractor is in compliance with applicable laws and 27 regulations. The legislative body shall not renew or extend the 28 contract prior to receiving and considering the audit report. 29 (E) The contract shall include provisions for an audit by the 30 city, or an independent auditor approved by the city, to determine 31 whether and to what extent the anticipated cost savings have 32 actually been realized. The city shall not renew or extend the 33 contract before receiving and considering the audit report. 34 (b) This section does not preclude a city from adopting more 35 restrictive rules regarding the contracting of public services. 36 (c) When otherwise permitted by law, the absence of any 37 requirement of subdivision (a) shall not prevent personal services 38 contracting when any of the following conditions are met: 98 C-12 -13 — AB 1250 1 (1) The contract is for a new city function and the Legislature 2 has specifically mandated or authorized the performance of the 3 work by independent contractors. 4 (2) The services contracted cannot be performed satisfactorily 5 by city employees, or are of such a highly specialized or technical 6 nature that the necessary expert knowledge, experience, and ability 7 are not available among city employees. 8 (3) The services are incidental to a contract for the purchase 9 or lease of real or personal property. Contracts under this 10 criterion, known as "service agreements," shall include, but not 11 be limited to, agreements to service or maintain office equipment 12 or computers that are leased or rented. 13 (4) The legislative, administrative, or legal goals and purposes 14 cannot be accomplished through the utilization of city employees. 15 Contracts are permissible under this criterion to protect against 16 a conflict of interest or to ensure independent and unbiased 17 findings in cases where there is a clear need for a different, outside 18 perspective. These contracts shall include, but not be limited to, 19 obtaining expert witnesses in litigation. 20 (5) The nature of the work is such that the standards of this title 21 for emergency appointments apply. These contracts shall conform 22 with Section 45080. 23 (6) Public entities or officials need private counsel because a 24 conflict of interest on the part of the city attorney's officeprevents 25 it from representing the public entity or official without 26 compromising its position. These contracts shall require the written 27 consent of the city attorney. 28 (7) The contractor will provide equipment, materials, facilities, 29 or support services that could not feasibly be provided by the city 30 in the location where the services are to be performed. 31 (8) The contractor will conduct training courses for which 32 appropriately quaked city employee instructors are not available, 33 provided that permanent instructor positions in academies or 34 similar settings shall be filled by city employees. 35 (9) The services are of such an urgent, temporary, or occasional 36 nature that the delay incumbent in their implementation by city 37 employees would frustrate their very purpose. 38 (d) All persons who provide services to a city under conditions 39 constituting an employment relationship shall by employed directly 40 by the city. 9s C-13 AB 1250 1 (e) (1) Except as provided in paragraph (2), this section shall 2 apply to all cities, including cities that have adopted a merit or 3 civil service system. 4 (2) This section does not apply to a charter city formed pursuant 5 to Section 3 of Article XI of the California Constitution. 6 )) (1) This section does not apply to any contract for services 7 described in Section 4525 or 4529.10. 8 (2) This section does not apply to any contract that is subject 9 to Chapter I (commencing with Section 1720) of Part 7 of Division 10 2 of the Labor Code. 11 (3) This section does not apply to a contract for public transit 12 services, including paratransit services, if the county's transit 13 services are fully funded by Federal Transit Administration 14 assistance and the county is thereby subject to the guidelines 15 established in FTA Circular 4220. IF or any subsequent guidelines 16 or revisions issued by the Federal Transit Administration. 17 (g) This section shall apply to personal services contracts 18 entered into, renewed, or extended on or after January 1, 2018. 19 SEC. 4. Section 37103.2 is added to the Government Code, to 20 read: 21 37103.2. (a) Each city shall maintain on its Internet Web site 22 a searchable database of all contracts of an annual value in excess 23 of one hundred thousand dollars ($100, 000) entered into pursuant 24 to Section 37103.1. The database shall include, but is not limited 25 to, thefollowing: 26 (1) A description of the services provided under the contract. 27 (2) The name of the agency, department, or division responsible 28 for providing the service in the absence of the contract. 29 (3) The name of the contractor and any subcontractors providing 30 services under the contract. 31 (4) The effective and expiration dates of the contract. 32 (5) The annual amount paid pursuant to the contract to the 33 contractor in the past three fiscal years and the currentfiscal year, 34 including the funding source for all amounts paid. 35 (6) The annual amount expected to be paid pursuant to the 36 contract to the contractor in the next three fiscal years. 37 (7) The total projected cost of the contract for all fiscal years 38 and the funding source for all amounts to be paid. 39 (8) The names of the employees of the contractor and any 40 subcontractors providing services pursuant to the contract and 98 C-14 -15 — AB 1250 1 their hourly pay rates, and the total number offull-time equivalent 2 positions involved in performing the services under the contract. 3 (9) The names of any workers providing services pursuant to 4 the contract as independent contractors and the compensation 5 rates for such workers. 6 (b) The information identified in subdivision (a) shall be 7 compiled in an annual service contractor expenditure budget 8 accompanying the county budget, reflecting all spending on 9 personal services contracts by the county. 10 SEC. 5. The provisions of this act are severable. If any 11 provision of this act or its application is held invalid, that invalidity 12 shall not affect other provisions or applications that can be given 13 effect without the invalid provision or application. 14 SEC. 6. If the Commission on State Mandates determines that 15 this act contains costs mandated by the state, reimbursement to 16 local agencies and school districts for those costs shall be made 17 pursuant to Part 7 (commencing with Section 17500) of Division 18 4 of Title 2 of the Government Code. 19 SECT -!ON 1. Seetren1000 of theGovernment Codeis 20 amended to . ead.2 21 31000. The board of sWervisors may eontraet for speeial 22 serviees on behalf of the following pttblie entities 2 the eottnty, any 23 eottnty offieer or department, or any distriet or eottft in the eotnttr. 24 , 25 . 26 The speeial sefviees shall eonsist of seffiees, adviee, 27 training for these pttblie entities or the etnployees thereof The 28 speeial serviees shall be in finaneial, eeon, 29 (ineluding the preparation and issuanee of 30 , 31 arehiteetufal, aifport or building seetffity tnatters, lattndty 32 33 or ettstodial matters, if the board finds that the site : ote r 34 ' 35 36-A44 F4 QI JA Qi Q 37 entployees. The board may pay Front any available fttnds 38 eontpensation as it deems proper for these speeial sevviees. The 39 , 98 C-15 AB 1250 Al 98 C-16