Revenge of the outsourcing bills

By CMTA Staff

Capitol Update, May 20, 2005 Share this on FacebookTweet thisEmail this to a friend

The issue of "outsourcing" played a prominent role in last year's legislative and political climate both at the federal and state level. This year, the focus and volume of bills has diminished but still exist:

AB 524 (Wilma Chan, D-Oakland) requires all prospective bidders on state contracts to complete a formal document and questionnaire that would disclose all portions of the contract to be performed by subcontractors or employees outside of the state of California.

AB 1654 (Hector De La Torre, D-South Gate) gives a 5 percent preference credit of the bid price or quotation to a business that directly provides goods or services when 90 percent of the employees of that business performing work on the contract live within the state of California.

While other outsourcing-related bills exist in the legislature, the two bills mentioned above highlight the challenges with implementing such proposals.  There is no bright line test to determine which employees are "performing work on the contract".  As a result, such proposals would likely be subject to litigation and may negate any economic benefits of accepting the contract.

Beyond that, several states (including Oregon) have statutes that penalize companies from states with preferences like the one proposed in AB 1654.  For instance, for every point awarded to a California company that bids on a California state contract, the same company is docked a point on their bids in other states with these reciprocal laws.

At a time when the state faces a continued and severe budget deficit, elected officials should be focused on how the state can acquire products and services on a best value basis, rather than on an arbitrary set of social policies that could very well drive up the costs of certain services and products.

Finally, such proposals would make it more difficult for businesses to offer their goods and services in states other than California to the detriment of California based businesses and their employees.

If your company has concerns over these two proposals, contact Matt Sutton
Capitol updates archive 989898989