PROP. 224



U.S. Senate



Secretary of State



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Insurance Commissioner

Superintendent of Public Instruction

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Prop 224
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Districts 2 - 40

Districts 1 - 20
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Background | Proposal | Arguments for | Arguments against

An initiative affecting the use of private contracts for state design and engineering projects and instituting a new process for determining which projects, if any, could be contracted out.

One of the most contentious and sometimes ideological arguments in the public sector is that over contracting out for public services. Private contracts for such things as prison construction, highway design, and so forth are viewed by public employees unions as a direct threat to their jobs and livelihoods. The agencies which enter the contracts say they allow them to do more work with less money without the bureaucratic headaches normally ascribed to government work. The battle is especially pitched in the area of highway construction. In 1989, then-Governor George Deukmejian signed a law opening the way for private contractors to be used to design and build toll roads, including a major toll-road project in Orange County. The Professional Engineers in California Government, the union representing the majority of Caltrans' civil service road engineers, balked and began a long court battle with Deukmejian and subsequent administrations. A superior court judge invalidated much of the law, citing constitutional limitations on outside contracting. But after a series of legal wrangles, the Legislature and Deukmejian's successor, Pete Wilson, tried again in 1993 with legislation authored by then-Senator Marian Bergeson. PECG challenged that law as well, and it too was overturned, a ruling that was upheld last year on a 5 to 2 vote of the state Supreme Court. In the meantime, Caltrans continued to find work for private contractors, most notably and visibly in the rapid repair of the Santa Monica Freeway, which was damaged in the 1994 Northridge earthquake. While it pursued its court challenge, PECG began circulating this initiative, further upping the ante in its ongoing legal and political struggle with the Wilson administration. The measure was billed in early promotion as the "competitive bidding" initiative. But in early March, a Sacramento Superior Court judge ordered the removal of the phrase "competitive bidding" from the initiative's descriptive title.

Proposition 224, referred to as the Government Cost Savings and Taxpayer Protection Amendment, requires that any state contract for engineering, architecture or the like that exceeds $50,000 in value be let only in a public process with sealed public bids. The bids would be assessed using a cost analysis prepared by the state Controller. The formula for that analysis, included in the initiative, requires that only additional direct costs to the state be used to assess the state's bid, while private contractors would have to enumerate all of its anticipated costs, as well as those of the state for monitoring the contract. The Controller or the contracting entity would also be empowered to overrule any outside contract if it determined the contract would adversely affect public health or result in a lower quality of work.

Arguments For:
The primary proponent is the Professional Engineers in California Government, but an array of public employee unions also back the measure, including the California Correctional Peace Officers Association and the California State Employees Association. Other labor organizations, including public employee affiliates of AFL-CIO, also support the measure. They argue that private no-bid contracts waste taxpayer dollars and are a threat to public safety. They contend private design contracts are often awarded to large campaign contributors, and that there is no accountability in the process, leading to the potential of inadequate or poor-quality work. They contend the cost-analysis formula to be used by the Controller is a more accurate comparison than the strict matching of costs, since private contracts have the ability to "lowball" their estimates in order to undercut state costs.

Arguments Against:
Opponents include the California Chamber of Commerce and other business and trade organizations, as well as a host of public agency organizations, among them the League of California Cities and the California State Association of Counties. Some individual AFL-CIO locals also oppose the measure, and were instrumental in convincing the California Democratic Party to rescind an earlier endorsement. The California Teachers Association and the California Republican Party also oppose. Opponents argue the initiative is a "competition killer," designed to eliminate the use of any private contractors in state government projects. They contend the "cost analysis" process for the bidding is rigged to favor state civil service engineers every time. They argue the measure could cost the state thousands of construction jobs by creating a state monopoly for virtually all contracts. They also contend the measure will establish a new bureaucracy in the Controllers office, in effect making the Controller the state's "contract czar."

-- Article by Steve Scott

This page first published May 5, 1998

Last updated May 25, 1998

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