Assemblymember Joan Buchanan (D- Alamo) introduced legislation Friday that will make the flexible allowances for IT contracts and withholding decisions permanent, removing a sunset provision set to expire in 2013.
Assembly Bill 1517 will extend the provision allowing departments to make individual decisions on how much withholding or retention should be made for an IT contract with state departments and agencies, Buchanan said today. The current bill simply removes the sunset provision from law already in place, she said.
"[The bill] gives the California Technology Agency and the Department of General Services the flexibility to take a look at the complexity of contracts and then decide what withholding or retention should be written into that contract," Buchanan said.
The state deals with technology contracts related to purchasing computers and equipment as well as consulting contracts with large and small firms, making some contracts very complex while others remain simple, according to Buchanan. The original legislation was written to address the one-size-fits-all attitude toward withholding policies written into IT contracts, she said.
Assemblymember Joan Buchanan speaks at TechAmerica's 7th Annual California Technology Executive Briefing in Sacramento - September 8, 2011 Photo: Bill Foster, Techwire.net
"The intention of the bill when it was originally passed was to say, ‘Look we want you to use your professional judgment to decide the risk associated with the contract and then be able to assign the [withholding] associated with that risk," Buchanan said.
The law allows for a 10 percent withholding on IT contracts unless the department determines that the contract holds less risk under requirements outlined by law, in which case contracts of more than $10 million can withhold no less than 5 percent and contracts of less than $10 million can withhold no less than 3 percent of the contract price until the goods or services are delivered, according to the bill.
Buchanan said AB 1517 came out of a select hearing on IT procurement and was brought up by TechAmerica, which testified at the hearing in November. Agreement from the California Technology Agency and the Department of General Services that the original bill is working supported a push to remove the sunset provision, she said.
TechAmerica is pleased with the bill’s introduction and will offer an official position on the legislation next week, said Carol Henton, TechAmerica’s vice president of state and local government in an e-mail.
