Governor Brown has signed legislation that will make the flexible allowances for IT contracts and withholding decisions permanent, removing a sunset provision set to expire in 2013, the governor’s office announced today.
AB 1517 by Assemblymember Joan Buchanan (D-San Ramon) 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, according to the bill’s author. The current bill simply removes the sunset provision from law already in place.
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. The original legislation was written to address the one-size-fits-all attitude toward withholding policies written into IT contracts, Buchanan told Techwire.net in January when she introduced the legislation.
“TechAmerica is pleased that the State of CA will never return to a time when IT vendors are asked to put up a Performance Bond in the amount of fifty percent of the value of a contract,” said TechAmerica Vice President Carol Henton today in an email. “TechAmerica firmly believes the State has better tools it can use to ensure adequate risk protection when contracting for technology goods and services.”
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.
The Department of General Services executes more than 8,000 contracts for IT goods and services for state agencies annually, according to a committee analysis of the legislation.
