Existing law authorizes the Department of Corrections and Rehabilitation to contract for provisions, clothing, medicines, forage, fuel, and all other staple supplies needed for the support of the prisons for any period of time, not exceeding one year, as specified.

Existing law governs the use of the terms California grown and California-grown in the labeling or advertising of agricultural products. Existing law specifically authorizes the use of those terms to identify food or agricultural products that have been produced in the state or harvested in its surface or coastal waters.

This bill would require contracts entered into or renewed on or after January 1, 2018, for the supply of food for the prisons to require that not less than 50% of the food supplied be California grown, as specified.

Date of Hearing: April 5, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 627

Author:(Bigelow) – As Introduced Ver:February 14, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires that contracts entered into or renewed on or after January 1, 2018, for the supply of food for prisons require that no less than 50% of the food supplied is California grown, as specified.

FISCAL EFFECT:

1. Significant cost to the Department of Corrections and Rehabilitation (CDCR):
2. In the range of $3.6 million (GF) for 35 positions (approximately $103,000 per position) to work with the Procurement and Food Department at each institution to ensure that all competitive bids and purchase orders at each institution comply with the new requirement.
3. Unknown additional food costs. By requiring a contract to provide that half of the goods are California grown, CDCR and/or the Department of General Services (DGS) may be required to accept bids at a higher price than current standards. At a minimum, this may draw funding away from other programs, such as rehabilitation, and financially burden a prison system that is already in crisis.
4. Approximately $400,000 (GF) cost to DGS for three staff who will be responsible for ensuring bidders have meet the 50% requirement.

COMMENTS:

1. Background. Current law authorizes DGS to contract for various services on behalf of most state agencies. CDCR is authorized to contract for provisions, clothing, medicines, forage, fuel, and all other staple supplies needed for the support of the prisons for any period of time, not exceeding one year. It also requires CDCR to reject any bid, or contract entered into in when such bid is higher than any other bid for the same class or schedule of articles, quality considered, and when a contract can be had at such lower bid. However, price, fitness and quality being equal person charged with the purchase, or permitted or authorized to purchase supplies for the use of the State, or of any of its institutions or offices, or for the use of any county or city must always prefer supplies grown, manufactured, or produced in the State, and must next prefer supplies partially manufactured, grown, or produced in the State.
2. Purpose. According to the author, "The California Department of Corrections and Rehabilitation is the largest State food purchaser and food service provider, serving 130 million meals each year at 35 state prisons, two of which are women’s facilities. CDCR purchases approximately $150 million worth of food each year through contracts negotiated by DGS, CAL PIA, and directly from distributors. Over a third of the country’s fruits and nuts are grown in California. California’s agricultural abundance includes more than 400 commodities. …This bill will help keep business in California, ensuring a healthy food supply for our prisons, driving down the cost of food, and lowering emissions from transporting goods.”
3. Prior Legislative Attempts. Prior legislation in this area has attempted to provide California businesses that produce agricultural products with an advantage over out-of state producers, even if the California products are slightly more expensive. In 2016, AB 199 (Holden) would have required all California state-owned or state-run institutions, except public universities, public schools, and school districts, to purchase agricultural products grown in California to the extent possible from a California company before those that are grown outside of the state, as specified.

While supporters stated that this preference will give local farmers a fair chance to sell their products within the state, and give a boost to the California farming economy, Governor Brown vetoed AB 199 with the following message:

“This bill would require the state to implement a preference for agricultural products grown in California and offered by a California company. This preference would be difficult to comply with and quite onerous. Every purchase, even a single bag of apples, would be affected.

I strongly support California's agricultural industry and encourage all state-run institutions to support local farmers and businesses. In fact, state growers and processors have no trouble competing for - and winning - the state's business. Today, approximately half of all food the Department of General Services purchases for state institutions comes from California, without a preference or a mandate.”

1. Support. According to Pacific Coast Renderers, "California Prison Industry authority produces and sells approximately $65 million worth of agricultural and food products including almonds, bread, juice, peanut butter, jelly, milk, meat, eggs, chicken, coffee, and cookies.”

"AB 627 will ensure that Californians are supporting California's agricultural industry while providing economically viable food options. This bill will begin to set a standard for our state and in turn affect all of California's growers."

1. Related Legislation: AB 822 (Caballero) requires all California state-owned or state-run institutions, except public universities, colleges, and school districts, to purchase agricultural products grown in California when the bid or price meets certain conditions. AB 822 is awaiting a hearing at the Assembly Agriculture Committee.
   

Analysis Prepared by: Pedro Reyes / APPR. / (916) 319-2081

Date of Hearing: March 21, 2017

Consultant: Adam Smith

ASSEMBLY COMMITTEE ON

Reginald Byron Jones-Sawyer, Sr., Chair

ABPCA Bill Id:

Author:() – As Ver:February 14, 2017

SUMMARY:

Requires that contracts to supply food to prisons provide at least 50% of the food be California grown. Specifically, this bill: Requires that contracts entered into or renewed on or after January 1, 2018, for the supply of food for prisons provide that no less than 50 percent of the food supplied be California grown, as specified.

EXISTING LAW:

1. Authorizes the Department of Corrections and Rehabilitation to contract for provisions, clothing, medicines, forage, fuel, and all other staple supplies needed for the support of the prisons for any period of time, not exceeding one year, as specified. (Pen. Code, § 2051.)
   
2. Requires the Department of Corrections and Rehabilitation to reject any bid, or contract entered into in pursuance thereof, when such bid is higher than any other bid at the same letting for the same class or schedule of articles, quality considered, and when a contract can be had at such lower bid. (Pen. Code, § 2051.)
   
3. Provides that, price, fitness and quality being equal, any body, officer, or other person charged with the purchase, or permitted or authorized to purchase supplies for the use of the State, or of any of its institutions or offices, or for the use of any county or city shall always prefer supplies grown, manufactured, or produced in the State, and shall next prefer supplies partially manufactured, grown, or produced in the State. (Gov. Code, § 4331.)
   
4. Provides that the terms “California grown,” “California-grown,” and similar terms with identical connotations may be used for marketing, advertising, or promotional purposes only to identify food or agricultural products that have been produced in the state or harvested in its surface or coastal waters. (Food and Agr. Code, § 43100.)

FISCAL EFFECT:

Unknown

COMMENTS:

1. Author's Statement: According to the author, "The California Department of Corrections and Rehabilitation is the largest State food purchaser and food service provider, serving 130 million meals each year at 35 state prisons, two of which are women’s facilities. CDCR purchases approximately $150 million worth of food each year through contracts negotiated by DGS, CALPIA, and directly from distributors. Over a third of the country’s fruits and nuts are grown in California. California’s agricultural abundance includes more than 400 commodities. Despite being a national leader in agriculture, California is ranked at the bottom when it comes to providing a business-friendly climate. This bill will help keep business in California, ensuring a healthy food supply for our prisons, driving down the cost of food, and lowering emissions from transporting goods.”
   
2. Prior Attempts to Require California Agriculture Products: Agriculture is a key California industry that employs more than 330,000 workers and generated $47.4 billion in annual output as of 2011. Prior legislation in this area has attempted to provide California businesses that produce agricultural products an advantage over out-of state producers even if the California products are slightly more expensive. Prior authors have argued that this pricing advantage would likely mean an increase in the state's purchases of California-grown and California-processed agricultural products. Such an increase could positively impact the state's agricultural economy.

Supporters of prior attempts have stated that with the current economic climate, it is important to keep state tax dollars local. Supporters have also stated that this preference will give local farmers a fair chance to sell their products within the state, and give a boost to the California farming economy.

Previous legislative attempts to grant purchasing preference for California grown agricultural commodities, or other California produced products, have either been vetoed or held in Legislative Committees. Reasons for the Governors' vetoes ranged from cost to the general fund, cost to local governments, and concerns that the legislation “could result in costly legal challenges, retaliation by other states and nations, and bid protests from those claiming the preference should be granted and those objecting to it.”

1. Possible Effect on Prison Funding: Current law dictates that prisons accept the lowest priced available bid when bids are being considered for comparable products. Preference may be given to contracts that benefit the state but this is only allowed when bids are equal in amount. (Pen. Code, § 2051.) By requiring a contract to provide that half of the goods are California grown, prisons may be required to accept bids at a higher price than current standards and this would undermine current law. This may draw funding away from other programs, such as rehabilitation, and financially burden a prison system that is already in crisis.
   
2. Veto Message of AB 199 (Holden): In 2016, AB 199 (Holden) would have required all California state-owned or state-run institutions, except public universities, public schools, and school districts, to purchase agricultural products grown in California to the extent possible from a California company before those that are grown outside of the state, as specified. AB 199 was vetoed by the Governor. The governor issued the following veto message:

This bill would require the state to implement a preference for agricultural products grown in California and offered by a California company. This preference would be difficult to comply with and quite onerous. Every purchase, even a single bag of apples, would be affected.

I strongly support California's agricultural industry and encourage all state-run institutions to support local farmers and businesses. In fact, state growers and processors have no trouble competing for - and winning - the state's business. Today, approximately half of all food the Department of General Services purchases for state institutions comes from California, without a preference or a mandate.

1. Argument in Support: According to Pacific Coast Renderers, "The California Department of Corrections and Rehabilitation is the largest state food purchaser and food service provider, serving 130 million meals each year at the 35 state prisons, two of which are women's facilities. CDCR purchases approximately $150 million worth of food each year through contracts negotiated by DGS, CALPIA, and directly from distributers.

"California has spent approximately $150 million annually on food for the state's incarcerated population. California Prison Industry authority produces and sells approximately $65 million worth of agricultural and food products including almonds, bread, juice, peanut butter, jelly, milk, meat, eggs, chicken, coffee, and cookies.

"AB 627 will endure that Californians are supporting California's agricultural industry while providing economically viable food options. This bill will begin to set a standard for our state as a while and in turn affect all of California's growers."

1. Related Legislation: AB 822 (Caballero) would require all California state-owned or state-run institutions, except public universities and colleges and school districts, to purchase agricultural products grown in California when the bid or price meets certain conditions. AB 822 is pending hearing from the Assembly Accountability and Administration Review Committee.
   
2. Prior Legislation: AB 199 (Holden), of the 2013-2014 Legislative Session, would have required all California state-owned or state-run institutions, except public universities, public schools, and school districts, to purchase agricultural products grown in California to the extent possible from a California company before those that are grown outside of the state, as specified. AB 199 was vetoed by the Governor.
   

REGISTERED SUPPORT / OPPOSITION:

Support

Association of California Egg Farmers

Buy California Marketing Agreement

California Ag Irrigation Association

California Alfalfa & forage Association

California Association of Nurseries

California Association of Wheat Growers

California Bean Shippers Association

California Cherry Growers and Industry Foundation

California Grain & Feed Association

California Pear Growers Association

California Seed Association

California State Floral Association

California Warehouse Association

Pacific Coast Renderers

Opposition

None

Analysis Prepared by: