Court Opinion

ID: 9723783
Source: CourtListenerOpinion
Date Created: 2023-08-26 10:31:02.215077+00
Date Added: 2024-06-11T18:24:51.851069
License: Public Domain

EVANS, Acting P. J.
I dissent.
The factual background set forth in the majority opinion does not adequately establish a sufficient basis to appropriately construe Government Code section 19130 et seq.;1 and as a consequence, I am compelled to expand the factual background giving rise to the present controversy.
Prior to May 24, 1985, Department of General Services (General Services) provided security guard service to the Stephen P. Teale Data Center in Sacramento. Prior to that date, the State Personnel Board had been advised by General Services of its decision to phase out use of the security guard class of personnel. As a result, all appropriate agencies were notified that by virtue of General Services’ decision, Teale Data Center had elected to contract for its needed security services, and that defendant Universal Service Contractors had been the low responsible bidder.
As required by section 19130, defendant State Personnel Board (SPB or board) made an analysis of the circumstances and the contract, in which it applied and considered each of the elements (11) required to be met by section 19130. SPB communicated its decision to approve the cost-based contract with Universal Service Contractors and advised plaintiff, California State Employees’ Association (CSEA), that the decision to contract was predicated upon General Services’ decision to no longer provide security guards and furnished CSEA a copy of its detailed analysis of the contract. The board’s detailed analysis of the contract was not factually challenged in the trial court nor here, and is fundamental to a proper resolution of the controversy; I accordingly set forth that analysis in full.
“The following is an analysis of the standards that must be met in a cost-based contract, as required by Government Code Section 19130:
“1. ‘The proposed contract will result in an actual overall cost savings to State Government. ’ [§ 19130, subd. (a)(1).] The proposed contractor will provide the required service for a cost to the department of $127,020 per year, for three years. For Teale Data Center to hire its own security staff, it would cost $183,944.60 per year (see Chart A below). The savings from contracting out to the proposed vendor would be $56,924.60 per year, or $170,773.80 over the three-year period of the contract. This is a 31% savings. (See Chart B.)
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“2. ‘The savings must be large enough to ensure that they will not be eliminated by private sector and State cost fluctuations that could normally be expected during the contracting period.’ [§ 19130, subd. (a)(5).] The State Personnel Board policy on review of cost-based contracts indicates that a savings margin of at least 10% annually will meet this criteria. The proposed contract represents an annual savings of 31%, so this criteria is met.
“3. ‘The potential for future economic risk to the State from potential contractor rate increases must be minimal.’ [§ 19130, subd. (a)(9).] The proposed contractor has agreed to a set rate for the full three-year period covered by the proposed contract. Since there will be no rate increases during the life of the contract, the risk of rate increase is ‘minimal’.
*385“4. ‘The amount of savings must clearly justify the size and duration of the contracting agreement.!’] !§ 19130, subd. (a)(6).] This criteria is met as the savings are not ‘temporary’ or ‘spot’ as defined by State Personnel Board policy. The savings are substantial and long term.
“5. ‘The contract may not cause the displacement of civil service employees.’ [§ 19130, subd. (a)(3).] No State employees will be laid off, demoted, involuntarily transferred to a new class, or reduced in time base. The Department of General Services plans to place all Security Guards who are currently at Teale Data Center in other classes and locations on a voluntary basis. General Services has obtained special permission from the Department of Personnel Administration to place their Security Guards on SROA lists to assist in the voluntary placement of their employees. Employees who do not want a change in classification will be retained in the State Police Division as Security Guards.
“6. ‘Proposals to contract out work will not be approved solely on the basis that savings will result from lower contractor pay rates or benefits. Proposals to contract out work shall be eligible for approval if the contractor’s wages are at the industry’s level and do not significantly undercut State pay rates.’ [§ 19130, subd. (a)(2).] The Bureau of Labor Statistics’ report of December 1984 shows that security guards in the Sacramento area are paid an average of $5.58 per hour in wages. This study did not differentiate between armed and unarmed guards; however, in past years, the difference between armed and unarmed guard salaries was $.50 per hour more for armed guards. Therefore, the average wage for unarmed guards in the Sacramento area is assumed to be approximately $5.08 per hour. The wage under the proposed contract is $5.00 per hour and considered to be at industry’s level. The State’s second step pay rate for Security Guards is $6.94 per hour. (The second step would be approximately the average salary during the three-year period of the contract.) Although the proposed contractor’s wage is lower than the State’s wage, savings from this lower wage is not the sole basis for approval of this contract. Approval of the proposed contract is warranted by: (a) the inability of the department to continue to obtain service from the State Police after May 24, 1985; (b) the overall cost savings of 31% to the State by contracting out to the proposed vendor; (c) the proposed vendor’s wage being at industry’s level; and (d) the ability of the proposed vendor to provide more efficient service than the department could provide. Should any of the proposed vendor’s security staff be unable to work, coverage can be provided from the pool of reserve staff. On the other hand, if a State employee cannot come to work, there is no reserve staff to cover; other Security Guards must cover at the overtime rate of pay. In addition, the proposed vendor can provide supervision more efficiently *386because the supervisor is not permanently assigned onsite on a full-time basis but circulates among several of the contractor’s client businesses. Supervision is available 24 hours a day as needed. Chart C below shows a comparison of the proposed vendor’s cost of supervision per hour of service provided and the State’s cost.
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“7. ‘The contract must not adversely impact the State’s affirmative action efforts.’ [§ 19130, subd. (a)(4).] Since no employees will be displaced and General Services will no longer be hiring Security Guards, there will be no adverse impact on protected groups.
“8. ‘All contracts approved based on cost savings must be with firms; contracting with individuals based on cost savings is not permissible. ’ [§ 19130, subd. (a)(10).] The proposed contractor is a firm.
“9. ‘Cost-based contracts must be awarded through a well-publicized, competitive bidding process.’ [§ 19130, subd. (a)(7).] The request for bids was advertised through the State Contract register. Bids were received from eight firms, four of which submitted all the required information. The proposed contractor is the low bidder of the four responsive bidders.
“10. ‘Cost-based contracts shall include specific provisions pertaining to the qualifications of the staff that will perform the work under the contract, as well as assurances that the contractor’s hiring practices meet applicable nondiscrimination/affirmative action standards.’ [§ 19130, subd. (a)(8).] The proposed contract contains provisions concerning both the qualifications of staff and equal employment opportunity practices.
*387“11. ‘Cost-based contracting shall not occur where the public’s interest in having a particular function performed directly by State Government outweighs the potential economic advantage of contracting.’ [§ 19130, subd. (a)(11).] Security guard service is not the type of service the public inherently expects to be performed by the government. The security guards under the proposed contract are unarmed and will not be performing law enforcement or emergency services functions. Law enforcement and emergency services will continue to be provided by qualified State Police Officers.”
With this background, the statute may be examined pursuant to existing judicial standards for construing statutes and their application. “The fundamental rule of statutory construction is that the court should ascertain the intent of the Legislature so as to effectuate the purpose of the law. (California Toll Bridge Authority v. Kuchel, 40 Cal.2d 43, 53 [251 P.2d 4]; County of Alameda v. Kuchel, 32 Cal.2d 193, 199 [195 P.2d 17]; Dickey v. Raisin Proration Zone No. 1, 24 Cal.2d 796, 802 [151 P.2d 505, 157 A.L.R. 324]; 82 C.J.S., Statutes, § 321, p. 560; 45 Cal.Jur.2d, Statutes, § 126, p. 634.) Moreover, ‘every statute should be construed with reference to the whole system of law of which it is a part so that all may be harmonized and have effect.’ (Stafford v. Los Angeles etc. Retirement Board, 42 Cal.2d 795, 799 [270 P.2d 12].) If possible, significance should be given to every word, phrase, sentence and part of an act in pursuance of the legislative purpose. (People v. Western Air Lines, Inc. 42 Cal.2d 621, 638 [268 P.2d 723].) Such purpose will not be sacrificed to a literal construction of any part of the act. ...” (Select Base Materials v. Board of Equal. (1959) 51 Cal.2d 640, 645 [335 P.2d 672].)
As I apply these principles to the facts presented, I. am forced to the conclusion that the trial court was wrong. Its decision was apparently the result of judicial tunnel vision. It focused on but one part of one of the eleven factual criteria and gave that one fact more than a literal construction. As a consequence, the trial court effectually rendered nugatory the total purpose of the statutory enactment.
Just as importantly, the trial court totally ignored the administrative analysis of the factual circumstances, the purpose of the statute, and the board’s interpretation of each. I recognize that while an administrative construction of a statute does not acquire legal sanction merely by reason of usage, it should be accorded great respect by the courts and upheld if not obviously erroneous. (Los Angeles v. Superior Court (1941) 17 Cal.2d 707, 712 [112 P.2d 10]; see also Los Angeles City School Dist. v. Simpson (1952) 112 Cal.App.2d 70, 75 [245 P.2d 629].)
*388From the record presented, I conclude the trial court did not accord the board’s administrative analysis any deference or consideration; more importantly, the court’s resolution did not address all of the issues tendered, but rather, at the insistence of plaintiffs, focused on the single element of a comparison of the contractor’s wage level to that of General Services’, without consideration of any of the other criteria or the resolution of obviously conflicting statutory provisions relative to wages. Such a judicial interpretation does a disservice to all of the parties and sound judicial practice. The court had before it evidence of the factual context, the administrative agency’s analysis of the wage problem, as well as the agency’s overall interpretation and harmonization of those elements. The court obviously did not give the agency’s decision any consideration. In Pitts v. Perluss (1962) 58 Cal.2d 824 [27 Cal.Rptr. 19, 377 P.2d 83], the Supreme Court articulated the proper legal consideration the court should give to administrative determinations and stated that parties and court should recognize the intricate and technical nature of the subject matter as well as the expertise and full technical knowledge which its administration requires. It would be presumptive of a court to claim such skill; it should not therefore superimpose its policy judgment upon the agency in the absence of an arbitrary and capricious decision. (Id., at p. 832.)
The administrative decision in this instance was thorough, thoughtful, factual, and reasonable, not capricious or arbitrary.
Another fundamental rule of statutory interpretation requires that where a statute is susceptible of different interpretations, the one that leads to the more reasonable result should be followed. (Metropolitan Water Dist. v. Adams (1948) 32 Cal.2d 620, 630 [197 P.2d 543].) In addition to all of the factual criteria which precipitated the need to contract for security services, the agency carefully analyzed the wage differential in the total factual environment; the trial court did not do so. The SPB on the facts concluded the wage differential did not warrant rejection of the contract. Its conclusion was that the salaries to be paid by the successful bidder met the industry level and although the contractor’s wage rate was lower than the state’s wage, that fact did not warrant rejection of the contract and concluded “Approval of the proposed contract is warranted by: (a) the inability of the department to continue to obtain service from the State Police after May 24, 1985; (b) the overall cost savings of 31% to the State by contracting out to the proposed vendor; (c) the proposed vendor’s wage being at industry’s level; and (d) the ability of the proposed vendor to provide more efficient service than the department could provide. Should any of the proposed vendor’s security staff be unable to work, coverage can be provided from the pool of reserve staff. On the other hand, if a State employee cannot *389come to work, there is no reserve staff to cover; other Security Guards must cover at the overtime rate of pay. In addition, the proposed vendor can provide supervision more efficiently because the supervisor is not permanently assigned onsite on a full-time basis but circulates among several of the contractor’s client businesses. Supervision is available 24 hours a day as needed.”
Such an interpretation and application obviously carries out the intent and purpose of the Legislature and effectuates the purpose of the law. (Select Base Materials v. Board of Equalization, supra, 51 Cal.2d at p. 645.) It is fundamental in such cases that a statutory construction which sensibly resolves an apparent controversy is preferred to one which renders statutory purpose or language meaningless. (Wells v. Marina City Properties, Inc. (1981) 29 Cal.3d 781, 788 [176 Cal.Rptr. 104, 632 P.2d 217].)
In the context of the needs presented by virtue of General Services’ decision and Teale Data Center’s requirement of security service, the statute required a broad rather than literal interpretation in order to uphold the usefulness of the statute and give its purpose meaning and effect and avoid an absurd result. (Herbert Hawkins Realtors, Inc. v. Milheiser (1983) 140 Cal.App.3d 334, 338 [189 Cal.Rptr. 450].)
Moreover, I consider the trial court’s interpretation of the term “undercut” as used in section 19130, subdivision (a)(2), to have effectually rendered the statute meaningless and purposeless. The statutory language which requires the contractor’s pay scale to be at the industry level, which Universal Service Contractor’s was, but at the same time virtually meet the state pay level, creates a conflict and results in a language surplusage in the statute. (§ 19130, subd. (a)(2).)
The trial court decision seems to ignore the semantics involved in the consideration of the term “undercut” as used in section 19130, subdivision (a)(2). The definition of the term in this context is to accept or offer to accept a lower wage than is standard or general. The definition implies a deliberate act to abridge or depress a wage level. Such evidence is not demonstrated by the record; rather, the contrary appears to clearly be the case. The question then becomes which of the conflicting provisions must yield. I am firmly convinced that to achieve the overall legislative purpose, the administrative decision correctly resolved that problem.
I would reverse the judgment.
*390Appendix A
Government Code section 19130 provides as follows:
“The purpose of this article is to establish standards for the use of personal services contracts.
“(a) Personal services contracting is permissible to achieve cost savings when all the following conditions are met:
“(1) The contracting agency clearly demonstrates that the proposed contract will result in actual overall cost savings to the state, provided that:
“(A) In comparing costs, there shall be included the state’s additional cost of providing the same service as proposed by a contractor. These additional costs shall include the salaries and benefits of additional staff that would be needed and the cost of additional space, equipment, and materials needed to perform the function.
“(B) In comparing costs, there shall not be included the state’s indirect overhead costs unless these costs can be attributed solely to the function in question and would not exist if that function was not performed in state service. Indirect overhead costs shall mean the pro rata share of existing administrative salaries and benefits, rent, equipment costs, utilities and materials.
“(C) In comparing costs, there shall be included in the cost of a contractor providing a service any continuing state costs that would be directly associated with the contracted function. These continuing state costs shall include, but not be limited to, those for inspection, supervision, and monitoring.
“(2) Proposals to contract out work shall not be approved solely on the basis that savings will result from lower contractor pay rates or benefits. Proposals to contract out work shall be eligible for approval if the contractor’s wages are at the industry’s level and do not significantly undercut state pay rates.
“(3) The contract does not cause the displacement of civil service employees. The term ‘displacement’ includes layoff, demotion, involuntary transfer to a new class, involuntary transfer to a new location requiring a change of residence, and time base reductions. Displacement does not include changes in shifts or days off, nor does it include reassignment to other positions within the same class and general location.
“(4) The contract does not adversely affect the state’s affirmative action efforts.
“(5) The savings shall be large enough to ensure that they will not be eliminated by private sector and state cost fluctuations that could normally be expected during the contracting period.
“(6) The amount of savings clearly justify the size and duration of the contracting agreement.
“(7) The contract is awarded through a publicized, competitive bidding process.
“(8) The contract includes specific provisions pertaining to the qualifications of the staff that will perform the work under the contract, as well as assurance that the contractor’s hiring practices meet applicable nondiscrimination, affirmative action standards.
“(9) The potential for future economic risk to the state from potential contractor rate increases is minimal.
“(10) The contract is with a firm. A ‘firm’ means a corporation, partnership, nonprofit organization, or sole proprietorship.
“(11) The potential economic advantage of contracting is not outweighed by the public’s interest in having a particular function performed directly by state government.
“(b) Personal services contracting also shall be permissible when any of the following conditions can be met:
“(1) The functions contracted are exempted from civil service by Section 4 of Article VII of the California Constitution, which describes exempt appointments.
“(2) The contract is for a new state function and the Legislature has specifically mandated or authorized the performance of the work by independent contractors.
“(3) The services contracted are not available within civil service, cannot be performed satisfactorily by civil service employees, or are of such a highly specialized or technical *391nature that the necessary expert knowledge, experience, and ability are not available through the civil service system.
“(4) The services are incidental to a contract for the purchase or lease of real or personal property. Contracts under this criterion, known as ‘service agreements,’ shall include, but not be limited to, agreements to service or maintain office equipment or computers that are leased or rented.
“(5) The legislative, administrative, or legal goals and purposes cannot be accomplished through the utilization of persons selected pursuant to the regular civil service system. Contracts are permissible under this criterion to protect against a conflict of interest or to insure independent and unbiased findings in cases where there is a clear need for a different, outside perspective. These contracts shall include, but not be limited to, obtaining expert witnesses in litigation.
“(6) The nature of the work is such that the Government Code standards for emergency appointments apply. These contracts shall conform with Article 8 (commencing with Section 19888) of Chapter 2.5 of Part 2.6.
“(7) State agencies need private counsel because a conflict of interest on the part of the Attorney General’s office prevents it from representing the agency without compromising its position. These contracts shall require the written consent of the Attorney General, pursuant to section 11040.
“(8) The contractor will provide equipment, materials, facilities, or support services that could not feasibly be provided by the state in the location where the services are to be performed.
“(9) The contractor will conduct training courses for which appropriately qualified civil service instructors are not available, provided that permanent instructor positions in academies or similar settings shall be filled through civil service appointment.
“(10) The services are of such an urgent, temporary, or occasional nature that the delay incumbent in the implementation under civil service would frustrate their very purpose.
“(c) All persons who provide services to the state under conditions the board determines constitute an employment relationship shall, unless excepted from civil service by Section 4 of Article VII of the California Constitution, be retained under an appropriate civil service appointment. ”

All further statutory references are to the Government Code unless otherwise indicated.