McGeorge School of Law

Proposition 35

Proposition 35:
The Taxpayer Savings and Fair Competition Initiative

By Jason M. Ackerman

Copyright © 2000 by University of the McGeorge School of Law

JD, McGeorge School of Law, University of the Pacific
to be conferred December 2001
B.A., Philosophy, San Francisco State University, 1996

Table of Contents

I. Executive Summary
II. The Law
III. Drafting Issues
IV. Constitutional Analysis
V. Public Policy Considerations
VI. Conclusion

I. Executive Summary

Since 1934, governmental entities in California have been allocated most public works architectural and engineering contracts because courts have interpreted Article VII of the California Constitution and its predecessor, former Article XXIV, to give civil servants a first right to these projects.

Former Article XXIV was added to the constitution by way of the initiative process, and was later remunerated as Article VII by the Constitutional Revision Commission in 1976. The purpose of former Article XXIV was to promote economy and efficiency within state government. That purpose carried over after the remuneration of Article VII.

While the text of Article VII does not expressly speak to the allocation of public works contracts, judges have interpreted the language to mean that civil servants have the first right to contracts which they can perform "adequately and competently," or that are within the "nature of the services" performed by civil servants in the past. (State Compensation Insurance Fund v. Riley, 9 Cal.2d 126, 135 (1937).) The services under such contracts are broad, and include clerical support, building maintenance and security, and legal services.

The Legislature attempted to circumvent Article VII in 1993 by drafting legislation that provided exceptions to the constitutional provision, however the California Supreme Court criticized the legislation as "inartfully drafted" and affording "[no] legitimate basis for disregarding the constitutional restriction on private contracting." (Professional Engineers In California Government et. al., v. Department of Transportation, 15 Cal. 4th 543, 553 [1997] [hereinafter PECG].)

If passed, Proposition 35 would amend the Constitution with proposed Article XXII. Proposed Article XXII would effectively except architectural and engineering firms from Article VII, and provide a forum for competitive selection in the arena of private contracting for all public works projects. Additionally, Proposition 35 would add statutory language to the Government Code to enable private architectural and engineering entities to participate in the competitive selection process for public works contracts.

Proposition 35 appears to be well drafted, however this review contains an analysis of whether the creation of a new state constitutional article is appropriate, since Proposition 25 could have accomplished the same purpose by merely creating new exceptions to Article VII. Additionally, the breadth of the proposed statutes is analyzed.

Proposition 35 implicates no federal constitutional issues, however, two significant California Supreme Court cases are analyzed to determine whether proposed Article XXII improperly revises the state constitution or constitutes an amendment. The analysis indicates that Proposition 35 could, if passed, constitute a valid amendment to the California Constitution.

To conclude the analysis, policy arguments by the proponents and opponents are addressed.

II. The Law

A. State Constitution

In 1934, California voters passed the State Civil Services Act through the initiative process, creating former state constitution Article XXIV. The purpose of former Article XXIV was to "promote efficiency and economy in state government by prohibiting appointments and promotion of service except on the basis of merit, efficiency and fitness ascertained by competitive examination." (State Compensation Ins. Fund v. Riley, 9 Cal. 2d 126, 134-136 [1937].)

Article VII, which replaced former Article XXIV in 1976, is titled "Public Officers and Employees." Article VII defines the Civil Service as officers and employees of the state, and provides: "In civil service permanent appointment and promotion shall be made under a general system based on merit ascertained by competitive examination." (Cal. Const. art. VII § 1(a), (b) [West 2000].) Also, article VII provides for the appointment of a personnel board (§ 2), the delegation of personnel board duties (§ 3), civil service exemptions (§ 4), and civil servant qualifications (§§ 5-11). (Cal. Const. art. VII [West 2000].)

Neither Article VII nor former Article XXIV expressly prohibits or restricts public entities from private contracting: "Decisional law interprets VII as a restriction on the 'contracting out' of state activities or tasks to the private sector." (California State Employees' Assn. v State of California 199 Cal.App.3d 840, 844 [1988].) Rather, the restriction emanates from an implicit need to protect the policy of the original civil service mandate, as discussed below.


B. Case Law

After the Civil Service Act (the Act) was passed in 1934, the judicial branch was required to interpret the scope and the meaning of the Act. The first case interpreting the scope of the Act was State Compensation Insurance Fund v Riley, 9 Cal.2d 126 (1937). At issue in Riley was the validity of a contract for legal services. The State Compensation Insurance Fund was established to provide a public agency from which all employers could obtain compensation insurance. (Id. at 127). Pursuant with instructions from the Attorney General of the United States, the Internal Revenue Service (IRS) sought to impose certain excise and stamp taxes on the fund, and income tax on the salaries of fund employees. (Id.) At the urging of the Industrial Accident Commission (IAC), the fund's Secretary, Joseph Gallager, instituted a suit against the IRS on grounds that the imposition of such taxes would disrupt the fund, disarrange its rates, and impair all of the functions of the fund. (Id. at 129). The IAC and the Department of Finance approved an independent contract with attorney John L. McNab to represent Mr. Gallager and the fund, however, the State Controller refused to approve the claim and draw a warrant on the contract, citing the Civil Service Act. (Id.) Since Mr. McNab was not an employee of the fund, the Riley court held the contract for his legal services was invalid. The court held:

"The [Civil Service Act] leaves no room for interpretation, applying as it states, to "every officer and employee of this state" with fourteen exceptions. [The] court is without power to create additional exceptions.. The true test. is whether the services contracted for, whether temporary or permanent, are such a nature that they could be performed by one selected under the provisions of civil service. " (Id. at 135.)

The court followed by stating: "Attorneys are included within civil service, and in the absence of showing to the contrary we must assume that such services could be adequately and competently performed by [Civil Servants]." (Id. at 129.) Therefore, McNab's contract was invalidated and lower courts were given a standard for assessing the validity of private contracts based on, "the nature of the services," and whether civil servants could "adequately and competently" perform such services.


The next significant case affecting the Civil Service Act was Kennedy v Ross 28 Cal.2d 569 (1946). Although the Kennedy court did not directly address the Civil Service Act, it did so by implication when it addressed the language of the 1932 Charter of the City and County of San Francisco, language that parallels the Act's language. In Kennedy, the Director of Public Works for the City and County of San Francisco entered into a contract with Clyde C. Kennedy, a private consulting engineer, to prepare and furnish engineering and architectural plans, specifications, estimates of costs, and contract documents required for a proposed sewage, sludge treatment and disposal plant. (Kennedy, 28 Cal.2d. at 571.) A suit was filed to enjoin the Controller of the City and County of San Francisco from making payment on a private contract for public works. The cause of action was based upon the1932 Charter language, which provided in pertinent part:

All positions in the several departments and offices of the city are included in the classified civil service and are filled from the list of eligibles. (1932 City and Charter of the City and County of San Francisco, [Stats. 1931, p. 2973, as amended].)

The court held that the contract was enforceable because "the services for which [Kennedy] is engaged are not such as could be rendered by an existing department of the city." (Kennedy, 28 Cal.2d at 573.) It reasoned that modern sewage treatment was a matter of scientific treatment, requiring a high degree of specialized and scientific knowledge which emanates from plant operations in that specialized field. The court concluded that it was within the proper sphere of action by the Director of Public Works to determine the qualifications and requirements of the experts who undertake the preparation of plans and specifications for proposed improvements, since no civil servant was qualified in the specialized field of sewage management.

The most recent case addressing private contracting under the Civil Service Act is PECG 15 Cal.4th 543, discussed below.


C. Statutory Law

i. Chapter 433

The most significant attempt to modify private contracting is contained in the language of Chapter 433, passed by the Legislature in 1993. Chapter 433 was an attempt by the Legislature to enact provisions governing the state's authority to contract with private entities by articulating and expounding upon preexisting statutes that are in compliance with article VII of the Constitution.

The relevant preexisting constitutional statutes, found in the California Government Code, include the following:

§ 14101 - This section provides that the Department of Transportation can contract with architects and engineers when it is determined by the Director of Transportation, with approval by the Director of Finance, that the obtainable staff is unable to perform such work within the time the public interest requires completion. This section is consistent with the "adequately performed" standard articulated in earlier decisional law because timeliness is a relevant factor of adequacy; (Cal. Gov. Code § 14101 [West 2000].)

§ 14130 - This section provides that the Department of Transportation is permitted to contract out if consistent with the articulation of state courts. That is, the agency may contract out when the project is not within the nature of the services provided by the state agency, when the agency cannot adequately perform the project, or when contracting out would result in significant savings to the state. The policy supporting this section includes the public's interest in acquiring federal funds that cannot be obtained, due to time restrictions, if California government kept the project in-house. Also, this section seeks to avoid laying off state employees, because if the agency has to hire civil servants to meet current contract demands and the availability of public works contracts subsequently diminishes, then the agency would be burdened with compensating unnecessary employees. Essentially, this section was passed in recognition of the effectiveness of state agencies based upon the capacity of its staff; (Cal. Gov. Code §14130 [West 2000].)

§§ 14131 and 14134 - Section 14131 permits the contracting of technical services, provided that no public employees are displaced by such contracts. Section 14134 provides policies the department must bear when creating guidelines for public contracting with private entities. They include maintaining the integrity of contracting procedures, while addressing the "short-term fluctuations" in workloads and cost effectiveness of contracting out; (Cal. Gov. Code §§ 14131, 14134 [West 2000].) and

§ 19130 - This section governs personal service contracts and codifies pre-existing decisional law relating to the policies of reducing state costs, while maintaining the integrity of the civil service. (Cal. Gov. Code §19130 [West 2000].)

However, Chapter 433 constitutionally went awry with its additions to the Government Code. Specifically, the Legislature sought to add §§ 14130.1 (b) and 14130.2 (permitting government entities to contract out irrespective of project delivery staffing needs), 14130.3 (overturning recent court decisions which held private contracts based on minority-, women-, and disabled-veteran- owned firms inconsistent with public contracting goals), and 14137 (forbidding the judicial system from breaking private contracts entered into before July 1, 1993, which were subsequently found to be inconsistent with article VII).

The provisions were addressed by the Supreme Court in PECG, where the plaintiffs [a union representing state engineers and a state citizen] filed a lawsuit in 1990 to enjoin the California Department of Transportation [Caltrans] from contracting with private entities to carry out state highway projects traditionally done by state civil service employees. (PECG, 15 Cal.4th at 552-553.) Following trial, the court issued an extensive statement of decision in favor of plaintiffs and granted a permanent injunction prohibiting Caltrans from contracting privately for engineering and inspection services for highway projects, unless the work was to be in compliance with the then existing criteria set forth in section 14101 and former section 14130 et al. (Id. at 555.)

In September 1993, after the Legislature passed Chapter 433, Caltrans took the position that the statutory changes undermined the injunction. (Id. at 547.) Caltrans froze the hiring of new employees, began to terminate limited term appointments, and called for a fifty- percent reduction of temporary help to eliminate an assumed "over-staffed condition." (Id. at 554.) Based upon prior case law, the trial court found Caltrans' conduct to be in violation of the injunction. (See Riley, 9 2d. 126, at 135 (regarding the "adequately and competently" standard)). (Id. at 558.)

The Court of Appeals reversed and remanded the matter to the trial court with instructions to dissolve the injunction. The court concluded that Chapter 433 contains sufficient pronouncements, directions and safeguards to satisfy plaintiffs' earlier objections based on the private contracting restriction of Article VII. (Id. at 558.) In effect, the Court of Appeals sought to overrule Riley and its progeny, stating that the Legislature was free to create exceptions to Article VII.

The Supreme Court then overturned the appellate decision, holding that "if the constitutional civil service mandate was to retain any vitality as a protective device against the deterioration of the civil service system through private contracting, we must hold that Chapter 433 represents an ineffectual attempt to circumvent that constitutional mandate." (Id. at 546.) Consequently, the Legislature was not permitted to freely create exceptions to Article VII.


ii. Proposition 224

In 1998, PECG sought to constitutionally solidify the PECG decision by passing Proposition 224, titled "The State Funded Design and Engineering Services Initiative." By constitutional amendment, Proposition 224 sought to implement a new contracting process which required the State Controller's Office to prepare an analysis for each proposed contract, comparing the cost of contracting with a private firm (including the anticipated amount a private firm would charge to provide services, plus the cost to bid, award, administer, and monitor the contract), with the "additional direct costs," if state employees provided the same services. (State Funded Design and Engineering Services Initiative. California Official Voter Information Guide, at 41 [June 1998].)

The proposed constitutional amendment was criticized as overbroad because it did not define "additional direct costs." Specifically, it was likely that portions of state agency overhead, such as "top management salaries," and payroll, accounting and human resources would not be calculated as "additional direct costs." Furthermore, calculating training costs, increased construction costs due to delays, and costs of maintaining excess state staff if workloads declined were discretionary costs which might or might not be calculated in determining "additional direct costs." Consequently, public entities had an advantage in calculating the cost of contracting public-works projects because private entities were required to take such costs into account when formulating a construction bid.

As a result of the drafting flaws in Proposition 224, opponents of the initiative gained additional support in their effort to defeat the proposition, and did so by a vote of 62%.


iii. Government Code


California Government Code §§ 4526 and 4528 permit public contracts to be awarded through negotiated procurement, which uses qualification based selection criteria. When the public agencies determine that a project is such that it falls within the exceptions of Article VII and the department is free to use non-governmental agencies, qualification based selection is employed. After a private candidate is identified as an acceptable candidate, the public and private entities enter into negotiation on the terms of such contracts. Sections 4526 and 4528 mandate and regulate this process. In sum, the current law is as follows:

"The state and local governments frequently contract with private firms

for construction-related services, which include architectural, engineering,

and environmental impact studies. State and local governments enter into

these contracts through a competitive process of advertising for the service,

selecting the firm determined to be best qualified, and negotiating a con-

tract with that firm. However, neither the state nor most local government

entities use a bidding process for these services. By comparison, bidding

generally is used to acquire goods and for construction of projects."

(Cal. Gov. Code §§ 4526, 4528 [West 2000].)

D. Changes Proposed by Proposition 35

i. State Constitution

If passed, Proposition 35 would add Article XXII to the California Constitution to explicitly address the issue of private contracting. In pertinent part, the Constitution would read:

  1. The State of California and all other governmental entities shall be allowed to contract with qualified private entities for architectural and engineering services for all public works of improvement. The choice and authority to contract shall extend to all phases of project development regardless of whether or not the project is part of any State owned or State operated system or facility. (Public Works Projects. Use of Private Contractors for Engineering and Architectural Services. California Official Voter Information Guide, at 65 [Nov. 2000] [hereinafter, Guide].)

Additionally, the amendment would effectively overturn the case law descending from Article VII, through the following language:

  1. Nothing contained in Article VII of this Constitution shall limit, restrict or prohibit the State. from contracting with private entities for the performance of architectural and engineering services. (Id.)

The proposed language of the amendment indicates that Proposition 35 would provide private firms with an opportunity to participate in the competitive selection of all architectural and engineering services for public works projects. That is, architects and engineers would be able to vie for public works contracts even if the projects are within the nature of the services of civil servants or if state employees could adequately and competently perform the contracts.

This is a departure from current law because California courts have consistently held, under Article VII, that private architectural and engineering firms cannot compete for public works contracts, unless: (1) The projects were not within the nature of the services performed by state employees; (2) The projects could not be adequately performed by state employees; or (3) The private contract would result in a substantial cost savings and would not interfere with the intent of Article VII.

ii. Statutory Law

Provisions of Chapter 10.1 would be added to Division 5 of Title 1 of the Government Code to provide the following:

    1. § 4529. 10. - This proposed section defines architectural and engineering services broadly to include architectural, landscape architectural, environmental, engineering, land surveying, and construction management services. (Guide, at 65.)

      § 4529. 11. - This section provides that all projects included in the State Transportation Improvement Program that are programmed and funded as interregional or regional improvements are subject to Article XXII, and permits governmental entities sponsoring such programs to contract with qualified architectural and engineering firms. Regional or local project sponsors shall be a regional or local public entity. (Id.)

      § 4529. 12. - This section requires a competitive selection process and prohibits government employees from participating in the selection process when they have a financial interest in or business relationship with any private entity seeking the contract. The procedure requires compliance with laws regarding political contributions, conflicts of interest, and unlawful activities. It is not clear whether Government Code §§ 4526 or 4528, which permit contracts to be awarded through a negotiated procurement and uses qualification-based selection criteria, will survive if Proposition 35 is passed because this section might mandate competitive selection. (Id.)

      § 4529. 13. - This section provides that this act does not change standards of design, safety, or project construction. (Id.)

      § 4529. 14. - This section subjects all projects obtained under these provisions to standard accounting practices. (Id.)

      § 4529. 15. - This section limits the act to architectural and engineering services defined in § 4529.10 and specifies that it does not apply to contracts for public safety or educational services. (Id.)

      § 4529. 16. - This section provides that this act shall not interfere with federal funding provided to any governmental entity. (Id.)

      § 4529. 17. - This section states that any part of this act found to be invalid will be severable from the rest of the act and that the act will remain valid and effectual. (Guide, supra, at 66.)

      § 4529. 18. - This section provides that this act shall prevail in conflicts of legislation. (Id.)

      § 4529. 19. - This section permits a liberal interpretation of the act so that the purposes of the act may prevail. (Id.)

      § 4529. 20. - This section is intended to make this act applicable to all governmental entities. (Id.)

      Finally, this initiative gives the legislature authority to enact amendments to the measure by a two-thirds vote. (Id.)

iii. Case Law

Proposition 35 would effectively erase Riley and its progeny, with regard to private contracting of public works projects. The "nature of the services" and "adequately and competently" standards might still apply to other forms of private contracting, such as the private contracting of legal counsel by a public entity or when public entities seek private investment advice. However, they would have no application in private contracting of architectural and engineering services.

III. Drafting Issues

The text of Proposition 35 does not appear to be ambiguous or subject to varied interpretation. Proposed Article XXII clearly states what it intends to do, that is, remove the existing restrictions on contracting for architectural and engineering services and allow governmental entities to use qualified private architectural and engineering firms to efficiently and economically complete public-works projects. Furthermore, proposed Article XXII, § 2 provides that nothing in Article VII should be read to limit, restrict or prohibit the application of Article XXII.

It is unlikely that Proposition 35 will be challenged on grounds that it is unclear or ambiguous and, therefore, any legal challenge will probably be the result of the application of Proposition 35, rather than an interpretation of its language.

However, why the proponents have chosen to amend the California Constitution by adding a new article instead of new civil service exceptions to Article VII, and the breadth of proposed initiative are two drafting issues which deserve attention.

A. Creation of Article XXII versus the creation of a new exception to VII

Proposition 35 was drafted to amend the California Constitution by creating Article XXII rather than providing for a new exception within Article VII. Proponents of Proposition 35 give two reasons for creating a new article. First, they note that there are fourteen exceptions found in Article VII, section 4. Seven exceptions apply to individuals appointed or employed by either the Executive, Legislative or Judicial branches of the government, two exceptions apply to individuals employed within the public school system, and additional exceptions are provided for employees of state homes/institutions, employees of agricultural associations, certain employees appointed by the Attorney General's Office and the Public Utilities Commission, and members of the military. It is the proponents' position that an exception within Article VII for architects and engineers would be inappropriate because the currently excepted classes of employees share a closer nexus to public employees than privately employed architects and engineers. (Telephone interview with James P. Corn, drafting attorney of the Fair Competition and Taxpayer Savings Initiative [July 11, 2000].)

Second, the proponents of Proposition 35 intend to provide an affirmative statement of law which is exclusively applicable to architects and engineers. It is the proponents' contention that if they create a new exception to Article VII, the exception would dilute the impact of Proposition 35's intent because disputes arising under any newly created exception would be analyzed through the looking glass of Article VII. By enacting proposed Article XXII, architects and engineers can point to an affirmative statement of the law concerning public works contracts with private architectural and engineering entities. Thus, a new, independent body of judicial law will be created. The new body of law will be independent because section 2 of proposed Article XXII provides that "nothing contained in Article VII shall be construed to limit, restrict or prohibit [government entities]. from contracting with private entities for the performance of architectural and engineering services." (Guide, supra, at 65.)

In short, proposed Article XXII provides architects and engineers with an appropriate, affirmative statement of law relating to the private contracting of architectural and engineering contracts. (Id.)

B. The breadth of Proposition 35

One of the most significant drafting issues relates to the scope of Proposition 35. Particularly, the measure adds section 4529.12 to the Government Code, which provides: "All architectural and engineering services shall be procured pursuant to a fair, competitive selection process.." (Id.)

Taken literally, this section appears to fully occupy the field of procuring architectural and engineering services by the state and municipalities. If courts interpret this section to encompass all procurements of architectural and engineering services, then the new Government Code may trump current Government Code §§ 4526 and 4528, which permits architectural contracts to be awarded through a negotiated procurement process, using qualification-based selection criteria.

Under current law, government agencies must adopt regulations for determining whether public entities are capable of performing a desired architectural or engineering task. If the agency finds that public entities are not qualified to perform the tasks, then they may determine which private entities are qualified and negotiate for their services. Government Code, section §4526 provides:

"In order to implement this [qualified selection], state agency heads contracting for private architectural, landscape architectural, professional engineering, environmental, land surveying, and construction project management services shall adopt by regulation, and local agency heads contracting for private architectural, landscape architectural, professional engineering, environmental, land surveying, and construction project management services may adopt by ordinance, procedures that assure that these services are engaged on the basis of demonstrated competence and qualifications for the types of services to be performed and at fair and reasonable prices to the public agencies." (Cal. Gov. Code § 4526 [West 2000].)

Proponents of Proposition 35 contend that competitive selection is multifarious and courts may determine that a negotiated procurement process and qualification-based selection fall within competitive selection. Nevertheless, courts must determine to what extent state and local agencies may use negotiated procurement processes and qualification-based selection, independent of competitive selection.

IV. Constitutional Analysis

      1. Federal Constitution

    There are no federal Constitutional issues.

    1. State Constitution

One relevant state constitutional question is whether proposed Article XXII amends or revises the California Constitution. Although the electors may amend the Constitution by initiative, a revision of the Constitution may be accomplished only by convening a constitutional convention and obtaining popular ratification, or by legislative submission of the measure to the voters. (Cal. Const. art. XVII §§ 2, 3 and 4 [West 2000].)

Although the Constitution does not define the terms "amendment" or "revision," some guidelines have been provided through decisional law. The revision/amendment analysis has a dual aspect, requiring courts to examine both the quantitative and qualitative effects of the measure on the constitutional scheme. (Raven v. Dukemejian 52 Cal.3d 336, 350 [1990].) Substantial changes in either respect could amount to a revision. (Id.)

The standard for determining whether an initiative violates the quantitative aspect is whether the measure "is so extensive in its provisions as to change directly the "substantial entirety" of the Constitution by the deletion or alteration of numerous existing provisions.." (Amador Valley Joint Union High School District v State Board of Equalization 22 Cal.3d 208, 223 [1978].) The Amador court cited only one case which met the quantitative aspect, indicating that a proposed measure must be significantly extensive to constitute a revision based upon the quantitative aspect. (Amador at 222, citing the holding in McFadden v Jordan 32 Cal.2d 330, 332 [1948], which found a measure adding 21,000 words to the then-existing 55,000 word constitution and repealing or altering 15 of 25 Articles to violate the quantitative aspect.) The quantitative standard is a high standard which is not often met, and which would not be violated by Proposition 35 because it is not so extensive in its provisions so as to change directly the "substantial entirety."

The standard for whether an initiative violates the qualitative aspect is whether the enactment accomplishes "such far reaching changes in the nature of our basic governmental plan." (Amador at 223.) This too, appears to be a high standard.

For example, in Amador, the California Supreme Court was asked to determine whether Proposition 13, which amended the California Constitution to include Article XIII A, was an improper revision rather than an amendment. (Amador at 221). The measure sought to impose a limitation on the ad valorem taxation of real property, restrict the assessed value of real property, and require a super majority vote of the state legislature or local electors to raise taxes. (Id. at 220). With regard to the qualitative effects upon the basic governmental plan, petitioners asserted that Proposition 13 destroyed "home rule," which involved the ability of local government to control and finance local affairs without undue interference from the Legislature, and that the operation of Article XIIIA resulted in the loss of a "republican" form of government (i.e., lawmaking by elected officials) to a "democratic" government plan (i.e., lawmaking directly by the people). (Id. at 226.) On the "home rule" issue, the court found that petitioners' argument was illusory because Article XIII A permitted local governments to continue to impose special taxes, and it did not by its terms empower the Legislature to direct or control local budgetary decision. (Id. at 226-227.) Regarding the "change in government plan," the court concluded that the imposition of a super majority vote of the electors, limited to the subject of taxation, added nothing novel to the existing governmental framework of the state. (Id. at 228.) In light of these conclusions, the court held that Article XIII A fairly was an amendment, not a revision. (Id. at 229.)

Proposition 35 is more analogous to Amador, because like Proposition 13, it probably does not make "such far reaching changes in the nature of our basic governmental plan." (Amador at 223.) However, if a qualitative attack is to be made upon Proposition 35, it likely would be based upon the intent of the original 1934 Act or the changes to local contracting.

The intent of the original Civil Service Act was to promote efficiency and economy in state government by prohibiting appointments and promotions in service except on the basis of merit, efficiency, and fitness ascertained by competitive examination. (Civil Service Act. California Voter Pamphlet at 12 [Nov. 6, 1934].) Furthermore, subsequent legal rules sought to assure that the state civil service was not neglected, diminished, or destroyed through routine appointments to "independent contractors" made solely on the basis of political considerations and cronyism. (PECG at 564.) In short, the intent of the 1934 Act was to preserve the integrity of civil service.

Proposition 35 would circumvent this policy argument in favor of civil service because it would permit private architectural and engineering entities to participate in the competitive selection process for public works. The opposition to Proposition 35 asserts that private entity participation in the competitive selection process will ultimately lead to corruption on the basis of "political considerations and cronyism," which the original Act sought to avoid.

While Proposition 35 does seek to re-introduce private entities into the competitive selection process, it does not appear to accomplish "such far reaching changes in the nature of our basic governmental plan" (Amador at 223) because it is limited in its application to private architectural and engineering contracts. Furthermore, Proposition 35 provides for checks and balances to ferret out corruption. (Guide, supra, at 65.)

Next, Proposition 35 might be subjected to qualitative attack because it effects how local public entities must conduct private contracting. Government Code, § 4529.12 provides "All architectural and engineering services shall be procured pursuant to a fair, competitive selection process.." (Cal. Gov. Code § 4529.12 [West 2000].) This is significant because under current law, local government is permitted to adopt its own selection process for local public works projects.

While this comes closer to "such far reaching changes in the nature of our basic governmental plan" (Amador at 223), the criticism is defused if the use of competitive process is permissive, as contended by the proponents of the initiative. (Telephone interview with James P. Corn, drafting attorney of the Fair Competition and Taxpayer Savings Initiative, [July 11, 2000].) It appears that the application would be permissive because section one of the proposed constitutional amendments provides that "all governmental agencies shall be allowed to contract with private entities.." Proposed Article XXII, sec. 1 of the Cal. Const. (emphasis added). Even if it is permissive, the question remains whether a public entity must use competitive selection if it chooses to contract with private architectural and engineering firms for public works projects, or whether the public entity may choose to use alternative selection processes. In any case, this appears to be a drafting issue to be resolved by the courts, and the qualitative weight given to this issue can be assessed only after a judicial determination of what the initiative mandates.

V. Public Policy Considerations

A. Proponents

The proponents of Proposition 35 include taxpayer groups, engineering and architectural labor organizations, and a significant number of cities and counties throughout California. Specifically, Proposition 35 is supported by the Coalition of Taxpayer Protection Committee, the Taxpayers for Fair Competition, the Structural Engineers Association of California, and the California Chamber of Commerce. (For a comprehensive list of supporters, see Who Supports 35? Proponents contend that Proposition 35 will allow state and local governments to select the most qualified architects and engineers to complete projects more efficiently than under the current selection process, which favors governmental entities.

During the past 15 years, state transportation managers have tried to use private sector architects and engineers to supplement the California Department of Transportation's (Caltrans) design staff, primarily to meet peak workloads and to create competition. However, the use of private sector architectural and engineering firms has been rebuffed in several court cases. Proponents state that Proposition 35 will overturn these lawsuits so that California can use "public-private partnerships" to alleviate the large backlog of infrastructure projects. (Why the Fair Competition and Taxpayer Savings Act?.)

Proponents contend there is so much work that must be completed, including state highway projects, school construction, and seismic retrofitting, that government entities cannot complete the work economically or efficiently. (Guide, supra, at 20.) Proponents point specifically to a number of projects which include public-private partnerships and reflects successful project completions. (Local Public-Private Partnerships: A History of Success, A Future at Risk.)

Proponents state that Proposition 35 includes accountability provisions to protect taxpayers. (Why the Fair Competition and Taxpayer Savings Act? Proposition 35 requires compliance with laws governing political contributions and conflicts of interest, subjects contracts awarded under Proposition 35 to standard accounting practices, and provides for audits. (Guide, supra, at 65.)

Proponents contend that Proposition 35 will not put state workers at risk of unemployment because a large volume of work remains available. Furthermore, the amendment proposed by Proposition 35 is permissive in nature, and public entities may use competitive selection at their discretion. In light of the discretionary nature of the amendment, many public entities may not choose competitive selection and can continue to use the government agencies they have used in the past. (Telephone interview with James P. Corn, drafting attorney of the Fair Competition and Taxpayer Savings Initiative, [July 11, 2000].)

Proponents claim that Proposition 35 will reduce traffic congestion caused by a huge backlog of transportation projects. (Guide, supra, at 20.)

B. Opponents

Opponents of Proposition 35 include state politicians, including Senator Jack O'Connell and Assembly Member Darrell Steinberg, taxpayer groups such as the California Tax Reform Association, and the state employee labor union, Professional Engineers in California Government. (For a comprehensive list of opponents, see Coalition Opposed to Proposition 35.) Opponents contend that Proposition 35 will eliminate all existing procedures for the contracting of architectural and engineering design work, stripping school districts, cities and counties of control over their own contracting procedures.

Recently, opponents effectively removed and/or changed several Proposition 35 ballot statements by filing lawsuits successfully alleging false and misleading statements. (See Judge Throws Out CELSOC's Lies!.) In particular, Professional Engineers in California Government (PECG), were disgruntled with statements concerning Caltrans, specifically:

"PECG had to file a lawsuit to have the falsehoods removed from the

ballot. PECG presented documents which proved that 17%, not 44%, of

Caltrans engineers have three years of experience or less. The court

ordered that all of CELSOC's false statements be replaced by

truthful ones." (Id.)

Californians have always been weary of political corruption, and are fearful of back-room deals and favoritism in the allocation of government contracts. Proposition 7, titled the Civil Service Act, was passed by the voters in 1934 to address some of those fears by regulating appointments and promotions within civil service. The ballot arguments favoring the civil service mandate referred to its purpose "to prohibit appointments and promotion in civil service except on the basis of merit, efficiency and fitness ascertained by competitive examination." (Civil Service Act. California Voter Pamphlet at 12 [Nov. 6, 1934].) Since the 1934 Act was passed, the courts have provided very narrow exceptions for private contracts of public works and only where exceptions were equitable. (See Riley, 9 Cal.2d at 135, [articulating the "adequately and competently" standard]; Kennedy, 28 Cal.2d at 571-574 [articulating the "nature of the services" standard].)

Opponents claim that Proposition 35 creates a special interest exemption for "a few huge, greedy corporations." (Guide, supra, at 21.)

Opponents contend that if Proposition 35 is passed, construction delays will mean loss of thousands of union jobs in California. (Labor Fed Opposes Prop. 35, No on Proposition 35 Newsletter #3, [Sept. 2000].)

Opponents claim that Proposition 35 will cause traffic congestion because opponents estimate there will be a 14 to 18 month delay in construction projects while awaiting statutory and regulatory guidance on how to implement the initiative's provision. (Guide, supra, at 21.) Such a delay will generate an additional cost of $261 million to $344 million to state and local governments. (Kurt R. Sjoberg, Proposition 35:Estimated Fiscal Impacts of Construction - Delays.)

VI. Conclusion

If passed, Proposition 35 creates a new constitutional amendment. Proposed Article XXII would except architectural and engineering firms from Article VII, and provide a forum for competitive selection in the arena of private contracting of public works. Additionally, Proposition 35 would add statutory language to the Government Code to enable private architectural and engineering entities to participate in the competitive selection process for public works contracts.

Proposition 35 appears to be well drafted, however, issues will probably arise in the interpretation and scope of the newly created amendment and statutes.

Proposition 35 implicates no federal constitutional issues, and analysis indicates that Proposition 35 would, if passed, constitute a valid amendment, rather than a revision, to the California Constitution.

Proponents view Proposition 35 as an opportunity to permit public entities to contract with private architectural and engineering firms in an atmosphere of competitive selection, while opponents view Proposition 35 as a detriment, leading to the decay of California's civil service.