BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 569| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 569 Author: Emmerson (R) and Solorio (D) et al Amended: 9/10/09 in Senate Vote: 27 - Urgency PRIOR VOTES NOT RELEVANT SUBJECT : Public contracts: disabled veteran business enterprise: small business enterprise SOURCE : Author DIGEST : This bill re-establishes the good faith effort to meet existing disabled veteran business enterprise goals by a state agency or department on any advertised contract by July 28, 2009. ANALYSIS : AB 21xxxx was enacted as part of the budget package in July and signed into law as an urgency statute on July 28. AB 21xxxx made changes to the Public Contract Code modifying the manner in which Disabled Veteran Business Enterprises (DVBE) are contracted with to perform public works projects contracted by state agencies. Public Contract Code (Section 10115 (c)) requires state departments to meet a three percent goal of having DVBE firms be contracted with on state contracts. Prior to AB 21xxxx, bidding contractors were required to either meet the three percent goal in their bid or were required to CONTINUED AB 569 Page 2 demonstrate a good faith effort to solicit bids from DVBE firms. AB 21xxxx eliminated the good faith option for a contractor which results in the bidding contractor being required to meet the three percent goal (quota) in their bid or have their bid rejected as non-responsive. There are currently only 300 DVBE firms statewide certified by the Department of General Services who are eligible to be solicited for bids on state contracts. There is not a large enough pool of DVBE contractor firms to allow bidding contractors to meet the 3% goal on all bids. (For example, a drywall contractor normally would not be used on a Caltrans highway project.) This will result in fewer contractors bidding on state work; contractors bids being considered non-responsive and rejected, and increased incidents of bid protests over concern of the use of "false front" DVBE firms being used by contractors in an attempt to meet the three percent goal. The construction industry has reached a compromise with state agencies to modify the statutory changes enacted by AB 21xxxx to avoid the bidding issues resulting from the new law. This bill: 1.Reinstates the option for a contractor to demonstrate efforts to contract with DVBE firms as an alternative to strictly meeting the three percent DVBE goal for public works contracts only. 2.Requires the contractor to solicit DVBE's from the Certified DVBE data base maintained by the Department of General Services. 3.Requires contractors to use the following specific efforts to solicit bids from DVBE's: A. Document that the bidder provided interested disabled veteran business enterprises with information such as: identification of the work available, the date the disabled veteran business AB 569 Page 3 enterprises bid was due to the bidder, the specified bonding and licensing requirements, and the prime contractor's contact person. B. Give disabled veteran business enterprises a seven (7) calendar day response time to respond to a solicitation C. Utilize various contact methods including but not limited to: published advertising, telephone, email, fax, or regular mail. D. Provide all bids received from disabled veteran business enterprises. 4.Requires contractors to state reasons and provide documentation for not using a bid from a DVBE firm. 5.Sunsets these provisions in 2013. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 9/11/09) Associated General Contractors of California California Association of Sheet Metal and Air Conditioning Contractors National Association California Chapter of the American Fence Contractors' Association California Chapters of the National Electrical Contractors Association California Fence Contractors' Association California Legislative Conference of the Plumbing, Heating and Piping Industry California Nevada Conference of Operating Engineers Construction Employers Association Engineering and Utility Contractors Association Engineering Contractors Association Flasher Barricade Association Golden State Builders Exchanges Marin Builders' Association Southern California Contractors Association AB 569 Page 4 AGB:nl 9/11/09 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****