BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 569|
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                                 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  
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          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  







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                 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







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          AGB:nl  9/11/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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