BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1341
                                                                  Page  1

          Date of Hearing:  June 28, 2010

                                Cameron Smyth, Chair
                     SB 1341 (Price) - As Amended:  June 15, 2010

           SENATE VOTE  :  28-0
          SUBJECT  :  Los Angeles County Metropolitan Transportation  
          Authority:  contracting.

           SUMMARY  :  Enacts provisions for the Los Angeles County  
          Metropolitan Transportation Authority (Metro) relative to  
          preferences in contracting for small business enterprises under  
          specified conditions.  Specifically,  this bill  :

          1)Allows Metro, on contracts above $100,000, to award contracts  
            to the lowest responsible bidder, except as to contracts for  
            professional services involving private architectural,  
            landscape architectural, engineering, environmental, land  
            surveying, or construction management, to do any of the  
            following in facilitating contract awards to small businesses:
             a)   Provide for a small business preference in construction,  
               the construction component of 
             a design-build team, the procurement of goods, or the  
               delivery of services, and provides that the preference  
               shall be five percent (5%) of the lowest responsible bidder  
               meeting specifications that provide for small business  

             b)   Establish a subcontracting participation goal for small  
               businesses on contracts financed with nonfederal funds and  
               grant a preference of 5% to the lowest responsible bidders  
               who meet the goal; or,

             c)   Require bidders to make a good faith effort prior to the  
               time bids are opened, to comply with the goals and  
               requirements established by Metro relating to participation  
               in the contract by small businesses.

          2)Provides that the following shall apply to bidders:

             a)   The bidder attended any presolicitation or prebid  
               meetings that were scheduled by Metro to inform all bidders  


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               of the small business enterprise program requirements for  
               the project for which the contract will be awarded, and  
               provides that Metro may waive this requirement if it  
               determines that the bidder is informed as to those program  

             b)   The bidder identified and selected specific items of the  
               project for which the contract will be awarded to be  
               performed by small business enterprises to provide an  
               opportunity for participation by those enterprises;

             c)   The bidder advertised, not less than 10 calendar days  
               before the date the bids are opened, in one or more daily  
               or weekly newspapers, trade association publications or  
               trade-oriented publications, trade journals, or other  
               media, specified by Metro for small business enterprises  
               that are interested in participation in the project, and  
               provides that this only applies if Metro gave public notice  
               of the project not less than 15 calendar days prior to the  
               date the bids are opened;
             d)   The bidder provided written notice of his or her  
               interest in bidding on the contract to the number of small  
               business enterprises required to be notified by the project  
               specifications not less than 10 calendar days prior to the  
               opening of bids, and provides that Metro shall make  
               available to the bidder not less than 15 calendar days  
               prior to the date the bids are opened a list or source of  
               lists of enterprises which are certified by Metro as small  
               business enterprises;

             e)   The bidder followed up initial solicitations of interest  
               by contacting the enterprises to determine with certainty  
               whether the enterprises were interested in performing  
               specific items of the project;

             f)   The bidder provided interested small business  
               enterprises with information about the plans,  
               specifications, and requirements for the selected  
               subcontracting or material supply work;

             g)   The bidder requested assistance from small business  
               community organizations; small business contractor groups;  
               local, state, or small business assistance offices; or,  
               other organizations that provide assistance in the  
               recruitment and placement of small business enterprises, if  


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               any are available;

             h)   The bidder negotiated in good faith with the small  
               business enterprises, and did not unjustifiably reject as  
               unsatisfactory bids prepared by any small business  
               enterprises, as determined by Metro;

             i)   Where applicable, the bidder advised and made efforts to  
               assist interested small business enterprises in obtaining  
               bonds, lines of credit, or insurance required by Metro or  
               contractor; and,

             j)   The bidder's efforts to obtain small business enterprise  
               participation could reasonably 
             be expected by Metro to produce a level of participation  
               sufficient to meet the goals and requirements of Metro.

          3)Defines "small business enterprise" to mean a business  
            enterprise that is classified as a small business under United  
            States Small Business Administration rules and meets the  
            current small business enterprise size standards found in  
            Title 13 of the Code of Federal Regulations, Part 121 (13 CFR  
            Part 121) appropriate to the type of work the enterprise seeks  
            to perform.
          EXISTING LAW  :

          1)Creates the County Transportation Commissions Act, which  
            generally provides for the purchase of supplies, equipment,  
            and materials, and the construction of all facilities and  
            works, when the expenditure required exceeds $25,000, shall be  
            by contract let to the lowest responsible bidder.

          2)Provides, for specified county transportation commissions,  
            that whenever the expected expenditure required exceeds  
            $1,000, but not $25,000, the commission shall obtain a minimum  
            of three quotations, either written or oral, that permit  
            prices and terms to be compared.

          3)Provides, for specified county transportation commissions,  
            that where the expenditure required by the bid price is less  
            than $50,000, the executive director may act for the  

          4)Provides, for specified county transportation commissions,  


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            that all bids for construction work  shall be presented under  
            sealed cover and shall be accompanied by one of the following  
            forms of bidder's security:

             a)   Cash;

             b)   A cashier's check made payable to the commission;

             c)   A certified check made payable to the commission; or,

             d)   A bidder's bond executed by an admitted surety insurer,  
               made payable to the commission.

          5)Creates specific provisions in the County Transportation  
            Commissions Act applicable only to  Metro that:

             a)   Require the purchase of all supplies, equipment, and  
               materials, and the construction of all facilities and  
               works, when the expenditure exceeds $25,000, to be by  
               contract let to the lowest responsible bidder;

             b)   Require that contracts involving the purchase of  
               supplies, equipment and materials in excess of $100,000 be  
               awarded to the lowest responsible bidder or to the bidder  
               that provides "best value" to Metro; and,

             c)   Define "best value" to mean the overall combination of  
               quality, price, and other elements of a proposal that, when  
               considered together, provide the greatest overall benefit  
               in response to requirements described in the solicitation  

           FISCAL EFFECT  :  None

           COMMENTS  :

          1)SB 1341 creates a process for Metro to establish a small  
            business participation goal of 5% 
          for construction projects, services, and the acquisition of  
            supplies funded with local, state, or other nonfederal sources  
            of revenue.  The bill provides for the conditions that must be  
            met for the small business preference to apply.

          2)According to the author, Metro recently conducted an outside  
            audit of its minority and small business programs and the  


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            findings recommended that Metro increase small business  
            enterprise participation on non-federally funded contracts.  
            Additionally, the author notes that in November 2008, Los  
            Angeles County (County) voters approved Measure R by 67 %,  
            committing a projected $40 billion to traffic relief and  
            transportation upgrades throughout the County over the next 30  
            years.  In order to increase small business participation,  
            legislation is needed to expand Metro's authority.

          3)This section of law pertaining to county transportation  
            commissions and their authority is contained in the Public  
            Utilities Code, and has been amended several times since its  
            creation in 1987.  Most recently, AB 1471 (Eng), Chapter 536,  
            Statutes of 2009, amended the same statute last year to allow  
            Metro to purchase supplies, equipment, and materials from a  
            public auction sale, to participate in a procurement agreement  
            involving other public entities, and the bill increased the  
            minimum bid threshold from $2,500 to $3,000 before triggering  
            the requirement that specifies that Metro must obtain at least  
            three quotes prior to making an expenditure.

          4)The author took amendments on June 15, 2010, to narrow the  
            bill according to concerns raised by the Associated General  
            Contractors and the American Council of Engineering Companies.  
              The amendments deleted references to "best value  
            contracting" that were previously contained in the bill and  
            narrowed the small business goal to specifically exclude  
            architectural and engineering services.

           5)Support Arguments  :  Many small businesses within Metro's  
            jurisdiction argue that the bill's improvements to Metro's  
            current contracting statutes will foster greater small  
            business inclusion in Metro's procurement process.

             Opposition Arguments  :  Opposition could say that this bill  
            sets up a situation where a preference is given to small  
            businesses, at the expense of other willing bidders who might  
            offer a better financial deal for Metro.

          6)This bill is double-referred to the Committee on  



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          Los Angeles County Metropolitan Transportation Authority (Metro)  
          Abratique & Associates, Inc.
          Absolute International Security
          ADKO Engineering
          ATHALYE Consulting Engineering Services, Inc.
          AP Engineering & Testing, Inc.
          BASE Architecture
          California Testing and Inspections, Inc.
          California Watershed Engineering
          Choctaw Construction Company, Inc.
          Community Resources Group
          CSE Technologies
          DMS Engineering & Associates, Inc.
          EARL Security, Inc.
          ELITE Engineering Consultant
          Fleming Alliance Architecture
          Gemstone Masonry, Inc.
          Integrated Engineering Management
          International Word Processing Services, Inc.


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          JMDiaz, Inc.
          Katherine Padilla & Associates
          Larry Brown Construction Co., Inc.
          Lenax Construction Services, Inc.
          LIN Consulting, Inc.
          Los Angeles County Chapter of American Council of Engineering  
          Phoenix Engineering
          Reyes & Sons Electric, Inc.
          Rothman Engineering, Inc.
          SRD Architects Inc.
          Safeprobe, Inc
          Transtar Builders, Inc.
          UltraSystems Environmental
          Wincal Technology Corporation
          None on file

           Analysis Prepared by  :    Debbie Michel / L. GOV. / (916)