BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1341
                                                                  Page  1


          SENATE THIRD READING
          SB 1341 (Price)
          As Amended  June 15, 2010
          Majority vote 

           SENATE VOTE  :28-0  
           
           LOCAL GOVERNMENT    9-0         TRANSPORTATION      13-1        
           
           ----------------------------------------------------------------- 
          |Ayes:|Smyth, Caballero,         |Ayes:|Bonnie Lowenthal,         |
          |     |Arambula, Bradford, Coto, |     |Jeffries,                 |
          |     |Davis, Knight, Logue,     |     |Bill Berryhill,           |
          |     |Monning                   |     |Blumenfield, Buchanan,    |
          |     |                          |     |Eng, Furutani, Galgiani,  |
          |     |                          |     |Hayashi, Miller, Niello,  |
          |     |                          |     |Portantino, Solorio       |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |Nays:|Norby                     |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 

           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 5% of the lowest responsible bidder meeting  
               specifications that provide for small business  
               participation;

             b)   Establish a subcontracting participation goal for small  








                                                                  SB 1341
                                                                  Page  2


               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  
               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  
               requirements;

             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;









                                                                  SB 1341
                                                                  Page  3


             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  
               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,  








                                                                  SB 1341
                                                                  Page  4


            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  
            commission.

          4)Provides, for specified county transportation commissions,  
            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:  cash; a cashier's check made  
            payable to the commission; a certified check made payable to  
            the commission; or, 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  
               documents.

           FISCAL EFFECT  :  None









                                                                  SB 1341
                                                                  Page  5


           COMMENTS  :  This bill 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.

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

          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.

          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.

          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  








                                                                  SB 1341
                                                                  Page  6


          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.

           
          Analysis Prepared by  :    Debbie Michel / L. GOV. / (916)  
          319-3958 

                                                                FN: 0005075