BILL ANALYSIS                                                                                                                                                                                                    


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                              UNFINISHED BUSINESS

          Bill No:  SB 1341
          Author:   Price (D)
          Amended:  8/12/10
          Vote:     21

          AYES:  Lowenthal, Huff, DeSaulnier, Harman, Kehoe, Pavley,  
          NOES:  Ashburn
          NO VOTE RECORDED:  Oropeza

           SENATE FLOOR  :  28-0, 5/28/10
          AYES:  Alquist, Ashburn, Cedillo, Corbett, Correa,  
            DeSaulnier, Ducheny, Dutton, Florez, Hollingsworth, Huff,  
            Kehoe, Leno, Liu, Lowenthal, Negrete McLeod, Padilla,  
            Pavley, Price, Romero, Runner, Simitian, Steinberg,  
            Strickland, Wolk, Wright, Wyland, Yee
          NO VOTE RECORDED:  Aanestad, Calderon, Cogdill, Cox,  
            Denham, Hancock, Harman, Oropeza, Walters, Wiggins,  
            Vacancy, Vacancy

           ASSEMBLY FLOOR  :  72-3, 8/16/10 - See last page for vote

           SUBJECT  :    Los Angeles County Metropolitan Transportation  
                      contracting practices

           SOURCE  :     Author

           DIGEST  :    This bill enacts provisions applicable to the  


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          Los Angeles County Metropolitan Transportation Authority  
          relative to preferences in contracting for small business  
          enterprises, as defined.

           Assembly Amendments  exempt contracts for professional  
          services involving private architectural, landscape  
          architectural, engineering, environmental, land surveying,  
          or construction management from the provisions of the bill,  
          and allow Los Angeles County Metropolitan Transportation  
          Authority to establish limitations regarding the average  
          annual gross receipts of a small business and establish  
          limitations regarding the personal net worth of the owner  
          of the small business, as specified.

           ANALYSIS  :    In 1996, California voters approved  
          Proposition 209, which amended the California Constitution  
          to preclude granting preferences on the basis of race, sex,  
          color, ethnicity, or national origin in the operation of  
          public employment, public education, or public contracting.  
           The provision does not apply to federal contracting  
          requirements.  In response to Proposition 209, the Los  
          Angeles County Metropolitan Transportation Authority  
          (METRO) adopted a local ordinance that provides a  
          preference to small businesses and is not inconsistent with  
          the provisions of Proposition 209.  This bill endeavors to  
          codify the small business preference requirements.

          Existing law governing METRO procurement:

          1. Requires that construction contracts in excess of  
             $25,000 be awarded to the lowest responsible bidder.

          2. Requires 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.  To award  
             contracts on the basis of best value METRO must include  
             in the solicitation for a bid the evaluation criteria  
             that will be used to determine best value. 

          3. Defines value as 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  


                                                               SB 1341

             solicitation documents." 
           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 of the lowest  
                responsible bidder meeting specifications that  
                provide for small business participation.

             B.    Establish a subcontracting participation goal for  
                small businesses on contracts financed with  
                nonfederal funds and grant a preference of five  
                percent to the lowest responsible bidders who meet  
                the goal.

             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  


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                provide an opportunity for participation by those  

             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/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  

             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  


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                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.
             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  

          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. 

          4. Allows METRO to establish limitations regarding the  
             average annual gross receipts of a small business over  
             the previous three fiscal years and establish  
             limitations regarding the personal net worth of the  
             owner of the small business, exclusive of the value of  
             the owner's personal residence. 


           Purpose of the bill  .  The purpose of this bill is to create  
          a process to establish a small business participation goal  
          of five percent for construction projects, services, and  
          the acquisition of supplies funded with local, state, or  
          other nonfederal sources of revenue.  Under the terms of  
          the California Constitution business participation goals  
          associated with public contracting cannot be race or gender  
          based.  This bill meets that test. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  5/4/10) (Unable to reverify)


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           Los Angeles County Chapter of the American Council of  
            Engineering Companies of California
          ACE Fence Company
          AGS Architects
          Aviva Spectrum
          CK Management
          Integrated Engineering Management
          Langford and Carmichael
          Lenax Construction Services
          PJS&P Associates
          R-T Welding and Fabrication
          Selbert Perkins Design
          Ultra Systems
          Wincal Technology

          ASSEMBLY FLOOR  :
          AYES:  Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom  
            Berryhill, Block, Blumenfield, Bradford, Brownley,  
            Buchanan, Caballero, Carter, Chesbro, Conway, Cook, Coto,  
            De La Torre, De Leon, DeVore, Eng, Evans, Feuer,  
            Fletcher, Fong, Fuentes, Fuller, Furutani, Galgiani,  
            Garrick, Gatto, Gilmore, Hagman, Hall, Harkey, Hayashi,  
            Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,  
            Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,  
            Monning, Nava, Nestande, Niello, Nielsen, V. Manuel  
            Perez, Portantino, Ruskin, Salas, Saldana, Silva,  
            Skinner, Smyth, Solorio, Audra Strickland, Swanson,  
            Torlakson, Torres, Torrico, Tran, Villines, Yamada, John  
            A. Perez
          NOES:  Anderson, Gaines, Norby
          NO VOTE RECORDED:  Bass, Blakeslee, Charles Calderon,  
            Davis, Vacancy

          JJA:mw  8/17/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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