BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1341| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 1341 Author: Price (D) Amended: 8/12/10 Vote: 21 SENATE TRANSPORTATION & HOUSING COMMITTEE : 7-1, 5/4/10 AYES: Lowenthal, Huff, DeSaulnier, Harman, Kehoe, Pavley, Simitian 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 Authority: contracting practices SOURCE : Author DIGEST : This bill enacts provisions applicable to the CONTINUED SB 1341 Page 2 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 Page 3 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 SB 1341 Page 4 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/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 any are available. H. The bidder negotiated in good faith with the small business enterprises, and did not unjustifiably SB 1341 Page 5 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 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. 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. Comments 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) SB 1341 Page 6 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 **** END ****