BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          SB 1068 (Rubio) - Procurement: Golden Empire Transit District / 
          Sacramento Regional Transit District.
          
          Amended: April 9, 2012          Policy Vote: T&H 8-0
          Urgency: No                     Mandate: Yes
          Hearing Date: April 30, 2012                           
          Consultant: Mark McKenzie       
          
          This bill does not meet the criteria for referral to the 
          Suspense File. 

          
          Bill Summary: SB 1068 would revise the procurement requirements 
          for the purchase of supplies, equipment, and materials by the 
          Golden Empire Transit District (GET) and the Sacramento Regional 
          Transit District (Sac RT), including the authorization to use 
          best value procurement methods for contracts exceeding $100,000, 
          as specified.

          Fiscal Impact: 
           Potential for increased procurement costs to the extent 
            contracts are not awarded to the lowest responsible bidder 
            (Public Transportation Account and nonstate funds).  Any 
            increased costs would likely be offset by longer term savings 
            to the extent that other factors considered in a best value 
            procurement result in a greater overall benefit.  (see staff 
            comments)

           Likely minor reimbursable mandate costs, if any, related to 
            the revised procurement requirements imposed on GET and Sac 
            RT.

          Background: Existing law requires GET to award contracts for the 
          purchase of supplies, equipment, and materials that exceed 
          $10,000 to the lowest responsible bidder, requires the board to 
          seek a minimum of three bids for contracts exceeding $1,000, and 
          requires solicitations to be published in a newspaper of general 
          circulation at least 10 days before bids are received.  Existing 
          law requires Sac RT to award contracts for the purchase of 
          supplies, equipment, and materials that exceed $40,000 to the 
          lowest responsible bidder, except in an emergency declared by 
          four-fifths of the governing board.  Existing law authorizes 








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          certain transit districts to award contracts for supplies, 
          equipment, and materials with a value exceeding $100,000 to 
          either the lowest responsible bidder or the responsible bidder 
          that provides the best value, as specified.

          Proposed Law: SB 1068 would make the following changes to the 
          procurement requirements for purchases of supplies, equipment, 
          and materials by GET and Sac RT:

           Authorizes the districts to award contracts with a value 
            greater than $100,000 on the basis of either lowest 
            responsible bidder or "best value," defined 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 the bid solicitation documents.
           Requires the districts, to the extent practicable, to obtain a 
            minimum of three quotations, either written or oral, that 
            permit price comparison for contracts with a value of $2,500 
            to $100,000 ($3,000 to $100,000 for Sac RT).  These contracts 
            would still be awarded to the lowest responsible bidder, but 
            the bill relieves the entities from formal bidding 
            requirements.
           Requires all GET bid notices to be published on the agency's 
            website.

          Related Legislation: The Legislature has provided similar 
          procurement authority to other transit districts in recent 
          years.  AB 116 (Beall) Chapter 408/2009 authorized similar 
          procurement authority to the Santa Clara Valley Transportation 
          Authority, the Alameda-Contra Costa Transit District, the San 
          Mateo County Transit District, and the Golden Gate Bridge, 
          Highway and Transportation District.  SB 1687 (Murray) Chapter 
          814/2006 provided similar procurement authority to the Bay Area 
          Rapid Transit District and the Los Angeles County Metropolitan 
          Transportation Authority.  SB 959 (Kehoe) Chapter 557/2005, 
          authorized similar procurement authority to the San Diego 
          Metropolitan Transit System.

          Staff Comments: By allowing GET and Sac RT to procure supplies, 
          equipment, and materials using criteria other than price, the 
          bill could result in higher costs for certain contracts.  These 
          costs could be offset by longer term savings if items are 
          procured using best value, to the extent that factors such as 
          life-cycle costs, quality, and other intangible benefits (the 








          SB 1068 (Rubio)
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          inclusion of warranties, training, and maintenance for certain 
          items), when considered together with price, result in a greater 
          overall benefit.  In addition, use of best value procurement 
          methods could increase the ability of these entities to 
          participate in regional cooperative purchasing agreements, 
          resulting in benefits related to economies of scale.

          This bill would not necessarily authorize sole source 
          procurement of supplies, equipment, and materials for contracts 
          with a value of less than $100,000, although the phrase "to the 
          extent practicable" provides some flexibility to secure fewer 
          than three bids on these contract solicitations.  The bill does 
          establish a less formal, but still competitive process for the 
          procurement of relatively small contracts.  This process would 
          result in moderate cost savings due to decreased advertising, 
          reprographics, and staff costs for these smaller contracts.

          Recommended Amendments: The bill should be amended to strike 
          Section 4 from the bill and replace it with the following local 
          request mandate disclaimer provision to ensure there is no 
          obligation for state reimbursement of any mandated costs:


          SEC. 4.  No reimbursement is required by this act pursuant to 
          Section 6 of Article XIIIB of the California Constitution 
          because the only costs that may be incurred by a local agency or 
          school district are the result of a program for which 
          legislative authority was requested by that local agency or 
          school district, within the meaning of Section 17556 of the 
          Government Code and Section 6 of Article XIIIB of the California 
          Constitution.