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 SB 1068 (Rubio) Page 1 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) Page 2 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.