BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1280
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          SENATE THIRD READING
          SB 1280 (Pavley)
          As Amended  August 13, 2012
          Majority vote 

           SENATE VOTE  :33-0  
          
           HIGHER EDUCATION    8-0         APPROPRIATIONS      17-0        
           
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          |Ayes:|Block, Olsen, Brownley,   |Ayes:|Fuentes, Harkey,          |
          |     |Fong, Galgiani, Lara,     |     |Blumenfield, Bradford,    |
          |     |Miller, Portantino        |     |Charles Calderon, Campos, |
          |     |                          |     |Davis, Donnelly, Gatto,   |
          |     |                          |     |Hall, Hill, Lara,         |
          |     |                          |     |Mitchell, Nielsen, Norby, |
          |     |                          |     |Solorio, Wagner           |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
          SUMMARY  :  Authorizes a California Community College (CCC) 
          district and the University of California (UC), until January 1, 
          2018, to award contracts for supplies and materials over $50,000 
          and $100,000, respectively, to the lowest responsible bidder 
          offering the "best value," as determined pursuant to specified 
          policies adopted by district governing boards and by UC.  
          Specifically,  this bill  :

             1)   Defines "best value" as the most advantageous balance of 
               price, quality, service, performance, and other elements as 
               defined by the CCC district board or UC. 

             2)   Specifies procedures for CCC districts and UC to follow 
               in advertising, evaluating, and awarding such contracts.

             3)   Requires CCC districts using the above authority to 
               report specified information to the Chancellor's Office by 
               January 1, 2016, and requires the Legislative Analyst's 
               Office (LAO) to request this information from the CCC 
               Chancellor's Office by July 1, 2016, and requires UC to 
               provide the LAO with similar information by that date.

             4)   Requires the LAO to report to the Legislature by 
               February 1, 2017, on CCC districts' and UC's use of this 
               contracting method, including any recommendation as to 








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               whether this authority should be continued.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee:

          1)Minor absorbable one-time costs for UC and CCC districts to 
            provide the required information for the LAO, and for the LAO 
            to complete the required reports.

          2)Any costs to districts would be non-reimbursable, as the bill 
            is discretionary.

          3)To the extent UC and CCC districts successfully implement best 
            value purchasing, significant savings could be realized over 
            time.  UC estimates that it could save up to $20 million in 
            five years in computer software and hardware alone.

           COMMENTS  :   According to the author, UC and CCC can only 
          consider up-front costs for the acquisition of materials, 
          equipment, services, and supplies.  In many cases, this process 
          prevents these public institutions from purchasing products in 
          the most cost effective manner.  This bill would allow, on a 
          five-year pilot basis, UC and CCC to structure a competitive bid 
          process using best value procurement, allowing them to consider 
          factors such as life-cycle costs, servicing costs, durability, 
          and factors other than price in order to stretch their scarce 
          funds.  (The California State University has had statutory 
          authority to do best value contracting for many years.)

          Best value contracting has generally been recognized as a viable 
          alternative for construction projects and for the acquisition of 
          technology, telecommunications and related equipment.  
          This bill proposes best value contracting for the acquisition of 
          goods and services.  While this would be the first attempt 
          authorized for educational entities, best value has been 
          authorized and used by municipal utility districts (MUDs) for 
          procurement of individual supplies and materials purchases over 
          $50,000 ƯAB 793 (Cox), Chapter 665, Statutes of 2001].  

          An evaluation of this authority by LAO found that while low-cost 
          purchasing still has an important role in government 
          procurement, getting the best value for a product or service 
          does not always mean choosing the lowest bidder.  LAO also noted 
          that an organization must make the up-front investment necessary 








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          to support best value procurement, and procurement managers must 
          ensure staff are properly trained on the process and must help 
          their staff develop requirements that promote the organization's 
          strategic goals.  LAO noted that, early on, best value 
          procurements can be time-consuming and cumbersome as bid 
          evaluation criteria are developed, but that with repeated use, 
          agencies can perform best value procurements with a similar 
          level of effort as traditional procurements.  According to LAO, 
          based on the limited experience to date, best value procurement 
          authority appears to provide MUDs with an important tool.


           Analysis Prepared by  :    Sandra Fried / HIGHER ED. / (916) 
          319-3960 


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