BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 173
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          Date of Hearing:   May 1, 2013

           ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
                                 Jim Frazier, Chair
                     AB 173 (Weber) - As Amended:  April 24, 2013
          
          SUBJECT  :   Postsecondary education: Small Business Procurement  
          and Contract Act 

           SUMMARY  :   Provides public postsecondary institutions an  
          alternative to competitive bidding requirements when they  
          contract with California Certified Small Businesses and Disabled  
          Veteran Business Enterprises (DVBE).   

          Specifically, this bill  :  

          1)Allows the University of California (UC) to award contracts  
            for the acquisition of goods, services, or information  
            technology that have an estimated value of between $100,000  
            and less than $250,000 to a certified small business or a DVBE  
            if UC obtains price quotations from two or more certified  
            small businesses or two or more DVBEs.
             a)   This shall only apply to UC if the Regents of the  
               University of California make the provision applicable by  
               appropriate resolution.
          2)Allows the California State University (CSU) to award  
            contracts for the acquisition of goods, services, or  
            information technology that have an estimated value greater  
            than $5,000 and less than $250,000 to a certified small  
            business or a DVBE if CSU obtains price quotations from two or  
            more certified small businesses or two or more DVBEs.  
          3)Allows the California Community Colleges (CCC) to award  
            contracts for the acquisition of goods, services, or  
            information technology that have an estimated value greater  
            than $5,000 and less than $250,000 to a certified small  
            business or a DVBE if CCC obtains price quotations from two or  
            more certified small businesses or two or more DVBEs.  
              

           EXISTING LAW  Various sections of Education, Government, and  
          Public Contract codes as well as the California Constitution set  
          rules related to public postsecondary institutions' procurement.  
          Additionally, policies adopted by these institutions impact  
          purchasing practices. 









                                                                  AB 173
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          In general, laws and policies limit the contract amount before  
          postsecondary institutions must enter into competitive bidding  
          processes in which the bids are awarded to the lowest  
          responsible bidder. For the UC system, that threshold is  
          $100,000. For CSU, it is $50,000 and for CCC, it is $81,000.  
          Some exceptions apply.

          Additionally, Government Code Section 14838.5 sets a small  
          business and DVBE program by allowing state agencies to award  
          contracts for the acquisition of goods, services, or information  
          technology that has an estimated value of greater than $5,000,  
          but less than $250,000 to a certified small business or to a  
          DVBE, as long as the agency obtains price quotations from two or  
          more certified small businesses, including microbusinesses, or  
          from two or more disabled veterans business enterprises. It is  
          not clear if this section applies to some or all of the state's  
          public postsecondary institutions.   

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   This bill provides public postsecondary institutions  
          an alternative to the competitive bidding process for contracts  
          under $250,000 for goods, services, or information technology.  
          Specifically, the institutions would be allowed to exempt  
          themselves from low bid requirements by contracting with a small  
          business or a disabled veteran business enterprise (DVBE). Under  
          the bill, postsecondary institutions using this option would be  
          required to obtain quotes from at least two small businesses or  
          at least two DVBEs before entering into a contract.

          This bill would not require postsecondary institutions to enter  
          into contracts under $250,000 by using this process. Instead,  
          according to the author, the intent is to provide the  
          educational institutions with flexibility in order to encourage  
          contracting with small businesses and DVBEs. 

          As noted in the existing law section, it is not clear if the  
          Government Code section that specifies the small business and  
          DVBE already applies to some postsecondary institutions or if  
          these institutions already have the authority to establish such  
          programs. For example, the CSU Policy Manual for Contracting &  
          Procurement references the Government Code section when  
          describing its small business/DVBE option. Under the policy,  
          campuses are allowed to award contracts of more than $5,000 but  
          less than $250,000 to a certified small business or a DVBE as  








                                                                  AB 173
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          long as the campus obtains quotes from at least two or more  
          small businesses or DVBEs. 

          Additionally, various code sections and the California  
          Constitution provide postsecondary institutions with contracting  
          parameters and requirements. The author explained that because  
          of different interpretations and requirements that apply to  
          different postsecondary institutions, the bill is meant to add  
          clarification by amending sections of the Government and Public  
          Contract codes to allow all of the state's postsecondary  
          institutions to use the small business and DVBE contracting  
          option.

          While the fiscal impact is unknown, this bill could lead to  
          increased expenses since it allows postsecondary institutions to  
          avoid competitive bidding for some contracts.    

               
           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Asian Pacific Chamber of Commerce
          California Association for Micro Enterprise Opportunity

           Opposition 
           
          None on File
           
          Analysis Prepared by  :    Scott Herbstman / A. & A.R. / (916)  
          319-3600