BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 173
                                                                  Page  1


          ASSEMBLY THIRD READING
          AB 173 (Weber)
          As Amended  May 9, 2013
          Majority vote 

           ADMINISTRATIVE REVIEW         12-0                   
          APPROPRIATIONS      12-0        
           
           ----------------------------------------------------------------- 
          |Ayes:|Frazier, Achadjian,       |Ayes:|Gatto, Bocanegra,         |
          |     |Buchanan,                 |     |Bradford,                 |
          |     |Ian Calderon, Cooley,     |     |Ian Calderon, Campos,     |
          |     |Gorell, Hagman,           |     |Eggman, Gomez, Hall,      |
          |     |Lowenthal, Medina, Olsen, |     |Rendon, Pan, Quirk, Weber |
          |     |Quirk-Silva, Salas        |     |                          |
           ----------------------------------------------------------------- 

           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.

          2)Provides that 1) above, shall only apply to UC if the Regents  
            of the University of California make the provision applicable  
            by appropriate resolution.

          3)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.

          4)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  








                                                                  AB 173
                                                                  Page  2


            business or a DVBE if CCC obtains price quotations from two or  
            more certified small businesses or two or more DVBEs.  
              
           EXISTING LAW  : 

          1)Sets rules related to public postsecondary institutions'  
            procurement in various sections of Education, Government, and  
            Public Contract Codes as well as the California Constitution.   
            Additionally, policies adopted by these institutions impact  
            purchasing practices. 

          2)Provides that, 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.

          3)States that 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 DVBEs. 

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, to the extent UC, CSU, and CCC campuses use this  
          authority, contract costs could increase if only two small  
          businesses or two DVBEs were solicited rather than allowing all  
          potential vendors to competitively bid on the contracts.  Any  
          additional costs should be largely offset due to administrative  
          cost savings in soliciting quotations rather than preparing bid  
          documents, advertising for bids, and receiving, evaluating and  
          awarding competitive bids on relatively small contracts.

           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 DVBE.  Under the bill, postsecondary institutions  
          using this option would be required to obtain quotes from at  








                                                                  AB 173
                                                                  Page  3


          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. 

          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 and Procurement references the  
          Government Code section when describing its small business and  
          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 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.


           Analysis Prepared by  :    Scott Herbstman / A. & A.R. / (916)  
          319-3600 


                                                                FN: 0000661