BILL ANALYSIS Ó SENATE COMMITTEE ON EDUCATION Carol Liu, Chair 2013-2014 Regular Session BILL NO: AB 173 AUTHOR: Weber AMENDED: May 23, 2013 FISCAL COMM: Yes HEARING DATE: June 19, 2013 URGENCY: No CONSULTANT:Kathleen Chavira NOTE: This bill has been referred to both the Senate Education and the Senate Governmental Organization Committees. A do pass motion should include a referral to the Senate Governmental Organization Committee. SUBJECT : Small Business Procurement and Contract Act. SUMMARY This bill authorizes the California Community Colleges, the California State University and the University of California to award a contract with a value greater than $5000 but less than $250,000 for the acquisition of goods, services or information technology without competitive bidding, to a certified small business or a disabled veteran business, if the institution receives a price quote from two or more of these entities, as specified. BACKGROUND Current law requires a community college governing board to let any contract involving an expenditure of $50,000 or more for purchase of equipment, materials, supplies, repairs and services, other than construction services, to the lowest responsible bidder or to reject all bids. Current law also requires the Board of Governors of the California Community Colleges to annually adjust the $50,000 threshold to reflect the percentage change in the annual average value of the Implicit Price Deflator for State and Local Government Purchases of Goods and Services for the United States. (Public Contract Code § 20651) Current law requires the CSU trustees to prescribe policies and procedures for the acquisition of services, facilities, materials, goods, supplies, or equipment, and requires that AB 173 Page 2 these include competitive means for obtaining best value while complying with legislative intent regarding competitive bids or proposals as it is expressed in Public Contract Code (PCC) provisions. Under the PCC, , all contracts for the acquisition or lease of goods in an amount of $25,000, or a higher amount as established by the director of General Services, are required to use competitive bidding. The Department of General Service has set the threshold amount for competitive bidding for these contracts at $50,000. (Education Code § 89036, PCC §10301) Current law also requires that the Regents of the University of California (UC) let any contract involving an expenditure of $100,000 or more for purchase of equipment, materials, supplies, repairs and services, other than construction services, to the lowest responsible bidder or to reject all bids. (PCC § 10507.7) Current law, notwithstanding existing Government Code and Public Contract Code provisions outlining competitive bidding requirements, authorize a state agency to award a contract for the acquisition of goods, services, or information technology that has an estimated value of greater than five thousand dollars ($5,000), but less than two hundred fifty thousand dollars ($250,000), to a certified small business, including a microbusiness, or to a disabled veteran business enterprise, 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. (Government Code §14838.5) ANALYSIS This bill : 1) Establishes parallel authorities regarding the awarding of contracts or the acquisition of goods, services, or information technology to certified small businesses or disabled veteran businesses for California Community College districts, the California State University (CSU) and the University of California (UC), as that which exists for state agencies. More specifically it: a) Authorizes the CSU, UC, and the AB 173 Page 3 governing board of a community college district to award a contract with an estimated value greater than $5000 but less than $250,000 to a certified small business, including a microbusiness, or to a disabled veteran business enterprise, 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. b) Requires the CSU, UC, and the governing board of a community college district to consider a responsive timely received offer from a responsible certified small business, including a microbusiness, or from a disabled veteran business enterprise. 2) Provides that these provisions only apply to the UC to the extent the Regents adopt a resolution making it applicable. 3) Defines the terms of the bill's provisions by reference to existing Government Code provisions that define, among other things, "small business," "microbusiness," and "disabled veteran business enterprise." STAFF COMMENTS 1) Need for the bill . According to the author, the Government Code provides a streamline alternative contracting process for state agencies contracting with California Certified Small Business and Disable Veteran Business Enterprises. By extending these permissive authorities to California's public higher education segments, universities and colleges can continue to support procurement through businesses which are crucial to the state's international competitiveness and important to providing diversity. 2) Competitive bidding . Current law establishes AB 173 Page 4 thresholds above which the public institutions of higher education must generally utilize statutorily outlined competitive bidding procedures before awarding a contract for goods and services or for information technology services. These thresholds are currently statutorily set at $100,000 for the University of California, and $50,000 for the California State University and California Community College (CCC) districts. Current law requires the adjustment of the CCC threshold to reflect the percentage change in the annual average value of the Implicit Price Deflator. As a result the actual current threshold for community colleges is $81,000. SUPPORT California Asian Pacific Chamber of Commerce OPPOSITION None on file.