BILL ANALYSIS                                                                                                                                                                                                    






                         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  




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          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  




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                    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  




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               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.