Amended in Assembly March 14, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 550

Introduced by Assembly Member Brown

February 20, 2013

An act to amend begin delete Section 14839 end delete begin insert Sections 14838.5 and 14841 end insert of begin insert , and to add Section 14838.6 to, end insert the Government Code, relating to state government.

LEGISLATIVE COUNSEL’S DIGEST

AB 550, as amended, Brown. State government: Office of Small Business and Disabled Veteran Business Enterprise Services.

Existing law provides for various programs to encourage the participation of small businesses, as certified by the Department of General Services, in state agency contracts, and sets forth the duties of the Office of Small Business and Disabled Veteran Business Enterprise Services in this regard.

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This bill would make a technical, nonsubstantive change to this provision.

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This bill would require the head of a state agency to promote the use of small businesses in state contracting activity and take every reasonable means to ensure that a state contracting program is administered in a manner that promotes small business participation. This bill would require the head of a state agency to develop a plan for increasing small business participation levels within 60 days when participation levels are low.

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This bill would require the Department of General Services to examine best practices for utilization of small businesses in their contracting programs and to present findings and recommendations to the Legislature detailing changes to the state’s business practices that will provide businesses with greater contracting opportunities within the State of California, as specified.

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This bill would encourage independent state entities, as specified, to take all necessary actions to comply with the intent and the requirements of this bill.

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This bill would require a state agency to aggressively pursue an annual 25% small business participation level in state contracting and, for an agency that does not achieve this level, to submit to the Governor’s office and the Legislature an explanation for why the level was not achieved and a plan for improving small business contracting. This bill would require the Department of General Services to provide guidance to state agencies in developing a plan for, and taking the necessary actions toward, achieving the 25% participation level.

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Existing law allows a state agency to award a contract 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, including a microbusiness, or to a disabled veteran business enterprise, as long as the agency obtains price quotations from 2 or more certified small businesses, including microbusinesses, or from 2 or more disabled veterans business enterprises.

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This bill would increase the $250,000 amount to $500,000.

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This bill would not require an action that would result in the violation of a court order or a loss of eligibility for federal funding.

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This bill would also make findings and declarations regarding small business participation in state contracting.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert The Legislature finds and declares all of the
following: end insert

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(a) California spends billions of dollars each year on goods,
information technology, services, construction, and public works
contracts.

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(b) California small businesses comprise nearly 98 percent of
all businesses in the state, employing more than 50 percent of
California’s workforce, and generating more than one-half of the
state’s gross domestic product.

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(c) Small businesses are the principal source of new jobs in
California’s economy and are instrumental to the health of
California’s economy.

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(d) California should lead the nation in creating an optimum
environment that affords all businesses equal access to state agency
contracting opportunities, thereby enhancing and encouraging
competition and preserving the free enterprise system.

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(e) Disabled veterans have made incomparable sacrifices while
serving and protecting our country and most disabled veteran
business enterprises are also certified California small businesses.

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(f) Enhancing opportunities for small business to participate in
the state contracting process is “good business” for California.

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begin insert SEC. 2. end insert   

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begin insert Section 14838.5 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

14838.5.  

(a) Notwithstanding the advertising, bidding, and
protest provisions of Chapter 6 (commencing with Section 14825)
of this part and Chapter 2 (commencing with Section 10290) and
Chapter 3 (commencing with Section 12100) of Part 2 of Division
2 of the Public Contract Code, a state agency may 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 begin delete two hundred fifty thousand dollars
($250,000) end delete begin insert five hundred thousand dollars ($500,000) end insert , 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) In carrying out subdivision (a), a state agency shall consider
a responsive offer timely received from a responsible certified
small business, including a microbusiness, or from a disabled
veteran business enterprise.

(c) If the estimated cost to the state is less than five thousand
dollars ($5,000) for the acquisition of goods, services, or
information technology, or a greater amount as administratively
established by the director, a state agency shall obtain at least two
price quotations from responsible suppliers whenever there is
reason to believe a response from a single source is not a fair and
reasonable price.

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begin insert SEC. 3. end insert   

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begin insert Section 14838.6 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

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begin insert 14838.6. end insert   

(a) The head of a state agency shall promote the use
of small business in state contracting activities and take every
reasonable means to ensure that a state contracting program is
administered in a manner that promotes small business
participation. The head of a state agency shall review small
business participation levels within the agency and develop a plan
for increasing small business participation levels within 60 days
when participation levels are low.

(b) The Department of General Services shall research and
examine the best practices of both the public and private sectors
in the utilization of small businesses in their contracting practices
and programs. The Department of General Services shall prepare
and present findings and recommendations to the Legislature
detailing changes to the state’s business practices that will provide
businesses with greater contracting opportunities within the State
of California.

(c) State constitutional officers, the University of California,
the California State University, the Lottery Commission, the Public
Employees’ Retirement System, that State Teachers’ Retirement
System, the State Compensation Insurance Fund, and other
independent state entities are encouraged to take all necessary
actions to comply with the intent and the requirements of the act
adding this section.

(d) This section shall not be construed to require an action that
would result in the violation of a court order or a loss of eligibility
for federal funding.

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begin insert SEC. 4. end insert   

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begin insert Section 14841 of the end insert begin insert Government Code end insert begin insert is amended to
read: end insert

14841.  

begin insert (a) end insert begin insert   end insert Upon completion of a public contract for which a
commitment to achieve small business or disabled veteran business
enterprise participation goals was made, the contractor shall report
to the awarding department the actual percentage of small business
and disabled veteran business enterprise participation that was
achieved.

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(b) A state agency shall aggressively pursue an annual 25
percent small business participation level in state contracting. A
state agency that does not achieve a 25 percent level shall submit
to the Governor’s office and the Legislature an explanation for
why the level was not achieved. The explanation shall include a
plan for improving contracting opportunities for small businesses.
The Department of General Services shall provide guidance to
state agencies in developing a plan for and taking the necessary
actions towards achieving the 25 percent participation level. This
subdivision shall not be construed to require an action that would
result in the violation of a court order or a loss of eligibility for
federal funding.

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SECTION 1.  

Section 14839 of the Government Code is
amended to read:

14839.  

There is hereby established within the department the
Office of Small Business and Disabled Veteran Business Enterprise
Services. The duties of the office shall include:

(a) Compiling and maintaining a comprehensive bidders list of
qualified small businesses and disabled veteran business
enterprises, and noting which small businesses also qualify as
microbusinesses.

(b) Coordinating with the Federal Small Business
Administration, the Minority Business Development Agency, and
the Office of Small Business Development of the Department of
Economic and Business Development.

(c) Providing technical and managerial aids to small businesses,
microbusinesses, and disabled veteran business enterprises, by
conducting workshops on matters in connection with government
procurement and contracting.

(d) Assisting small businesses, microbusinesses, and disabled
veteran business enterprises, in complying with the procedures for
bidding on state contracts.

(e) Working with appropriate state, federal, local, and private
organizations and business enterprises in disseminating information
on bidding procedures and opportunities available to small
businesses, microbusinesses, and disabled veteran business
enterprises.

(f) Making recommendations to the department and other state
agencies for simplification of terms and specifications in order to
increase the opportunities for small business, microbusiness, and
disabled veteran business enterprise participation.

(g) Developing, by regulation, other programs and practices
that are reasonably necessary to aid and protect the interest of small
businesses, microbusinesses, and disabled veteran business
enterprises in contracting with the state.

(h) Making efforts to develop, in cooperation with associations
representing counties, cities, and special districts, a core statewide
small business certification application that may be adopted by all
participating entities, with any supplemental provisions to be added
as necessary by the respective entities.

(i) The information furnished by each contractor requesting a
small business or microbusiness preference shall be under penalty
of perjury.

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