Amended in Assembly April 16, 2013

Amended in Assembly March 14, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 550

Introduced by Assembly Member Brown

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(Coauthors: Assembly Members Fox and Medina)

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February 20, 2013

An act to amend begin delete Sections 14838.5 and end delete begin insert Section end insert 14841 of, and to add Section 14838.6 to, 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.

This bill would require the head of a state agency to begin delete promote the use of small businesses in state contracting activity and take every reasonable means to end delete 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 begin insert to annually review small business participation levels and end insert to develop a plan for increasing small business participation levels within 60 days when participation levels are low.

This bill would require the Department of General Services begin insert and the Office of the Small Business Advocate end insert to begin delete examine end delete begin insert serve as a resource to assist the heads of state agencies in identifying end insert best practices for utilization of small businesses in their contracting programs begin delete 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 end delete .

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.

This bill would require a state agency to begin delete aggressively end delete begin insert proactively end insert 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 begin insert , the Office of the Small Business Advocate, end insert and the Legislature begin delete an explanation for why the level end delete begin insert , within 60 days of the close of the calendar year, notice that the small business participation end insert was not achieved and a plan for improving small business contracting. This bill would require the Department of General Services begin insert , and authorize the Office of the Small Business Advocate, end insert 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.

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

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

The Legislature finds and declares all of the
following:

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

(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.

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

(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.

(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.

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

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SEC. 2.  

Section 14838.5 of the Government Code is amended
to read:

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 five hundred thousand dollars ($500,000),
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) 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 delete SEC. 3. end delete
begin insert SEC. 2. end insert   

Section 14838.6 is added to the Government Code, to
read:

14838.6.  

(a) The head of a state agency shall begin delete promote the use
of small business in state contracting activities and take every
reasonable means to end delete 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 begin insert on an annual basis end insert
and develop a plan for increasing small business participation
levels within 60 days when participation levels are low.

(b) The Department of General Services begin insert and the Office of the
Small Business Advocate end insert shall begin delete research and examine end delete begin insert serve as a
resource to assist the heads of state agencies in identifying end insert the
best practices of both the public and private sectors in the
utilization of small businesses in their contracting practices and
programs. begin delete 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. end delete

(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. 3. end insert   

Section 14841 of the Government Code is amended
to read:

14841.  

(a) 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.

(b) A state agency shall begin delete aggressively end delete begin insert proactively end insert pursue an
annual 25 percent small business participation level in state
contracting. A state agency that does not achieve a 25 percent level
shall begin delete submit end delete begin insert give end insert to the Governor’s office begin insert , the Office of the Small
Business Advocate, end insert and the Legislature begin delete an explanation for why
the end delete begin insert , within 60 days of the close of the calendar year, notice that
the small business participation end insert level was not begin delete achieved. The
explanation shall include end delete begin insert achieved and shall submit end insert a plan for
improving contracting opportunities for small businesses. The
Department of General Services shall begin insert , and the Office of the Small
Business Advocate may, end insert 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.