BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 963
                                                                  Page  1

          Date of Hearing:   April 17, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                    AB 963 (Levine) - As Amended:  March 20, 2013 

          Policy Committee:                               
          AccountabilityVote:12-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill provides a 3% bid preference on certain state  
          contracts for bidders having a record of "environmentally  
          preferable purchasing," as currently defined in state law.  
          Specifically, this bill requires, on state contracts for goods  
          and services:

          1)Where the contract award is based on the lowest responsible  
            bidder, that state agencies select the bidder with a record of  
            environmentally preferable purchasing over a low bidder  
            without a similar record, if the difference in bids is 3% or  
            less.

          2)Where the award is determined by evaluation and scoring, that  
            state agencies consider a bidder's environmentally preferable  
            purchasing.

           FISCAL EFFECT  

          1)To the extent competitively bid contracts are awarded to other  
            than the lowest bidder, the state will incur additional costs  
            on contracts. These costs are unknown, but given the  
            considerable volume of state contracting, could total at least  
            several hundred thousand dollars annually (General Fund and  
            various special funds).

            [The Department of General Services (DGS) estimates that, in  
            2011-12, there were 1,900 goods or services contracts totaling  
            about $840 million that would have been subject to this bill.  
            (Information on the portion of this amount involving contracts  
            awarded based on the lowest bidder was not readily available.]








                                                                  AB 963
                                                                  Page  2


          2)DGS will also incur significant one-time administrative costs  
            to implement the new contracting requirement, i.e to amend  
            general contract language and instruct other state agencies on  
            the new requirements. In addition, adding a new factor for  
            awarding contracts is likely to result in additional protests  
            from unsuccessful bidders, with resulting costs and contract  
            delays.

           COMMENTS  

           1)Current law  defines "environmentally preferable purchasing" as  
            the procurement or acquisition of goods and services having a  
            reduced effect on human health and the environment compared  
            with competing goods or services serving the same purpose.  
            This comparison shall take into consideration, to the extent  
            feasible, raw materials acquisition, production,  
            manufacturing, packaging, distribution, reuse, operation,  
            maintenance, disposal, energy efficiency, product performance,  
            durability, safety, the needs of the purchaser, and cost. DGS  
            is charged with promoting the use of environmentally  
            preferable purchasing by state agencies.

           2)Purpose  . The author believes statutory fiscal incentive is  
            needed to ensure more use of environmentally preferable  
            products by vendors seeking state contracts. The author notes  
            that Arkansas, Connecticut, Hawaii, Idaho, and Virginia have  
            similar laws.

           3)Prior Legislation  . In 2012, SB 1427 (De Leon), which provided  
            a 5% preference for bidders on state contracts for electronic  
            goods if the bidder offered to fulfill the entire contract  
            only with "refurbished electronics," was held on this  
            committee's Suspense file.

            Also in 2012, AB 2426 (Galgiani), which provided a 5%  
            preference for bidders on public works contracts who agreed to  
            employ veterans, was held on this committee's Suspense file.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081