Amended in Senate April 10, 2013

Senate Bill No. 124

Introduced by Senator Corbett

January 18, 2013

An act to amend Sections 4217.11 and 4217.16 of the Government Code, and to add Section 10780.6 to, and to add Article 7 (commencing with Section 10390) to Chapter 2 of Part 2 of Division 2 of, the Public Contract Code, relating to public contracts.

LEGISLATIVE COUNSEL’S DIGEST

SB 124, as amended, Corbett. Public contracts: bid preferences: clean energy.

Existing law imposes various requirements with respect to contracting by state agencies and the Trustees of the California State University. Existing law requires state agencies and begin delete to end delete the Trustees of the California State University to use a competitive bidding process when contracting for goods and services. However, existing law allows a public agency to award an energy service contract if the governing body determines it is in the best interest of the agency and costs will be reduced, as specified.

This bill would require state agencies and the Trustees of the California State University that accept bids or proposals for a contract for the purchase or installation of a clean energy device, technology, or system, as defined, to provide a 5% preference to a bidder that certifies that all of the parts of the clean energy device, technology, or system to be installed have been manufactured or assembled in the state, in accordance with specified criteria. This bill would authorize a public agency, including, but not limited to, the Trustees of the California State University, to award a contract based on the fact that a clean energy device, technology, or system was manufactured or assembled in the state if the contract is an energy service contract determined to be in the best interest of the public agency.

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 faces the most severe economic downturn since
the Great Depression. Over two million Californians are out of
work, and California’s unemployment rate is one of the highest in
the nation.

(b) At a time of scarce state resources, state purchases should
be used to stimulate our state economy and put people back to
work.

(c) The Green Building Executive Order begin delete (S-20-04) end delete begin insert (B-18-12) end insert
mandated that state agencies evaluate the merits of using clean
and renewable onsite energy generation technologies in all new
building or large renovation projects.

(d) California has several companies that manufacture clean
energy devices, technology, and systems in the state, employing
Californians and helping our economy.

(e) California is the nation’s largest clean economy. More than
12,000 clean technology companies call California home and are
creating jobs at nearly 10 times the rate of the state’s other
industries. A number of these companies have developed novel
technologies, and it is in the interest of the state to incentivize these
companies to establish and grow manufacturing operations within
the state. This will create both construction and permanent
manufacturing jobs in California.

(f) It is the intent of the Legislature that a preference should be
allowed for clean energy devices, technology, and systems
manufactured in California.

SEC. 2.  

Section 4217.11 of the Government Code is amended
to read:

4217.11.  

The following terms, whenever used in this chapter,
have the meanings given in this section, except where the context
clearly indicates otherwise:

begin delete

(a) “Alternate energy equipment” means equipment for the
production or conversion of energy from alternate sources as its
primary fuel source, such as solar, biomass, wind, geothermal,
hydroelectricity under 30 megawatts, remote natural gas of less
than one billion cubic feet estimated reserves per mile from an
existing gas gathering line, natural gas containing 850 or fewer
British Thermal Units per standard cubic foot, or any other source
of energy, the efficient use of which will reduce the use of fossil
or nuclear fuels.

end delete begin delete

(b) (1) “Clean energy device, technology, or system” means
the following:

end delete begin delete

(A) A device, technology, or system that contributes to improved
energy management or efficiency.

end delete begin delete

(B) Ultralow-emission equipment for energy generation based
on thermal energy systems, including, but not limited to, natural
gas turbines and fuel cells.

end delete begin delete

(C) A device, technology, or system that conserves or produces
heat, processes heat, space heating, water heating, steam, space
cooling, refrigeration, mechanical energy, electricity, or in any
form convertible to these uses, that does not expend or use
conventional energy fuels, and that uses any of the following
electrical generation technologies:

end delete begin delete

(i) Biomass.

end delete begin delete

(ii) Solar thermal.

end delete begin delete

(iii) Photovoltaic.

end delete begin delete

(iv) Wind.

end delete begin delete

(v) Geothermal.

end delete begin delete

(2) For the purposes of this subdivision, “conventional energy
fuel” means any fuel derived from petroleum deposits, including,
but not limited to, oil, heating oil, gasoline, fuel oil, or natural gas,
including liquefied natural gas or nuclear fissionable materials.

end delete begin delete

(c) “Cogeneration equipment” means equipment for
cogeneration, as defined in Section 216.6 of the Public Utilities
Code.

end delete begin delete

(d) “Conservation measures” means equipment, maintenance,
load management techniques and equipment, or other measures
to reduce energy use or make for a more efficient use of energy.

end delete begin insert

(a) “Clean energy device, technology, or system” means devices
or technologies used for a renewable electrical generation facility,
as defined in paragraph (1) of subdivision (a) of Section 25741 of
the Public Resources Code; a combined heat and power system,
as defined in Section 2840.2 of the Public Utilities Code;
distributed generation and energy storage technologies eligible
under the self-generation incentive program pursuant to Section
379.6 of the Public Utilities Code, as determined by the Public
Utilities Commission; or a facility designed for the production of
renewable fuels the efficient use of which reduces the use of fossil
or nuclear fuels; and energy efficiency devices or technologies
that reduce the need for new electric generation and reduce
emissions of toxic and criteria pollutants and greenhouse gases.

end insert begin delete

(e)

end delete

begin insert (b) end insert  “Conservation services” means the electrical, thermal, or
other energy savings resulting from conservation measures, which
shall be treated as a supply of begin delete such end delete begin insert that end insert energy.

begin delete

(f)

end delete

begin insert (c) end insert  “Energy conservation facility” means begin delete alternate energy
equipment, cogeneration equipment, end delete begin insert clean energy devices,
technologies, or systems, end insert or conservation measures located in
public buildings or on land owned by public agencies.

begin delete

(g)

end delete

begin insert (d) end insert  “Energy service contract” means a contract entered into by
a public agency with any person, pursuant to which the person will
provide electrical or thermal energy or conservation services to a
public agency from an energy conservation facility.

begin delete

(h)

end delete

begin insert (e) end insert  “Facility financing contract” means a contract entered into
by a public agency with any person whereby the person provides
financing for an energy conservation facility in exchange for
repayment of the financing and all costs and expenses related
thereto by the public agency. A facility financing contract may
provide for the person with whom the public agency contracts to
provide any combination of feasibility studies for, and design and
construction of, all or part of the energy conservation facility in
addition to the financing and other related services, and may
provide for an installment sale purchase, another form of purchase,
or amortized lease of the energy conservation facility by the public
agency.

begin delete

(i)

end delete

begin insert (f) end insert  “Facility ground lease” means a lease of all, or any portion
of, land or a public building owned by, or under lease to, a public
agency to a person in conjunction with an energy service contract
or a facility financing contract. A facility ground lease may include,
in addition to the land on which energy conservation facilities will
be located, easements, rights-of-way, licenses, and rights of access,
for the construction, use, or ownership by the person of the facility
and all related utility lines not owned or controlled by the
interconnecting utility, and offsite improvements related thereto.
A facility ground lease may also include the addition or
improvement of utility lines and equipment owned by the
interconnecting utility begin delete which end delete begin insert that end insert are necessary to permit
interconnection between that utility and an energy conservation
facility.

begin delete

(j)

end delete

begin insert (g) end insert  “Person” means, but is not limited to, any individual,
company, corporation, partnership, limited liability company,
public agency, association, proprietorship, trust, joint venture, or
other entity or group of entities.

begin delete

(k)

end delete

begin insert (h) end insert  “Public agency” means the state, a county, city and county,
city, district, community college district, school district, California
State University, joint powers authority or other entity designated
or created by a political subdivision relating to energy development
projects, and any other political subdivision or public corporation
in the state.

begin delete

(l)

end delete

begin insert (i) end insert  “Public building” includes any structure, building, facility,
or work which a public agency is authorized to construct or use,
and automobile parking lots, landscaping, and other facilities,
including furnishings and equipment, incidental to the use of any
structure, building, facility, or work, and also includes the site
thereof, and any easements, rights-of-way appurtenant thereto, or
necessary for its full use.

SEC. 3.  

Section 4217.16 of the Government Code is amended
to read:

4217.16.  

Prior to awarding or entering into an agreement or
lease, the public agency may request proposals from qualified
persons. After evaluating the proposals, the public agency may
award the contract on the basis of the experience of the contractor,
the type of technology employed by the contractor, the cost to the
local agency, whether the clean energy device or technology is
manufactured or assembled in California, and any other relevant
considerations. The public agency may utilize the pool of qualified
energy service companies established pursuant to Section 388 of
the Public Utilities Code and the procedures contained in that
section in awarding the contract.

SEC. 4.  

Article 7 (commencing with Section 10390) is added
to Chapter 2 of Part 2 of Division 2 of the Public Contract Code,
to read:

 

Article 7.  Preference for California-Manufactured Clean Energy
Devices, Technology, and Systems

 

10390.  

For the purposes of this article:

(a)  begin delete (1) end delete begin delete   end delete “Clean energy device, technology, or system” means
begin delete the following: end delete begin insert devices or technologies used for a renewable
electrical generation facility, as defined in paragraph (1) of
subdivision (a) of Section 25741 of the Public Resources Code; a
combined heat and power system, as defined in Section 2840.2 of
the Public Utilities Code; distributed generation and energy
storage technologies eligible under the self-generation incentive
program pursuant to Section 379.6 of the Public Utilities Code,
as determined by the Public Utilities Commission; or a facility
designed for the production of renewable fuels, the efficient use
of which reduces the use of fossil or nuclear fuels; and energy
efficiency devices or technologies that reduce the need for new
electric generation and reduce emissions of toxic and criteria
pollutants and greenhouse gases. end insert

begin delete

(A) A device, technology, or system that contributes to improved
energy management or efficiency.

(B) Ultralow-emission equipment for energy generation based
on thermal energy systems, including, but not limited to, natural
gas turbines and fuel cells.

(C) A device, technology, or system that conserves or produces
heat, processes heat, space heating, water heating, steam, space
cooling, refrigeration, mechanical energy, electricity, or in any
form convertible to these uses, that does not expend or use
conventional energy fuels, and that uses any of the following
electrical generation technologies:

(i) Biomass.

(ii) Solar thermal.

(iii) Photovoltaic.

(iv) Wind.

(v) Geothermal.

(2) For the purposes of this subdivision, “conventional energy
fuel” means any fuel derived from petroleum deposits, including,
but not limited to, oil, heating oil, gasoline, fuel oil, or natural gas,
including liquefied natural gas or nuclear fissionable materials.

end delete

(b) “Power purchase agreement” means a financial arrangement
in which a third-party developer owns, operates, and maintains a
clean energy device, technology, or system, and a state agency
agrees to site the device, technology, or system on its roof or
elsewhere on its property and purchases the device, technology,
or system’s electric output, not the device, technology, or system
itself, from the third-party developer for a predetermined period
of time.

10391.  

(a) A state agency that accepts bids or proposals for a
contract for the purchase or installation of a clean energy device,
technology, or system through a power purchase agreement or a
direct purchase shall provide a preference of 5 percent to a bidder
that certifies that all of the parts of the clean energy device,
technology, or system to be installed have been manufactured or
assembled in this state. The preference shall be provided as follows:

(1) For solicitations to be awarded to the lowest responsible
bidder meeting specifications, the preference to a bidder that
certifies that all of the parts of the clean energy device, technology,
or system to be installed have been manufactured or assembled in
this state shall be 5 percent of the bid price of the lowest
responsible bidder meeting specifications.

(2) For solicitations to be awarded to the highest scored bidder
based on evaluation factors in addition to price, the preference to
a bidder that certifies that all of the parts of the clean energy device,
technology, or system to be installed have been manufactured or
assembled in this state shall be 5 percent of the total score of the
highest scored bidder.

(3) A preference awarded pursuant to paragraph (1) or (2) shall
not be awarded to a noncompliant bidder and shall not be used to
satisfy any applicable minimum requirements.

(4) In order to be eligible for the 5-percent preference authorized
pursuant to this section, a bidder shall submit all required
substantiating documentation and information needed by the state
agency to determine if the bidder is eligible for the preference,
including, but not limited to, documentation regarding the identity
of the manufacturer or assembler of the clean energy device,
technology, or system and the location or locations where the parts
of the clean energy device, technology, or system will be
manufactured or assembled.

(5) If, after application of the preferences set forth in this section,
more than one bid qualified as the lowest responsible bid or the
highest scored bid, the state agency shall award the contract to the
bidder that has the highest number of full-time employees who
assemble or manufacture the parts of the clean energy device,
technology, or system in the state when the contract is let.

(b) The Department of General Services shall establish a process
to verify that a bidder meets the criteria for the 5-percent
preference.

SEC. 5.  

Section 10780.6 is added to the Public Contract Code,
to read:

begin delete

10780.6.  

(a) For the purposes of this section:

(1) (A) “Clean energy device, technology, or system” means
the following:

(i) A device, technology, or system that contributes to improved
energy management or efficiency.

(ii) Ultralow-emission equipment for energy generation based
on thermal energy systems, including, but not limited to, natural
gas turbines and fuel cells.

(iii) A device, technology, or system that conserves or produces
heat, processes heat, space heating, water heating, steam, space
cooling, refrigeration, mechanical energy, electricity, or in any
form convertible to these uses, that does not expend or use
conventional energy fuels, and that uses any of the following
electrical generation technologies:

(I) Biomass.

(II) Solar thermal.

(III) Photovoltaic.

(IV) Wind.

(V) Geothermal.

(B) For the purposes of this subdivision, “conventional energy
fuel” means any fuel derived from petroleum deposits, including,
but not limited to, oil, heating oil, gasoline, fuel oil, or natural gas,
including liquefied natural gas or nuclear fissionable materials.

(2) “Power purchase agreement” means a financial arrangement
in which a third-party developer owns, operates, and maintains a
clean energy device, technology, or system, and the trustees agree
to site the device, technology, or system on their roof or elsewhere
on their property and purchases the device, technology, or system’s
electric output, not the device, technology, or system itself, from
the third-party developer for a predetermined period of time.

end delete

begin insert

begin insert 10780.6. end insert   

end insert begin insert

(a) For purposes of this section, “clean energy
device, technology, or system” means devices or technologies used
for a renewable electrical generation facility, as defined in
paragraph (1) of subdivision (a) of Section 25741 of the Public
Resources Code; a combined heat and power system, as defined
in Section 2840.2 of the Public Utilities Code; distributed
generation and energy storage technologies eligible under the
self-generation incentive program pursuant to Section 379.6 of
the Public Utilities Code, as determined by the Public Utilities
Commission; or a facility designed for the production of renewable
fuels, the efficient use of which reduces the use of fossil or nuclear
fuels; and energy efficiency devices or technologies that reduce
the need for new electric generation and reduce emissions of toxic
and criteria pollutants and greenhouse gases.

end insert

(b) The trustees that accept bids or proposals for a contract for
the purchase or installation of a clean energy device, technology,
or system through a power purchase agreement or a direct purchase
shall provide a preference of 5 percent to a bidder that certifies
that all of the parts of the clean energy device, technology, or
system to be installed have been manufactured or assembled in
this state. The preference shall be provided as follows:

(1) For solicitations to be awarded to the lowest responsible
bidder meeting specifications, the preference to a bidder that
certifies that all of the parts of the clean energy device, technology,
or system to be installed have been manufactured or assembled in
this state shall be 5 percent of the bid price of the lowest
responsible bidder meeting specifications.

(2) For solicitations to be awarded to the highest scored bidder
based on evaluation factors in addition to price, the preference to
a bidder that certifies that all of the parts of the clean energy device,
technology, or system to be installed have been manufactured or
assembled in this state shall be 5 percent of the total score of the
highest scored bidder.

(3) A preference awarded pursuant to paragraph (1) or (2) shall
not be awarded to a noncompliant bidder and shall not be used to
satisfy any applicable minimum requirements.

(4) In order to be eligible for the 5-percent preference authorized
pursuant to this section, a bidder shall submit all required
substantiating documentation and information needed by the
trustees to determine if the bidder is eligible for the preference,
including, but not limited to, documentation regarding the identity
of the manufacturer or assembler of the clean energy device,
technology, or system and the location or locations where the parts
of the clean energy device, technology, or system will be
manufactured or assembled.

(5) If, after application of the preferences set forth in this section,
more than one bid qualifies as the lowest responsible bid or the
highest scored bid, the trustees shall award the contract to the
bidder that has the highest number of full-time employees who
assemble or manufacture the parts of the clean energy device,
technology, or system in the state when the contract is let.

(c) The Department of General Services shall establish a process
to verify that a bidder meets the criteria for the 5-percent
preference.