BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 124 (Corbett) - Public contracts: bid preferences: clean
energy
Amended: April 29, 2013 Policy Vote: EU&C 10-1; GO 9-2
Urgency: No Mandate: No
Hearing Date: May 23, 2013 Consultant: Mark McKenzie
SUSPENSE FILE.
Bill Summary: SB 124 require state agencies and California State
University (CSU) contracting for the installation of a clean
energy device, technology, or system to provide a five percent
bid preference to bidders that certify all parts of a clean
energy device, technology, or system are manufactured in
California.
Fiscal Impact:
One-time costs in the range of $100,000 to $200,000 to the
Department of General Services (DGS) to adopt regulations to
implement a preference program (General Fund).
Unknown, but potentially major increase in contracting
costs for state clean energy projects to the extent that the
preference provided in the bill results in contracts being
awarded to a contractor who is not the lowest bidder
(General and special funds). Neither the total dollar value
of state clean energy contracts, nor the percentage of those
contracts in which California-manufactured clean energy
devices, technologies, and systems were installed is known
at this time.
Background: Existing law establishes rules governing procurement
and contracting by state agencies, including general
requirements for competitive bidding on contracts for
construction projects, goods, services, and information
technology. Existing law authorizes public agencies to enter
into contracts with private entities to provide electrical or
thermal energy or conservation services from alternate energy
equipment or cogeneration equipment, if the cost of the services
provided will be less than the anticipated cost to the agency.
The contracts are also exempt from competitive bidding and may
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be awarded by the agency based on the experience of the
contractor and cost of the contract. Existing law also provides
a five percent bid preference for state construction contracts
awarded to California disabled veteran businesses and small
businesses certified DGS, as specified.
Proposed Law: SB 124 would require state agencies and CSU to
provide a five percent bid preference for contracts (either
through a power purchase agreement or direct purchase) in which
the bidder certifies that all parts of a clean energy device,
technology, or system to be installed have been manufactured in
California. The bill specifies that the preference shall be
five percent of the bid price of the lowest responsible bidder
meeting specifications, or five percent of the total score of
the highest scored bidder when factors in addition to price are
considered by the awarding authority. To be eligible for the
preference, bidders must submit information on the manufacturer
of the clean energy system, and the location where the system
parts will be manufactured. The bill also requires DGS to
establish a process to verify that a bidder meets the criteria
for the bid preference.
Related Legislation: SB 175 (Corbett), which died in the
Assembly Business, Professions, and Consumer Protection
Committee last year, would have provided a five percent bid
preference in state contracts for the purchase and installation
of solar panels manufactured or assembled in the state.
Staff Comments: DGS has a program for acquisition of solar power
systems through power purchase agreements. Approximately $50
million in contracts are awarded for solar power systems alone
in an average year, but this amount will decline in the future
as state facilities capable of hosting solar power systems
become built out. CSU and the Department of Transportation also
have solar power acquisition programs, but information on those
programs was unavailable at the time of this analysis. The
bill's preference would also apply to other contracts that
improve energy efficiency in state buildings. In addition to
current programs, Proposition 39 of 2012 provides up to $500
million annually for five years for energy efficiency
improvements in schools, universities, and other public
buildings. The total volume of state contracts for clean energy
devices, technologies, or systems is unknown at this time. In
addition, it is unknown how many state projects could be built
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with California-manufactured clean energy devices, technologies,
or systems. As such, the costs related to this measure are
indeterminable, but to the extent contracts are awarded to a
contractor who is not the lowest bidder due to the preference
for California-manufactured clean energy products, overall state
contract costs would increase. For example, for every
$5,000,000 in state contracts awarded to bidders who qualify for
the preference, contract costs could increase by $250,000.