BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 124|
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THIRD READING
Bill No: SB 124
Author: Corbett (D), et al.
Amended: 4/29/13
Vote: 21
SENATE ENERGY, UTILITIES & COMMUNICATIONS COMM. : 10-1, 4/2/13
AYES: Padilla, Cannella, Corbett, De León, DeSaulnier, Hill,
Knight, Pavley, Wolk, Wright
NOES: Fuller
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 9-2, 4/23/13
AYES: Wright, Calderon, Cannella, Correa, De León, Galgiani,
Hernandez, Lieu, Padilla
NOES: Nielsen, Berryhill
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/23/13
AYES: De León, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
SUBJECT : Public contracts: bid preferences: clean energy
SOURCE : Author
DIGEST : This bill requires state agencies and California
State University (CSU) contracting for the installation of a
clean energy device, technology, or system to provide a 5% bid
preference to bidders that certify all parts of a clean energy
device, technology, or system are manufactured in California.
ANALYSIS :
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Existing law:
1. Establishes rules governing the awarding of contracts by
state agencies, including general requirements for
competitive bidding on contracts for construction projects,
goods, services, and information technology.
2. 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 can be
awarded by the agency based on the experience of the
contractor and cost of the contract.
3. Defines cogeneration equipment and alternative energy
equipment as energy from alternate sources as its primary
fuel source including specified technologies such as solar
and wind and cogeneration equipment. This equipment forms
the basis of the contracts for electrical or thermal energy
or conservation services.
4. Entitles California disabled veteran businesses and small
businesses certified by the Department of General Services
(DGS) to a 5% preference in bidding on state contracts for
goods, services, information technology and for state public
construction contracts.
5. Requires the state to award a 5% preference in contracts for
goods and services to California based firms that demonstrate
and certify that at least 50% of the total labor hours for
manufactured goods or 90% of the total labor hours for
services will be performed in qualifying areas.
This bill:
1. Requires the California State University (CSU) and state
agencies 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 to provide a preference of 5% to a bidder
that certifies that all of the parts of the clean energy
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device, technology, or system to be installed have been
manufactured in this state.
2. Specifies that the preference shall be 5% of the bid price
of the lowest responsible bidder meeting specifications, or
5% of total score of the highest scored bidder when factors
in addition to price are considered by the awarding
authority.
3. To be eligible for the preference, bidders must submit
information on the manufacturer or assembler of the clean
energy system, and the location where the system parts will
be manufactured or assembled.
Background
Greening of State Buildings . To shrink the state's
environmental footprint and save taxpayer dollars, the Governor
has issued an executive order directing agencies and departments
to take immediate steps to green the state's buildings, reduce
greenhouse gas emissions and improve energy efficiency. The
executive order calls for new or renovated state buildings
larger than 10,000 square feet to achieve the U.S. Green
Building Council's LEED "Silver" certification or higher and to
incorporate clean, on-site power generation, such as solar
photovoltaic, solar thermal and wind power generation and clean
back-up power supplies. The order also sets a target of zero net
energy consumption for 50% of the square footage of existing
state-owned buildings by 2025 and zero net energy consumption
from all new or renovated state buildings beginning design after
2025. The executive order specifically directs state agencies
and departments to:
Reduce greenhouse gas emissions by 10% by 2015 and 20% by
2020, as measured against a 2010 baseline.
Reduce overall water use by 10% by 2015 and 20% by 2020, as
measured against a 2010 baseline.
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Reduce grid-based energy purchases and other non-building,
grid-based retail energy purchases by 20% by 2018, as compared
to a 2003 baseline.
Bid Preferences . Bid preferences are one tool commonly used in
government procurement programs to favor particular sellers. A
typical bid preference program awards a procurement contract to
the lowest favored bidder if its bid is within a certain
percentage of the low bid from the unfavored group. The price
bid is the price the bidder is ultimately paid. However, when
evaluating the contracts, the government agency, which is
normally required to take the lowest bid, will give points to
bidders that meet specified preferences to make them more
competitive with the lowest bidder.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time costs in the range of $100,000 to $200,000 to 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.
SUPPORT : (Verified 5/23/13)
Bloom Energy
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
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California Labor Federation
California Teamsters Public Affairs Council
Capstone Turbine Corporation
Engineers & Scientists of California, IFPTE Local 20
International Longshore and Warehouse Union
Professional & Technical Engineers, IFPTE Local 21
Solaria
Soraa
UNITE-HERE, AFL-CIO
United Food & Commercial Workers Western State Council
Utility Workers Union of America
OPPOSITION : (Verified 5/23/13)
California Chamber of Commerce
California Manufacturers & Technology Association
ARGUMENTS IN SUPPORT : According to Solaria, "California has
several companies that manufacture clean energy technologies in
the state, employing Californians and helping our economy,
including Solaria Corporations and others. By using California
clean energy manufacturers, California's purchase of such
technologies will employ the highest percentage of skilled
workers, attract the strongest capital investment in California
and have the largest ripple effect by creating infrastructure
jobs at local businesses and suppliers throughout the state.
ARGUMENTS IN OPPOSITION : The California Chamber of Commerce
states, "A potential result of protectionism legislation is
retaliation from our trade partners - other states and
international trade partners. To the extent that California
limits bidders, California companies could be penalized in trade
with other states and other nations. This practice creates a
patchwork of reciprocity and retaliation that makes it difficult
for California businesses to contract with other states. We
believe that this will have a net negative effect on California
businesses and their employees."
JG:nld 5/23/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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