BILL ANALYSIS Ó
SB 124
Page 1
Date of Hearing: July 3, 2013
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Jim Frazier, Chair
SB 124 (Corbett) - As Amended: April 29, 2013
SENATE VOTE : 28-8-3
SUBJECT : Public contracts: bid preferences: clean energy.
SUMMARY : 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.
Specifically, this bill :
1) Requires the 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 device, technology, or system to be
installed have been manufactured in California.
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 manufacture of the clean energy system,
and the location where the system parts will be
manufactured.
EXISTING LAW : Establishes Government Code Section 4303, which
generally requires state and local governments to contract only
with companies that use American produced or manufactured
material regardless of the cost of foreign products. Some
exceptions apply. Current law also provides a purchasing
preference to California products over out-of-state products if
other factors like price and quality are the same. Government
Code Section 4331 states that "price, fitness and quality being
equal, any body, officer, or other person charged with the
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purchase, or permitted or authorized to purchase supplies for
the use of the State, or of any of its institutions or offices,
or for the use of any county or city shall always prefer
supplies grown, manufactured, or produced in the State, and
shall next prefer supplies partially manufactured, grown, or
produced in the State."
Existing law also provides a 5% bid preference for state
construction contracts awarded to California disabled veteran
businesses and small businesses certified by the Department of
General Services (DGS), as specified.
FISCAL EFFECT : According to the Senate Appropriations
Committee, there may be one-time costs in the range of $100,000
to $200,000 to DGS to adopt regulations to implement a
preference program (General Fund). Additionally, unknown but
potentially major increases in contracting costs for state clean
energy projects could result. Overall costs will be determined
by the extent that the preference provided in this 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.
COMMENTS : 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. 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.
The State Contracting Manual addresses how state agencies deal
with multiple or overlapping bid preferences stating, "In
combination with any other preference the maximum limit of the
combined preference is 15% of the bid amount and, in no case,
shall be more than $100,000 per bid, whichever is less."
The author's office argues that this bill supports the continued
development of energy efficiency and alternative energy in
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California and protects the financial investment in green
technology by giving a small bid preference of 5% on state or
CSU contracts to a bidder that certifies all of the parts of the
clean energy device, technology or system, as defined, for
installation were manufactured in California.
The opposition argues that state costs will increase if the bid
preference in this bill is adopted. The Senate Appropriations
Committee analysis notes potentially major increases in
contracting costs for state clean energy projects.
Additionally, the California Manufacturers & Technology
Association states, "future growth of green technology
manufacturers in California will depend on their ability to
export to other markets where energy efficiency and renewable
energy development lag California." Opponents are concerned
that what jobs may be gained through the bid preference will be
lost through retaliatory trade actions by other states and
nations.
RELATED & PRIOR LEGISLATION :
AB 199 (Holden) proposed a 5% bid preference for California
grown agricultural products. This bill passed out of the
Assembly Accountability and Administrative Review Committee in
the current year and was amended in the Assembly Appropriations
Committee to remove the 5% bid preference.
AB 963 (Levine) proposed a 3% bid preference for bidders with a
record of environmentally preferable purchasing. This bill
passed out of the Assembly Accountability and Administrative
Review Committee in the current year and was held on suspense in
the Assembly Appropriations Committee.
SB 175 (Corbett) died in the Assembly Business, Professions, and
Consumer Protection Committee last year. This bill would have
provided a 5% bid preference in state contracts for the purchase
and installation of solar panels manufactured or assembled in
the state.
COMMITTEE RECOMMENDATIONS : The author's office has worked
closely with the Assembly Utilities and Commerce Committee and
the Assembly Accountability and Administrative Review Committee
and has agreed to accept the following amendments:
1) Include solar water heating within the definition of
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clean energy devices, technologies, and systems.
2) Require DGS to publish information on its website on the
location of sites that receive bid preferences; the name of
the manufacturer and the type of clean energy device,
technology, or system utilized.
3) Require DGS to publish a report on employment growth
associated with the clean energy bid preference for women,
minority, and disabled veterans.
4) Clarify that there is a single 5% bid preference per
bidder applicable to the clean technology portion of the
bid.
5) Limit the total of all bid preferences authorized by
this and other statutes to 15%.
6) Sunset this program in 2020.
REGISTERED SUPPORT / OPPOSITION :
Support
Bloomenergy
Capstone Turbine Corporation
CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
California Labor Federation
California Teamsters Public Affairs Council
Engineers & Scientists of CA, IFPTE Local 20
International Longshore and Warehouse Union
Professional & Technical Engineers, IFPTE Local 21
SORRA
SOLARIA
UNITE-HERE, AFL-CIO
United Food & Commercial Workers Western States Council
Utility Workers Union of America
Opposition
CalChamber
California Manufacturers & Technology Association
Analysis Prepared by : William Herms / A. & A.R. / (916)
SB 124
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319-3600