BILL ANALYSIS �
Bill No: SB
297
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2013-2014 Regular Session
Staff Analysis
SB 297 Author: Roth
As Introduced: February 15, 2013
Hearing Date: April 9, 2013
Consultant: Art Terzakis
SUBJECT
Public Contracts: disabled veterans
DESCRIPTION
SB 297 increases the annual statewide participation goal
for disabled veteran business enterprises (DVBEs),
applicable to certain state contracts, from 3% to 5%.
EXISTING LAW
Under existing law, contracts awarded by state entities for
professional bond services, construction, and acquisition
of materials, supplies, and services are required to have
annual statewide participation goals of not less than 3%
for disabled veteran-owned business enterprises (DVBEs).
Existing law requires the Department of General Services
(DGS) to establish a DVBE contract preference incentive to
be used by state agencies when awarding contracts.
Existing law defines a DVBE as a business entity that is at
least 51% owned or controlled by one or more disabled
veterans, as specified.
Under current law, a state agency may award a contract for
the acquisition of goods, services, or information
technology that has a value between $5,000 and $250,000 to
a certified small business or to a DVBE, as long as the
agency obtains price quotations from two or more certified
small businesses, or from two or more DVBEs. Contracts
awarded pursuant to this law are exempt from the
SB 297 (Roth) continued
Page 2
advertising, bidding, and protest provisions in the State
Contract Act.
Existing law provides that in state contracts for
construction, the procurement of goods, information
technology, or the delivery of services, a small business,
as defined, shall receive a 5% bid preference.
Existing law establishes a 25 percent small business
participation goal in all construction projects financed
with proceeds of the infrastructure bond acts of 2006.
Governor's Executive Order S-02-06, issued in March 2006,
requires all state agencies, departments, boards and
commissions to achieve a goal of 25 percent small business
participation in state procurements and contracts.
Existing law provides that each state agency must submit an
annual report that tracks contract award activity involving
DVBEs and small businesses. The report must demonstrate
that the various participation goals have been met or
exceeded. If the minimum goals are not met, the agency
must provide a sound justification and specify remedial
action that will be taken to attain or exceed the goal(s)
the following year.
BACKGROUND
Purpose of SB 297: The author's office notes that
California is home to over 2 million veterans, 15 percent
of whom have a service connected disability. As the wars
in Iraq and Afghanistan wind down, it is projected that
35,000 veterans will return home to California, 50 percent
of whom will have service connected disabilities.
Additionally, the author's office indicates that
unemployment among younger veterans, aged 18-24, is
approximately 44 percent, which is significantly higher
than non-veterans and certainly well above the national
average. Given the influx of disabled veterans returning to
California, it is the author's belief that the state must
reaffirm its commitment to these men and women and provide
them with as many economic opportunities as possible.
SB 297 (Roth) continued
Page 3
History: In 1989, SB 1517 - Dills (Chapter 1207)
established a 3% participation goal for disabled veteran
business enterprises (DVBEs), applicable to all contracts
including those for professional bond services, to assist
and encourage DVBE participation in state contracting
opportunities. In 1990, SB 2398 - Dills (Chapter 516)
extended the DVBE participation program to contracts of the
University of California, the Department of Corrections and
specified public utilities. In 1993, SCR 18 - Dills,
encouraged local entities to enact ordinances and implement
policies promoting the participation of DVBEs in
construction and procurement contracts. Also, SJR 13 -
Dills of 1993, requested that Congress establish and
maintain DVBE programs. Approximately six years ago,
Congress expressed support for service disabled and
prisoner of war veterans by enacting a 3% participation
goal for DVBEs that is modeled after California law.
The Small Business Procurement and Contract Act which was
enacted over 30 years ago, directs DGS and other state
agencies that award state contracts to establish small
business participation goals. Both the DVBE and small
business programs were established to increase business
opportunities for DVBEs and small businesses; thereby
stimulating the state's overall economy. The programs are
designed to help DVBEs and small businesses participate in
a more level playing field with certain advantages when
competing against other non-DVBEs and non-small businesses
for state contracts.
For purposes of the Act, a "small business" is defined as
an independently owned and operated business not dominant
in its field of operation, with its principal offices in
California, and which, together with affiliates, has 100 or
fewer employees, and average annual gross receipts of $14
million dollars or less over the previous three years, or
is a manufacturer with 100 or fewer employees.
Small businesses certified by DGS are entitled to a five
percent preference in bidding on state contracts for goods,
services, information technology and for state public
construction contracts. The state is also required to
award a five percent preference in contracts for goods to a
California-based company certifying that a certain amount
of labor required to perform the contract is performed at a
work site or work sites located in a distressed area or
SB 297 (Roth) continued
Page 4
within an enterprise zone.
PRIOR/RELATED LEGISLATION
SB 722 (Correa) 2013-14 Session. Would define "disabled
veteran," for purposes of the DVBE program, as a veteran of
the Armed Forces of the United States, as specified, who
has a service-connected disability, as documented by a
letter from any branch of the United States Armed Forces or
the federal Department of Veterans Affairs, and who is
domiciled in the state. (Pending in Senate Veterans
Affairs Committee; dual referred to Senate G.O.)
SB 733 (Block) 2013-14 Session. Among other things, would
delete the provisions allowing the awarding department to
accept submission of a DVBE utilization plan and would
instead specify that the statewide participation goal for
DVBEs may be met by the business utilization plan value of
a business utilization plan partner, as defined,
established by payments between the partner and a DVBE, as
specified. (Pending in this Committee)
SB 382 (Roth) 2013-14 Session. Would require the
Department of Veterans Affairs to create a California
Veterans Leadership Program to connect veterans with
employment, housing, and mental health resources. (Pending
in Senate Veterans Affairs Committee)
SB 276 (Roth) 2013-14 Session. Would modify the Small
Business Procurement and Contract Act by increasing the
upper limit (from $250,000 to $500,000) of the value of
certain contracts that a state agency may award to a
certified small business, including a microbusiness, or to
a DVBE without complying with specified competitive bidding
requirements. (Pending in this committee)
SB 67 (Price) of 2011-12 Session. Would have authorized
DGS to direct all state agencies, departments, boards, and
commissions to establish and achieve a goal of 25 percent
small business participation in state procurements and
contracts. (Died in Assembly Appropriations - suspense
file)
AB 309 (Price) 2009-2010 Session. Would have mandated a 25
percent small business participation goal for all state
entities and directed DGS to monitor the progress of state
SB 297 (Roth) continued
Page 5
agencies in meeting the goal. (Died in Assembly
Appropriations - suspense file)
SB 1108 (Price) 2009-2010 Session. Would have authorized
DGS to direct all state agencies, departments, boards, and
commissions to establish the goal to achieve 25% small
business participation in state procurements and contracts.
(Died in Assembly Appropriations - suspense file)
SB 967 (Correa) 2009-10 Session. Would have created a five
percent bid preference on state contracts to provide goods
and services with a value of $1 million or more for vendors
that can certify that 90 percent of its employees slated to
work on the government contract will be California
residents. (Vetoed by Governor)
SB 643 (Denham) 2009-10 Session. Would have added
"disabled veteran business enterprise" to the definition of
small business, found within the California Prompt Payment
Act, so that certified DVBEs receive the same prompt
payment protections afforded other California small
businesses. (Died in Senate Appropriations)
SB 467 (Dutton) 2009-10 Session. Would have authorized
agencies and departments to award contracts of less than
$25,000 for goods or services by California certified small
businesses, microbusinesses, or DVBEs without seeking an
exemption of the Prison Industries Authority (PIA) mandate
for products provided at a lower price than the price
available from the PIA. (Died in Senate Appropriations)
AB 31 (Price), Chapter 212, Statutes of 2009. Among other
things, increased the maximum contract to $250,000 from
$100,000 for goods, services, or information technology
that the Small Business Procurement and Contract Act
permits a state agency to award to certified small
business, including a micro-business and a DVBE without
complying with specified competitive bidding requirements.
AB 761 (Coto), Chapter 611, Statutes of 2007. Established
a 25 percent small business participation goal for
contracts related to revenues expended from the 2006
infrastructure bond measures.
SB 115 (Florez), Chapter 451, Statutes of 2005. Created a
SB 297 (Roth) continued
Page 6
DVBE incentive program for state contracts.
SB 1008 (Machado), Chapter 632, Statutes of 2003. Among
other things, strengthened the sanctions that can be levied
against businesses that fraudulently misrepresent their
eligibility for DVBE certification.
AB 669 (Cohn), Chapter 623, Statutes of 2003. Among other
things, required DVBEs and small businesses, as defined, to
perform commercially useful functions, as defined, in
relation to any contract those businesses are awarded under
certain provisions of law. Also, imposed certain civil
penalties for fraudulent misrepresentations regarding DVBE
and small business state contracts.
SB 1033 (Knight) 2001-02 Session. Would have established
an additional 3% bid preference for a small business that
is also certified as a DVBE. (Held in Assembly
Appropriations)
AB 941 (Florez) Chapter 666, Statutes of 2002. Required
the Department of Veteran's Affairs and awarding
departments to appoint DVBE advocates to assist in meeting
participation goals.
SUPPORT: As of April 5, 2013:
Disabled Veteran Business Enterprise Alliance
OPPOSE: None on file as of April 5, 2013.
FISCAL COMMITTEE: Senate Appropriations Committee
**********