BILL ANALYSIS �
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THIRD READING
Bill No: SB 297
Author: Roth (D)
Amended: As introduced
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 4/9/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De Le�n, Galgiani, Hernandez, Lieu, Padilla
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/13
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Public contacts: disabled veterans
SOURCE : Author
DIGEST : This bill increases the annual statewide
participation goal for disabled veteran business enterprises
(DVBEs), applicable to certain state contracts, from 3% to 5%.
ANALYSIS :
Existing law:
1.Requires contracts awarded by state entities for professional
bond services, construction, and acquisition of materials,
supplies, and services to have annual statewide participation
goals of not less than 3% for DVBEs.
2.Requires the Department of General Services (DGS) to establish
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a DVBE contract preference incentive to be used by state
agencies when awarding contracts.
3.Defines a DVBE as a business entity that is at least 51% owned
or controlled by one or more disabled veterans, as specified.
4.Provides that 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 advertising, bidding, and protest
provisions in the State Contract Act.
5.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.
6.Establishes a 25% 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%
small business participation in state procurements and
contracts.
7.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.
This bill increases the annual statewide participation goal for
DVBEs, applicable to certain state contracts, from 3% to 5%.
Background
In 1989, SB 1517 (Dills, Chapter 1207) established a 3%
participation goal for DVBEs, applicable to all contracts
including those for professional bond services, to assist and
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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, Resolution Chapter 46)
encouraged local entities to enact ordinances and implement
policies promoting the participation of DVBEs in construction
and procurement contracts. Also, SJR 13 (Dills, Resolution
Chapter 2, Statutes of 1994) 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 (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 5%
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 5% 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 within an enterprise zone.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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According to the Senate Appropriations Committee, DGS indicates
that administrative costs related to this bill are minor and
absorbable, consisting of updating materials related to DVBE
program publications, presentations and training materials.
However, increasing the DVBE participation goal by two
percentage points could have unknown, potentially major costs
(General Fund and special funds) with respect to contract
spending. The most recent data available indicates that DVBE
participation is currently greater than 3%, but below this
bill's targeted goal of 5%. DGS notes that if 5% of the value
of specified state contracts went to DVBEs as opposed to the
actual current ratio, all else equal, the incremental increase
of spending will be about $38 million. The extent to which this
figure completely represents new spending is indeterminable.
SUPPORT : (Verified 5/23/13)
AMVETS, Department of California
California Association of County Veterans Service Officers
Disabled Veteran Business Enterprise Alliance
Elite Service Disabled Veteran Owned Business Network
Vietnam Veterans of America, California State Council
ARGUMENTS IN SUPPORT : The author's office notes that
California is home to over two million veterans, 15% 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% of whom will have service
connected disabilities. Additionally, the author's office
indicates that unemployment among younger veterans, aged 18-24,
is approximately 44%, 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. This bill increases
opportunities for DVBEs to contract with state agencies and
create jobs for disabled veterans.
MW:nk 5/24/13 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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