BILL ANALYSIS �
SENATE COMMITTEE ON VETERANS AFFAIRS
Senator Ben Hueso, Chair
BILL NO: SB 719 HEARING DATE: 4/23/13
AUTHOR: Correa
VERSION: As amended 4/17/13
FISCAL: Yes
VOTE: Majority
SUBJECT
Disabled Veteran Business Enterprise Program: compliance
reporting.
DESCRIPTION
Summary :
Modifies reporting requirements for State departments
regarding their goal attainment in the California Disabled
Veteran Business Enterprise (DVBE) procurement program.
More specifically, requires each department that adopts
and uses the Financial Information System for California
(FISCal) system to begin reporting its statewide goal
attainment to the Department of General Services (DGS) in
terms of overall dollar amount expended each year by the
awarding department.
Existing law:
Requires State departments to implement a goal of awarding
at least 3% of their annual contract dollars to certified
DVBEs.
Designates the Department of General Services (DGS) as the
administering agency for the DVBE program, except in the
case of contracts for professional bond services.
Provides that an awarding State department shall require
the prime contractor, upon completion of a contract that
includes DVBE subcontracting, to certify to the department
the following information:
o The total amount the prime contractor received
under the contract.
o The name and address of the DVBE that participated
in the contract.
o The amount each DVBE received from the prime
contractor.
o That all payments under the contract have been
made to the DVBE.
Requires the awarding department to keep that
certification on file.
Provides for civil penalties if a person or entity
knowingly provides false information shall be subject to a
civil penalty for each violation (minimum of $2,500, maximum
of $25,000). An action for a civil penalty under this
subdivision may be brought by any public prosecutor in the
name of the people of the State of California and the
penalty imposed shall be enforceable as a civil judgment.
This bill :
Requires an awarding department that uses the FISCal
system -- commencing with the first reporting period after
its implementation of the FISCal system - to begin reporting
its statewide DVBE participation goals in terms of overall
dollar amount expended each year by the awarding department
to the Department of General Services.
BACKGROUND
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DVBE Program
California's Small Business Act (SBA), which is administered
through DGS, was implemented more than 30 years ago to establish
a small business preference within the state's procurement
process for the purpose of increasing the number of contracts
between the state and small businesses.
In 1989, a DVBE component was established within the SBA to
address the special needs of disabled veterans seeking
rehabilitation and training through entrepreneurship, and to
recognize the sacrifices of Californians disabled during
military service. Under the provisions of the DVBE program,
each state agency is required, in awarding contracts throughout
the year, to honor California's disabled veterans by taking all
practical actions necessary to meet or exceed an annual 3% DVBE
participation goal.
State agencies have a goal to award at least 3% of their annual
contract dollars to certified DVBEs. The agency decides whether
or not to include the DVBE participation requirements in a
particular solicitation and the percentage of the goal, if it is
included. The result is that some contracts may have a goal of
more than 3%, some may have a goal of less than 3%, and some
contracts may have no DVBE participation goal.
However, the overall 3% DVBE annual goal was reached rarely by
any state agency until recent years. The primary problems have
been that (1) state law contains no strong enforcement measure
to ensure agency compliance and (2) a supply shortfall - the
lack of certified DVBEs to meet aggregate agency demand.
DGS plays several important roles in the program, including
certifying veteran-owned businesses as eligible DVBEs and
monitoring the compliance of state agencies in meeting their 3%
goals.
DGS reports DVBE goal attainment in state contracting in its
"Statewide Consolidated Annual Report" for each fiscal year.
According to these reports, the State generally was
underperforming in attaining the 3% DVBE goal until the three
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most recent years for which data is available. (The most current
data year available is for Fiscal Year 2010-2011.)
According to DGS, the State's recent record is 2.96% in FY
2008-2009, 3.78% in FY 2009-2010, and 4.82% in FY 2010-2011.
FISCal
The FISCal Project is a transformation project intended to
optimize the business management of State government in the
areas of budgeting, accounting, procurement, and cash
management. The project will prepare the state systems and
workforce to function in an integrated financial management
system environment.
Existing law provides that "(all) state departments and agencies
shall use the FISCal system." [Government Code Section
15849.22(b) (1)] The system is scheduled to be deployed through
State government in five waves: Pre-Wave and Waves 1-4.
COMMENT
1.Committee Staff Comments :
a. In August 2012, the Senate Veterans Affairs Committee held
a public informational hearing on the DVBE Program.
Testimony by a representative from DGS' Procurement Division
indicated that the State's recent positive DVBE record
reflects a mix of nonstandardized data from various
agencies. The mix includes reporting from some agencies
based on the dollar amounts expressed up-front in DVBE
contracts and reporting from other agencies based on the
dollar amounts actually paid to the DVBEs under those
contracts. Thus, the State's official performance record is
a mix of "actually paid out" and "what was promised." Since
the purpose of the problem is to provide economic assistance
to disabled veterans, the more appropriate measure of
success would be actual awards paid out. That metric is what
SB 719 would standardize as the metric for all agency
reporting.
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b. It is appropriate to time this bill's change in DVBE
compliance reporting with the adoption of FISCal in order to
streamline the overall transformation process and also
because agencies will begin using FISCal for internal
management of their DVBE programs.
c. The effective implementation date of this bill's reporting
requirements for any given State agency parallels that
agency's position within the five-wave adoption schedule for
FISCal. According to FISCal's Annual Report to the
Legislature (February 13, 2013), the program's Pre-Wave is
scheduled to "go live" on July 1, 2013. Waves 1 through 4
are scheduled to go live in the following three years, with
full implementation targeted for July 1, 2016.
1.Related Legislation :
SB 276 (Roth, pending, 2013)
Existing law permits a state agency to award contracts for
goods, services, or information technology with values of
between $5,000 and $250,000 to certified small businesses,
including microbusinesses, or to disabled veteran business
enterprises (DVBE), without complying with specified
competitive bidding requirements. This bill increases the upper
limit of the value of those contracts to $500,000.
SB 297 (Roth, pending, 2013)
Increases the DVBE program's annual statewide participation
goals for state agencies from 3% up to 5%.
SB 733 (Block, pending, 2013)
Existing law permits the use of business utilization plans
(BUP) to meet certain requirements in the DVBE program. This
bill repeals those provisions and establishes new criteria
using the "business utilization plan value" of a "business
utilization plan partner," as defined.
SB 817 (Committee on Vet Affs, held Senate Approps, 2011)
Allows a vendor with state contracts to meet DVBE goals with
dollars from other than state contracts. (2) Modifies the
requirement for a DVBE business utilization plan so that the
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plan's required listing of products and services includes both
direct and indirect costs. (3) Codifies certain key definitions
into the Public Contract Code.
ABX4 21 (Evans, Ch. 19, Stats. 2009 4th Ex.S.)
Deleted the requirement (including all of the supporting
subdivisions) that the lowest responsible bidder make "a good
faith effort" to meet minority business enterprise, women
business enterprise, and disabled veteran business enterprise
participation goals on all state procurements.
SB 115 (Florez, Ch. 451, Stats. 2005)
Moved the DVBE from the Department of Veterans Affairs to the
Department of General Services and modified the standards for
meeting the program's participation goals.
POSITIONS
Sponsor: Author.
Support:
American Legion (Dept of CA); AMVETS (Dept of CA); California
State Commanders Veterans Council; Vietnam Veterans of America
(CA State Council)
Oppose: None received.
Analysis by: Wade Cooper Teasdale
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