BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 351

                                                                    Page  1

          Date of Hearing:   April 29, 2015


                                  Rudy Salas, Chair

          AB 351  
          (Jones-Sawyer) - As Introduced February 17, 2015

          SUBJECT:  Public contracts:  small business participation

          SUMMARY:  Requires each state agency to establish and achieve a  
          goal of 25% small business (SB) participation.   Specifically,  
          this bill:  

          1)Requires all state agencies to establish and achieve an annual  
            goal of 25% SB participation.

          2)Makes heads of agencies responsible for meeting the 25% annual  
            goal and reporting to the Department of General Services (DGS)  
            on their agency's progress.

          3)Requires agencies that fail to meet the 25% annual goal to  
            submit a corrective action plan to DGS within 45 days of the  
            close of any fiscal year.

          4)Requires DGS to regularly monitor agencies' progress in  
            meeting the 25% annual goal and regularly share related  
            information with the Office of the Small Business Advocate  
            (OSBA), including corrective action plans.  

          5)Directs DGS and the OSBA to assist agencies in implementing  
            their corrective action plans to the extent feasible.


                                                                     AB 351

                                                                    Page  2

          6)Requires all state agencies to apply the existing streamlined  
            SB state contracting option to contracts under $100,000 and  
            construction contracts under $120,000.  

          7)Requires DGS to collaborate with the OSBA to provide outreach  
            and actively promote SB certification.

          8)Clarifies that the requirements of this bill apply to the  
            University of California, the California State University, and  
            the California Community Colleges when contracting with state  

          EXISTING LAW:  

          1)Designates the DGS as the lead purchasing and procurement  
            agency for the State of California tasked with administering  
            the SB certification programs. 

          2)Requires, through executive order, various state contracts to  
            have annual statewide participation goals of at least 25%.

          3)Establishes the streamlined SB state contracting option, which  
            allows state agencies to award a contract valued between  
            $5,000 and $250,000 to a SB if quotes are obtained from two or  
            more certified firms.

          FISCAL EFFECT:  Unknown

          COMMENTS:  According to the author, this bill would "codify a  
          statewide procurement goal of 25% SB participation in statute,  
          only to be removed by the Legislature, and in doing so, send a  
          strong message to potential investors that the state supports  
          small businesses."  


                                                                     AB 351

                                                                    Page  3

          According to the consolidated annual report on procurement for  
          fiscal year (FY) 2013-14 by DGS, the state entered into nearly  
          $9 billion in contracts, with approximately 26% awarded to small  
          businesses.  The report also indicates statewide departments  
          achieved nearly 26% percent SB participation in contracts.   
          However, in the last 15 report periods, the state has only met  
          the 25% SB participation goal five times.

          To provide more consistency in achieving the SB procurement  
          participation goal, this bill places the goal in statute;  
          charges DGS with regularly monitoring agencies' progress in  
          meeting the goal; and, requires mitigation plans from poor  
          performing departments.  
          PRIOR LEGISLATION:  AB 1734 (Jones-Sawyer) of 2014 was  
          substantially similar to this bill and would have additionally  
          required an annual phased-in goal of 5% participation by  
          disabled veteran business enterprises in state contracting.  AB  
          1734 was held in the Assembly Appropriations Committee.  

          DOUBLE REFERRAL:  This measure was previously heard in the  
          Assembly Jobs, Economic Development and the Economy Committee on  
          April 21, 2015, with a vote of 8-0.



          California Black Chamber of Commerce (sponsor)


                                                                     AB 351

                                                                    Page  4

          California Asian Pacific Chamber of Commerce


          None on file

          Analysis Prepared by:Cassie Royce / A. & A.R. / (916) 319-3600