BILL ANALYSIS Ó AB 351 Page 1 Date of Hearing: April 29, 2015 ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW 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 funds. 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. REGISTERED SUPPORT / OPPOSITION: Support California Black Chamber of Commerce (sponsor) AB 351 Page 4 California Asian Pacific Chamber of Commerce Opposition None on file Analysis Prepared by:Cassie Royce / A. & A.R. / (916) 319-3600