BILL ANALYSIS Ó
AB 351
Page 1
Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
351 (Jones-Sawyer) - As Introduced February 17, 2015
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|Policy |Jobs, Economic Development, |Vote:|8 - 0 |
|Committee: |and the Economy | | |
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| |Accountability and | |9 - 0 |
| |Administrative Review | | |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires all state agencies, departments, boards, and
commissions to establish and achieve an annual goal of 25% small
business participation in state procurements and contracts.
AB 351
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Specifically, this bill:
1)Requires heads of agencies, departments, boards and
commissions to ensure the 25% annual goal is met and further
requires them report to the Department of General Services
(DGS) on their agency's progress.
2)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 the fiscal year.
3)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.
4)Directs DGS and the OSBA to assist agencies in implementing
their corrective action plans to the extent feasible.
5)Requires all state agencies to apply the existing streamlined
small business state contracting option to contracts under
$100,000 and construction contracts under $120,000.
6)Requires DGS to collaborate with the OSBA to provide outreach
and actively promote small business certification.
7)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.
FISCAL EFFECT:
1)Ongoing General Fund administrative costs to the DGS of
approximately $292,000 for program staff to train departments,
review reports and provide technical assistance plus
approximately $10,000 for printing materials and webcasting.
AB 351
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The DGS currently receives approximately 180 reports from
state agencies, and would receive approximately 73 additional
reports with UC and community college districts reporting.
2)Unknown GF and SF costs, in excess of $500,000, for the
workload associated with departments, including the California
State University system, the University of California system,
and community colleges, to prepare annual reports that include
statistics regarding small business participation and
preparing the required corrective action and implementation
plans.
3)To the extent the 25% small business requirement increases the
number of state contracts awarded to other than the low
bidder, state contracting costs will increase. Given the
thousands of state contracts, the cost impact of the bill
could be in the tens of millions of dollars each year.
COMMENTS:
1)Purpose. Governors Arnold Schwarzenegger and Gray Davis issued
executive orders calling for all state agencies to pursue an
annual 25% small business participation level in state
contracting. According to the author, codifying the executive
order reinforces the state's support in small businesses.
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 small business
participation in contracts. However, in the last 15 report
periods, the state has met the 25% small business
participation goal five times.
To provide more consistency in achieving the small business
procurement participation goal, this bill places the goal in
statute; charges DGS with regularly monitoring agencies'
AB 351
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progress in meeting the goal; and, requires mitigation plans
from poor performing departments.
2)Prior legislation. AB 1734 (Jones-Sawyer) of 2014, similar to
this bill, required each state agency to establish and achieve
a goal of 25 % small business (SB) participation and an annual
phased-in goal of 5 % disabled veteran business enterprises
(DVBE) participation in state contracting. This bill was held
on Suspense in this committee.
AB 550 (Brown) of 2013, similar to this bill, codified the
executive order establishing the 25% small business
participation goal. The bill also made changes to state
procurement procedures for small business, including
microbusiness and DVBE participation rates. This bill was
held on Suspense in this committee.
Analysis Prepared by:Misty Feusahrens / APPR. / (916)
319-2081