BILL ANALYSIS Ó AB 558 Page 1 Date of Hearing: April 21, 2015 ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION Mike Gatto, Chair AB 558 (Low) - As Amended March 26, 2015 SUBJECT: Public contracts: state contracts: information technology goods and services SUMMARY: Requires the Department of Technology (CalTech) to develop procedures to make large-scale information technology (IT) procurements more efficient by requiring electronic submission of bids and other documents whenever possible. Specifically, this bill: 1)Requires CalTech, in developing procedures to make large-scale IT acquisition more efficient, to require the use of electronic means for the submission of bids and proposals, whenever possible. 2)Requires sealed cost proposals, which are submitted for certain IT acquisitions, to be submitted as electronic cost proposals, whenever possible. 3)Requires cost proposals that are submitted electronically to be sufficiently secured electronically. AB 558 Page 2 4)Requires the Department of General Services (DGS) and CalTech to include in the standard methods for submitting and receiving requests for proposals (RFPs) for IT procurement the use of electronic formats for submission and receipt of bid proposals, whenever possible. 5)Requires the rules and requirements governing a given IT procurement to be communicated electronically, whenever possible, to all vendors who have expressed an intent to bid on a project and requires those rules and requirements to be posted on the DGS and CalTech website, whenever possible. EXISTING LAW: 1)Authorizes state and local agencies to enter into contracts by way of electronic transmission, including the issuance of solicitation documents and the receipt of responses thereto. (Public Contract Code (PCC) Section 1600) 2)Allows state and local agencies to accept bids on public works or other contracts over the Internet (PCC Section 1601) 3)Allows DGS to use a competitive online-bidding procedure known as "reverse auctioning" for the acquisition of goods, services and IT. (PCC 10290) 4)Requires CalTech to work with the private sector and state agencies to develop procedures that streamline the IT procurement process for large-scale systems integration projects (PCC 12102.2) 5)Requires cost proposals for solicitations for acquisitions based on evaluation criteria other than cost alone to be submitted as sealed cost proposals, which are held under "lock AB 558 Page 3 and key" until the time the cost proposals are opened. (PCC 12102.2) 6)Requires the State Contracting Manual to set forth procedures and methods to be used by the state when seeking bids for the acquisition of IT and requires the DGS and CalTech to develop, implement, and maintain standardized methods for the development of all IT RFPs (PCC 12104) 7)Requires DGS or CalTech to communicate in writing the rules and requirements governing IT procurement to all vendors who have expressed intent to bid on a project and, in addition, requires those rules and requirements to be posted in a public location. (PCC 12104.5) FISCAL EFFECT: Unknown COMMENTS: 1)Purpose of this bill . This bill intends to streamline state IT procurement by allowing state agencies to use electronic means whenever possible for the submission and receipt of bids and cost proposals and requires DGS and CalTech to post certain project documents on the Internet, whenever possible. AB 558 is sponsored by TechAmerica. 2)Author's statement . According to the author, "In the late 1970s, the Legislature passed the most innovative and groundbreaking IT procurement policies in the nation. However, the original statute was not written in a way to accommodate future technological advancements and the capabilities of modern IT systems. These policies are critical to the state's IT procurements and require frequent amendments to allow the state to have the ability to AB 558 Page 4 efficiently acquire IT good and services." "Currently, the State is in the process of launching the FI$Cal System, one of the most significant administrative technology upgrades in decades. The FI$Cal System will be implementing the State's first ever electronic procurement system in December 2015 which will automate the current paper based process currently in use by State Departments. "The current laws governing IT procurement are outdated, as there are several statutory requirements for the processing of paper documents and the posting of notices in public places. These burdensome practices require procurement professionals to process and post paper documents outside of any automated systems and require extensive physical storage for all paper documents." 3)The benefits of going digital . In 1993, the Legislature authorized state and local agencies to enter into contracts electronically, and in 2002 the Legislature first authorized state and local agencies to accept bids for public works and other projects via the Internet. Around the same time, then-Governor Gray Davis issued Executive Order D-17-00 establishing a Director of E-Government within the Governor's office responsible for working with the then-Department of Information Technology (DOIT) and state agencies to develop plans to move many state services from paper-based systems to electronic systems using the Internet to transmit documents. An E-Government Business Advisory Council composed of representatives from the state's IT firms advised the state on e-government architecture and policy during the state's transition from paper-based services to electronic and AB 558 Page 5 Internet-based services. During the 15 years that followed, the Legislature changed state laws to permit the electronic submission of documents to state agencies, including business filings, income tax returns, professional license renewals, driver or vehicle license renewals, campaign finance reports, voter registration applications and more. However for complex IT projects, bidders are still be required to submit documents on paper to state agencies. For example, according to the bill's sponsor TechAmerica, for state projects such as the California Medicaid Management Information System (CA-MMIS), vendors were required to submit Bid Proposal Responses containing so much paper it had to be delivered on pallets, which the state then had to store and destroy at a later date. If the IT procurement had been structured to allow for the submission of electronic proposals, then the state and the prospective vendors would have saved paper, staff time, and money. This bill requires CalTech and DGS to streamline the state's large IT procurement projects by establishing procedures that permit the electronic submission and receipt of key documents, such as RFPs and cost proposals. 4)Public college systems and some agencies exempted . The University of California, California State University, and the California Community College systems, would not be subject to this bill's requirements, because IT procurement at the public college systems is governed by policies and procedures developed by those systems individually. AB 558 Page 6 5)Arguments in support . TechAmerica, the bill's sponsor, states in support of AB 558, "Procurement is a critical element of IT Project Lifecycle and updating our State's Public Contract Codes to embrace future technology capabilities will not only bring value to the State of California but will help ensure more competitive procurements." Natoma Technologies states, "There are still several statutory requirements for submitting paper documents and posting notices in public places. This bill would allow for electronic bid submissions for IT procurements by cleaning up statutory requirements that currently require paper public documents, and will allow using electronic means whenever possible." 6)Prior Legislation . AB 565 (Polanco), Chapter 1175, Statutes of 1993, authorized cities, counties and state agencies to enter into, and may payment on, contracts by way of electronic submission. SB 1687 (Margett), Chapter 398, Statutes of 2002, authorized public entities to adopt methods and procedures to receive bids on public works or other contracts over the Internet. AB 722 (Matthews), Chapter 266, Statutes of 2003, authorized DGS to use a competitive online-bidding procedure known as "reverse auctioning" for the acquisition of goods, services and IT. 7)Double-referral . This bill was double-referred to the Assembly Accountability and Administrative Review Committee, where it was heard on April 15, 2015, and passed out on a 9-0 vote. AB 558 Page 7 REGISTERED SUPPORT / OPPOSITION: Support TechAmerica (sponsor) Natoma Technologies Opposition None received. Analysis Prepared by:Jennie Bretschneider / P. & C.P. / (916) 319-2200 AB 558 Page 8