BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 558


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          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.










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          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  








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            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  








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            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  








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            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. 









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           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.
          











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          REGISTERED SUPPORT / OPPOSITION:




          Support


          TechAmerica (sponsor)


          Natoma Technologies




          Opposition


          None received.




          Analysis Prepared by:Jennie Bretschneider / P. & C.P. / (916)  
          319-2200
















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