Amended in Assembly May 4, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1125

Introduced by Assembly Member Weber

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(Coauthor: Assembly Member Brown)

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February 27, 2015

An act to amend begin delete Section end delete begin insert Sections 4535.2 and end insert 14838 of the Government Code, begin insert and to amend Section 42893 of the Public Resources Code, end insert relating to public contracts.

LEGISLATIVE COUNSEL’S DIGEST

AB 1125, as amended, Weber. State agency contracts: small business.

Existing law, the Small Business Procurement and Contract Act, provides for various programs to encourage the participation of small businesses, as certified by the Department of General Services, in state agency contracts, including a microbusiness and a disabled veteran business enterprise. Existing law requires directors of state agencies, in awarding prescribed contracts, to provide a 5% preference to small businesses and microbusinesses, and a preference of up to 5% to a nonsmall business that provides for small business or microbusiness subcontractor participation, not to exceed prescribed amounts. Existing law provides, in solicitations where an award is made to the lowest responsible bidder, that the preferences shall not exceed $50,000 for any bid and that the combined cost of preferences granted shall not exceed $100,000. Existing law provides that, in bids in which the state has reserved the right to make multiple awards, the $50,000 maximum preference cost shall be applied.

This bill would provide, in solicitations where an award is made to the lowest responsible bidder, that the preference to small business and microbusiness be 5% of the lowest responsible nonsmall business bidder meeting specifications and that the preference to nonsmall business bidders that provide for small business or microbusiness subcontractor participation be up to a maximum of 5% of the lowest responsible nonsmall business bidder. This bill also would provide that the preference not exceed $100,000 for any contract award and that the combined cost of preferences granted not exceed $150,000. This bill would require that the $100,000 maximum preference cost be applied in multiple contract awards.

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Existing law, the Target Area Contract Preference Act, requires, if the contract is for goods or services in excess of $100,000, except as specified, the state to award preferences to California-based companies submitting bids or proposals for state contracts who demonstrate and certify under penalty of perjury that of the total labor hours required to manufacture the goods and perform the contract, at least a specified percentage of the hours will be accomplished at an identified worksite or worksites located in a distressed area by persons with a high risk of unemployment. Existing law also provides that the maximum preference and incentive a bidder may be awarded pursuant to this act is $50,000 for any bid, and $100,000 for the combined cost of these preferences and incentives and those provided pursuant to any other provision of law.

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This bill would instead provide, if the bid includes preferences or incentives provided under the Target Area Contract Preference Act and the Small Business Procurement and Contract Act, that the maximum preference and incentive a bidder may be awarded pursuant to these provisions shall not exceed $150,000 for the combined cost of these preferences and incentives and those provided pursuant to any other provision of law.

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Existing law, the California Tire Recycling Act, provides, on state purchases of products that are made of, or contains components that can be derived from the recycling of used tires, to suppliers of recycled tire products, a bid preference of 5% of the lowest bid or price quoted by suppliers offering similar products made from nonrecycled components. That law limits the preference to $100,000 each year, or $50,000 if the preference exceeding that amount would preclude an award to a small business that offers a similar product made of nonrecycled tire components and is qualified in accordance with the Small Business Procurement and Contract Act.

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This bill would provide, notwithstanding those limitations, if the bid includes the preference authorized in the California Tire Recycling Act and the Small Business Procurement and Contract Act, the combined cost of preferences and incentives granted pursuant to California Tire Recycling Act and any other law is not to exceed $150,000.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 4535.2 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

4535.2.  

(a)  begin insert (1) end insert begin insert   end insert The maximum preference and incentive a
bidder may be awarded pursuant to this chapter and any other
provision of law shall be 15 percent. However, in no case shall the
maximum preference and incentive cost under this chapter exceed
fifty thousand dollars ($50,000) for any bid, nor shall the combined
cost of preferences and incentives granted pursuant to this chapter
and any other provision of law exceed one hundred thousand
dollars($100,000). In those cases where the 15-percent cumulated
preference and incentive cost would exceed the one hundred
thousand dollar ($100,000) maximum preference and incentive
cost limit, the one hundred thousand dollar ($100,000) maximum
preference and incentive cost limit shall apply.

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(2) Notwithstanding the one-hundred-thousand-dollar
($100,000) limitation specified in paragraph (1), if the bid includes
preferences or incentives under this chapter and Section 14838,
the combined cost of preferences and incentives granted pursuant
to this chapter and any other law shall not exceed one hundred
fifty thousand dollars ($150,000).

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(b) Notwithstanding the provisions of this chapter, small
business bidders qualified in accordance with Section 14838 shall
have precedence over nonsmall business bidders in that the
application of any bidder preference for which nonsmall business
bidders may be eligible, including the preference contained in this
chapter, shall not result in the denial of the award to a small
business bidder. This subdivision shall apply to those cases where
the small business bidder is the lowest responsible bidder, as well
as to those cases where the small business bidder is eligible for
award as the result of application of the 5-percent small business
bidder preference and incentive.

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begin insert SEC. 2. end insert   

Section 14838 of the Government Code is amended
to read:

14838.  

In order to facilitate the participation of small business,
including microbusiness, in the provision of goods, information
technology, and services to the state, and in the construction
(including alteration, demolition, repair, or improvement) of state
facilities, the directors of the department and other state agencies
that enter those contracts, each within their respective areas of
responsibility, shall do all of the following:

(a) Establish goals, consistent with those established by the
Office of Small Business Certification and Resources, for the extent
of participation of small businesses, including microbusinesses,
in the provision of goods, information technology, and services to
the state, and in the construction of state facilities.

(b) Provide for small business preference, or nonsmall business
preference for bidders that provide for small business and
microbusiness subcontractor participation, in the award of contracts
for goods, information technology, services, and construction, as
follows:

(1) In solicitations where an award is to be made to the lowest
responsible bidder meeting specifications, the preference to small
business and microbusiness shall be 5 percent of the lowest
responsible nonsmall business bidder meeting specifications. The
preference to nonsmall business bidders that provide for small
business or microbusiness subcontractor participation shall be, up
to a maximum of 5 percent of the lowest responsible nonsmall
business bidder meeting specifications, determined according to
rules and regulations established by the Department of General
Services.

(2) In solicitations where an award is to be made to the highest
scored bidder based on evaluation factors in addition to price, the
preference to small business or microbusiness shall be 5 percent
of the highest responsible bidder’s total score. The preference to
nonsmall business bidders that provide for small business or
microbusiness subcontractor participation shall be up to a
maximum 5 percent of the highest responsible bidder’s total score,
determined according to rules and regulations established by the
Department of General Services.

(3) The preferences under paragraphs (1) and (2) shall not be
awarded to a noncompliant bidder and shall not be used to achieve
any applicable minimum requirements.

(4) The preference under paragraph (1) shall not exceed one
hundred thousand dollars ($100,000) for any contract award, and
the combined cost of preferences granted pursuant to paragraph
(1) and any other provision of law shall not exceed one hundred
fifty thousand dollars ($150,000). For contract awards in which
the state has reserved the right to make multiple awards, this one
hundred thousand dollar ($100,000) maximum preference cost
shall be applied, to the extent possible, so as to maximize the dollar
participation of small businesses, including microbusinesses, in
the contract award.

(c) Give special consideration to small businesses and
microbusinesses by both:

(1) Reducing the experience required.

(2) Reducing the level of inventory normally required.

(d) Give special assistance to small businesses and
microbusinesses in the preparation and submission of the
information requested in Section 14310.

(e) Under the authorization granted in Section 10163 of the
Public Contract Code, make awards, whenever feasible, to small
business and microbusiness bidders for each project bid upon
within their prequalification rating. This may be accomplished by
dividing major projects into subprojects so as to allow a small
business or microbusiness contractor to qualify to bid on these
subprojects.

(f) Small business and microbusiness bidders qualified in
accordance with this chapter shall have precedence over nonsmall
business bidders in that the application of a bidder preference for
which nonsmall business bidders may be eligible under this section
or any other provision of law shall not result in the denial of the
award to a small business or microbusiness bidder. In the event of
a precise tie between the low responsible bid of a bidder meeting
specifications of a small business or microbusiness, and the low
responsible bid of a bidder meeting the specifications of a disabled
veteran-owned small business or microbusiness, the contract shall
be awarded to the disabled veteran-owned small business or
microbusiness. This provision applies if the small business or
microbusiness bidder is the lowest responsible bidder, as well as
if the small business or microbusiness bidder is eligible for award
as the result of application of the small business and microbusiness
bidder preference granted by subdivision (b).

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begin insert SEC. 3. end insert   

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begin insert Section 42893 of the end insert begin insert Public Resources Code end insert begin insert is
amended to read: end insert

42893.  

(a) The combined amount of preference granted
pursuant to this begin delete section end delete begin insert article end insert shall not exceed one hundred
thousand dollars ($100,000) each year.

(b) Notwithstanding Section 42892, the recycled tire product
preference shall not exceed fifty thousand dollars ($50,000) if a
preference exceeding that amount would preclude an award to a
small business that offers a similar product made of nonrecycled
tire components and is qualified in accordance with Section 14838
of the Government Code. This provision applies regardless of
whether the small business is the lowest responsible bidder or is
eligible for the contract award on the basis of application of the 5
percent small business preference.

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(c) Notwithstanding the one-hundred-thousand-dollar limitation
specified in subdivision (a) or the fifty-thousand-dollar ($50,000)
limitation specified in subdivision (b), if the bid includes the
preference authorized in Section 42891 and Section 14838 of the
Government Code, the combined cost of preferences and incentives
granted pursuant to this article and any other law shall not exceed
one hundred fifty thousand dollars ($150,000).

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