BILL ANALYSIS Ó
AB 1218
Page 1
ASSEMBLY THIRD READING
AB
1218 (Weber)
As Amended April 23, 2015
Majority vote
-------------------------------------------------------------------
|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+---------------------+---------------------|
|Jobs |8-0 |Eduardo Garcia, Kim, | |
| | |Brough, Brown, Chau, | |
| | |Chu, Gipson, Irwin | |
| | | | |
|----------------+------+---------------------+---------------------|
|Accountability |9-0 |Salas, Lackey, | |
| | |Brough, Burke, | |
| | |Frazier, Beth | |
| | |Gaines, Irwin, | |
| | |Medina, Rodriguez | |
| | | | |
|----------------+------+---------------------+---------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, | |
AB 1218
Page 2
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
-------------------------------------------------------------------
SUMMARY: This bill harmonizes the statutory provisions of the
existing 3% goal for contracting with disabled veteran-owned
business enterprises (DVBE) and the related reporting
requirements. This bill addresses other program deficiencies, as
identified by a 2014 audit of the DVBE Program. Specifically,
this bill:
1)Modifies the existing DVBE incentive program to provide for a
higher incentive when the bid is submitted by: a DVBE prime
contractor; a DVBE prime or subcontractor who employs a
workforce that is comprised of more than 50% veterans; or a DVBE
prime or subcontractor who has not previously participated in a
state contract.
2)Requires the California Department of Veterans Affairs (CalVet)
to establish a system for tracking the effectiveness of its
efforts to promote the DVBE program and maintain complete
records of its promotional events, as specified.
3)Requires departments to retain DVBE payment records for at least
five years and establish review procedures to ensure the
accuracy and completeness of the records.
4)Expands the type of information the Department of General
Services (DGS) is required to report on DVBE contracting
activity to include the dollar amount of state funds that were
actually paid to DVBEs, the number of DVBEs that served as prime
contractors, and the number of DVBE's who served as
AB 1218
Page 3
subcontractors during the report period.
5)Directs DGS to establish guidelines for reporting multiyear
contracts.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1)Ongoing General Fund costs of approximately $430,000 for DGS
workload related to reporting requirements for awarding
departments. DGS anticipates at least two staff would be needed
to enter, analyze, and evaluate the information DGS receives.
Further, DGS indicates they may need to contract for the design
of an information technology (IT) solution to analyze the data.
While DGS would need to conduct a formal analysis, it is not
unlikely a data system would result in costs of approximately $1
million to $2 million. Absent an IT system, this information
would have to be tracked manually on a spreadsheet and would
result in increased staffing costs.
2)Minor/absorbable costs for DGS to collect the amounts awarded
and paid to DVBE prime contractors and subcontractors, and to
engage in the rulemaking process.
COMMENTS: This bill implements changes to the DVBE Program in
response to a 2014 State Auditor Report which found, among other
things, that DVBE participation was limited to a fairly small
segment of the certified DVBE contractors, compliance data was
potentially misleading, and awarding departments failed to
maintain sufficient records on contracts involving DVBEs to allow
for effective oversight of the program.
Concerns with DVBE Program: While DVBE participation rates are
AB 1218
Page 4
generally up, programmatic challenges continue to plague the
program. A February 2014 State Audit found the following:
1)The objective of the program "to increase DVBE participation in
state procurement," is not appropriately being measured through
the current reporting system. The system measurers the award
value and not the actual amount DVBEs' receive.
2)Only a small percentage of certified DVBEs serve as prime
contractors. As an example, only 19% of certified DVBEs served
as primes and, of those, 30 firms received 83% funding.
3)There is inadequate documentation by state contracting agencies
on DVBE participation.
4)Reporting methodologies differ by state agencies on DVBE
participation.
5)DGS has inadequate control over the state's procurement vendor,
Bidsync.
6)CalVet needs to take a more active role in working with state
agencies and tracking outreach activities.
Based on these findings, the State Auditor recommended key actions
for the Legislature, DGS, and CalVet. These recommendations
focused on better and more consistent reporting including:
verification of DVBE status before finalizing the contract,
increasing the number of DVBEs that participate in state
contracting, better management by the state vendor, and a
heightened role and accountability for CalVet. Implementing
legislation, SB 839 (Correa) of 2014 was held in Senate
AB 1218
Page 5
Appropriations Committee and AB 1734 (Jones-Sawyer) of 2014 was
held in Assembly Appropriations Committee.
In January 2015, the State Auditor again highlighted the
deficiencies in the program and encouraged the Legislature to take
action. This bill addresses concerns identified in the 2014
audit, improves program accountability, and requires DGS and state
awarding agencies to take actions to better meet the important
mission of the DVBE program.
The Assembly Jobs, Economic Development and The Economy Committee
analysis includes additional information on the Small Business
Procurement and Contract Act, current DVBE Program activity, and
related legislation.
Analysis Prepared by: Toni Symonds / J.,
E.D., & E. / (916) 319-2090 FN: 0000610