BILL ANALYSIS Ó
AB 1445
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Rudy Salas, Chair
AB 1445
(Brown) - As Introduced February 27, 2015
SUBJECT: Public contracts: small business contracts
SUMMARY: Increases the amount for which a state agency can
directly contract with a certified small business (SB) or a
disabled veteran business enterprise (DVBE) from $250,000 to
$500,000.
EXISTING LAW:
1)Designates the Department of General Services (DGS) as the
lead purchasing and procurement agency for the State of
California.
2)Establishes the certified SB/DVBE option in state contracting,
which allows a state agency to award a contract for goods,
services, or information technology to a certified SB or DVBE
without complying with formal advertising and bidding
requirements if the following conditions are met:
a) The contract award is greater than $5,000 and less than
$250,000; and,
b) Quotes are obtained from two or more SBs or from two or
more DVBEs.
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FISCAL EFFECT: Unknown
COMMENTS: Under current law, certain state contracts with SBs
and DVBEs for goods, services, or information technology can
bypass formal competitive bidding requirements. Specifically,
state agencies are allowed to contract directly with a SB or
DVBE after obtaining price quotes from at least two firms before
awarding the contract. Contracts offered under this streamlined
SB/DVBE option are currently limited to between $5,000 and
$250,000 in value. This bill increases the maximum amount to
$500,000.
According to the author, "Small businesses are the lifeblood of
California's economy. Increasing the threshold of the SB/DVBE
contracting option to $500,000 will help these businesses expand
and hire more workers as they provide valuable services to the
state." The author argues that this bill will encourage more of
these firms to compete because the informal bidding process is
less costly.
DGS reports, in fiscal year 2013-14, 11,483 contracts were
initiated using the SB/DVBE option. DGS notes that the number
of additional firms that could win contracts if the maximum
contract value under this option was raised to $500,000 is
difficult to quantify. Since formal bidding requirements do not
apply under this option, state agencies could, if they wish,
pick specific certified firms with whom they have done business
before and invite them to make offers.
PRIOR LEGISLATION:
1)SB 276 (Roth) of 2013 was substantively identical to this bill
and held in the Senate Appropriations Committee.
2)AB 550 (Brown) of 2013 would have made a number of changes to
improve state procurement practices relating to SB and DVBE
contract participation, including a provision substantively
identical to this bill. AB 550 was held in the Assembly
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Appropriations Committee.
3)AB 31 (Price), Chapter 212, Statutes of 2009, includes, among
other provisions, the increase in the maximum threshold for
contracts under the SB/DVBE option from $100,000 to the
current $250,000 limit.
REGISTERED SUPPORT / OPPOSITION:
Support
Disabled Veteran Business Alliance (sponsor)
California Black Chamber of Commerce
National Federation of Independent Business
Sacramento Metropolitan Chamber of Commerce
Opposition
None on file
Analysis Prepared by:Cassie Royce / A. & A.R. / (916) 319-3600
AB 1445
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