BILL ANALYSIS                                                                                                                                                                                                    



                                                                    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









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