BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2030


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          Date of Hearing:  May 4, 2016


                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT


                           Susan Talamantes Eggman, Chair


          AB 2030  
          (Mullin) - As Amended April 26, 2016


          SUBJECT:  Transportation districts:  contracts.


          SUMMARY:  Changes specified bidding requirements for the San  
          Francisco Bay Area Rapid Transit District and the San Mateo  
          County Transit District.  Specifically, this bill:  


          1)Increases the bid threshold, from $100,000 to $150,000, above  
            which the San Francisco Bay Area Rapid Transit District (BART)  
            and the San Mateo County Transit District (SamTrans) must  
            award contracts for supplies, equipment and materials to the  
            lowest responsible bidder or to the bidder who submits a  
            proposal that provides best value, as defined.


          2)Increases, from $100,000 to $150,000, the maximum procurement  
            amount for supplies, equipment or materials under which BART  
            and SamTrans must obtain at least three quotations that permit  
            prices and terms to be compared.


          3)Increases, from $2,000 to $5,000, the minimum procurement  
            amount for construction and 










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          for supplies, equipment or materials above which BART must  
            obtain at least three quotations that permit prices and terms  
            to be compared.
          4)Increases, from $2,000 to $5,000, the minimum procurement  
            amount for supplies, equipment or materials above which  
            SamTrans must obtain at least three quotations that permit  
            prices and terms to be compared.


          5)Requires the $5,000 amount for SamTrans, specified in 4),  
            above, to be adjusted on 


          January 1, 2018, to reflect the percentage change since January  
            1, 2016, in the California Consumer Price Index (California  
            CPI), and further requires that amount to be adjusted each  
            January 1 thereafter to reflect the annual percentage change  
            in the California CPI.
          EXISTING LAW:  


          1)Requires BART and SamTrans to let contracts for the purchase  
            of supplies, equipment, and materials to the lowest  
            responsible bidder or to the bidder who submits a proposal  
            that provides best value, as defined, if the amount of the  
            contract exceeds $100,000.


          2)Requires BART to obtain at least three quotations that permit  
            prices and terms to be compared whenever the expected  
            procurement required exceeds $2,500 and does not exceed  
            $10,000 for the construction of facilities and works or does  
            not exceed $100,000 for supplies, equipment, or materials.


          3)Requires SamTrans to obtain at least three quotations that  
            permit prices and terms to be compared whenever the expected  
            procurement required exceeds $2,500 and does not exceed  
            $100,000 for supplies, equipment, or materials.








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          FISCAL EFFECT:  None





          COMMENTS:  


          1)Bill Summary.  This bill makes several changes to the  
            procurement requirements for BART and SamTrans.  For both BART  
            and SamTrans, this bill increases the formal bid threshold  
            from $100,000 to $150,000 above which both agencies must award  
            contracts for the purchase of supplies, equipment and  
            materials to the lowest bidder or the bidder that provides the  
            best value. 
            For BART, this bill also increases the minimum dollar amount,  
            from $2,500 to $5,000, above which BART must obtain three  
            quotes for construction of facilities and works for the  
            purchase of supplies, equipment or materials.  It also  
            increases the maximum amount allowed under this relaxed  
            procurement method for the purchase of supplies, equipment or  
            materials, from $100,000 to $150,000.


            For SamTrans, this bill increases the minimum dollar amount,  
            from $2,500 to $5,000, above which SamTrans must obtain three  
            quotes for the purchase of supplies, equipment or materials,  
            and increases the maximum amount allowed under this  
            procurement method from $100,000 to $150,000 (there is no  
            construction component in this provision for SamTrans).  The  
            bill also requires the $5,000 minimum for SamTrans to be  
            adjusted for inflation using the California CPI.  This  
            adjustment must be made on January 1, 2018, to reflect the  
            change since January 1, 2016, and annually thereafter to  
            reflect the annual change in the California CPI.









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            This bill is sponsored by the author.


          2)Author's Statement.  According to the author, "This bill  
            adjusts SamTrans' and BART's procurement thresholds as  
            follows: 1) Raises the limit under which the agencies can  
            purchase supplies, equipment and materials via the 'best  
            value' process from $100,000 to $150,000; and 2) Increases the  
            small purchase threshold from $2,500 to $5,000, allowing the  
            agencies additional flexibility to meet their purchasing needs  
            more quickly, particularly for locally-funded purchases?AB  
            2030 increases (these) purchasing thresholds?to allow  
            relatively low-cost procurements to be processed in a more  
            efficient and expeditious manner while still complying with  
            Federal Transit Administration (FTA) requirements."



          3)Background.  Current law requires both BART and SamTrans to  
            issue contracts for the purchase of supplies, equipment, and  
            materials to the lowest responsible bidder or to the bidder  
            who submits a proposal that provides best value, as defined,  
            if the amount of the contract exceeds $100,000.
            A less formal procurement method is allowed for smaller  
            contracts.  For construction of facilities and works that is  
            expected to cost between $2,500 and $10,000, and for the  
            purchase of supplies, equipment or materials that is expected  
            to cost between $2,500 and $100,000, BART must obtain at least  
            three quotes that permit prices and terms to be compared.   
            SamTrans must follow the same rules when purchasing supplies,  
            equipment or materials.


            According to the author, "Effective approximately one year  
            ago, the federal government raised the 'Simplified Acquisition  
            Threshold' to allow federal grantees like BART and SamTrans to  
            make purchases using federal grant funds via informal  
            procurement methods for services, supplies, and other property  








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            of up to $150,000, with even less stringent requirements for  
            'micro-purchases' of under $3,000."


            The Simplified Acquisition Threshold (SAT) is set by the  
            federal government for its Simplified Acquisition Procedures  
            (SAP), which are designed to help federal agencies meet their  
            small business procurement targets.  SAPs employ streamlined  
            contracting procedures for contracts valued between $2,500 and  
            $150,000, such as allowing quotations (including oral  
            quotations) instead of requiring full-blown bids, requiring  
            less stringent reporting, and setting simpler rules for  
            subcontracting.  Federal acquisition thresholds are adjusted  
            every five years and published in the Federal Register.  The  
            latest adjustment in 2015 raised the micro-purchase threshold  
            to $3,500.  The SAT ceiling remained the same at $150,000.


          4)Policy Considerations.  The Committee may wish to consider the  
            following:



             a)   Conformity to Federal Limits.  The author has pointed to  
               the SAT as justification for changing the procurement  
               limits in this bill.  The minimum SAT for "micro purchases"  
               is $3,500.  This bill adjusts a similar minimum for BART  
               and SamTrans to $5,000.  The Committee may wish to consider  
               whether the stated intent of this bill - to conform to the  
               federal SAT - has been accomplished with the bill's  
               proposed increase to $5,000.



             b)   Legislative Oversight.  This bill requires an automatic  
               adjustment for inflation of the increased $5,000 minimum  
               dollar amount above which SamTrans must obtain at least  
               three quotes when contracting for supplies, equipment or  
               materials.  This would effectively eliminate legislative  








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               oversight of this authority.  The Committee may wish to  
               consider whether the Legislature should relinquish this  
               oversight function. 



          5)Arguments in Support.  None on file.



          6)Arguments in Opposition.  None on file.
          REGISTERED SUPPORT / OPPOSITION:




          Support




          None on file




          Opposition


          None on file




          Analysis Prepared by:Angela Mapp / L. GOV. / (916) 319-3958












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