BILL ANALYSIS Ó SENATE COMMITTEE ON TRANSPORTATION AND HOUSING Senator Jim Beall, Chair 2015 - 2016 Regular Bill No: AB 2030 Hearing Date: 6/21/16 ----------------------------------------------------------------- |Author: |Mullin | |----------+------------------------------------------------------| |Version: |6/1/2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Manny Leon | |: | | ----------------------------------------------------------------- SUBJECT: Transportation districts: contracts DIGEST: This bill changes certain bidding requirements for the San Francisco Bay Area Rapid Transit District (BART) and the San Mateo County Transit District (SamTrans), as specified. ANALYSIS: 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. AB 2030 (Mullin) Page 2 of ? This bill: 1)Increases the bid threshold, from $100,000 to $150,000, above which BART and 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 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. COMMENTS: 1)Purpose. According to the author, "This bill adjusts SamTrans and BART's procurement thresholds as follows: a) Raises the limit under which the agencies can purchase supplies, equipment, and materials via the 'best value' process from $100,000 to $150,000 b) 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 purchase. AB 2030 increases (these) purchasing threshold, 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." AB 2030 (Mullin) Page 3 of ? 1)What are existing practices? 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 procurement rules when purchasing supplies, equipment, or materials. 2)Federal regulations: 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. 3)Rising costs: This bill proposes to raise the micro-purchase threshold to $5,000, which is $1,500 above the micro-purchase threshold specified in federal regulations. Proponents argue that with the rising cost of various supplies and materials, the $3,500 threshold would still require transit agencies to obtain at least three bids for routine purchases such as printing/mailing orders (up to $4,700), ergonomic workstations ($4,700), or a remanufactured transmission ($3,700). Raising the micro-purchase threshold to $5,000 will provide BART and SAMTRANS with the flexibility to purchase routine items without having to obtain additional bids and also create a buffer as costs for materials and supplies continue to rise. AB 2030 (Mullin) Page 4 of ? FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No Assembly Votes: Floor: 73-1 L. Gov: 8-0 POSITIONS: (Communicated to the committee before noon on Wednesday, June 15, 2016.) SUPPORT: Caltrain (co-sponsor) San Mateo County Transit District (co-sponsor) San Mateo County Transportation Authority (co-sponsor) San Francisco Bay Area Transit District OPPOSITION: None received -- END --