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
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          |Author:   |Mullin                                                |
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          |Version:  |6/1/2016                                              |
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          |Urgency:  |No                     |Fiscal:      |No              |
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          |Consultant|Manny Leon                                            |
          |:         |                                                      |
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          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 



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