BILL ANALYSIS Ó
AB 2690
Page 1
Date of Hearing: April 18, 2016
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
AB 2690
(Ridley-Thomas) - As Amended April 12, 2016
SUBJECT: Los Angeles County Metropolitan Transportation
Authority: contracting
SUMMARY: Allows the Los Angeles County Metropolitan
Transportation Authority (Metro) to facilitate contract awards
with disabled veteran business enterprises (DVBEs), and makes a
number of changes to Metro's existing authority to facilitate
contract awards with small business enterprises (SBEs).
Specifically, this bill:
1)Allows Metro to facilitate contract awards with DVBEs, except
for contracts for professional services involving private
architectural, landscape architectural, engineering,
environmental, land surveying, or construction management, as
specified.
2)Replaces provisions allowing Metro to require bidders to make
a good faith effort to comply with SBE goals and requirements
prior to bid opening with provisions that require bidders to
comply with the SBE and DVBE goals and requirements prior to
bid opening.
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3)Allows Metro to award contracts to the lowest responsible
bidder meeting the SBE and DVBE goals.
4)Allows Metro to set aside work for competition among certified
SBEs and to award a contract to the lowest responsible bidder
whenever the expected expenditure required exceeds $5,000 but
is less than $3 million, as long as price quotations are
obtained by Metro from three or more certified SBEs; requires
Metro to report to the Legislature regarding contracts awarded
under this authority.
5)Requires an SBE recommended for a contract award through the
use of a set aside to be performing a commercially useful
function. An SBE shall be presumed to be performing a
commercially useful function if it performs and exercises
responsibility of at least 30% of the total cost of the
contract work with its own workforce.
6)Defines "disabled veteran business enterprise" to have the
meaning as defined in California's DVBE program pursuant to
the Military and Veterans Code.
7)Defines "goal" as used in the statutes governing Metro's
authority to facilitate contract awards with SBEs and DVBEs to
mean a numerically expressed objective that bidders are
required to achieve.
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8)Deletes a number of provisions related to how a bidder would
demonstrate good faith efforts to meet SBE goals.
EXISTING LAW:
1)Allows Metro, except as to contracts for professional services
involving private architectural, landscape architectural,
engineering, environmental, land surveying, or construction
management, to do any of the following in facilitating
contract awards to small businesses:
a) Provide for a small business preference in construction,
the construction component of a design-build team, the
procurement of goods, or the delivery of services. The
preference shall be 5% of the lowest responsible bidder
meeting specifications that provide for small business
participation;
b) Establish a subcontracting participation goal for small
businesses on contracts financed with non-federal funds and
grant a preference of 5% to the lowest responsible bidders
who meet the goal; and,
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c) Require bidders to make a good faith effort, in
accordance with the criteria established in 2), below,
prior to the time bids are opened, to comply with the goals
and requirements established by Metro relating to
participation in the contract by small businesses.
2)Sets forth parameters by which bidders can demonstrate good
faith efforts to achieve SBE goals.
3)Defines "small business enterprise" to mean a business
enterprise that is classified as a small business under United
States Small Business Administration rules and meets the
current SBE size standards found in part 121 of Title 13 of
the Code of Federal Regulations appropriate to the type of
work the enterprise seeks to perform.
4)Allows Metro to establish limitations regarding the average
annual gross receipts of a small business over the previous
three fiscal years and establish limitations regarding the
personal net worth of the owner of the small business,
exclusive of the value of the owner's personal residence.
5)Allows, pursuant to the Small Business and Procurement and
Contract Act, state agencies to award contracts for goods,
services, or information technology to a certified small
business or a DVBE without complying with formal advertising
and bidding requirements if the following conditions are met:
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a) The contract award is greater than $5,000 and less than
$250,000; and,
b) Quotes are obtained from two or more SBEs or from two or
more DVBEs.
6)Allows state agencies to award contracts for construction to a
certified small business or a 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, as specified; and,
b) Quotes are obtained from two or more SBEs or from two or
more DVBEs.
FISCAL EFFECT: Unknown, this bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS: AB 2690 is intended to allow Metro to utilize a range
of tools to further promote and facilitate increased
participation of SBEs and DVBEs in its contracting. The agency
lets between $2 billion and $5 billion in contracts annually.
The small business set-asides provided for in this bill will
allow for small business to bid as prime contractors and foster
opportunities to grow and continue to build capacity.
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According to the author, "LA Metro is the largest transportation
agency in the state, issuing approximately $2 to $5 billion in
contracts annually. Under existing law, contractors voluntarily
opt-in to the current Small Business Enterprise (SBE) preference
program. While the current SBE preference program has aided
Metro in increasing SBE participation, requiring bidders to meet
a specific SBE subcontracting goal on contracts would
substantially increase SBE participation rates. As for
Disadvantaged Veteran Business Enterprise (DBVE) participation,
existing law does not allow LA Metro to use goals or preferences
on those contracts.
"Small businesses are the engine of economic growth and job
creation in this state. Allowing LA Metro to use a range of
tools to increase opportunities for small businesses will create
multipliers in the local economy and bring opportunities to
underserved communities."
California has had a small business preference within the
state's procurement process for more than 30 years, and a DVBE
component for more than 15 years. Some cities have programs
that grant preference to local or regional small businesses.
These may be in lieu of or in addition to preferences for small
businesses in general. These current programs are governed by a
combination of state law and city charter provisions.
This bill significantly strengthens Metro's authority to
facilitate contracting with SBEs and DVBEs, in addition to
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expanding the existing 5% bid preference for SBEs to DVBEs.
Bidders will now be required to meet (rather than make a good
faith effort to meet) SBE and DVBE goals and these goals will
now carry a numerically expressed objective that bidders must
achieve. In awarding contracts to the lowest responsible
bidder, Metro will now be allowed to award the contract to the
lowest responsible bidder who meets the SBE and DVBE goals.
Metro will also be able to set aside contracts for competition
by certified SBEs, as long as Metro obtains quotes from three or
more certified SBEs. These SBEs must perform and exercise
responsibility for at least 30% of the total cost of the
contract work with their own workforce.
Double referral. This bill passed out of the Assembly Local
Government Committee on April 6, 2016, on a vote of 9-0.
Previous legislation: AB 2440 (Lowenthal), Chapter 703,
Statutes of 2012, eliminated the $100,000 limitation on Metro's
authority to facilitate contract awards to small businesses.
AB 1341 (Price), Chapter 494, Statutes of 2010, authorized Metro
to facilitate contract awards to small businesses on contracts
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over $100,000.
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REGISTERED SUPPORT / OPPOSITION:
Support
Los Angeles County Metropolitan Transportation Authority
(Sponsor)
Opposition
None on file
Analysis Prepared by:Janet Dawson / TRANS. / (916) 319-2093