BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 2690 Hearing Date: 6/28/2016
-----------------------------------------------------------------
|Author: |Ridley-Thomas |
|----------+------------------------------------------------------|
|Version: |4/12/2016 |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Urgency: |No |Fiscal: |No |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Consultant|Manny Leon |
|: | |
-----------------------------------------------------------------
SUBJECT: Los Angeles County METROpolitan Transportation
Authority: contracting
DIGEST: This bill 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).
ANALYSIS:
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.
AB 2690 (Ridley-Thomas) Page 2 of ?
c) Require bidders to make a good faith effort, in
accordance with the criteria established in the parameters
specified 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:
a) The contract award is greater than $5,000 and less than
$250,000
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
b) Quotes are obtained from two or more SBEs or from two or
AB 2690 (Ridley-Thomas) Page 3 of ?
more DVBEs
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.
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.
8)Deletes a number of provisions related to how a bidder would
demonstrate good faith efforts to meet SBE goals.
AB 2690 (Ridley-Thomas) Page 4 of ?
COMMENTS:
1)Purpose. The author notes, "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 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 DBVE
participation, existing law does not allow LA METRO to use
goals or preferences on those contracts."
2)Background. AB 1341 (Price, Chapter 494, Statutes of 2010)
authorized METRO to facilitate contract awards to small
businesses on contracts over $100,000. AB 2440 (Lowenthal,
Chapter 703, Statutes of 2012) eliminated the $100,000
limitation on METRO's authority to facilitate contract awards
to small businesses. In facilitating SBE contracts, METRO may
provide a bid preference of 5% to the lowest responsible
bidder. METRO can also establish a subcontracting
participation goal for SBEs on certain contracts financed with
nonfederal funds and give a preference of 5% to the lowest
responsible bidders that meet that goal. METRO currently has
no authorization to facilitate contract awards to DVBEs, or to
use small business set-asides.
3)Various state and local programs. 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. Furthermore, local
transportation agencies such as the Riverside County
Transportation Commission, the Orange County Transportation
Authority, and the San Bernardino Associated Governments have
similar programs for disadvantage businesses. Ultimately,
these programs assist various types of businesses win
government contracts by "setting aside" specific government
purchases exclusively for participation by these particular
types of businesses. It is important to note that the
AB 2690 (Ridley-Thomas) Page 5 of ?
contracts are still competitive; however, the competition is
narrowed.
This bill improves METRO's efforts to contract with SBEs and
DVBEs by providing the authority to facilitate contracting
with both SBEs and DVBEs, in addition to expanding the
existing 5% bid preference for SBEs to DVBEs. Furthermore,
bidders will now be required to meet, rather than make a good
faith effort to meet, SBE and DVBE goals, which will allow
METRO to award contracts to the bidder who meets these SBE and
DVBE goals; in turn providing economic growth for these
particular industries. Lastly, this bill substantially
increases the SBE bid threshold to require METRO to obtain
three bids for projects greater than $5,000 but less than $3
million to encourage participation. In order to determine the
effectiveness of these changes to METRO's SBE and DVBE
programs, this bill additionally requires METRO to report to
the Legislature on the contracts awarded under the provisions
specified in this bill.
Assembly Votes:
Floor: 77-0
Trans: 15-0
LGov: 9-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 22, 2016.)
SUPPORT:
Los Angeles County Metropolitan Transportation Authority
(Sponsor)
Hispanic Engineers Business Corporation
Redwood Resources
T&T Public Relations
OPPOSITION:
None received
AB 2690 (Ridley-Thomas) Page 6 of ?
-- END --