BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2690|
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CONSENT
Bill No: AB 2690
Author: Ridley-Thomas (D)
Amended: 4/12/16 in Assembly
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 10-0, 6/28/16
AYES: Beall, Cannella, Allen, Bates, Gaines, Leyva, McGuire,
Mendoza, Roth, Wieckowski
NO VOTE RECORDED: Galgiani
ASSEMBLY FLOOR: 77-0, 4/25/16 - See last page for vote
SUBJECT: Los Angeles County Metropolitan Transportation
Authority: contracting
SOURCE: Los Angeles County Metropolitan Transportation
Authority
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
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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.
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, as specified.
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
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$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 specific
conditions are met.
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.
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6)Deletes a number of provisions related to how a bidder would
demonstrate good faith efforts to meet SBE goals.
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.
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
disadvantaged 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 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
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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.
Comments
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."
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified7/7/16)
Los Angeles County Metropolitan Transportation Authority
(source)
Hispanic Engineers Business Corporation
Redwood Resources
T&T Public Relations
OPPOSITION: (Verified7/7/16)
AB 2690
Page 6
None received
ASSEMBLY FLOOR: 77-0, 4/25/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper,
Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes,
McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,
Waldron, Weber, Wilk, Wood, Rendon
NO VOTE RECORDED: Chang, Olsen, Williams
Prepared by:Manny Leon / T. & H. / (916) 651-4121
7/29/16 10:43:32
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