California Legislature—2015–16 Regular Session

Assembly BillNo. 2905


Introduced by Committee on Jobs, Economic Development, and the Economy (Assembly Members Eduardo Garcia (Chair), Kim (Vice Chair), Brown, Chu, Gipson, and Mathis)

March 7, 2016


An act to amend Section 14838 of the Government Code, and to amend Section 10111 of the Public Contract Code, relating to public contracting.

LEGISLATIVE COUNSEL’S DIGEST

AB 2905, as introduced, Committee on Jobs, Economic Development, and the Economy. Public contracting: small business goal.

Existing law requires the Director of the Department of General Services and the directors of other state agencies to establish goals for the participation of small businesses, including microbusinesses, in the provision of goods, information technology, and services to the state, and in the construction of state facilities.

This bill would state the intent of the Legislature to set and implement a 25% small business participation goal for state procurement and contracting.

Existing law requires each state agency that was awarded any contract financed with the proceeds of the infrastructure-related bond acts of 2006 in the previous fiscal year to report to the Director of General Services statistics comparing the small business and microbusiness participation dollars for contracts funded by these bonds to the total contract dollars for contracts funded by the bonds.

This bill would require that the goals established by the agency director for the participation of small businesses, as described above, be reported to the director in that report.

Existing law requires the department to make available a report on contracting that contains information on the level of participation by small businesses in state contracting.

The bill would also require the goals established by the director for the participation of small businesses, as described above, to be included in that report. The bill would also require that, to the extent feasible, beginning in 2018, that specified information in the report about the participation of small businesses be provided by prime contractor and subcontractor, separately. The bill would define subcontractor and prime contractor for purposes of these provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

(a) The Legislature finds and declares all of the
2following:

3(1) California’s dominance in many economic areas is based,
4in part, on the significant role small businesses play in the state’s
5$2.3 trillion economy.

6(2) Business owners with no employees make up the single
7largest component of businesses in California, 2.8 million out of
8an estimated 3.5 million businesses in 2010.

9(3) Nearly 90 percent of all businesses with employees have
10fewer than 20 employees, employing 37 percent of all workers in
112012.

12(4) Research by the United States Census Bureau and the Ewing
13Marion Kauffman Foundation confirm that job growth is greater
14among businesses with fewer than 20 employees.

15(5) California’s nonemployer and small employer firms create
16jobs, generate tax revenue, and revitalize communities.

17(b) It is the intent of the Legislature that the state set and
18implement a 25 percent small business participation goal for state
19procurement and contracting.

20

SEC. 2.  

Section 14838 of the Government Code is amended
21to read:

P3    1

14838.  

In order to facilitate the participation of small business,
2including microbusiness, in the provision of goods, information
3technology, and services to the state, and in the constructionbegin insert,end insert
4begin delete(end deleteincluding alteration, demolition, repair, or improvementbegin delete)end deletebegin insert,end insert of state
5facilities, the directors of the department and other state agencies
6that enter those contracts, each within their respective areas of
7responsibility, shall do all of the following:

8(a) Establish goals, consistent with those established by the
9Office of Small Business Certification and Resources, for the extent
10of participation of small businesses, including microbusinesses,
11in the provision of goods, information technology, and services to
12the state, and in the construction of state facilities.begin insert Each state
13agency that is required to make a report to the Director of General
14Services pursuant to subdivision (f) of Section 14838.1 shall include
15the goals in its report. The director shall also include the goals in
16the department report made pursuant to Section 10111 of the
17Public Contract Code.end insert

18(b) Provide for small business preference, or nonsmall business
19preference for bidders that provide for small business and
20microbusiness subcontractor participation, in the award of contracts
21for goods, information technology, services, and construction, as
22follows:

23(1) In solicitations where an award is to be made to the lowest
24responsible bidder meeting specifications, the preference to small
25business and microbusiness shall be 5 percent of the lowest
26responsible bidder meeting specifications. The preference to
27nonsmall business bidders that provide for small business or
28microbusiness subcontractor participation shall be, up to a
29maximum of 5 percent of the lowest responsible bidder meeting
30specifications, determined according to rules and regulations
31established by the Department of General Services.

32(2) In solicitations where an award is to be made to the highest
33scored bidder based on evaluation factors in addition to price, the
34preference to small business or microbusiness shall be 5 percent
35of the highest responsible bidder’s total score. The preference to
36nonsmall business bidders that provide for small business or
37microbusiness subcontractor participation shall be up to a
38maximum 5 percent of the highest responsible bidder’s total score,
39determined according to rules and regulations established by the
40Department of General Services.

P4    1(3) The preferences under paragraphs (1) and (2) shall not be
2awarded to a noncompliant bidder and shall not be used to achieve
3any applicable minimum requirements.

4(4) The preference under paragraph (1) shall not exceed fifty
5thousand dollars ($50,000) for any bid, and the combined cost of
6preferences granted pursuant to paragraph (1) and any other
7provision of law shall not exceed one hundred thousand dollars
8($100,000). In bids in which the state has reserved the right to
9make multiple awards, this fifty thousand dollar ($50,000)
10maximum preference cost shall be applied, to the extent possible,
11so as to maximize the dollar participation of small businesses,
12including microbusinesses, in the contract award.

13(c) Give special consideration to small businesses and
14microbusinesses by both:

15(1) Reducing the experience required.

16(2) Reducing the level of inventory normally required.

17(d) Give special assistance to small businesses and
18microbusinesses in the preparation and submission of the
19information requested in Section 14310.

20(e) Under the authorization granted in Section 10163 of the
21Public Contract Code, make awards, whenever feasible, to small
22business and microbusiness bidders for each project bid upon
23within their prequalification rating. This may be accomplished by
24dividing major projects into subprojects so as to allow a small
25business or microbusiness contractor to qualify to bid on these
26subprojects.

27(f) Small business and microbusiness bidders qualified in
28accordance with this chapter shall have precedence over nonsmall
29business bidders in that the application of a bidder preference for
30which nonsmall business bidders may be eligible under this section
31or any other provision of law shall not result in the denial of the
32award to a small business or microbusiness bidder. In the event of
33a precise tie between the low responsible bid of a bidder meeting
34specifications of a small business or microbusiness, and the low
35responsible bid of a bidder meeting the specifications of a disabled
36veteran-owned small business or microbusiness, the contract shall
37be awarded to the disabled veteran-owned small business or
38microbusiness. This provision applies if the small business or
39microbusiness bidder is the lowest responsible bidder, as well as
40if the small business or microbusiness bidder is eligible for award
P5    1as the result of application of the small business and microbusiness
2bidder preference granted by subdivision (b).

3

SEC. 3.  

Section 10111 of the Public Contract Code is amended
4to read:

5

10111.  

Commencing January 1, 2007, the department shall
6make available a report on contracting activity containing the
7following information:

8(a) A listing of consulting services contracts that the state has
9entered into during the previous fiscal year. The listing shall
10include the following:

11(1) The name and identification number of each contractor.

12(2) The type of bidding entered into, the number of bidders,
13whether the low bidder was accepted, and if the low bidder was
14not accepted, an explanation of why another contractor was
15selected.

16(3) The amount of the contract price.

17(4) Whether the contract was a noncompetitive bid contract,
18and why the contract was a noncompetitive bid contract.

19(5) Justification for entering into each consulting services
20contract.

21(6) The purpose of the contract and the potential beneficiaries.

22(7) The date when the initial contract was signed, and the date
23when the work began and was completed.

24(b) The report shall also include a separate listing of consultant
25contracts completed during that fiscal year, with the same
26information specified in subdivision (a).

27(c) The information specified in subdivisions (a) and (b) shall
28also include a list of any contracts underway during that fiscal year
29on which a change was made regarding the following:

30(1) The completion date of the contract.

31(2) The amount of money to be received by the contractor, if it
32exceeds 3 percent of the original contract price.

33(3) The purpose of the contract or duties of the contractor. A
34brief explanation shall be given if the change in purpose is
35significant.

36(d) The level of participation, by agency, of disabled veteran
37business enterprises in statewide contracting and shall include
38dollar values of contract award for the following categories:

39(1) Construction.

40(2) Architectural, engineering, and other professional services.

P6    1(3) Procurement of materials, supplies, and equipment.

2(4) Information technology procurements.

3Additionally, the report shall include a statistical summary
4detailing each awarding department’s goal achievement and a
5statewide total of those goals.

6(e) The level of participation by small business in state
7contracting including:

8(1) Upon request, an up-to-date list of eligible small business
9bidders by general procurement and construction contract
10categories, noting company names and addresses and also noting
11which small businesses also qualify as microbusinesses.

12(2) begin insert(A)end insertbegin insertend insertBy general procurement and construction contract
13categories, statistics comparing the small business and
14microbusiness contract participation dollars to the total state
15contract participation dollars.

begin insert

16(B) To the extent feasible, beginning in 2018, the information
17required to be included pursuant to subparagraph (A) also shall
18be provided by prime contractor and subcontractor, separately.

end insert

19(3) begin insert(A)end insertbegin insertend insert By awarding department and general procurement and
20construction categories, statistics comparing the small business
21and microbusiness contract participation dollars to the total state
22contract participation dollars.

begin insert

23(B) To the extent feasible, beginning in 2018, the information
24required to be included pursuant to subparagraph (A) also shall
25be provided by prime contractor and subcontractor, separately.

end insert

26(4) Any recommendations for changes in statutes or state
27policies to improve opportunities for small businesses and
28microbusinesses.

29(5) A statistical summary of small businesses and
30microbusinesses certified for state contracting by the number of
31employees at the business for each of the following categories:
320-5,begin delete 26-50, 51-75, and 76-100.end deletebegin insert 6end insertbegin insert-20, 21end insertbegin insert-50, and 51 to 100.end insert

33(6) To the extent feasible, beginning in the year 2008, the
34number of contracts awarded by the department in the categories
35specified in paragraph (5).

36(7) The number of contracts and dollar amounts awarded
37annually pursuant to Section 14838.5 of the Government Code to
38small businesses, microbusinesses, and disabled veteran business
39enterprises.

P7    1(f) The level of participation of business enterprises, by race,
2ethnicity, and gender of the owner, in contracts to the extent that
3the information has been voluntarily reported to the department.
4 In addition, the report shall contain the levels of participation of
5business enterprises, by race, ethnicity, and gender of the owner,
6and whether the business is a lesbian, gay, bisexual, or transgender
7owned business for the following categories of contracts, to the
8extent that the information has been voluntarily reported to the
9department:

10(1) Construction.

11(2) Purchases of materials, supplies, or equipment.

12(3) Professional services.

begin delete

13(g) In the years 2011 and 2012, any errors reported to the
14department by an awarding agency as required by Sections 10302,
1510344, and 12104.5, in the previous fiscal year.

end delete
begin insert

16(g) For purposes of this section, “subcontractor” and “prime
17contractor” shall have the same meaning as those terms are
18defined in Section 4113.

end insert

19(h) The amendments made to this section bybegin delete the act adding this
20subdivisionend delete
begin insert Chapter 861 of the Statutes of 2012end insert shall apply on and
21after January 1, 2013.



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