BILL ANALYSIS Ó
AB 2905
Page 1
Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2905 (Committee on Jobs, Economic Development, and the Economy)
- As Amended April 12, 2016
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|Policy |Jobs, Economic Development, |Vote:|9 - 0 |
|Committee: |and the Economy | | |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill expands existing reporting requirements related small
business and disabled veteran business enterprise (DVBE)
participation in state contracts, and specifies Legislative
AB 2905
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intent that the state set and implement a 25% small business
participation goal for state procurement and contracting.
Specifically, this bill:
1)Requires a state agency to annually report small business
participation by prime contractors and subcontractors,
beginning with the 2017-18 contract period.
2)Modifies the categories of reporting for small businesses from
0-5, 26-50, 51-75, and 76-100 employees, to 0-5, 0-20, and
21-100 employees.
FISCAL EFFECT:
1)General Fund administrative costs, likely in excess of $1
million, to reconfigure FI$Cal to support electronic reporting
based on the prime contractor and subcontractor distinctions.
This bill would also result in unknown costs to state
departments, including the Department of General Services, to
report this information.
2)To the extent the Legislature sets and implements a 25% small
business participation goal for procurement and contracting,
and to the extent this requirement increases the number of
state contracts awarded to other than the low bidder, state
contracting costs will increase. Given the thousands of state
contracts, the cost impact of the bill could be in the tens of
millions of dollars each year.
COMMENTS:
1)Purpose. Small businesses play an essential role within the
California economy. According to the author, in recognition of
the sacrifices made by California's disabled veteran community
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and the important economic role of small businesses, state
agencies are required to take certain actions to include these
two groups in state procurement opportunities. The author is
concerned that participation rates of these groups have not
been as high as desired. This bill is intended to enhance the
state's procurement management practices as they relate to
small businesses.
2)Background. Governors Arnold Schwarzenegger and Gray Davis
issued executive orders calling for all state agencies to
pursue an annual 25% small business participation level in
state contracting. According to the consolidated annual
report on procurement for fiscal year (FY) 2013-14 by DGS, the
state entered into nearly $9 billion in contracts, with
approximately 26% awarded to small businesses. The report
also indicates statewide departments achieved nearly 26%
percent small business participation in contracts.
3)Related Legislation.
a) AB 351 (Jones-Sawyer) of 2015, would have required each
state agency to establish and achieve a 25% small business
procurement participation goal. Agencies that failed to
meet the goal would have been required to develop and
implement a corrective plan, as specified. This bill was
held on the Suspense file in this committee.
b) AB 1734 (Jones-Sawyer) of 2014, would have required each
state agency to establish and achieve a goal of 25 % small
business (SB) participation and an annual phased-in goal of
5 % disabled veteran business enterprises (DVBE)
participation in state contracting. This bill was held on
Suspense in this committee.
c) AB 550 (Brown) of 2013, would have codified the
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executive order establishing the 25% small business
participation goal. The bill also made changes to state
procurement procedures for small business, including
microbusiness and DVBE participation rates. This bill was
held on Suspense in this committee.
d) SB 67 (Price) of 2011, would have authorized DGS to
direct all state entities to establish an annual goal of
achieving no less than 25% small business participation in
state procurement contracts, as specified. This bill was
held on the Suspense file in this committee.
e) AB 309 (Price) of 2011, would have required the
establishment of a 25% small business participation goal
for all state entities and directs DGS to monitor each
agency's progress in meeting this goal. The bill would have
required that the Office of the Small Business Advocate
receive the same progress report information as state
entities and directs DGS and the Office of the Small
Business Advocate to work collaboratively to assist state
entities in meeting their goal. This bill was held on the
Suspense file in this committee.
Analysis Prepared by:Misty Feusahrens / APPR. / (916)
319-2081