BILL ANALYSIS Ó
SB 1219
Page 1
Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1219
(Hancock) - As Amended August 1, 2016
-----------------------------------------------------------------
|Policy |Jobs, Economic Development, |Vote:|8 - 0 |
|Committee: |and the Economy | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill, beginning July 1, 2017, includes employment social
enterprises (ESEs) within the Small Business Procurement and
Contract Act, for the purpose of allowing them to participate in
state contracting bid preferences. Specifically, this bill:
1)Defines "employment social enterprise" as a social purpose
corporation, benefit corporation or nonprofit corporation
based in California, as specified. Requires, among other
things, the enterprise to earn 51% or more of its revenue from
the production or assembly of goods or the provision of
SB 1219
Page 2
services, or a combination of both and be comprised of at
least 80% of enterprise participants who face multiple
barriers to employment.
2)Requires state agencies to expand procurement goals to include
ESEs and give the same special consideration as currently
provided to small businesses and microbusinesses, including
the reduction of required experience and the level of
inventory normally required for state contracting, among other
potential adjustments.
3)Applies the 5% small business and microbusiness bid preference
to ESEs for state contract bid packages, including a contract
with the California State University. A single preference may
not exceed $50,000 or when added to other preferences, the
total value cannot exceed $100,000.
4)Expands the duties of the Office of the Small Business and
Disabled Veteran Business Enterprise Services to include
support to employment social enterprises, including, but not
limited to: compiling and maintaining a comprehensive bidders
list of qualified employment social enterprises; assisting
employment social enterprises comply with bidding procedures;
and making an effort to develop certification application that
can be adopted by cities, counties, and special districts.
5)Requires the Department of General Services to certify and
determine eligibility of ESEs, and provide access to a public
list of certified ESEs online for local agencies to confirm
certification. Authorizes DGS to assign certification
requirements, as specified, to another state or local entity.
FISCAL EFFECT:
SB 1219
Page 3
1)One-time General Fund costs, in the range of $5.5 million to
$7.5 million, to make programming changes to FI$Cal to modify
system functionality to accommodate the ESEs in the processing
of procurements. As a point of comparison, developing the
certification systems for the small business and disabled
veteran business enterprise programs cost roughly $8 million.
2)DGS indicates they would need 3 positions and $406,000
(special funds) to conduct outreach to ESEs and departments to
make them aware of the new status, assist ESEs through the
certification process, review applications and certify ESEs.
COMMENTS:
1)Background. The Small Business Procurement and Contract Act
was implemented in 1973 to establish a preference for small
business within the state's procurement process with the goal
of increasing the number of contracts between small business
and the State.
Under current law, certified small businesses and
micro-businesses are entitled to a 5% bid preference on
applicable state solicitations once eligibility requirements
have been satisfied. Additionally, certified small business
and microbusiness are eligible for the State's Small Business
Participation Program. This program sets a goal for the use
of small businesses in at least 25% of the State's overall
annual contract dollars.
Employment social enterprises (ESEs) are businesses that
provide jobs for individuals who have experienced significant
barriers to employment, including youth and inexperience,
previous incarceration, homelessness, or mental health
SB 1219
Page 4
disorders. Most social enterprises, in addition to employment
opportunities also provide on-the-job skills development,
counseling and other support such as clothing, food, and
housing.
2)Purpose. According to the author, ESEs cannot meet small
business requirements due to their nonprofit status or annual
number of employees. This bill would define and grant
preferences for ESEs to secure state business development
services and procurement contracts.
3)Related legislation. SB 1176 (Galgiani), pending in this
committee, would revises the definition of a small business
and microbusiness by increasing the threshold for a small
business to $30 million, increasing the threshold for a micro
business to $5 million, and requiring those dollar amounts to
be adjusted to reflect increases in the California Consumer
Price Index biennially.
Analysis Prepared by:Misty Feusahrens / APPR. / (916)
319-2081
SB 1219
Page 5