BILL ANALYSIS
AB 31
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 31 (Price) - As Introduced: December 1, 2008
Policy Committee: Jobs Vote:7 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes several changes to state procurement procedures
for the purpose of increasing small business and disabled
veteran-owned business enterprise (DVBE) participation.
Specifically, this bill:
1)Increases the maximum contract threshold amount for
streamlined procurement from $100,000 to $250,000 for small
businesses and DVBEs.
2)Requires contractors that committed to including small
business or DVBE participation as a requirement in their
contract to report at the conclusion of their contract on the
actual percent of the contract amount that was allocated to
those small businesses and DVBEs.
3)Increases the minimum threshold for projects covered under the
State Contract Act from $100,000 to $250,000, which increases
the value of the contracts not covered by the advertising,
bidding and protest provisions under the act.
FISCAL EFFECT
1)Costs for these contracts could increase, as the competitive
pressure would be reduced if an awarding department solicited
only two small businesses or two DVBEs, rather than allowing
all potential vendors, including non-small businesses, to bid
on the contracts. However, because this option is faster and
administratively simpler, increased costs might be offset by
reduced administrative workload associated with advertising
and more complex bidding procedures.
AB 31
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2)The Department of General Services indicates that in 2006-07,
there were 393 contracts for goods, services, and information
technology between $100,000 and $250,000, and 266 contracts
for construction between $131,000 and $250,000. The combined
value of those contracts was $96.8 million. Less than five
percent of the contracts up to $100,000 that were eligible for
the streamlined procurement process were actually awarded
using that process. Therefore, if five percent of the 650
contracts up to $250,000 were awarded through the streamlined
procurement process and those contract amounts increased by
five percent due to a lack of competition, it would cost the
state approximately $250,000 per year. It is likely, however,
that amount would be largely offset by the administrative
savings associated with the streamlined process.
COMMENTS
1)Purpose . This bill, sponsored by the Department of General
Services, is designed to increase the number of small
businesses and DVBEs that participate in the state's contract
procurement process. With the approval of $40 billion in
general obligation infrastructure development bonds in 2006,
the state is poised to begin a large number of infrastructure
improvement projects over the next 10 years. The author is
concerned that this will place a burden on the state's
contracting industry to provide enough qualified contractors.
By making it easier for small businesses and DVBEs to compete
for these contracts, the sponsor, the Department of General
Services, hopes to increase the pool of available contractors.
2)The Infrastructure Bond Acts of 2006 authorized the issuance
of general obligation bonds for five distinct infrastructure
programs including the Proposition 1B transportation bond
($19.9 billion), the Proposition 1C housing bond ($2.9
billion), the Proposition 1D education bond ($10.4 billion),
the Proposition 1E flood control bond ($4.1 billion), and the
Proposition 84 natural resources bond ($5.4 billion).
Collectively, these five bonds are known as the Infrastructure
Bond Acts of 2006. The Infrastructure Bond Acts create over 60
funding programs for the purpose of constructing physical
infrastructure improvements for roads, parks, schools, water
resources, sewage treatment, and more.
AB 31
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3)Related Legislation . This bill is substantially similar to
last year's AB 2773 (Price). That bill was held on the
suspense file of the Senate Appropriations Committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081