BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 31|
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THIRD READING
Bill No: AB 31
Author: Price (D), et al
Amended: 7/16/09 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 10-0, 6/23/09
AYES: Wright, Harman, Benoit, Denham, Negrete McLeod,
Oropeza, Padilla, Price, Wiggins, Yee
NO VOTE RECORDED: Calderon, Florez, Wyland
SENATE APPROPRIATIONS COMMITTEE : 12-0, 7/13/09
AYES: Kehoe, Cox, Corbett, Denham, Hancock, Leno, Price,
Runner, Walters, Wolk, Wyland, Yee
NO VOTE RECORDED: Oropeza
ASSEMBLY FLOOR : 79-0, 6/1/09 - See last page for vote
SUBJECT : Public contracts: Small Business Procurement
and
Contract Act
SOURCE : Department of General Services
DIGEST : This bill increases the maximum amount of a
contract for goods, services, or information technology to
a certified small business (CSB) from $100,000 to $250,000
without complying with specified competitive bidding
requirements. This bill requires the contractor, upon
completion of a public contract for which a commitment to
achieve CSB or disabled veteran business enterprise (DVBE)
CONTINUED
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participation goals was made, to report the actual
percentage of CSB or DVBE participation that was achieved.
ANALYSIS :
Existing law:
1. Designates the Department of General Services (DGS) to
administer the state Small Business Procurement and
Contract Act (Small Business Act) and declares state
policy that small business and microbusiness receive a
fair portion of the total purchases and contracts or
subcontracts for state goods, services, information
technology, and construction.
2. Provides for a streamlined procurement process which is
exempt from advertising, bidding, and protest provisions
in the State Contract Act for the acquisition of goods,
services, or information technology, if
A. The contract is awarded to a small business,
including a microbusiness, or a DVBE.
B. The value of the contract is between $5,000 and
$100,000.
C. The agency has obtained quotes from two or more
certified small businesses, including
microbusinesses, or DVBEs.
3. Defines a 'small business' as independently owned, not
dominant in its field of operation, domiciled in
California, employing 100 or fewer employees, and
earning $10 million or less in average annual gross
revenues for the three previous years.
4. Defines a 'microenterprise' as a small business that has
average annual gross receipts of $250,000 or less during
the previous three years or is a manufacturer with 25 or
fewer employees.
5. Defines a 'DVBE' as a business entity that is at least
51 percent owned or controlled by one or more disabled
veterans, as specified.
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6. Establishes the State Contract Act for the purpose of
governing contract practices between state agencies and
private contractors, covering, among other items,
contracts for projects with a value of over $100,000,
adjusted biennially for changes in the California
Construction Index, as specified.
This bill:
1. Increases the maximum contract threshold amount for
streamlined procurement for goods, services, or
information technology that may be awarded to certified
small businesses, including a microbusiness and DVBEs
without complying with specified competitive bidding
requirements, from $100,000 to $250,000.
2. Requires contractors, upon completion of a public
contract for which a commitment to achieve small
business or DVBE participation goals was made, to report
the actual percentage of small business or DVBE
participation that was achieved.
3. Establishes for the calendar year 2010 a cost threshold
of $250,000 for projects covered under the State
Contract Act (construction, erection, alteration, repair
or improvement of buildings and roads) that will be
adjusted every two years to reflect the percentage
change in the annual California Construction Index.
Comments
The author's office points out that in light of the fact
that California voters approved over $40 billion in general
obligation infrastructure development bonds in 2006 it is
critical to update existing contract thresholds to ensure
that more small businesses and DVBEs participate in the
contract process. The funding provided by the bonds is
targeted for improvements to roads, highways, public
transit, flood control, schools, and affordable housing.
Project funding is expected to occur over the next 10
years, although the Governor and Legislature have placed a
priority on expediting project delivery.
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This massive public works endeavor is expected to place a
burden on the state's contracting industry to provide
enough qualified contractors to whom contracts can be
awarded and who can complete the work within reasonable
timeframes. Coupled with this challenge is an opportunity
for the state to use these moneys to strengthen the core of
California's economy by expanding business opportunities
for small contractors and DVBEs.
As noted above, current law provides for a streamlined
procurement process that permits state entities to award
contracts for goods, services, or information technology
with a value of between $5,000 and $100,000 to a small
business or DVBE without complying with competitive bidding
requirements. This bill will increase the maximum contract
award from $100,000 to $250,000. Additionally, this bill
will increase the minimum threshold for projects covered
under the State Contract Act from $100,000 to $250,000.
The author's office emphasizes that the changes
incorporated in this bill are intended to enhance small
business and DVBE participation rates in state procurement.
Prior/Related legislation
SB 642 (Denham) 2009-10 Session , identical to this bill.
(In Senate Appropriations Committee - suspense file)
AB 2773 (Price) 2007-08 Session , identical to this bill.
(Died in Senate Appropriations Committee)
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/16/09)
Department of General Services (source)
California Chamber of Commerce
California Disabled Veteran Business Alliance
CALED
California Small Business Association
Independent Maintenance Contractors Association
Magi Advisors Public Finance Consulting
National Federation of Independent Business
Natoma Technologies
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Pacific Association of Building Service Contractors
Sacramento Black Chamber of Commerce
ARGUMENTS IN SUPPORT : According to the California
Chamber of Commerce, "AB 31 would raise the maximum
allowable state procurement contract amount for a certified
small business from $100,000 to $250,000. This increased
contract amount would allow procuring agencies and
departments to offer small businesses a greater level of
participation in the Fulfillment of California's ubiquitous
need for goods and services.
"This bill could not come at a better time. As the state
takes steps to position itself for economic recovery, it is
essential that we provide small businesses more
opportunities to lead the way. In providing this expanded
opportunity, AB 31 recognizes the important role played by
small business in maintaining economic growth and vitality
in California."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,
Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.
Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
NO VOTE RECORDED: Block
TSM:do 7/16/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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