BILL ANALYSIS
AB 864
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Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 864 (Price) - As Introduced: February 26, 2009
Policy Committee: Governmental
Organization Vote: 14 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires at least 10% of the total amount of all state
contracts for infrastructure improvements at any racetrack
grounds in the state be let to small businesses or disabled
veteran business enterprises (DVBEs).
FISCAL EFFECT
To the extent that the 10 % set aside for small businesses and
DVBEs increases the number of state contracts awarded to other
than the low bidder, state contracting costs will increase.
Estimates suggest that $80 million to $120 million would be
needed to fund just stabling and backstretch improvements at
racetracks and state and county fairs in northern and southern
California. If California began investing in those improvements,
even a 1% increase in the costs of those contracts due to this
requirement would cost an additional $800,000 to $1.2 million.
COMMENTS
1)Purpose . According to the author, the intent of this bill is
to ensure that small and emerging contractors obtain a fair
portion of infrastructure construction contracts by requiring
that at least 10% of state contracts for infrastructure
improvement of any racetrack grounds that conduct horse racing
in the state be awarded to small businesses or disabled
veteran business enterprises.
2)The Small Business Act . The Small Business Act, administered
through DGS, was implemented more than 30 years ago to
establish a small business preference within the state's
AB 864
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procurement process that would increase the number of
contracts between the state and small businesses. In 1998, a
disabled veteran-owned business enterprise (DVBE) component
was added to state procurement practices. In 2004, nonprofit
veteran service organizations were authorized to be certified
as a small business, including being eligible for the 5% small
business procurement incentive.
3)Existing Law . Current law establishes a preference for bids
made by certified small businesses and microbusinesses for the
award of state procurement contracts of 5% where solicitations
are made either on the basis of lowest responsible dollar bid,
or on the basis of highest score, considering factors in
addition to price. A single bid preference is limited to
$50,000. Non-small businesses that subcontract at least 25%
of their contracts with certified small businesses also
qualify for the small business bidders' preference.
4)Committee Concern . Traditionally, the state has tried to
encourage small business participation in state contracting by
establishing participation goals for state agencies. This
bill, however, would establish a requirement that at least 10%
of all of the contracts be awarded to small businesses or
DVBEs. In the event, there are not enough small businesses or
DVBEs bidding for these contracts or that their bids are cost
prohibitive, it is unclear whether the improvements would be
allowed to move forward. Therefore, conceivably, this
legislation could prevent the state from being able to make
infrastructure improvements at race tracks.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081