BILL ANALYSIS
AB 1444
Page 1
Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 1444 (Garrick) - As Amended: April 20, 2009
SUBJECT : Disposition of state property: services contracts.
SUMMARY : Authorizes the Department of General Services (DGS)
to advertise and award service contracts related to the
disposition of real properties, and to establish a list of
prequalified firms that may enter into these service contracts.
Specifically, this bill :
1)Defines "qualified firm" as an individual, firm, or
combination of firms and individuals having appropriate
expertise and knowledge related to due diligence
investigations, land use planning, real estate development,
entitlement, appraisals, real estate economics and valuation,
marketing, public relations, auctioning, and other related
matters involved in the disposal, reuse, leasing, and sale of
real property.
2)Defines "prequalified list" (PL) as a list of firms that
possess the qualifications established by DGS to perform
specific types of services needed.
3)Establishes a process to advertise and award contracts, which
includes soliciting statements of qualifications (SQs) of
interested firms and making announcements through the State
Contracts Registrar and applicable publications.
4)Requires DGS to evaluate the SQs and to create a list of the
most qualified firms that meet the criteria established and
published by DGS.
5)Requires DGS to update PLs at least every two years from the
date the lists are established to include additional firms.
6)Requires DGS to use the PL of a particular category (or
profession) to find at least three firms with sufficient
staffing available for a project. If the first category does
not yield three results, DGS may utilize other categories that
can provide the desired services.
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7)Requires DGS to solicit cost proposals from the three
identified firms available and originating from the PL, and to
negotiate a contract with the best qualified firm at
compensation deemed fair and reasonable to the State.
8)Requires DGS to negotiate a contract with the next qualified
firm if DGS is unable to negotiate a successful contract with
the identified qualified firm. DGS may remove a qualified
firm from the PL if contract negotiations are unsuccessful on
three separate occasions.
EXISTING LAW :
1)Authorizes the DGS Director to take various actions with
respect to the sale, lease, and disposition of state
properties, including entering into lease purchase agreements
with state agencies for specified state properties.
2)Authorizes the state to utilize multiple awards, including
Federal General Service Administration (GSA) Multiple Awards
Schedules (MAS) and master agreements or contracts for goods,
information technology, services, or consulting services.
3)Authorizes state agencies, in exercising their contracting
authority delegated by DGS, to contract with suppliers who
have MAS with the Federal GSA on the same terms, conditions,
and prices if the supplier is agreeable. The state MAS
process is referred to as the California Multiple Awards
Schedules (CMAS).
4)Authorizes DGS to require vendors to be prequalified prior to
placing bids in a reverse auction.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of the bill . According to the author's office, "DGS
must go through a cumbersome bid process for these specialized
services relating to enhancing and selling the State's real
estate. This bid process is time consuming, often taking at
least three to six months to secure a contract to retain the
necessary consultants. As a result, DGS is delayed from
completing work on enhancing or disposing of properties. This
bill would allow DGS to establish lists of prequalified external
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consultants who can perform the various services DGS typically
utilizes as part of its real property disposition program. The
PL would save the State money as DGS would not have to use the
bid process for each external service required. As a result,
real properties could be sold in a much more efficient and
timely manner, which would bring in sales proceeds to the State
in a more expedited timeframe.
Background . According to DGS, when the State receives
legislative authorization to sell a property, the State can sell
the property two ways - "as is" or "subject to" entitlements.
DGS utilizes a variety of contracted professional consultants
such as real estate economists, marketing consultants, and
entitlement specialists, in its real property sales and property
enhancement programs. For larger, more valuable properties, DGS
utilizes an entitlement enhancement process to increase the
value. These types of properties have significant revenue
potential when they are rezoned through the local government
entitlement process (e.g., zoning, general plan amendments and
specific plan processes). DGS uses specialized consultants to
perform the preliminary entitlement work, prior to placing the
real property on the real estate market. This process
eliminates much of the risk for the buyer since the buyer and
DGS already understand the level of entitlements before close of
escrow on the sale of the property. A buyer is inclined to pay
a higher price for the property to the State for the reduced
risk resulting from this process.
DGS states that the impact of the bill is limited to the sale of
state property and would affect approximately 10-12 contracts
each year. In addition, there are only a select number of
specialized consultants who would meet the criteria for the type
of project DGS is looking for and who would submit a SQ to be
eligible on the PL. These are individuals that DGS routinely
work with. DGS estimates that using PLs will achieve a
significant amount of savings in staff time and expedite a
project delivery schedule. The Request for Proposal (RFP)
process used to hire an external consultant can take three to
six months. DGS estimates that the average RFP costs
approximately $25,000-$50,000 in staff resources. DGS claims
that using a PL will reduce that amount to approximately $5,000
in staff time.
Support . According to DGS, "When the DGS receives legislative
authorization to sell a property, the DGS utilizes a variety of
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contracted professional consultants such as real estate
economists, land planning consultants or appraisers to
facilitate the sale process. Under current law, the DGS must
use the State's request for qualifications (RFQ) and/or RFP
contracting processes to secure contracts for these specialized
services. These processes are time consuming?The prequalified
list would save the State money as the DGS would not have to use
the more laborious and time consuming RFQ/RFP process for
external consultants. As a result, real properties could be
sold in a more efficient and timely manner, which would expedite
the receipt of sale proceeds to the State."
REGISTERED SUPPORT / OPPOSITION :
Support
Department of General Services (DGS) (sponsor)
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301