BILL ANALYSIS
AB 1918
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
AB 1918 (Davis) - As Amended: April 5, 2010
SUBJECT : Public Utilities Commission procurement
SUMMARY : Requires the Public Utilities Commission (PUC) to
require specified wireless telecommunications service providers
to annually report on their progress in increasing contracting
with women- and minority-owned businesses and disabled veteran
business enterprises (DVBEs). Specifically, this bill :
1)Requires the PUC to require wireless telecommunications
service providers, with gross annual revenues exceeding $25
million and their commission-regulated subsidiaries and
affiliates, to adopt a detailed and verifiable plan for
increasing women- and minority-owned businesses and DVBEs
contract participation rates and to report annually on its
implementation.
2)Requires the PUC to establish guidelines for the
implementation of this bill.
3)Requires the PUC to provide a report to the Legislature on
September 1 of each year, on the progress of activities
undertaken by wireless telecommunications service providers,
as specified.
4)Requires the PUC, by rule or order, to adopt criteria for
verifying and determining the eligibility of women- and
minority-owned businesses and DVBEs for targeted procurement
contracts.
5)Requires the PUC to develop, and requires wireless
telecommunications service providers to implement, an outreach
program to inform and recruit women- and minority-owned
businesses and DVBEs to apply for procurement contracts, as
specified.
6)Adds wireless telecommunications service providers to the list
of business entities that can be prosecuted for false
representation of a women- and minority-owned business or a
DVBE in the procurement of a contract.
AB 1918
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EXISTING LAW :
1)Requires the PUC to require each electrical, gas, water, and
telephone corporation with revenues over $25 million and their
commission-regulated subsidiaries and affiliates to submit
annually a detailed and verifiable plan for increasing women-
and minority-owned business and DVBE procurement in all
categories.
2)Requires the PUC to establish guidelines for the annual
women- and minority-owned business and DVBE procurement plans.
3)Requires the PUC to adopt criteria for determining and
verifying the eligibility of a women- and minority-owned
business and DVBE for procurement contracts.
4)Encourages each electrical, gas, water, and telephone
corporation that is not required to submit a plan under
current law to voluntarily adopt a plan for increasing women-
and minority-owned business and DVBE procurement in all
categories.
5)Establishes as a crime for false representation of a women,
minority, or DVBE in the procurement of a contract, punishable
by a fine of $5,000, or by imprisonment in the county jail or
state prison, not to exceed one year, or by both fine and
imprisonment. In the case of a corporation, the fine or
imprisonment shall be imposed on every director, officer, or
agent for the false statements.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's purpose : Currently, wireless telecommunications
service providers are not among the utility companies required
to comply with General Order 156. AB 1918 is necessary in
order to increase diversity participation in wireless
telecommunications service providers as other major utilities
are required.
2)PUC General Order 156 : In 1986, the PUC adopted General Order
156 (GO 156), which created the Women-owned and Minority-owned
Business Enterprise program to increase diversity in various
AB 1918
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utility operations and procurement processes. GO 156 requires
the PUC-regulated electrical, gas, and telephone corporations
with gross annual revenues exceeding $25 million to submit
annual reports on their progress in meeting the short- and
long-term goals and timelines set in their diversity plan for
increasing the participation of women- and minority-owned
businesses in all procurement categories.
GO 156 includes rules and regulations for the utilities'
compliance with the women- and minority-owned business
program, and it requires participating utilities to inform,
recruit, and obtain at least 20% of their products and
services purchased within a five-year period from women- and
minority-owned businesses. The targets are 15% for
minority-owned businesses and 5% for women-owned businesses.
In 1990, DVBEs were included in GO 156 in SB 2398 (Dills)
Chapter 516, Statutes of 1990. In implementing the bill the
PUC adopted (D. 95-12-045) which set a 1.5% goal for DVBEs.
3)Wireless service providers: The chart below describes the
women- and minority-owned business and DVBE contract
participation rates for three wireless telecommunication
providers in 2008 and 2009.
-------------------------------------------------
| Women and Minority Owned Business and DVBE |
| Contract Participation Rates |
-------------------------------------------------
|------------+-----------+-----------+------------|
| Service | Women, | | |
| Provider | Minority, | 2008 | 2009 |
| | or DVBE | | |
|------------+-----------+-----------+------------|
|AT&T |Women | 1.31% |0.62% |
|Mobility | | | |
|------------+-----------+-----------+------------|
| |Minority | 4.33% | 6.14% |
|------------+-----------+-----------+------------|
AB 1918
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| |DVBE | 0.01% | 0.003% |
|------------+-----------+-----------+------------|
| | | | |
| |TOTAL | 5.65% | 6.77% |
|------------+-----------+-----------+------------|
|Verizon |Women | 9.11% | 2.75% |
|Wireless | | | |
|------------+-----------+-----------+------------|
| |Minority | 3.43% | 3.43% |
|------------+-----------+-----------+------------|
| |DVBE | 0.18% | 0.11% |
|------------+-----------+-----------+------------|
| | | | |
| |TOTAL | 17.5% | 6.29% |
|------------+-----------+-----------+------------|
|Sprint |Women | | 4.90% |
|------------+-----------+-----------+------------|
| |Minority | | 8.49% |
|------------+-----------+-----------+------------|
| |DVBE | | 0.55% |
|------------+-----------+-----------+------------|
| |TOTAL | | |
| | | | 13.93% |
-------------------------------------------------
-------------------------------------------------
|Source: According to author information for AT&T |
|and Verizon Wireless and Sprint was excerpted |
|from the yearly reports to the CPUC. |
-------------------------------------------------
As the chart indicates, the largest percentage of contracts
went to minority business owners (8.49%). Women and DVBE
contracts were awarded at a much smaller percentage rate
(3.43% and 0.18% respectively). In 2008 Verizon Wireless was
the only one to exceed the 5% goal for women-owned businesses
with 0.11% of contracts being awarded. However, all three
companies did not meet their DVBE goal. In all cases, DVBEs
were awarded contracts at less than 1% in each year reported.
Concerns have been raised that meeting the procurement
participation goals may be difficult. AB 1918 encourages this
challenge and requires the PUC to assist in designing an
outreach program to assist the wireless telecommunication
providers in reaching their goal. In addition, organizations
AB 1918
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such as the California Hispanic Chamber of Commerce have
established their own outreach programs for corporate
contracts with small business.
4) Women-Owned Businesses: While the number of women on
corporate boards and in upper management of Fortune 500
companies significantly lags behind women's overall
representation in the workforce, women-owned businesses are an
increasingly important segment of the small business
community. Below are some facts on women-owned businesses
from the Center for Women's Business Research (Center).
a) As of 2004, there are an estimated 1,249,343 privately
held, women-owned firms in California, accounting for
48.6% of all privately held firms in the state.
b) The 1,249,343 privately held, women-owned firms in
California generated more than $406 billion in sales and
employed 2,818,949 people in 2004.
c) Between 1997 and 2004, the Center estimates that the
number of privately held, women-owned firms in California
increased by 7.1%, employment grew by 31%, and sales
increased by 47.2%.
d) Among the 50 states and Washington, D.C., California
ranked first in the number of privately held, women-owned
firms in 2004, first in employment, and first in sales.
e) California ranked 47th in the growth of privately
held, women-owned firms between 1997 and 2004, 19th in
employment growth, and 24th in sales growth among the 50
states and Washington, D.C.
f) Woman-owned firms, particularly among ethnic women,
increased at a rate five times greater than all firms.
The rate of African-American women-owned firms increased
by 12% annually, as compared to 2% for all firms and just
under 4% for all woman-owned firms.
g) Although women own approximately 40% of all
businesses in the U.S., they receive less than 5% of all
venture capital.
5) Minority-Owned Businesses : In 2000, the Milken Institute's
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Center on Emerging Domestic Markets issued a report in
collaboration with the U.S. Department of Commerce. The
report which found minority-owned firms are surpassing the
growth of all U.S. businesses, growing at a rate of 17% per
year, six times the growth rate of all other firms. Minority
firms' sales were growing 34% per year-more than twice the
rate of all other firms. California has also seen an increase
in minority-owned firms, including:
a) In 2002, Latino-owned firms totaled 427,805-an
increase of 27% from 1997.
b) In 2002, African American-owned firms totaled
113,003-an increase of 43% from 1997.
c) In 2002, Asian-owned firms totaled 372,221-an increase
of 19% from 1997.
d) In 2002, American Indian and Alaska Native-owned firms
totaled 40,541-an increase of 52% from 1997.
e) However, even with this growth, minority-owned firms
receive less than 2% of venture capital.
6)Related Legislation: Below is a list of related legislation.
a. AB 873 (Davis) - PUC: procurement contracts with water
companies - This bill requires each water corporation with
10,000 or more service connections to submit annual plans
for increasing procurement from women- and minority-owned
businesses and DVBEs to encourage each electrical, gas,
water, and telephone corporation that is not required to
submit a plan under current law to voluntarily adopt a plan
for increasing women, minority, and DVBE procurement in all
categories. Status: Chapter 316, Status of 2008.
b. SB 2398 (Dills) - PUC: DVBE procurement goal - This bill
included DVBEs in the classes of entities eligible under
women- and minority-owned business programs. A subsequent
PUC decision includes disabled veteran-owned business
enterprises (D. 95-12-045) and establishes a 1.5-percent
goal for disabled veteran-owned businesses. Status:
Chapter 516, Statutes of 1990.
c. AB 3678 (Moore) - PUC procurement goals - This bill
AB 1918
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codified the broader parameters of GO 156, and requires
electrical, gas, and telephone corporations (with gross
annual revenues exceeding $25 million) to annually submit a
detailed and verifiable plan for increasing women- and
minority-owned business procurement in all categories that
includes short- and long-term goals and timetables, and
furnish an annual report. It also required the PUC to
establish guidelines for the plans. Status: Chapter 1259,
Statutes of 1986.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
Analysis Prepared by : Mercedes Flores / J., E.D. & E. / (916)
319-2090