BILL ANALYSIS
AB 2448
Page 1
Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2448 (Furutani) - As Amended: May 6, 2010
Policy Committee: Higher
EducationVote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes a community college district (CCD) to award
contracts for supplies and materials over $50,000 to the bidder
offering the best value at the lowest cost. Specifically, this
bill:
1) Defines "best value at lowest cost acquisition" as a
competitive procurement process where the award of a
contract for supplies and materials takes into
consideration factors such as the total cost, operational
cost or benefit to the CCD, the added value of vendor-added
services, the quality and effectiveness of supplies and
materials, the reliability of the vendor's schedule,
product warranties and vendor guarantees, financial
stability and quality assurances of the vendor, vendor
experience and prior consistency, and the economic benefits
to the local community including job creation.
2) Specifies procedures for districts to follow in
advertising, evaluating, and awarding such contracts.
3) Requires CCDs using the above authority to report
specified information to the Legislative Analyst's Office
(LAO) by January 1, 2015, and requires the LAO to report to
the Legislature by April 1, 2015 on CCD's use of this
contracting method, including any recommended
modifications.
4) Sunsets all of the above on January 1, 2016.
5) Clarifies that CCDs may authorize a contractor to
AB 2448
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proceed with one or more change orders, without securing
bids, if the net cost of all the change orders to not
exceed currently prescribed limits.
FISCAL EFFECT
1)Minor absorbable one-time costs to the LAO for the report.
2)Any costs to districts would be non-reimbursable, as the bill
is discretionary.
COMMENTS
1) Purpose . According to the author, this bill seeks to
help CCDs maximize their resources by modifying contracting
provisions as follows:
a) Best value : According to the author, lowest price does
not always guarantee cost effectiveness, and it does not
account for what may be the most advantageous for a CCCDs
needs. CCCDs need the authority to make assessments based
on criteria in addition to price, accounting for the
quality and longevity of a product, for example that will
lead to the best value ultimately for the CCCD's
investment.
b) Change orders : The author wishes to clarify current law
to allow CCCDs to proceed with a change order without
securing bids as long as the net cost of the changes does
not exceed 10% of the original contract price. For example,
if one change order increases costs equal to 12% of the
original contract price and a second change order decreases
costs equal to 5% of the original price, the net impact of
these two changes would be less than the 10% threshold.
2) Results of Best-Value Contracting . AB 793 (Cox)/Chapter
665 of 2001, authorized municipal utility districts (MUDs)
to use best value procurement for individual supplies and
materials purchases over $50,000 until 2007. (This
authority was extended in subsequent legislation.) AB 793
required MUDs electing to use this method to submit a
report to the LAO, who was required to submit an evaluation
to the Legislature. The LAO found that while low-cost
purchasing still has an important role in government
purchasing, getting the best value for a product or service
AB 2448
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does not always mean choosing the lowest bidder. LAO also
noted that an organization must make the up-front
investment necessary to support best value procurement, and
procurement managers must ensure staff are properly trained
on the process and must help their staff develop
requirements that promote the organization's strategic
goals. LAO noted that, early on, best value procurements
can be time-consuming and cumbersome as bid evaluation
criteria are developed, but that with repeated use,
agencies can perform best value procurements with a similar
level of effort as traditional procurements. According to
LAO, based on the limited experience to date, best value
procurement authority appears to provide MUDs with an
important tool.
3) Recommended Amendment . Staff recommends removing the
LAO report requirement from the bill. As discussed above,
the LAO has already assessed and reported on this
contracting method. It is unlikely that the office would
reach a different general conclusion for CCDs as
previously-determined for MUDs.
4) Prior Legislation . AB 2550 (Furutani, 2008), which was
substantially similar to this bill, was vetoed. The
Governor, while supportive in concept, expressed concerns
that the legislation could allow subjective methods to
govern the bidding process for procurement of supplies and
materials with a relatively short life-cycle, which could
be more open to manipulation and abuse in the bid selection
process. To address these concerns, the author has added a
provision to AB 2448 requiring best value acquisition
policies to consider a life-cycle of no fewer than three
years.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081