BILL ANALYSIS
AB 2627
Page 1
Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2627 (Nielsen) - As Amended: April 8, 2010
Policy Committee: Jobs, Econ.
Development & the Economy Vote: 6 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill limits the portion of state funds that count toward
the Disabled Veteran Business Enterprise (DVBE) goal to a
broker's commission fees, if the funds were awarded through a
broker. Specifically, this bill:
1)Requires that for state funds expended through a broker or
equipment broker, only the broker's commission fees shall be
credited toward the participation goals established for DVBEs.
2)Specifies that a DVBE that rents equipment to an awarding
department or contractor shall be deemed to be an equipment
broker.
FISCAL EFFECT
Costs associated with this legislation would be minor and
absorbable within existing Department of General Services'
resources.
COMMENTS
1)Purpose . Last year during budget discussions, the Legislature
approved, and the governor signed AB 21 X4 (Evans) which
eliminated the "good faith effort" in public contracting for
Disabled Veteran Business Enterprises (DVBEs). As a result,
departments must achieve an overall department wide 3% DVBE
participation on their public contracts.
The primary concern for contractors is ensuring that their
AB 2627
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bids are not thrown out as "non-responsive" due to lack of
DVBE participation to meet the requirement set forth by the
bid. The author asserts that there have been complaints and
bid protests; however, these are mainly due to the DVBE "false
front" issue. The "false front" problem has to do with DVBEs
who are either acting as brokers without a real product or
others who are not providing a real function. AB 2627
addresses these problems by simply clarifying the role and
definition of a broker.
2)Background . The DVBE Program was established in 1989 to
address the special needs of disabled veterans seeking
rehabilitation and training through entrepreneurship, and to
recognize the sacrifices of Californians disabled during
military service. Prior to the passage of AB 21 X4, each
state agency was encouraged, in awarding contracts, to honor
California's disabled veterans by taking all practical actions
necessary to meet or exceed a 3% DVBE participation goal.
AB 21 X4 eliminated, on certain state contracts, the exception
that a bidder does not have to meet advertised DVBE
participation goals if the bidder can successfully demonstrate
that a good faith effort was made to hire DVBE firms. As a
result of the change, the awarding department is required to
award the contract to the lowest responsible bidder meeting
the advertised DVBE participation goal.
3)Related Legislation . AB 31 (Price; Chapter 212, Status of
2009) increased the maximum contract threshold amount for
awards to small business, including microbusiness and DVBEs
under the streamlined procurement process, from $100,000 to
$250,000, as specified.
AB 21 (X4) (Evans; Chapter 19, Statutes of 2009) changes
requirements on bidders and state departments when considering
contracts for procurement of goods and services.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081