BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2627 (Nielsen)
Hearing Date: 08/09/2010 Amended: 07/15/2010
Consultant: Maureen Ortiz Policy Vote: VA 4-0
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BILL SUMMARY: AB 2627 restructures the criteria for businesses
to qualify as a disabled veteran business enterprise (DVBE).
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Admin expenses $264
$660 $660 General
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense file.
According to the Department of General Services (DGS), this bill
will result in significant one-time workload and costs of
approximately $264,000 in FY 2010-11 as follows: $61,000
staffing costs for 1.3 PY, $42,000 in legal fees, $11,000 for
services associated with the rulemaking hearing including
videography, internet streaming, court reporter, sign language
interpreter, and other persons providing assistance to persons
with disabilities, and $150,000 to modify the information
technology systems for small business and DVBE certification to
include Business Utilization Plan certifications.
Additionally, DGS anticipates the need for 14 PYs with annual
ongoing costs of approximately $660,000 to review, certify,
oversee, and audit BUPs, train departments on the BUP reporting
requirements, prepare legislative reports, and develop and
implement forms, processes, and procedures. AB 2627 will also
result in unknown costs to awarding departments associated with
the tracking and reporting requirements.
AB 2627 expands the Business Utilization Plan (BUP) to allow
general contractors an alternative means of receiving Disabled
Veteran Business Enterprise participation credit on their state
contract solicitations. It will allow the use of the DVBE
bidding incentive to those general contractors that have an
approved BUP. However, the use of a BUP does not apply towards
a department's totals in meeting its required 3% DVBE
participation goals which means state departments will need to
offer additional incentives to achieve DVBE participation goals.
In 2008 the state awarded $185 million in contracts to DVBE
firms.
AB 2627 will revise the requirements imposed on DVBE firms to
require a disabled veteran to have at least a 10%
service-connected disability and require a DVBE to submit income
tax information to the Office of Small Business and Disabled
Veteran Business Enterprise Services.
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AB 2627 (Nielsen)
Specifically, AB 2627 does the following:
a) Permits direct and indirect costs to be applied to BUP
goals.
b) Expands the list of contract types for which approved BUPs
must be accepted.
c) Permits bidders to amend their BUP in the event a
solicitation specifies higher participation goals than those in
the bidder's original BUP.
d) Provides definitions relating to DVBEs and criteria for
businesses to be classified as a DVBE in the Public Contract
Code.
e) Renames the Office of Small and Minority Business to the
Office of Small Business and Disabled Veterans Business
Enterprise Services.
The intent of the BUP is to encourage prime contractors to use
DVBEs in routine day to day operations that may not be
associated with a specific state contract. It will allow those
contractors to still get some preference credit for using a DVBE
on a regular basis for items such as insurance even though
insurance is not a specific item of the state contract itself.