BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           642 (Denham)
          
          Hearing Date:  5/28/2009        Amended: 5/4/2009
          Consultant:  Bob Franzoia       Policy Vote: G O 12-0
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          ____
          BILL SUMMARY: SB 642 would increase from the maximum amount of a  
          contract to a certified small business, including a  
          microbusiness and a disabled veteran business enterprise,  
          without complying with specified competitive bidding  
          requirements, from less than $100,000 to less than $250,000.   
          This bill would require the contractor, upon completion of a  
          public contract to report to the awarding department the actual  
          percentage of small business or disabled veteran business  
          enterprise participation that was achieved.  Finally, this bill  
          would increase from less than $100,000 to less than $250,000  
          projects where the total cost limit shall be adjusted upward or  
          downward to reflect the change in the California Construction  
          Index.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2009-10      2010-11       2011-12     Fund
           Increase in contract amounts      $169-$844    
          $338-$1,688$338-$1,688 General/
          eligible for small business                             Special*
          preference

          * Service Revolving Fund (estimated 55 percent General Fund - 45  
          percent Special Fund split)
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          ____

          STAFF COMMENTS: SUSPENSE FILE.
          
          The Department of General Services indicates that in 2007-08,  
          there were 853 contracts between $100,000 and $250,000 for a  
          combined value of $130,855,711.  At this time, it is unclear if  
          396 of those contracts (designated as non-information technology  
          services and as public works) for a combined value of  
          $63,351,319 would have been subject to the provisions of this  
          bill.











          If ten percent ($6,750,439) of the lesser combined value  
          ($67,504,392) of the contracts was awarded to small business  
          pursuant to this bill, the five percent small business  
          preference would increase costs by $337,521 annually.  If 50  
          percent of the contracts were awarded in this manner, the  
          additional contract costs due to reduced competitive pressure on  
          vendors could be $1,687,610 annually.

          In 2006-07, information indicated there were 659 such contracts  
          with a combined value of $96.8 million.

          This bill is similar to AB 2773 (Price) 2008 which was held on  
          the committee's Suspense File.