BILL ANALYSIS
SB 1108
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1108 (Price) - As Amended: June 23, 2010
Policy Committee: Business and
Professions Vote: 7 - 4
Jobs, Econ Development and the Economy6 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires all state agencies and departments to
establish and achieve a 25% small business participation rate
for state contracts and authorizes the Department of General
Services (DGS) to monitor progress in meeting this rate.
Specifically, this bill:
1)Requires all state agencies and departments to establish and
achieve a 25% small business participation rate for state
contracts.
2)Requires the heads of all state agencies, departments, boards
and commissions to ensure that the state's procurement and
contract processes are administered in order to meet or exceed
the 25% small business participation goal.
3)Requires the heads of all state agencies, departments, boards,
and commissions to report on an annual basis to DGS the
statistics regarding small business annual participation.
4)Allows DGS to undertake reasonable measures to assist agencies
in improving small business participation.
5)Requires DGS to actively promote small business certification.
FISCAL EFFECT
1)GF costs for DGS to implement the new program, monitor
progress, and report on department progress would be in the
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range of $300,000 per year.
2)Unknown GF costs, in excess of $500,000 for the workload
associated with departments, including the California State
University system, the University of California system, and
community colleges, preparing annual reports that include
statistics regarding small business participation and
preparing the required corrective action and implementation
plans.
3)To the extent that the 25% small business requirement
increases the number of state contracts awarded to other than
the low bidder, state contracting costs will increase. Given
the thousands of state contracts awarded annually totaling
several billion dollars, the cost impact of the bill could be
at least in the tens of millions of dollars each year.
COMMENTS
1)Purpose . The intent of this legislation is to increase the
participation of small businesses in state contracting.
According to the author, this bill codifies two executive
orders that establish a small business participation goal for
the state of 25%. The author notes that the state has
continually had an overall 25% small business goal for its
contracts, however individual departments still struggle to
reach the goal.
2)The Small Business Act . The Small Business Act, administered
through DGS, was implemented more than 30 years ago to
establish a small business preference within the state's
procurement process that would increase the number of
contracts between the state and small businesses. In 1998, a
disabled veteran-owned business enterprise (DVBE) component
was added to state procurement practices. In 2004, nonprofit
veteran service organizations were authorized to be certified
as a small business, including being eligible for the 5% small
business procurement incentive.
3)Bidding Preferences . Under current law, there are certain
circumstances where contractors bidding on a state contract
can have the overall cost of their bid discounted by 5% in
order to make them more competitive as a low bidder.
Preferences can currently be given for small business in
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general, disabled veteran-owned business enterprises, for
small businesses in economically target areas, and for
businesses, regardless of size, located in economically
distressed areas. The maximum amount provided for each
qualifying bidding preference is $50,000 with a total bid
maximum of $100,000. This means that contractors with bids of
up to $100,000 higher than the lowest bid can be awarded the
contract if they qualify for two bidding preferences.
4)Related Legislation . This bill is similar to SB 309 (Price) in
2009 which also required codifying a 25% small business
participation goal for every entity in the state. That bill
was held on this committee's suspense file.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081