BILL ANALYSIS �
AB 150
Page 1
Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 150 (Perea) - As Amended: April 14, 2011
SUBJECT : Public contracts: small business and disabled veteran
business enterprise participation.
SUMMARY : Allows the Department of General Services (DGS) to
direct minimum business participation goals for minority, women,
and disabled veteran-owned businesses and small businesses in
state contracts and to monitor progress in meeting this goal,
commencing July 1, 2012. Specifically, this bill :
1)Allows DGS to direct the following minimum business
participation goals for state contracts:
a) 25% for small businesses;
b) 3% for disabled veteran business enterprises (DVBEs);
c) 5% for women's business enterprises (WBEs); and,
d) 15% for minority business enterprises (MBEs).
2)Allows DGS to establish policies and procedures to monitor the
progress of state entities in meeting the specified annual
business participation goals and requires state entities to
implement and report to DGS on their progress in meeting those
goals. Authorizes DGS to share this information with the
Office of the Small Business Advocate (OSBA).
3)Allows DGS to require state entities that fail to meet the
small business participation goals in a fiscal year to submit
an implementation and corrective action plan to DGS until the
goal is met. Allows DGS to establish criteria for such a plan
and to publish those criteria in the State Administrative
Manual (SAM).
4)Allows DGS to undertake reasonable means to assist state
agencies in improving small business, DVBE, WBE, and MBE
participation in contracting, including entering into
memoranda of understanding with state agencies that have not
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met the goals.
5)Requires DGS to establish in the SAM and the State Contracting
Manual, policies for state entities to use the contracting
procedures authorized in the Small Business Procurement and
Contract Act (Small Business Act).
6)Requires DGS to actively promote small business, DVBE, WBE,
and MBE certification.
7)Creates the following definitions:
a) "DVBE" to mean a business in which disabled veterans
hold a majority ownership, manage and control daily
business operations, and whose home office is in the United
States (U.S.);
b) "MBE" to mean a business which a minority, or an ethnic
person of color, including American Indians, Asians,
Blacks, Filipinos, and Hispanics, who is a U.S. citizen or
lawfully admitted permanent resident, holds a majority
ownership, manages and controls daily business operations,
and whose home office is in the United States; and,
c) "WBE" to mean to mean a business which women hold a
majority ownership, manage and control daily business
operations, and whose home office is in the U.S.
EXISTING LAW :
1)Requires DGS to administer the state Small Business Act,
including a small business certification process and a
streamlined procurement process for state contracts under
$100,000 that is exempt from advertising, bidding, and protest
provisions in the State Contract Act.
2)Declares that small businesses and microbusinesses receive a
fair portion of the total purchases and contracts or
subcontracts for state goods, services, information
technology, and construction.
3)Establishes a 25% small business participation goal for all
contracts financed with the proceeds of the
infrastructure-related bond acts of 2006.
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4)Establishes bid preferences for certified small businesses and
microbusinesses for the award of state procurement contracts
of at least 5% of solicitations made either on the basis of
lowest responsible dollar bid or on the basis of highest
score, with a single bid preference limit of $50,000.
Non-small businesses that subcontract at least 25% of their
contracts with certified small businesses also qualify for the
small business bidders' preference.
5)Requires each state agency to consolidate its existing staff
functions that relate to contract opportunities for small
businesses into a single point of contact for small businesses
and designate a small business advocate as a liaison to small
business suppliers.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of the bill . According to the author's office, "This
bill seeks to help small businesses stay competitive in
procuring a contract with a state agency. With big businesses
�already having a] huge advantage, this bill would help smaller
businesses create avenues of business not available to them
today. This bill also authorizes DGS �to hold] other state
agencies accountable �to] reaching the 25% �small business
participation] goal. This bill attracts small businesses to
come and stay in California, thus creating more jobs for
Californians."
Background . The Small Business Act, administered through DGS,
was established 30 years ago to grant a small business
preference within the state's procurement process. In 1989, a
DVBE component was added to state procurement practices.
Current law requires DGS to report the participation levels of
DVBEs and businesses that include the owner's race, ethnicity,
and gender information in statewide contracts.
Executive Order (EO) S-02-06 required all state agencies,
departments, boards and commissions to achieve a goal of 25%
small business participation in state procurements and
contracts. Since 2001, the Governor has issued several EOs
specifying a 25% participation goal for small businesses and a
3% DVBE participation goal in state procurement contracts,
including EO D-37-01 (2001), EO S-02-06 (2006), EO
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D-43-01(2001), and EO S-11-06 (2006). Statutory advancements
were also made to strengthen the Small Business Act, including
SB 115 (Florez), Chapter 451, Statutes of 2005, which required
DGS to establish a DVBE incentive program for state contracts,
and AB 761 (Coto), Chapter 611, Statutes of 2007, which codified
the 25% small business participation goal for contracts related
to revenues expended from the 2006 infrastructure bonds.
Notwithstanding the longstanding existence of the SBA, statutory
upgrades, and EOs, the state's success in obtaining small
business and DVBE participation goals in state procurement
contracts has been inconsistent. Since small business
participation targets were established in 2001, DGS has achieved
the 25% participation goal twice.
In 1996, California voters passed Proposition 2009, which
prohibited state and local entities from discriminating against
or giving preferential treatment to any individual or group in
public employment, public education, or public contracting on
the basis of race, sex, color, ethnicity, or national origin.
The California Supreme Court, in a 6-1 ruling, upheld
Proposition 209's affirmative action ban, after the City of San
Francisco passed an ordinance in 2003 offering bid preferences
to women and minority-owned businesses in construction
contracts.
Support . According to Natoma Technologies, "�Natoma
Technologies] support�s] efforts to increase small business
participation in state contracting opportunities and believe�s]
that the State should encourage that this goal be met or
exceeded in coming years."
Related Legislation . SB 67 (Price) of 2011 is a similar bill
that authorizes DGS to direct all state agencies to establish
25% participation goal for California certified small businesses
in state procurement and contracts. This bill is pending in the
Senate Appropriations Committee.
Previous Legislation . AB 31 (Price), Chapter 212, Statutes of
2009, made several key changes to state procurement procedures,
including increasing the maximum contract threshold amount for
awards to small business and DVBE, from $100,000 to $250,000.
This bill also required contractors to include small business or
DVBE participation in reporting requirements.
AB 150
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AB 309 (Price) of 2009, was a similar bill that would have
required a 25% small business participation goal for state
contracts and would have required DGS to monitor progress in
meeting this goal. This bill was held in the Assembly
Appropriations Committee.
SB 642 (Denham) of 2009, would have 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. This bill also
would have required contractors to include small business or
DVBE participation in reporting requirements. This bill was
held in the Senate Appropriations Committee.
AB 1942 (Ruskin) of 2008, would have increased penalties for
persons engaging in fraudulent activities relating to the Small
Business Act, including DVBEs. The Governor vetoed a
substantial number of bills that year with the same message
that, due to the delay in passing the 2008-09 State Budget, he
would only sign bills that were "the highest priority for
California. AB 1942 was vetoed for this reason.
AB 2773 (Price) of 2008, would have 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. Further, the
bill also would have required contractors to include small
business or DVBE participation in reporting requirements. This
bill was held in the Senate Appropriations Committee.
AB 761 (Coto), Chapter 611, Statutes of 2007, required each
state agency awarding contracts financed with proceeds from the
infrastructure bonds approved by voters in November 2006 to
establish a 25% small business participation goal for state
infrastructure construction contracts and to provide specified
assistance to small businesses bidding on state infrastructure
bond-related contracts.
SB 115 (Florez), Chapter 451, Statutes of 2005, made various
changes to the DVBE Program, and required DGS to establish a
state agency-wide mandatory DVBE participation incentive. This
bill required the DGS Small Business Advocate to provide
specified services to small businesses and certified DVBEs.
This bill also required DGS to adopt a streamlined reporting
procedure for state agencies to use in reporting their DVBE
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participation to the Department of Veterans Affairs.
REGISTERED SUPPORT / OPPOSITION :
Support
Natoma Technologies
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301