BILL ANALYSIS �
AB 150
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 150 (Perea) - As Amended: April 14, 2011
Policy Committee: JEDE Vote:4-0
BPCP 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill 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 state agencies to meet the following
minimum business participation goals for state contracts: 25%
for small businesses, 3% for disabled veteran business
enterprises (DVBEs), 5% for women's business enterprises
(WBEs), and 15% for minority business enterprises (MBEs).
2)Requires DGS to establish in the State Administrative Manual
(SAM) and the State Contracting Manual, policies for the
contracting procedures authorized in the Small Business
Procurement and Contract Act (Small Business Act).
3)Requires DGS to actively promote small business, DVBE, WBE,
and MBE certification.
4)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. 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.
FISCAL EFFECT
AB 150
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1)If DGS chooses to implement this new program, there will be GF
costs for DGS to establish the new program, monitor progress,
develop corrective action plans and report on department
progress in the range of $250,000 per year.
2)Unknown GF costs, but probably of the same general magnitude
for the workload associated with state departments and
agencies preparing annual reports regarding small business
participation, and preparing the required corrective action
and implementation plans.
3)To the extent the 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 annual cost of the bill could be in the tens of millions
of dollars.
4)This bill codifies an existing executive order with respect to
small business and DVBEs, so many agencies already comply with
these requirements. Codifying increases the pressure to
comply, especially for independent agencies, which means
additional cost pressure.
5)The bill states that the preferences for women and minority
businesses are allowable, "?to the extent permitted by state
and federal law." Still the chances for litigation
increase, even if DGS believes they are consistent, as other
parties may disagree. The cost of any significant litigation
is unknown, but potentially significant.
COMMENTS
1)Purpose. 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."
AB 150
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2)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.
3)Proposition 209. 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 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.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081