BILL ANALYSIS �
Bill No: AB
1783
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 1783 Author: Perea
As Amended: April 10, 2012
Hearing Date: June 12, 2012
Consultant: Paul Donahue
SUBJECT
Public contracts: Small business preferences
DESCRIPTION
1)Revises the small business certification procedure to
provide that the Department of General Services has the
sole responsibility for certifying and determining
eligibility of small businesses.
2)Provides that local government agencies shall have access
to the DGS list of certified small businesses posted on
dgs.ca.gov for use as a reference guide to confirm a
small business certification.
3)Authorizes a local government agency to set additional
guidelines for local small business preference purposes.
EXISTING LAW
1)Authorizes a local agency to provide for a small business
preference in construction, the procurement of goods, or
the delivery of services, and to establish a
subcontracting participation goal for small businesses on
contracts with a preference for those bidders who meet
the goal.
2)Authorizes each local agency to define a small business
for the purposes of these preferences and goals.
AB 1783 (Perea) continued
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3)Designates DGS as the administrator of the state Small
Business Procurement and Contract Act, including the
small business certification process, procurement process
for state contracts of up to $250,000, and a preference
program for bids made by certified small business and
microbusinesses.
4)Establishes a 5% preference for bids made by certified
small business and microbusinesses for the award of state
procurement contracts.
5)Defines a small business as independently owned, not
dominant in its field of operation, domiciled in
California, employing 100 or fewer employees, and earning
$14 million or less in average annual gross revenues for
the three previous years.
BACKGROUND
1)State contracting with small businesses : The Small
Business Procurement and Contract Act was enacted more
than 30 years ago. It provides a small business
preference within the state's procurement process with a
view toward increasing the number of contracts between
the state and small businesses. In 1989, a disabled
veteran owned business enterprise (DVBE) preference was
added to the program. Since 2001, there have been four
Executive Orders (EOs) specifying a 25% goal for small
business and 3% DVBE participation in state procurement
contracts, including EO D-37-01 (2001), EO S-02-06
(2006), EO D-43-01(2001), and EO S-11-06 (2006).
Statutory enactments strengthened the Act, including SB
115 (Florez - 2005), which requires DGS to establish a
DVBE incentive program for state contracts; and AB 761
(Coto - 2007), which codified a 25% small business
participation goal for contracts related to revenues
expended from the 2006 infrastructure bonds.
2)Local government : Local government entities typically
manage the certification of small businesses and
microbusinesses for purposes of establishing local
bidding preferences. Although some jurisdictions have
signed memoranda of understanding with DGS in which the
local government entity agrees to recognize, for purposes
of local preferences, any small business or microbusiness
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that has been certified at the state level, only a few
jurisdictions participate. As a result, jurisdictions
require small and microbusinesses to repeat the
certification process at the local level in a process
that is often duplicative of state certification.
AB 1783 does not require local jurisdictions to recognize
and use the list of certified small businesses and
microbusinesses produced by DGS, but it does provide
local jurisdictions with the option of using it as a
reference for certifying small businesses for local
preferences.
3)State Small Business Certification : DGS is responsible
for the certification of small businesses for purposes of
the state's small business preference. To become
certified, DGS requires small businesses and
microbusinesses to submit a single application, and
supporting documentation, certifying that they:
a) Are independently owned and operated;
b) Not dominant in their field of operation;
c) Have their principal office in California;
d) Have owners (officers, if a corporation) domiciled
in California; and
e) Meet threshold employee head count and annual
revenue requirements.
PRIOR/RELATED LEGISLATION
SB 67 (Price) 2011-2012 Session . Would have authorized the
Department of General Services to direct all state entities
to establish an annual goal of achieving not less than 25%
small business participation in state procurement
contracts, as specified. (Held on Suspense in Assembly
Appropriations)
AB 309 (Price) 2009-2010 Session . Would have codified the
small business procurement goals set forth in Executive
Order (EO) D-37-01 and EO S-02-06, which require the
establishment of a 25% small business participation goal
for all state entities and directed the DGSto monitor each
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agency's progress in meeting this goal. (Held in Assembly
Appropriations)
AB 761 (Coto) Chapter 611, Statutes of 2007 required each
state agency awarding contracts that are 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.
SUPPORT:
CALASIAN Chamber of Commerce
California Chapter of American Fence Association
California Fence Contractors' Association
California Small Business Association
Central Valley Business Incubator
City of Firebaugh
City of Reedley
City of San Joaquin
City of Selma
East Bay Municipal Utility District
El Dorado Irrigation District
Engineering Contractors' Association
Flasher Barricade Association
Fresno Chamber of Commerce
Fresno County Economic Development Corporation
Marin Builders Association
Small Business California
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
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