BILL ANALYSIS �
AB 2426
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Date of Hearing: April 17, 2012
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 2426 (Galgiani) - As Amended: March 29, 2012
SUBJECT : Public contracts: veterans preference.
SUMMARY : Grants a 5% bid preference for state public works
projects to contractors who hire veterans registered with the
federal Helmets to Hardhats (H2H) Program. Specifically, this
bill :
1)Grants a 5% bid preference to contractors who hire veterans in
the H2H program for state public works projects procured using
lowest bidder or lowest responsible bidder.
2)Allows a bidder to qualify for the bid preference if:
a) The bidder or subcontractor utilized H2H in the year
preceding the bid submission; and,
b) The bidder and listed subcontractors each qualify for
the bid, and each certify in writing that they qualify.
3)The bid preference shall be calculated by reducing the bid of
the lowest responsible bidder, for purposes of comparing the
bid with competing bids.
4)Requires a bidder or subcontractor receiving a bid preference
to use H2H for at least a year after bid acceptance.
5)Imposes a civil penalty of $2,500 per violation, with a
maximum amount of $25,000, against a bidder who knowingly
certifies false information. Authorizes any public prosecutor
to bring a civil action to enforce these provisions.
6)Requires a winning bidder, at a state agency's request, to
provide written proof that the bidder is entitled to the bid
preference. If proof is not submitted, the preference will be
denied.
7)Allows a winning bidder who is denied the bid preference
because a listed subcontractor failed to establish entitlement
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to a bid preference, to substitute a subcontractor within 14
days. Requires the original subcontractor to pay the winning
bidder any reasonable cost increase in hiring a new
subcontractor.
8)Defines "Helmets to Hardhats" to mean the Center for Military
Recruitment, Assessment, and Veterans Employment program
administered by the Department of Defense.
9)Makes legislative findings and declarations related to the use
of military veterans in the construction industry.
EXISTING LAW :
1)Requires the Department of General Services (DGS) to
administer the state Small Business Procurement and Contract
Act (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. (Government Code, commencing with Section
14835)
2)Establishes a 5% bid preference for certified small businesses
and microbusinesses for state contracts 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.
Caps the aggregate amount of bid preferences for a single bid
at $100,000. (Government Code Section 14838)
3)Establishes a variable bid preference up to 15% for
contractors hiring individuals from enterprise zones in a
targeted employment area, with a single bid preference limit
of $50,000. Caps the aggregate amount of bid preferences for a
single bid at 100,000. (Government Code Section 7084)
4)Defines a "small business" to mean an independently-owned
business that is not dominant in its field of operation,
domiciled in California, employs 100 or fewer employees, and
has earned $10 million or less in average annual gross
revenues for the previous three years. (Government Code
Section 14837)
5)Establishes the California Disabled Veteran Business
Enterprise (DVBE) Program, and defines a "disabled veteran" to
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mean a veteran, as specified, who has at least a 10%
service-connected disability and who is domiciled in the
state, and a "DVBE" to mean a business that is majority-owned
by disabled veterans. (Military & Veterans Code Section 999).
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "There
are a tremendous number of returning veterans who are seeking
jobs in this economic downturn. The unemployment rate in
California is extremely high. AB 2426 would help lower the
unemployment level for returning veterans while stimulating the
economy.
"Not many people are comfortable with the process of
transitioning from the military to the civilian workforce? The
process can feel overwhelming, especially if it seems like
meaningful help is unavailable. H2H was formed for this reason
and is dedicated to helping the National Guard, �Military]
Reserve, retired, and transitioning active-duty military members
connect to quality career and training opportunities in one of
America's most challenging and rewarding industries - the
construction industry. H2H makes the connection between the
career providers and the candidates that apply for their career
opportunities."
Background . This bill would establish a 5% bid preference for
contractors who hire veterans in the federal H2H program for
state public works projects. The H2H program is administered by
a non-profit organization that transitions military veterans
into the construction workforce with job training and
assistance. H2H is a Web-based program that requires online
registration and provides online job postings. Veterans are
connected to regional directors and volunteers who assist
veterans with job training and applications.
Existing law allows for a 5% bid preference for small businesses
and up to $50,000, and a variable bid preference up to 15% for
contractors hiring individuals from enterprise zones in a
targeted employment area. Existing law also allows a 5% bid
incentive for DVBEs. Existing law caps an individual bid
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preference at $50,000, and multiple bid preferences at $100,000.
(Government Code Section 14838) DVBEs receive an incentive,
not a preference.
A bid incentive is calculated based on the percentage of DVBE
participation and a bid price is lowered by the incentive amount
for evaluation purposes when awarding contracts to the lowest
price or lowest responsible bidder. A bid incentive can vary
from 1% to 5%, depending on the level of DVBE participation. A
bid incentive is calculated based on incentive points when
contracts are awarded to the highest scoring bidder. According
to DGS, the incentive differs from any preference in that it
cannot be used to displace a bidder that would have won a
contract award with a preference, and it does not have a capped
value.
Suggested Author Amendments . The author may wish to consider
amendments to establish a cap consistent with existing law to
limit the bid preference to $50,000, and makes clarifying and
technical changes.
Double-referred . This bill is double-referred to Assembly
Veteran Affairs Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
AB 2426
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