BILL ANALYSIS �
AB 2426
Page 1
Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2426 (Galgiani) - As Amended: April 26, 2012
Policy Committee: Business and
Professions Vote: 8-1
Veterans Affairs 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires state agencies, in awarding construction
contracts, to provide a bid preference of up to 5% to a bidder
using Helmets to Hardhats (H2H)- H2H is a federal program to
help veterans enter the construction industry by assessing
aptitude for apprenticeship programs and hiring halls and
offering employment opportunities. Specifically, this bill:
1)Establishes a sliding scale bid preference of 1%, 2%, 3%, 4%,
and 5%, with the preference increasing as the percentage of a
bidders' employees working on a project that are California
resident veterans increases.
2)Stipulates that a bidder is entitled to the bid preference
only if the bidder and each listed subcontractor qualify for
the bid preference.
3)Requires the bidder and subcontractors to have used H2H for
the preceding 12-month period in order to qualify for the
preference, and to use the program for at least one year
following acceptance of the bid.
4)Requires bidders and subcontractors claiming the bid
preference to submit a separate statement certifying their
qualification for the preference, and stipulates that
knowingly providing false information on the certification is
a violation subject to civil penalty between $2,500 and
$25,000.
5)Requires a winning bidder claiming the bid preference, and
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their subcontractors, to submit substantiating information to
the state agency at the agency's request.
6)Stipulates if a winning bidder is denied a preference because
of a listed subcontractor's failure to establish entitlement
to the bid preference, the winning bidder has 14 days to find
a substitute subcontractor that is entitled to the preference.
FISCAL EFFECT
1)To the extent the preference provided in this bill results in
construction contracts being awarded to other than the lowest
bidders, state contract costs would increase. The extent of
such an increase is unknown, but given the large annual volume
of state construction contracts and that there is no dollar
limit to the preference (though a $50,000 limit in existing
sections of the Government Code may apply), costs could be in
the hundreds of thousands to the low millions of dollars
annually.
(For 2010-11, the Department of General Services indicates
that construction volume totaled about $250 million and
Caltrans indicates it awarded about $725 million in contracts
funded without federal funds. (Under federal law, contracts
funded with federal funds would not be eligible for this
preference.)
2)Significant administrative costs to verify and monitor
compliance with the bill's workforce requirements by
contractors and subcontractors awarded contracts due to the
preference. Typically, a contractor's workforce varies over
the period of a construction contract, and union contractors
in particular are not in control of a significant portion of
their workforce, as building trades workers are dispatched to
a jobsite from the unions in response to the contractor's
workforce needs. Therefore, maintaining compliance with the
threshold requirements for employing veterans would be
challenging, and monitoring such compliance will be labor
intensive. Each large public works departments of the state
will likely need two to three staff for this purpose at a cost
in the range of $200,000 to $300,000 per department.
COMMENTS
1)Purpose . According to the author's office, "There are a
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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.
2)Background . 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.
Current law allows for a 5% bid preference for certified small
businesses and a variable bid preference of up to 15% for
contractors hiring individuals from, enterprise zones in
targeted employment area. A 5% bid incentive is allowed for
disable veteran business enterprises. Existing law caps an
individual bid preference at $50,000, and multiple bid
preferences at $100,000.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081