BILL ANALYSIS �
Bill No: AB
2630
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 2630 Author: Hueso
As Amended: April 10, 2012
Hearing Date: June 12, 2012
Consultant: Paul Donahue
SUBJECT
State contracts: Small business participation and outreach
DESCRIPTION
Requires the Department of General Services (DGS), in
preparing its report on state contracting activity, to
include a list of activities each state agency used to
inform small businesses of each of the existing preferences
available under state law, and provide the number of
preferences used in bidding packages for the year.
EXISTING LAW
1)Designates DGS as the administrator of the state Small
Business Procurement and Contract Act, to include a small
business certification process, a procurement process
for state contracts of up to $250,000, and a preference
for bids made by certified small business and
microbusinesses.
2)Establishes a 5% preference for bids made by certified
small business and microbusinesses for the award of state
procurement contracts. A single bid preference is
limited to $50,000. Non-small businesses must
subcontract at least 25% of their contracts with small
business to qualify for the small business bidders'
preference.
AB 2630 (Hueso) continued
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3)Specifies that, to be certified by DGS, a small business
must be independently owned, not dominant in its field of
operation, domiciled in California, employ 100 or fewer
employees, and earn $14 million or less in average annual
gross revenues for the three previous years.
BACKGROUND
1)Purpose : According to the author, the Legislature "has
made several investments to promote and encourage small
business in this state through the creation of various
programs, including preferences on bidding for state
contracts. However, the benefits of these current
programs are limited to businesses that are aware of
them, know how to navigate them, and then utilize them.
It is in the best interest of this state to ensure that
we are taking measures to inform businesses of the many
tools already provided to them that are intended to
promote employment and growth.
"AB 2630 will help identify the activities currently
exercised by the Department of General Services to inform
small businesses of the existing preferences available
under state law and the outcomes of those activities.
This information will help guide future policy to
determine if the state should be investing more and if
small businesses are taking advantage of current
preferences."
2)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
AB 2630 (Hueso) continued
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participation goal for contracts related to revenues
expended from the 2006 infrastructure bonds.
Despite the longstanding existence of the SBA, statutory
upgrades, and EOs, the state's success in achieving small
business and DVBE participation goals in state
procurement contracts has been inconsistent.
For only the third time since the small business
participation target was established in 2001, DGS reports
that the state achieved its small business target by
awarding 26.88% ($2.40 billion), of the value of all
contracts to small businesses in 2008-09. This
represents a $2.0 billion increase in contracts from
2007-08. The state did not achieve its 3% DVBE
participation goal in 2008-09. DVBE contract awards,
however, did increase to 2.96% (190 million) in 2008-09,
up from 2.39% in 2007-08. California awarded $182
million in small business and DVBE contracts in 2008-09.
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 DGS to monitor each
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.
AB 2630 (Hueso) continued
Page 4
SUPPORT:
CALASIAN Chamber of Commerce
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
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