BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2630 (Hueso) - Public contracts: State Contract Act: report.
Amended: April 10, 2012 Policy Vote: GO 9-3
Urgency: No Mandate: No
Hearing Date: June 25, 2012 Consultant:
Bob Franzoia
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2630 would require the Department of General
Services (department) to include in the Consolidated Annual
Report the list of activities that each state agency used to
inform small businesses of each of the existing preferences
available under state law, and the total number of preferences
used in bidding packages by each state agency for the year.
Fiscal Impact: Estimated $50,000 initially and $150,000 annually
from the General Fund and various special funds.
The department is a fee for service agency that charges the
same fee to General Fund and special fund agencies.
The split between General Fund and special fund charges, which
can vary annually based on contact activities, is unknown.
Background: Since 2001, there have been four Executive Orders
(EO) specifying goals for small business and disabled veteran
business enterprises (DVBE) participation in state procurement
contracts. EO D-37-01 (2001) and EO S-02-06 (2006) set 25
percent small business participation goals. Under current law,
contractors bidding on a state contract can have the overall
cost of their bid discounted by five percent in order to make
them more competitive as a low bidder. The maximum amount
provided for each qualifying bidding preference is $50,000 with
a total bid maximum of $100,000. Therefore, contractors with
bids of up to $100,000 higher than the lowest bid can be awarded
the contract if they qualify for two bidding preferences.
State agencies with annual expenditures over $100,000 have
available to small business and DVBE suppliers, a liaison to
help them resolve contracting issues with the state. The small
business/DVBE advocate's duties must at minimum, include the
following services:
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- Make information regarding pending solicitations available to,
and consider offers from, California small business suppliers
capable of meeting the state's business need, and who have
registered with the state for this purpose.
- Ensure that payments due on a small business contract are made
promptly.
DGS maintains a directory of all Small Business Advocates and
contact information.
Government Code 11148.5 (a) requires that each state agency that
significantly regulates small business or that significantly
impacts small business shall designate at least one person who
shall serve as a small business liaison. The small business
liaison has the general responsibility of responding to small
business concerns relating to his or her agency's activities and
responsibilities.
From 2006-07 through 2008-09, the state directed 26.34 percent
of all its spending toward small business and 2.72 percent to
disabled veteran business. During this three-year timeframe, a
total of nearly $8 billion in contracts were awarded to small
businesses and almost $600 million to DVBEs.
For 2008-09, state departments spent 26.88 percent with small
business and 2.96 percent with DVBEs. This represented the
highest DVBE participation level achieved. For 2009-10, the
most recent information available, state departments spent 26
percent, or $2.4 billion, with small businesses.
The department and delegation holders (departments with
procurement staff and authority ranging generally from $5,000 to
$2 million) enter into tens of thousands of contracts annually.
While the department currently collects the raw number of
preferences used from the departments the department does not
collect the information this bill requires. Collecting this
information, and providing the delegation holders with guidance
and training in the collection and reporting this information,
will represent a new workload based upon the sheer volume of
contracting done by the state and the extensive outreach efforts
that take place at the department level and by individual
contract administrators. This analysis estimates the additional
workload will require at least 1.5 personnel years annually at
the associate government program analyst level to collect,
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synthesize, and assemble this information into the form required
by this bill.
This analysis estimates the department will require three to six
months to develop a new reporting form and have it approved and
distributed. Costs are related to creating and consolidating
department reports into a single document ($40,000), updating
the State Contracting Manual and State Administrative Manual
($5,000) and updating training materials for reporting ($5,000).
Annual costs will be for outreach to departments for reporting
and training ($50,000) and for compiling and integrating the
information into the Consolidated Annual Report ($105,000).
Staff notes FI$CAL may significantly reduce the workload related
to this bill, and similar bills proposing data collection and
reporting, as departments may be able to much more quickly
generate reports from information reported in FI$CAL.
Departments with a statewide presence such as CalFire,
California Department of Corrections and Rehabilitation,
Department of Fish and Game, Department of Parks and Recreation
and Department of Water Resources will generate the most General
Fund (or general obligation bond) workload in order to comply
with the provisions of this bill.