BILL ANALYSIS �
SB 67
Page 1
Date of Hearing: July 5, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 67 (Price) - As Introduced: January 10, 2011
SENATE VOTE : 33-4
SUBJECT : Public contracts: small business participation.
SUMMARY : Authorizes the Department of General Services (DGS)
to require a 25% small business participation goal for state
contracts and allows DGS to monitor progress in meeting this
goal, commencing July 1, 2012. Specifically, this bill :
1)Authorizes DGS to direct all state agencies, departments,
boards, and commissions to establish and report on their
progress in meeting the 25% small business participation goal
established by Executive Order (EO) D-37-01 and EO S-02-06,
and upon taking this direction, requires all of the following:
a) Requires state entities to implement procurement and
contract processes to meet the 25% small business
participation goal and submit annual participation
statistics to DGS;
b) Authorizes DGS to establish policies and procedures to
monitor the progress of state entities in meeting the 25%
small business participation goal and share information on
a state entity's progress, including corrective action
plans, with the Office of the Small Business Advocate; and,
c) Authorizes DGS to require a state entity not meeting the
25% small business participation goal to submit an annual
implementation and corrective action plan to DGS until the
goal is met, and further authorizes DGS to:
i) Establish criteria for a corrective action plan and
publish it in the State Administrative Manual (SAM); and,
ii) Undertake reasonable means to assist state agencies
in improving small business participation in state
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contracts, including entering into a memorandum of
understanding with state agencies that have not met the
small business participation goal.
2)Requires DGS to establish, in the SAM and State Contracting
Manual, policies for state entities to use when contracting
with small businesses, including the use of participation
goals and bid preferences.
3)Requires DGS to actively promote small business certification.
4)Makes the provisions of this bill operative on July 1, 2012.
EXISTING LAW :
1)Requires 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.
2)Declares that small businesses and microbusinesses shall
receive a fair portion of the total purchases and contracts or
subcontracts for state goods, services, information
technology, and construction.
3)Establishes a 25% small business participation goal for all
contracts financed with the proceeds of the
infrastructure-related bond acts of 2006.
4)Establishes 5% bid preferences for certified small businesses,
microbusinesses, and disabled veteran enterprise businesses
(DVBEs) for the award of state procurement contracts awarded
based on the lowest responsible dollar bid or highest scoring
bid, with a single bid preference limit of $50,000. Non-small
businesses that subcontract at least 25% of their contracts
with certified small businesses also qualify for the small
business bidders' preference.
5)Requires each state agency to consolidate its existing staff
functions that relate to contract opportunities for small
businesses into a single point of contract for small
businesses and designate a small business advocate as a
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liaison to small business suppliers.
6)Defines a small business as independently owned, not dominant
in its field of operation, domiciled in California, employing
100 or fewer employees, and earning $10 million or less in
average annual gross revenues for the previous three years.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "Small
business is a key economic driver of job growth and economic
development and continues to play a leading role in the state's
economic recovery efforts. Maintaining a strong small business
participation requirement on state-funded contracts promotes
competition that helps control state costs and ensures that
state agencies receive a good deal on their state contracts. SB
67 codifies two former EOs and ensures that some of the ground
small business has gained in state procurement and contracting
within the last few years will continue in the future,
regardless of party."
Background . The Small Business Act, administered through DGS,
was established 30 years ago to grant a small business
preference within the state's procurement process. In 1989, a
DVBE component was added to state procurement practices.
Current law requires DGS to report the participation levels of
DVBEs and businesses that include the owner's race, ethnicity,
and gender information in statewide contracts.
Since 2001, the Governor has issued several EOs specifying a 25%
participation goal for small businesses and a 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 advancements were also made to
strengthen the Small Business Act, including SB 115 (Florez),
Chapter 451, Statutes of 2005, which required DGS to establish a
DVBE incentive program for state contracts, and AB 761 (Coto),
Chapter 611, Statutes of 2007, which codified the 25% small
business participation goal for state contracts funded by 2006
infrastructure bonds.
Notwithstanding the lengthy existence of the SBA, statutory
upgrades, and EOs, the state's success in obtaining small
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business and DVBE participation goals in state procurement
contracts has been inconsistent. Since small business
participation targets were established in 2001, DGS has achieved
the 25% participation goal only three times. According to the
author's office, DGS reported that in 2008-09, the State
achieved its small business participation goal by awarding $2.5
billion, or 26.9%, worth of state contracts totaling $8.9
billion, to small businesses.
Related Legislation . AB 150 (Perea) of 2011, allows the
Department of General Services (DGS) to direct minimum business
participation goals for minority, women, and disabled
veteran-owned businesses and small businesses in state contracts
and to monitor progress in meeting this goal, commencing July 1,
2012. This bill was held in the Assembly Appropriations
Committee.
Previous Legislation . AB 309 (Price) of 2010, would have
required a 25% small business participation goal for state
contracts and would have required DGS to monitor progress in
meeting this goal. This bill was held in the Assembly
Appropriations Committee.
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 . According to the National Federation of Independent
Business, "SB 67 will codify the EOs to ensure that the state
continues to meet or exceed the 25% overall annual California
certified small business participation goal on state-funded
contracts. The small business participation target has only
been reached three times since it was established in 2001. Most
recently, DGS reported that in 2008-09, the state achieved its
small business target by awarding $2.5 billion (26.9%) of the
$8.9 billion in total state contracts to small businesses.
Small business is a key economic driver of job growth and
economic development and continues to play a leading role in the
state's economic recovery efforts. Maintaining a strong small
business participation requirement on state-funded contracts
promotes competition that helps control state costs and ensures
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that state agencies receive a good deal on their state
contracts.
REGISTERED SUPPORT / OPPOSITION :
Support
California Small Business Association
Coalition of Small and Disabled Veteran Businesses
Kern Minority Contractors Association
National Association of Women Business Owners of California
National Federation of Independent Business
Natoma Technologies
Sacramento Black Chamber
Small Business California
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301