BILL ANALYSIS �
SB 67
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Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 67 (Price) - As Introduced: January 10, 2011
Policy Committee: JEDE Vote:8-0
BPCP 5-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill 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.
2)Requires state entities to implement procurement and contract
processes to meet the 25% small business participation goal
and submit annual participation statistics to DGS.
3)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.
4)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.
FISCAL EFFECT
To the extent existing EOs remain effective and DGS continues to
administer contracts consistent with those EOs, there are no new
costs as the proposed statute and the EOs are nearly identical.
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To the extent this bill codifies a small business participation
rate, as opposed to an easily changed EO, this bill could result
in multi millions of dollars in contract preferences given the
thousands of state contracts.
COMMENTS
1)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."
2)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
disabled veteran business enterprise (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 enactments were also made to expand
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.
3)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
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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 that state agencies receive a
good deal on their state contracts.
4)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 on this
committee's Suspense File.
5)Previous Legislation . AB 309 (Price) of 2010 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 on this committee's Suspense File.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081