BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 175 (Corbett)
Hearing Date: 5/2/2011 Amended: 4/26/2011
Consultant: Bob Franzoia Policy Vote: G O 7-3
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BILL SUMMARY: SB 175 would require a state agency that accepts
bids or proposals for a contract for the purchase or
installation of a solar photovoltaic system, as defined, to
provide a five percent preference to a business that certifies
that all of the solar panels installed as part of the solar
photovoltaic system have been manufactured or assembled in
California, in accordance with specified criteria.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Bid preference Unknown, but potentially major annual
General/ costs, to the extent state
contracts are Special awarded to other
than the lowest bidder due to
the preference. To the extent
the residency requirement dissuades
contractors from bidding, costs may
increase due to reduced competition
Contract administrationUnknown, minor to significant costs
toGeneral/
determine compliance with residency
requirement; potential increase in bid
protests
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Preferences can currently be given for small business in
general, disabled veteran owned business enterprises (DVBE), for
small businesses in economically targeted areas, and for
businesses, regardless of size, located in economically
distressed areas. The maximum amount provided for each
qualifying bidding preference is $50,000 with a total bid
maximum of $100,000. Thus, a contractor with a bid of up to
$100,000 higher than the lowest bid can be awarded the contract
if he or she qualifies for two bidding preferences. Below, are
three examples of how the preference would be applied:
(1) Three California businesses (as defined by this bill) bid:
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Firm A Firm B
Firm C
Bid $1,000,000 Bid $1,050,000
Bid $1,025,000
Firm A would be awarded the contract as the low bidder; no
preference would be applied.
(2) Two California businesses and one non-California business
bid:
Firm A (non-California) Firm B
Firm C
Bid $1,000,000 Bid $1,050,000
Bid $1,025,000
No Preference Preference
$50,000 Preference $50,000
Total $1,000,000 Total $1,000,000
Total $975,000
Firm A is low bidder and a non-California business. The
preference is calculated on five percent of Firm A's bid. Firm
C, a California business would receive a preference and be
awarded the contract. The state would pay Firm C $1,025,000
(not $975,000), which is a 2.5 percent preference.
(3) Two California businesses and one non-California business
bid:
Firm A (non-California) Firm B
Firm C
Bid $1,030,000 Bid
$1,050,000 Bid $1,025,000
Total $1,030,000 Total
$1,050,000 Total $1,025,000
Firm C, a California business, is awarded the contract outright
without the preference. No preference is applied when a
California business is low bidder.
The specified criteria, as noted below, are similar to criteria
in current law. The preference shall be provided as follows:
(1) For solicitations to be awarded to the lowest responsible
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bidder meeting specifications, the preference to a business that
certifies that all of the solar panels installed as part of the
solar photovoltaic system have been manufactured in this state
shall be 5 percent of the bid price of the lowest responsible
bidder meeting specifications.
(2) For solicitations to be awarded to the highest scored bidder
based on evaluation factors in addition to price, the preference
to a business that certifies that all of the solar panels
installed as part of the solar photovoltaic system have been
manufactured in this state shall be 5 percent of the total score
of the highest scored bidder.
(3) A preference awarded pursuant to paragraph (1) or (2) shall
not be awarded to a noncompliant bidder and shall not be used to
satisfy any applicable minimum requirements.
(4) In order to be eligible for the 5 percent preference
authorized pursuant to this section, a business shall submit all
required substantiating documentation and information needed by
the state agency to determine if the business is eligible for
the preference, including, but not limited to, documentation
regarding who the manufacturer of the solar photovoltaic system
will be and the location or locations where the solar
photovoltaic system will be manufactured.
Staff notes the definitions in the bill may be overly broad,
potentially allowing nearly any assembler or manufacturer to
qualify for the preference. Additionally, staff recommends the
bill be amended to clarify (1) that a preference award of five
percent is the maximum preference and not in addition to other
existing preferences and (2) that the preference is on only the
dollar value of the solar panel(s) or some narrower definition
of solar photovoltaic system, which may include non-assembly or
non- manufacturing costs.