BILL ANALYSIS �
SB 301
Page 1
Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel P�rez, Chair
SB 301 (DeSaulnier) - As Amended: June 26, 2012
SENATE VOTE : Not applicable
SUBJECT : Office of the Small Business Advocate
SUMMARY : Makes technical changes to the duties of the Office
of the Small Business Advocate (OSBA), located within the
Governor's Office of Business and Economic Development (GO-Biz).
More specifically, the bill expands the mandated information on
the OSBA website to include the name and telephone number of the
Department of General Services' small business advocate whose
duty is to facilitate small businesses participating in state
procurement opportunities and the small business advocate
liaison at each state agency who has been designated to serve as
a liaison to small business suppliers who are interested in
contracting opportunities at their individual agency.
EXISTING LAW establishes the OSBA within the Governor's Office
of Business and Economic Development (GO-Biz) for the purpose of
supporting small business development in the state.
FISCAL EFFECT : Unknown
COMMENTS :
1)Small Business Preferences : The Small Business Act (SBA),
administered through DGS, was implemented more than 30 years
ago to increase the participation of small business within the
state's procurement process. In 1989, a disabled veteran
owned business enterprise (DVBE) component and a 3% annual
procurement participation goal was added to SBA. While
existing law has no annual small business goal, since 2001
there have been four Executive Orders (EOs) specifying a 25%
annual goal for small business participation in state
procurement.
In order to assist state government entities in reaching the
small business and DVBE participation goals, contracting
entities are provided a number of specific tools, including
bid preferences, a streamlined procurement method, and
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designation of a small business procurement liaisons at every
agency.
Under the streamlined procurement process, the awarding state
entity is authorized to bypass the advertising, bidding, and
protest provisions in the State Contract Act. This allows a
contract to be awarded directly to a certified small business
at a contract price established by checking the proposed rate
with two other small businesses. Contracts offered under the
streamlined procurement process are currently limited to
contracts between $5,000 and $100,000. Effective January 1,
2012, the maximum contract amount will increase to $147,000
for goods and services and $250,000 for public works.
Of the $2.5 billion of state contracts that were awarded to
small businesses in 2008-09, $225.4 million (17,310 contracts)
were awarded through the streamlined procurement process. The
actual number may be higher as only 78 of 124 departments
reported their small business procurement activities to DGS.
Certified small business and microbusiness bidders and other
bidders that commit to using certified small business and
microbusiness subcontractors are eligible for a 5% bid
preference where the solicitations are made either on the
basis of lowest responsible dollar bid, or on the basis of
highest score, considering factors in addition to price. DVBE
bidders and firms that commit to using DVBEs may also receive
a bid preference of between 1% and 5%. There are programmatic
limits to the overall value of these preferences with a single
bid preference limited to $50,000 and the combination of all
preferences not exceeding $100,000 (many DVBEs are also
certified small businesses, allowing for two preferences).
In order to qualify for state preferences and the streamlined
procurement process, small businesses and DVBE need to be
certified, which is undertaken through the Office of Small
Business & Disabled Veteran Business Enterprise Services at
DGS.
Another important component of the state's effort to increase
small business participation in state contracts is the work of
the Small Business Advocate, located at GO-Biz, and the
network of small business liaisons at larger departments
including the Department of Transportation and the Air
Resource Board. Under existing law, every state agency is
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also required to have a single point of contact for small
business state procurement opportunities.
2)California's Small Business Economy : California's dominance
in many economic areas is based, in part, on the significant
role small businesses play in the state's $1.9 trillion
economy. Businesses with fewer than 100 employees comprise
nearly 98% of all businesses, and they are responsible for
employing more than 37% of all workers in the state.
Among other advantages, small businesses are crucial to the
state's international competitiveness and are an important
means for dispersing the positive economic impacts of trade
within the California economy. Small businesses have
consistently functioned as economic engines. According to the
Small Business Administration's Small Business Economy 2011,
small businesses nationally outperformed large firms in net
job creation nearly three out of four times from 1992 through
2010 when private-sector employment rose.
During the most recent recession, however, small businesses
have been especially hard hit. Equifax reported that
bankruptcies in California rose by 81% in 2009, as compared to
44% nationally. This trend continued in 2010. While in
general bankruptcies were down across the nation in 2011 (a
26% decrease), Equifax reported small business bankruptcies in
California accounted for almost 20% of all small business
bankruptcies in the nation. In 2011, the metropolitan
statistical areas (MSAs) in western states continued to lead
the nation in small business bankruptcies. Bankruptcies in
the western region overall, however, experienced the most
significant decrease in bankruptcy filings year over year from
Q1 2011 to Q1 2012 in the nation - more than a 40% decline in
some MSAs.
3)Related Legislation : The following is a list of related
legislation.
a) AB 31 (Price) Small Business Contract Preferences and
Enforcement : This bill made several key changes to state
procurement procedures including increasing the maximum
contract threshold amount for awards to a small business
and DVBE, under a specific streamlined procurement process,
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from $100,000 to $250,000. Further, the bill required
contractors that made contract commitments to include small
business or DVBE participation to report the final percent
of the contract actually paid to these entities. Status:
Signed by the Governor - Chapter 212, Statutes of 2009.
b) AB 926 (Ruskin) Loss Leader Notice Requirements : This
bill required certain advertising of state contracting
opportunities to include a specified statement relating to
an existing prohibition against the use of "loss leaders."
Specifically, the bill requires every solicitation that
appears in the California State Contracts Register
including informational technology equipment to contain the
following statement, "It is unlawful for any person engaged
in business within this state to sell or use any article or
product as a "loss leader. Status: The bill was signed by
the Governor, Chapter 490, Statutes of 2009.
c) AB 761 (Coto) Small Business Preference for
Infrastructure Bonds : This bill 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. Status: Signed by
the Governor, Chapter 611, Statutes of 2007.
d) SB 115 (Florez) DVBE Procurement Preferences : This bill
made various changes to the DVBE Program, including
requiring DGS to establish a state agency-wide mandatory
DVBE participation incentive. The bill also requires the
DGS Small Business Advocate to provide specified services
to small businesses and certified DVBEs. Additionally,
this bill requires DGS to adopt a streamlined reporting
procedure for state agencies to use in reporting their DVBE
participation to the Department of Veterans Affairs.
Status: Signed by the Governor, Chapter 451, Statutes of
2005.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
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Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090