BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 734
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Price
VERSION: 4/26/11
Analysis by: Art Bauer FISCAL: yes
Hearing date: May 3, 2011
SUBJECT:
High-Speed Rail Authority: small business bidding preferences
DESCRIPTION:
This bill mandates that the High-Speed Rail Authority (HSRA)
develop an outreach and retention plan for small businesses,
microbusinesses, and disable veteran enterprises.
ANALYSIS:
SB 1420 (Kopp), Chapter 796, Statutes of 1996, created the HSRA
with a nine-member governing board, including five members
appointed by the governor, two members appointed by the Senate
Rules Committee, and two members appointed by the Speaker of the
Assembly.
AB 3034 (Galgiani), Chapter 267, Statutes of 2008, authorized
the Safe, Reliable High-Speed Passenger Train Bond Act for the
21st Century (Proposition 1A), which allows the HSRA to develop
a high-speed rail system extending from San Diego to Sacramento
with Phase I connecting Anaheim-Los Angeles Union
Station-Bakersfield-Fresno-San Jose-San Francisco Transbay
Terminal, authorizes $9.95 billion in general obligation bonds
to support the project, and requires the HSRA to prepare a draft
business plan by October 1, 2011 and a final plan by January 1,
2012, with updated plans due every two years. The bill also
authorizes the HSRA to enter into contracts with private or
public entities for the design, construction, and operation of
high-speed trains. In November 2008, the people passed
Proposition 1A.
California's Small Business and Procurement Act defines a
California-certified small business, and the Department of
General Services Office of Small Business and Disabled Veteran
Business Enterprise Services (DGS-OSDS) oversees their
certification. To be certified, a California-certified small
SB 734 (PRICE) Page 2
business cannot be dominant in its field. Furthermore,
regulation establishes that a certified small business is one
that meets each of the following requirements:
is independently-owned and operated;
has its principal office located in California;
has owners or officers who are domiciled in California;
and
is either a business with 100 or fewer employees and an
average annual gross receipts of $14 million or less over
the last three tax years; a manufacturer with 100 or fewer
employees, or a microbusiness, defined as a small business
with gross annual receipts less than $3,500,000; or a
manufacturer with 25 or fewer employees.
In addition, existing law establishes a state government small
business participation goal of 25 percent for contracts awarded
by the state.
When a state agency awards a low-cost contract, state law grants
a preference of 5 percent of the lowest responsible bid to a
small firm, if the low bid has been submitted by a firm other
than a small business. Further, existing law provides that the
5 percent preference is given to a nonsmall business contractor,
if the contractor commits 25 percent of the bid price to an
eligible small business that is included in the bid as a
subcontractor.
When a state agency awards a contract to the highest scored
bidder based on specified evaluation criteria in addition to
price, existing law provides a small business preference of 5
percent of the highest scored bidder, if the low score bid has
been submitted by a firm other than a small business. Further,
existing law provides that the 5 percent preference is given to
a nonsmall business contractor, if the contractor commits 25
percent of the bid price to an eligible small business is
included in the bid as a subcontractor.
This bill :
1. Makes findings and declarations related to the
importance of small businesses to California's economy.
2. Mandates that the HSRA, with the assistance of the
Department of General Services (DGS), prepare and adopt a
small business, microbusiness, and disabled veteran
SB 734 (PRICE) Page 3
business enterprise outreach and retention plan which the
HSRA is to adopt by July 31, 2012.
3. Requires HSRA to create an advisory committee with at
least nine members, the majority of whom shall represent
small businesses, microbusinesses, and disable veteran
business enterprises.
4. Requires the HSRA to hold a public hearing on the draft
plan at a monthly board meeting at least one month before
the plan's adoption. The draft plan and the final plan
shall be posted on the HSRA's website.
5. Mandates that all procurement documents include a
summary of the plan and a link to the plan on HSRA's
website.
6. Affirms that HSRA is subject to the provisions of the
Small Business Procurement and Contract Act, including all
contract preferences included in the act.
7. Mandates that the HSRA shall include at all bidders
conferences a presentation of the plan and the state's
small business participation goals and shall request a DGS
representative attend to explain the state's small business
program.
8. Establishes an additional price preference or score of
2.5 percent of the bid amount to state-qualified
microbusinesses.
COMMENTS:
1. Purpose . The author points out that small businesses
employ 6.8 million persons with fifty percent of
California's work force and 98 percent of all business
enterprises. The high-speed rail project will have a
positive economic impact throughout the state. The author
believes that it is important that the HSRA have a small
business outreach and retention program that will provide
"opportunities for California's small businesses, including
its certified qualified microbusinesses."
2. Background . The HSRA expects to issue design-build
contracts to construct an initial segment of high-speed
SB 734 (PRICE) Page 4
rail in the 2012-2013 fiscal year in the San Joaquin
Valley. The estimated cost of this proposed project is
$5.5 billion. The entire cost of the project from San
Francisco/Transbay Terminal to Los Angeles/Anaheim via the
San Joaquin Valley is between $43 and $65 billion.
Although the HSRA is unclear as to the organizational and
financial structure for delivering the entire project, it
will undoubtedly generate many contracting opportunities.
3. Microbusinesses preferences . As noted above
microbusinesses are entitled to a 5 percent preference when
bidding on price based or score based contracts. This bill
would provide microbusinesses an additional 2.5 five
percent preference for a total of 7.5 percent. The author
argues that this additional preference is necessary because
microbusinesses were awarded only 41 percent of the
contracts issued by the state in 2009.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 27, 2011 )
SUPPORT: Asian Business Association
California Black Chamber of Commerce
Latin Business Association
National Black Contractors Association
SCI Pavement Services, LP
OPPOSED: None received.