BILL ANALYSIS �
SB 734
Page 1
SENATE THIRD READING
SB 734 (Price)
As Amended August 26, 2011
Majority vote
SENATE VOTE :25-12
TRANSPORTATION 10-3 ECONOMIC DEVELOPMENT 4-2
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|Ayes:|Bonnie Lowenthal, |Ayes:|V. Manuel P�rez, Beall, |
| |Jeffries, Blumenfield, | |Block, Hueso |
| |Bonilla, Buchanan, Eng, | | |
| |Furutani, Galgiani, | | |
| |Portantino, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Miller, Norby |Nays:|Grove, Morrell |
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Hall, Hill, Lara, | | |
| |Mitchell, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | |
| |Nielsen, Norby, Wagner | | |
| | | | |
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SUMMARY : Imposes requirements on the High-Speed Rail Authority
(Authority) relative to small business participation in its
contracts. Specifically, this bill :
1)Makes findings and declarations regarding the need to ensure
that a fair proportion of the Authority's contracts are
awarded to microbusinesses.
2)Adds to unique requirements of state agencies with regard to
small business participation in contracts financed with the
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proceeds of the infrastructure-related bond acts of 2006, as
defined, contracts financed with the proceeds of high-speed
rail bonds also.
3)Requires the Authority, with assistance from the Department of
General Services (DGS), to prepare a small business,
microbusiness, and disabled veteran business enterprise
outreach and retention plan, by July 31, 2012, specifically to
ensure that Authority annually meets the small business
participation goal previously established by gubernatorial
executive order (i.e., 25%).
4)Directs the Authority, when developing the outreach and
retention plan, to consider examples of existing small
business programs used by other public agencies in California
and the United States; provides that, when preparing the plan,
the Authority is to be guided by provisions of the Small
Business Procurement and Contract Act.
5)Requires the Authority, prior to adopting the plan, to hold a
public hearing at least one month in advance of adopting the
plan.
6)Requires the draft plan and the adopted plan to be posted on
the Authority's Web site; also, requires a summary of the plan
and a link to the plan Web site to be included in all
procurement documents.
7)Requires all bidders' conferences convened by the Authority to
include a presentation of the state's small business
participation goals; requires the Authority to request a
representative of DGS to attend the bidders' conference to
answer questions related to the state's small business
procurement laws.
8)Adds a price preference of 2.5%, in addition to the already
established 5% preference for small businesses, to qualified
state-certified microbusinesses.
9)Requires the Authority to include in its 2012 business plan a
strategy for ensuring the participation of
California-certified small businesses in contracts awarded
during all phases of the high-speed rail project.
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EXISTING LAW:
1)Defines "small business" to mean an independently owned and
operated business that is not dominant in its field of
operation, the principal office of which is located in
California, the officers of which are domiciled in California,
and which, together with affiliates, has 100 or fewer
employees, and has an average annual gross receipts of
$10,000,000 or less over the previous three years, or is a
manufacturer, with 100 or fewer employees.
2)Defines "microbusiness" to mean a small business that,
together with affiliates, has average annual gross receipts of
$2,500,000 or less over the previous three years, or is a
manufacturer, with 25 or fewer employees.
3)Defines "awarding department" to mean any state agency,
department, governmental entity, or other office or entity
that is empowered by law to enter into contracts on behalf of
the State of California.
4)Requires state agencies to set goals for small business
(including microbusiness) participation in contracting for the
provisions of goods, information technology, services, and
construction; also requires state agencies to provide for
small business bid preferences and other considerations in
awarding contracts.
5)Requires DGS to report on the level of participation by small
businesses in state contracting.
6)Establishes the California Disabled Veteran Business
Enterprise Program to address the special needs of disabled
veterans seeking rehabilitation and training through
entrepreneurship and to recognize the sacrifices of
Californians disabled during military service.
7)Requires contracts awarded by any state agency, department,
officer, or other state governmental entity to have statewide
participation goals of not less than 3% for DVBEs. These
goals apply to the overall dollar amount expended each year by
the awarding department.
8)Provides that, to encourage competition for public contracts
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and to aid public officials in the efficient administration of
public contracting, to the maximum extent possible,
California's public contract law should be uniform.
9)Sets forth unique requirements of state agencies with regard
to small business participation in contracts financed with the
proceeds of the infrastructure-related bond acts of 2006, as
defined.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, annual administrative costs of around $100,000 for
the Authority to prepare and then implement the outreach plan
and to report annually on meeting the contracting goals. Costs
to DGS will be minor and absorbable.
COMMENTS : In March 2009, then-Governor Schwarzenegger issued
Executive Order S-02-06 relative to small business participation
in state procurement and contracts. That executive order
mandated, among other things, the following:
1)Each agency secretary, department director, and executive
officer must ensure that the state's procurement and
contracting processes are administered in order to meet or
exceed the 25% small business participation goal.
2)Each state agency must identify a Small Business Advocate at
the agency, department, board, or commission level, to develop
and share innovative procurement and contracting practices
from the public and private sectors to increase opportunities
for small businesses.
3)DGS must monitor the progress of all agencies, departments,
board and commissions towards meeting the 25% small business
participation goal.
4)Each state agency, department, board and commission that has
not achieved the small business participation goal must submit
an Implementation and Corrective Action Plan to DGS which
will, in turn, share these plans with the California Small
Business Advocate and together they will explore ways to work
with departments to improve performance.
According to DGS's 2010 report on the Fiscal Year (FY) 2008-2009
contracting activities, small business and microbusiness
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received a total of $2.4 billion, or 26.8% of the total dollars
awarded in contracts during the year.
In February 2011, the Authority published its draft policy
encouraging participation in project contracts by small
businesses and disabled veteran business enterprises. As it
currently reads, the policy calls for minimum contracting goals
of 25% for small businesses, and 3% for disabled veteran-owned
businesses, consistent with statewide goals for all other state
agencies. According to the Authority, the policy reflects
current practices it has already implemented. In Fiscal Year
2009-10, the Authority reported small business participation at
27.72% and 7.07% for disabled veteran business enterprise
participation.
According to the author, however, microbusinesses (a subset of
small businesses) are not getting their fair share of state
public contracting. The author asserts that, of the $2.4
billion worth of contracts issued by state agencies in FY
2008-2009 to small businesses, only 37% of those contract
dollars were awarded in contracts with microbusinesses even
though microbusinesses make up 80% of small businesses.
In 2006, voters approved passage of nearly $20 billion in bonds
for infrastructure projects. Those projects offered a unique
opportunity for the state to foster small business participation
in state contracting. Accordingly, the Legislature passed AB
761 (Cotto) Chapter 611, Statutes of 2007, to ensure that small
and emerging contractors obtain a fair portion of state
infrastructure construction contracts by establishing 25%
participation goals and by requiring state agencies to provide
specific assistance to help small businesses successfully bid on
infrastructure contracts.
With passage of a subsequent bond act providing $9 billion for
high-speed rail (to be used to leverage even greater amounts of
federal and private money) California has another opportunity to
bolster small business development, as provided for in this
bill. The author introduced this measure to provide assistance
to the Authority to develop contract and procurement strategies
for small contractors and raise the visibility and importance of
California microbusinesses.
Related legislation: AB 365 (Galgiani) and AB 1206 (Galgiani)
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would have enacted penalties and sanctions relative to the
certification of businesses as a small business enterprise,
microbusiness, or disabled veteran business enterprise. Both
bills were held on the suspense file in the Assembly
Appropriations Committee.
SB 733 (Price) would have required the Authority to develop a
strategy to ensure that at least 25% of the project workforce
used at each Authority worksite was from the local workforce.
That bill was held on the suspense file in the Senate
Appropriations Committee.
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093
FN: 0002241