BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1427 (De Leon) - state contracts: electronic goods: bid
preference.
Amended: April 25, 2012 Policy Vote: EQ 5-2, GO 7-4
Urgency: No Mandate: No
Hearing Date: May 7, 2012 Consultant: Bob Franzoia
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1427 bill would require a state agency that
accepts bids or proposals for a contract for electronic goods to
provide a preference of five percent to a company that offers to
fulfill the contract with refurbished electronics, as specified.
Fiscal Impact: New contract bid preference would have unknown,
but likely significant annual General Fund or special fund costs
to the extent contracts are awarded to other than the lowest
bidder due to the preference.
Significant General Fund or special fund costs one time to
establish specifications for refurbished electronics.
Significant General Fund or special fund costs ongoing to
manage a more complex contract process.
Background: Preferences can currently be given for small
business in general, disabled veteran owned business
enterprises, 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.
In California, computer monitors and televisions containing
cathode ray tubes (CRTs) cannot go in the trash. Discarded CRTs
are considered hazardous because of the amount of lead they
contain and must be handled appropriately. Also, many
electronics contain so-called rare earth conflict minerals Reuse
can have environmental and humanitarian benefits.
Proposed Law: This bill would specify that "refurbished
SB 1427 (De Leon)
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electronic" means any electronic device that the manufacturer
has tested and returned to a condition that meets factory
specifications for the device, has repackaged, and has labeled
as refurbished.
Staff Comments: Since refurbished electronics can be 10 to 15
percent less expensive than a new product, bidders of
refurbished electronics may use that price advantage to secure
the low bid and qualify for the bid preference. Additionally,
since the bill does not prescribe a minimum participation level
to receive the full preference, a bidder with less than one
percent of the goods incorporating refurbished electronics could
receive the full five percent preference.
Public Contract Code 12101.2 requires the Department of General
Services to pre-negotiate the repetitively used terms and
conditions in the state's model contract with each interested
vendor who bids or proposes on information technology or
telecommunications procurements.
Based on its experience developing specifications for goods and
services or restricted bidders, for example, scrutinized
companies pursuant to Chapter 715/2011, the department
anticipates significant workload to implement and administer a
more complex contract process.
Recommended Amendments: Government Code 4535.2 provides that the
combined cost of preferences and incentives granted pursuant by
any provision of law may not exceed $100,000. Depending how the
provisions of this bill are interpreted, the state could incur
higher preference costs than currently provided in statute.
Staff recommends this bill be amended to clarify that any
contracts awarded pursuant to Public Contract Code 12230 (as
added by this bill) comply with the provisions of Government
Code 4535.2.