BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1427
                                                                  Page  1

          Date of Hearing:   June 19, 2012

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER 
                                     PROTECTION
                                 Mary Hayashi, Chair
                    SB 1427 (De León) - As Amended:  June 11, 2012

           SENATE VOTE  :   25-14
           
          SUBJECT  :   State contracts: electronic goods: bid preference for 
          refurbished electronics. 

           SUMMARY  :   Requires state agencies to provide a 5% bid 
          preference for electronic goods contracts to bidders who fulfill 
          the entire contract with refurbished electronics.  Specifically, 
           this bill  :   

          1)Requires state agencies to provide a 5% bid preference for 
            electronic goods contracts to bidders who fulfill the entire 
            contract with refurbished electronics.  The preference shall 
            be provided to compliant bidders as follows:
             
             a)   For contracts awarded to the lowest responsible bidder, 
               the preference shall be 5% of bid price; or, 
                
             b)   For contracts awarded to the highest scored bidder based 
               on evaluation factors in addition to price, the preference 
               shall be 5% of the total scored bidder.

          2)Requires a bidder to submit substantiating documentation to 
            the state agency to be eligible for the 5% bid preference. 

          3)Requires the Department of General Services (DGS) to establish 
            a process to verify that a bidder meets the criteria to 
            receive a 5% bid preference.  

          4)Defines "refurbished electronics" to mean any electronic 
            device that the manufacturer has tested and returned to a 
            condition that meets factory specifications for the device, 
            has been repackaged, and has been labeled as refurbished. 

           EXISTING LAW : 

          1)Declares legislative intent, related to the state pursuing all 
            feasible measures to improve markets for recycled products 








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            including, but not limited to the following: 

             a)   Bid evaluation preferences for purchases made by the 
               state; and, 

             b)   If fitness and quality are equal, each state agency 
               shall purchase recycled products instead of non-recycled 
               products whenever recycled products are available at the 
               same or a lesser total cost than non-recycled products.

          2)Requires the DGS, in consultation with the California 
            Environmental Protection Agency (CalEPA), and other specified 
            groups, to provide state agencies with information and 
            assistance regarding environmentally preferable purchasing.

          3)Authorizes contracting between state agencies and private 
            contractors and sets forth the requirements for the 
            procurement of goods and services and for the solicitation and 
            evaluation of bids and the awarding of contracts by public 
            entities.  Authorizes the DGS to procure goods and services 
            contracts on behalf of state agencies.   

           FISCAL EFFECT  :   Unknown 

           COMMENTS  :   

           Purpose of this bill  .  According to the author's office, this 
          bill would, "encourage the state's use of refurbished 
          electronics to help local economies by increasing the demand for 
          electronics recycling and refurbished products, reduce the 
          amount of toxins in our environment, and lessen the demand for 
          newly-mined conflict minerals which fuel violence against 
          women." 

           Background  .  The Democratic Republic of Congo (DRC) is Africa's 
          third largest nation, and it is the eastern portion, Kivu, that 
          has been the site of conflict.  Illegally armed militia groups 
          have been responsible for human rights abuses, sexual 
          exploitation, acts of violence, and other atrocities in order to 
          mine the mineral-rich Kivu.  The Act defines "conflict 
          materials" as columbite-tantalite (coltan), cassiterite, gold, 
          wolframite, or their derivatives.  These materials, in turn, are 
          used to produce tungsten, tin, steel, or some other component 
          that results in the manufacture of light bulb filaments, 
          electrical components, computer chips and processors, cell 








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          phones, and other technology products.  China is the largest 
          foreign market for DRC minerals, importing 47% of all DRC 
          minerals to manufacture many of the products that make up the 
          world's $150 billion consumer-electronics industry.   According 
          to the author's office, reusing these minerals in refurbished 
          electronics products lessens the demand for newly mined conflict 
          materials and keeps electronic waste from going to landfills.    
           

           Support  .  According to actor Ryan Gosling, "The first goal of 
          this bill is to encourage the state's use of refurbished 
          electronics to reduce waste and toxins in our environment.  The 
          EPA estimates that only 15-20% of used electronics are collected 
          for reuse or recycling, while the remaining materials are 
          primarily sent to landfills in the United States.  Electronics 
          often contain toxic substances, such as lead and mercury, and 
          their end-of-life management has created a worldwide 
          catastrophe.  These toxins cause known adverse impacts on human 
          health and the environment.  

          "Further, by reusing rare earth minerals in refurbished 
          electronics via recycling, this bill would help lessen the 
          demand for newly mined conflict minerals which fuel violence 
          against women.  The greed for mineral wealth in the DRC and its 
          adjoining countries has been a prime cause of the atrocities and 
          conflict in Africa's third largest nation.  Multiple armed 
          forces use sexual violence and mass rape as a strategy to 
          intimidate and control communities in order to keep the mineral 
          trade flowing and financial illegal armed groups and militias.  
          The United Nations has also discovered Rwandan rebels sending 
          prisoners of war and children into the mines."

           Opposition  .  According to the TechAmerica and the California 
          Manufacturers & Technology Association, "First, in addition to 
          the State's existing e-waste laws which help ensure the safe and 
          environmentally sound disposal of covered electronic devices, 
          California was one of the earliest - and largest - states to 
          adopt the Electronic Product Environmental Assessment Tool 
          (EPEAT) as part of its purchasing guidelines in order to buy 
          greener electronic products.  Under this framework, companies 
          have an existing incentive to register their products with EPEAT 
          - which takes into account product refurbishment, among many 
          other environmental criteria - in order to receive preferential 
          treatment from the State. 









                                                                  SB 1427
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          "Second, with regard to the stated concerns over conflict 
          minerals, we believe SB 1427 is unnecessary in light of the 
          passage last year of SB 861 (Corbett), Chapter 715, Statutes of 
          2011, which has already provided a structure to discourage use 
          of conflict minerals in technology products sold in California.  
          SB 861 requires companies that do business with the State to 
          fulfill the public reporting obligations outlined in the 
          forthcoming Securities and Exchange Commission regulations.  
          Failing to meet these obligations will mean a company is 
          prohibited from seeking procurement contracts with the state.  
          Thus, a powerful disincentive is already in place in California 
          law to reduce the demand for conflict minerals in electronics 
          and other products."

           Previous Legislation  .  SB 861 (Corbett), Chapter 715, Statutes 
          of 2011, prohibited a scrutinized company, as defined, using 
          conflict minerals from the DRC from bidding on a state goods or 
          services contract. 

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          Ryan Gosling, Actor 
           
            Opposition 
           
          TechAmerica
          California Manufacturers & Technology Association 

           Analysis Prepared by  :    Joanna Gin / B.,P. & C.P. / (916) 
          319-3301