BILL ANALYSIS �
AB 1568
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Date of Hearing: March 26, 2014
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Jim Frazier, Chair
AB 1568 (Grove) - As Amended: March 18, 2014
SUBJECT : Public contracts: direct quotes
SUMMARY : Requires state agencies to solicit price quotes from
at least three certified small businesses (SBs) or disabled
veteran business enterprises (DVBEs) when awarding state
contracts under $250,000. Specifically , this bill:
1)Requires a state agency, if it has not already obtained more
than two quotes from certified SBs or DVBEs, to contact at
least one additional certified firm and provide a reasonable
opportunity for the firm to submit a price quote.
2)Permits the state agency to contact the third certified firm
at any time and clarifies that the agency is not required to
first obtain two price quotes before initiating contact with
the third firm.
3)Encourages state agencies to award a contract to a business
that has not previously contracted with the agency in the
prior 12 months.
4)Makes various findings and declarations relating to a February
2014 report from the California State Auditor (CSA) that
evaluated the state's DVBE program.
EXISTING LAW :
1)Designates the Department of General Services (DGS) as the
lead purchasing and procurement agency for the State of
California.
2)Establishes the certified SB/DVBE option in state contracting,
which allows a state agency to award a contract to a certified
SB or DVBE under the following conditions:
a) The contract award is greater than $5,000 and less than
$250,000; and,
b) Quotes are obtained from two or more SBs or from two or
more DVBEs.
AB 1568
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FISCAL EFFECT : Unknown
COMMENTS : According to the author, this bill is intended to
implement a recommendation from a February 2014 report from the
CSA on the state's DVBE program. Specifically, the CSA found
that, during fiscal year 2012-13, 2% of the state's DVBE firms
were awarded 83% of the DVBE contracts. The CSA recommended
that the Legislature enact legislation aimed at increasing the
number of DVBE contractors to ensure that the DVBE program
financially benefits a broad base of disabled veteran-owned
businesses. The author states that this bill will increase DVBE
participation by expanding the number of bids solicited to
include at least three certified firms and encouraging agencies
that use the SB/DVBE option to contact certified firms that have
not previously contracted with the agency.
The State Contracting Manual, created by DGS as a resource for
state contracting entities, specifies that an award can be made
using the SB/DVBE option if the contract is capped at $250,000
and quotes are received from at least two SBs or two DVBEs.
According to DGS, this is interpreted to mean that an agency
fulfills this requirement when quotes are received from a
minimum of two certified firms. This bill would revise the law
to require an agency to solicit a third certified firm.
While the recent CSA report only reviewed the DVBE program, this
bill would also apply to the SB program administered by DGS.
According to DGS, some of the findings in the CSA report are
based on data from the State Contract and Procurement
Registration System, which is managed by DGS to track overall
total contracting dollars procured by the State of California.
DGS indicates this data does not reflect subcontracting activity
and does not include contracts under $5,000. Due to these
limitations, DGS maintains that the CSA report does not present
a full picture of DVBE participation that reflects participation
by a greater number of DVBEs and greater diffusion of DVBE
participation dollars.
This bill could increase the number of participating DVBE
contractors by basically requiring an agency to solicit at least
three firms, one of which would ideally be an entity that the
agency has not contracted with in the past year.
PRIOR LEGISLATION : AB 173 (Weber), Chapter 262, Statutes of
AB 1568
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2013, allows the California State University, the University of
California and the California community college system to use
the SB/DVBE option for contracts below $250,000.
REGISTERED SUPPORT / OPPOSITION :
Support
Associated Builders and Contractors of California (prior
version)
Veterans Caucus of the California Democratic Party (prior
version)
Opposition
None on file.
Analysis Prepared by : Cassie Royce / A. & A.R. / (916)
319-3600