BILL ANALYSIS �
AB 1568
Page 1
ASSEMBLY THIRD READING
AB 1568 (Grove)
As Amended May 23, 2014
Majority vote
ADMINISTRATIVE REVIEW 11-0
APPROPRIATIONS 17-0
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|Ayes:|Frazier, Achadjian, |Ayes:|Gatto, Bigelow, |
| |Allen, Buchanan, Ian | |Bocanegra, Bradford, Ian |
| |Calderon, Cooley, Medina, | |Calderon, Campos, |
| |Olsen, Quirk-Silva, | |Donnelly, Eggman, Gomez, |
| |Salas, Hagman | |Holden, Jones, Linder, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Wagner, |
| | | |Weber |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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)Permits a state agency to award a contract under $250,000 to a
certified SB or DVBE as long as the agency solicits at least
three price quotes from, and obtains at least two price quotes
from, two or more certified firms.
2)Encourages an agency to solicit quotes from businesses that
have not previously contracted with the agency in the prior 12
months.
3)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.
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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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, additional costs to the General Fund and numerous
special funds, offset in whole or part by lower contract costs
due to increased competition. According to DGS, in 2011-12, an
estimated 13,700 contracts for goods, services, or information
technology were awarded to SBs or DVBEs using the process of
obtaining two quotes. Departments will incur costs to solicit
an additional quotation in those cases where they currently do
not do so, and, when a third bid is received, to review the
additional bid. It is estimated that the total contract volume
for the above contracts was $415 million. To the extent
obtaining a third quotation leads to lower contract costs, due
to increased competition, savings of just 1%-2% would reduce
total contract costs by $4.1 million to $8.3 million.
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
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fulfills this requirement when quotes are received from a
minimum of two certified firms.
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 within the past year.
Analysis Prepared by : Cassie Royce / A. & A.R. / (916)
319-3600
FN: 0003727