BILL ANALYSIS �
AB 1857
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Date of Hearing: April 9, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1857 (Frazier) - As Amended: March 28, 2014
Policy Committee:
TransportationVote:13-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes Caltrans to use best value procurement.
Specifically, this bill:
1)Authorizes Caltrans, until January 1, 2019, to purchase up to
$20 million annually of heavy mobile fleet vehicles and
special equipment using best value procurement.
2)Defines best value procurement to include the following
factors-total cost of ownership, product performance, the
supplier's ability to perform, and environmental benefits, and
requires the solicitation document to specify how these
factors will be weighted in scoring proposals.
3)Requires the Department of General Services (DGS), by June 1,
2018, to evaluate this best value procurement and recommend
whether it should be continued.
FISCAL EFFECT
1)Caltrans indicates that about $25 million of its current $28.5
million equipment budget would be eligible for purchase within
the $20 million annual limit of the pilot program. Assuming
initial costs using best value procurement could be up to five
percent greater than under competitive bidding, total annual
procurement costs could be up to $1 million greater during the
four years of the pilot program. [State Highway Account]
2)Costs per (1) could be more than offset by long-term ongoing
savings to the extent the vehicles and equipment acquired
using the best value procurement process result in lower
AB 1857
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maintenance and repair costs, lower fuel consumption, and
higher resale value.
3)DGS would incur one-time costs of at least $150,000 to
evaluate the program, which would require comparison of all
purchase, operations and maintenance cost factors among
similar equipment procured using best value and competitive
bidding.
COMMENTS
1)Purpose . Most public sector contracts in California are
awarded solely on a low-bid basis, whereby the contractor
submitting the lowest responsive and responsible bid is
awarded the contract. According to the author, low-bid
procurement forces Caltrans, when purchasing heavy mobile
fleet vehicles and special equipment, to select the lowest
bidder regardless of whether or not the equipment being
purchased performs better, gets better gas mileage, has fewer
GHG emissions, has improved warranties, or has higher salvage
or resale value. The author argues that as a result, Caltrans
is often forced to work with less than adequate equipment,
unreliable suppliers, limited warranties and performance, and
higher than normal maintenance costs. AB 1857 allows Caltrans
to test a system of soliciting bids and procure heavy mobile
fleet vehicles and special equipment based on a number of
factors, including price.
2)Prior Legislation . A substantially similar bill, AB 2403
(Smyth)/Chapter 495 of 2008 was signed by Governor
Schwarzenegger but did not take effect because it was joined
to another bill that was vetoed by the Governor.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081