BILL ANALYSIS �
AB 1857
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1857 (Frazier)
As Amended August 22, 2014
Majority vote
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|ASSEMBLY: |60-14|(May 27, 2014) |SENATE: |33-1 |(August 27, |
| | | | | |2014) |
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Original Committee Reference: TRANS.
SUMMARY : Establishes a pilot program at Department of General
Services (DGS) to test the effectiveness of the "best value"
procurement method for purchasing and equipping heavy mobile
fleet vehicles and special equipment for the California
Department of Transportation (Caltrans). Specifically, this
bill :
1)Defines best value procurement as a contract award determined
by objective criteria related to price, features, functions,
and life-cycle costs.
2)Authorizes DGS to purchase and equip heavy mobile fleet
vehicles and special equipment using best value procurement
using criteria and specifications developed in consultation
with Caltrans.
3)Provides criteria for solicitation document specifications,
bids, evaluation criteria, and bidder inquiry responses.
4)Limits the total value of vehicles and equipment purchased
through best value procurement to $20 million annually.
5)Requires DGS to prepare an evaluation of the best value
procurement pilot, including a recommendation on whether the
process should be continued, and requires Caltrans to post
evaluation results on its Internet Web site on or before June
30, 2020.
6)Sunsets and repeals these provisions on January 1, 2021.
The Senate amendments provide that DGS, rather than Caltrans, is
to conduct the best value procurement pilot. Additionally, the
amendments extend the duration of the pilot an additional two
AB 1857
Page 2
years so that the results of pilot can be better analyzed.
FISCAL EFFECT : Unknown
COMMENTS : The majority of public sector contracts in California
are awarded strictly on a low-bid basis where the contractor
submitting the lowest responsive and responsible bid is awarded
the contract. While the low-bid procurement system has a
long-standing legal precedence and has promoted open
competition, there are concerns that a system based strictly on
the lowest price does not provide the best overall product value
and can result in higher costs over the long-term.
In California, DGS sets the state procurement policies and
provides purchasing services for all state departments. In
certain circumstances, however, DGS delegates purchasing
authority to individual state departments as it has with
Caltrans for the procurement of heavy mobile fleet vehicles and
special equipment.
According to the author, the current low-bid procurement method
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. This, in turn, increases costs and adversely affects
Caltrans' ability to operate at peak performance to complete
critical work with minimal disruption to the travelling public.
The author amended this bill to allow DGS, in consultation with
Caltrans, to test a system of procuring and equipping heavy
mobile fleet vehicles and special equipment using a "best value"
procurement method. Specifically, this bill will allow DGS,
until January 1, 2021, to solicit bids and procure heavy mobile
fleet vehicles and special equipment based on a number of
factors including price. These factors include warranty, repair
costs, maintenance costs, fuel consumption, salvage values,
product performance, productivity, safety standards, ability of
a supplier to perform to contract requirements, and
environmental benefits including reduction of GHG emissions, air
AB 1857
Page 3
pollutants, or toxic or hazardous materials. This bill also
requires DGS to disclose the minimum requirements for
qualification in a "best value" procurement solicitation that is
provided to prospective bidders and to weigh the evaluation
factors along with price when selecting a successful bidder.
This bill limits purchases using this method to a total $20
million annually and requires DGS to evaluate the effectiveness
of the pilot, including a recommendation on whether or not the
process should be continued at Caltrans. The DGS evaluation
must be prepared on June 1, 2020, and is required to be posted
on Caltrans Internet Web site on or before June 30, 2020.
Best value procurement is not new. A literature search revealed
that a number of other states allow for bidding process similar
to the "best value" procurement process described in this bill.
In fact, according to the National Association of State
Procurement Officials' (NASPO) 2011-12 Survey of State
Procurement Practices, 34 states use life-cycle costing, e.g.,
taking into account costs of owning and operating the product,
in determining awards to vendors. Additionally, California has
long allowed for similar weighing of factors in addition to
price in solicitations when procuring Information Technology
goods and services.
This bill is similar to AB 2403 (Smyth), Chapter 495, Statutes
of 2008, which despite being passed by the Legislature and
signed by the Governor, was not enacted because it was joined to
a bill that was vetoed (AB 2560 (Lieu) of 2008) by then Governor
Schwarzenegger. This bill is identical to AB 2403 except that
this bill provides for DGS to conduct the procurement, extends
the pilot, updates reporting dates, and increases the amount
available for procurement under the pilot from $15 million to
$20 million.
Analysis Prepared by : Victoria Alvarez / TRANS. / (916)
319-2093
FN: 0005395