BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2022 (Medina) - Public Contracts: Target Area Contract
Preference Act
Amended: May 23, 2014 Policy Vote: BP&ED 9-0
Urgency: No Mandate: No
Hearing Date: August 14, 2014
Consultant: Robert Ingenito
SUSPENSE FILE. AS AMENDED.
Bill Summary: AB 2022 would redefine what qualifies as an
economically distressed area and persons at a high risk of
unemployment with respect to receiving bid preferences under the
Target Area Contract Preference Act (TACPA).
Fiscal Impact (as approved on August 14, 2014):
The Department of General Services (DGS) indicates that
it would incur first-year costs of $130,000 and ongoing
annual costs of $113,000 (various funds) to implement the
provisions of the bill. First year costs would include
rulemaking and updating documents.
Minor decennial savings to the Governor's Office of
Planning and Research (OPR) related to eliminate the
workload of creating maps following each census.
Revising the definition of distressed area would
increase expand the eligible areas, and thus the number of
firms, eligible for a worksite bid preference under TACPA.
Additionally revised definition of persons with a high risk
of unemployment would increase the likelihood of companies
being able to also utilize a workforce bidding preference.
The cost of the TACPA bid preference over the last four
years has averaged $110,000, and DGS has reviewed about 40
TACPA applications annually during this time at an
administrative cost of around $140,000. DGS notes that the
new parameters for the hiring credit would require
extensive substantiation of applications. The potential
impact of this bill is unknown, but could be in the
hundreds of thousands of dollars.
AB 2022 (Medina)
Page 1
Background: TACPA was enacted in 1983 to stimulate economic
growth and employment in economically disadvantaged areas of the
State. TACPA is administered by DGS with help from OPR. Under
TACPA, a 5 percent extra credit is awarded in the contract bid
evaluation phase to California firms that agree to undertake the
work in distressed areas, with additional credits for committing
to employ certain individuals in completing the contract.
The geographic boundaries of the distressed areas are determined
by OPR based on eight statutorily defined criteria, as reported
at the census block level. Recently, the availability of this
data has changed. In 2003, the U.S. Census Bureau switched from
gathering socioeconomic data in the "long form" survey component
of the decennial census to the American Community Survey (ACS),
conducted annually. Specifically, the Census Bureau no longer
collects and publishes socioeconomic data for two of the eight
criteria at the needed (block group) level. This lack of data
likely will threaten the integrity of the TACPA program in its
current form.
Proposed Law: This bill, with respect to providing bid
preferences under TACPA, redefines an economically distressed
area and persons at a high risk of unemployment. Specifically,
this bill:
1) Redefines a distressed area to be in the top quartile of
census tracts for having the highest unemployment and
poverty in the state, as defined by the Department of
Finance (DOF).
2) Redefines a person with a high risk of unemployment to
include, but not be limited to:
a) A person who is currently unemployed and has
been unemployed for more than 200 days.
b) Veterans who served on active duty since
September 11, 2001.
c) A person who has been convicted of a felony
under any statute of the United States or of any
state.
d) A person who receives benefits of the
Supplemental Nutrition Assistance Program.
AB 2022 (Medina)
Page 2
Related Legislation: AB 2278 (Weber), in part increases the
maximum amount of a bid preference for TACPA from $50,000 to
$350,000, but keeps the maximum preference at 5 percent of the
bid amount.
Staff Comments: It is unclear how many more companies would be
eligible for the TACPA preference based on this bill's revised
definition of "distressed." It would be difficult to determine
the number of future bidders that are TACPA-eligible. While DGS
maintains a list of certified small businesses and DVBEs that
makes it straightforward to determine whether those businesses
are eligible for their respective bid preferences, TACPA
preferences are evaluated on a case-by-case basis. DGS
indicates that there are an very small number of business
currently receiving this preference. This bill's revised
definitions of "distressed" and "person with a high risk of
unemployment" expands the pool of TACPA-eligible companies. It
is unclear how many bidders applying the TACPA bid preference
will win a contract (and by what margin) as a result of this
bill.
DGS's Procurement Division would require one additional position
to conduct extensive evaluation of eligibility of individuals
and to monitor and enforce preference commitments, including
site visits and work with other agencies. This position would
be necessary to monitor audit compliance with the TACPA bid
preference for the life of the contract to ensure program
integrity, and to review applications with new eligibility
requirements.
Author's amendment removes language that would modify
qualification for "persons at high risk of unemployment."