Amended in Assembly May 6, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2278

Introduced by Assembly Member Weber

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(Coauthor: Assembly Member V. Manuel Pérez)

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February 21, 2014

An act to amend begin delete Section end delete begin insert Sections 4535.2 and end insert 14838 of the Government Code, relating to public contracts.

LEGISLATIVE COUNSEL’S DIGEST

AB 2278, as amended, Weber. State agency contracts: small business.

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Existing law, the Target Area Contract Preference Act, provides, except as specified, that the state shall award preferences to California-based companies submitting bids or proposals for state contracts who demonstrate and certify under penalty of perjury that of the total labor hours required to manufacture the goods and perform the contract, at least 50 percent of the hours shall be accomplished at an identified worksite or worksites located in a distressed area by persons with a high risk of unemployment if the contract is for goods or services in excess of $100,000. Existing law also provides that the maximum preference and incentive a bidder may be awarded pursuant to these provisions is $50,000 for any bid, and $100,000 for the combined cost of these preferences and incentives and those provided pursuant to any other provision of law.

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This bill would instead provide that the maximum preference and incentive a bidder may be awarded pursuant to these provisions shall not exceed $350,000 for any bid, and $400,000 for the combined cost of these preferences and incentives and those provided pursuant to any other provision of law.

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Existing law, the Small Business Procurement and Contract Act, provides for various programs to encourage the participation of small businesses, as certified by the Department of General Services, in state agency contracts, including a microbusiness and a disabled veteran business enterprise. Existing law requires directors of state agencies, in awarding prescribed contracts, to provide a 5% preference to small businesses and microbusinesses, and a preference of up to 5% to a nonsmall business that provides for small business or microbusiness subcontractor participation, not to exceed prescribed amounts. Existing law provides, in solicitations where an award is made to the lowest responsible bidder, that the preferences shall not exceed $50,000 for any bid and that the combined cost of preferences granted shall not exceed $100,000. Existing law provides that, in bids in which the state has reserved the right to make multiple awards, the $50,000 maximum preference cost shall be applied.

This bill would provide, in solicitations where an award is made to the lowest responsible bidder, that the preference to small business and microbusiness be 5% of the lowest responsible nonsmall business bidder meeting specifications and that the preference to nonsmall business bidders that provide for small business or microbusiness subcontractor participation be up to a maximum of 5% of the lowest responsible nonsmall business bidder. This bill also would provide that the preference not exceed $350,000 for any contract award and that the combined cost of preferences granted not exceed $400,000. This bill would require that the $350,000 maximum preference cost be applied in multiple contract awards.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 4535.2 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

4535.2.  

(a) The maximum preference and incentive a bidder
may be awarded pursuant to this chapter and any other provision
of law shall be 15 percent. However, in no case shall the maximum
preference and incentive cost under this chapter exceed begin delete fifty
thousand dollars ($50,000) end delete begin insert three hundred fifty thousand dollars
($350,000) end insert for any bid, nor shall the combined cost of preferences
and incentives granted pursuant to this chapter and any other
provision of law exceed begin delete one hundred thousand dollars($100,000). end delete
begin insert four hundred thousand dollars ($400,000). end insert In those cases where
the 15-percent cumulated preference and incentive cost would
exceed the begin delete one hundred thousand dollar ($100,000) end delete
begin insert four-hundred-thousand- end insert begin insert dollar ($400,000) end insert maximum preference
and incentive cost limit, the begin delete one hundred thousand dollar
($100,000) end delete begin insert four-hundred-thousand- end insert begin insert dollar ($400,000) end insert maximum
preference and incentive cost limit shall apply.

(b) Notwithstanding the provisions of this chapter, small
business bidders qualified in accordance with Section 14838 shall
have precedence over nonsmall business bidders in that the
application of any bidder preference for which nonsmall business
bidders may be eligible, including the preference contained in this
chapter, shall not result in the denial of the award to a small
business bidder. This subdivision shall apply to those cases where
the small business bidder is the lowest responsible bidder, as well
as to those cases where the small business bidder is eligible for
award as the result of application of the 5-percent small business
bidder preference and incentive.

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begin insert SEC. 2. end insert   

Section 14838 of the Government Code is amended
to read:

14838.  

In order to facilitate the participation of small business,
including microbusiness, in the provision of goods, information
technology, and services to the state, and in the construction
(including alteration, demolition, repair, or improvement) of state
facilities, the directors of the department and other state agencies
that enter those contracts, each within their respective areas of
responsibility, shall do all of the following:

(a) Establish goals, consistent with those established by the
Office of Small Business Certification and Resources, for the extent
of participation of small businesses, including microbusinesses,
in the provision of goods, information technology, and services to
the state, and in the construction of state facilities.

(b) Provide for small business preference, or nonsmall business
preference for bidders that provide for small business and
microbusiness subcontractor participation, in the award of contracts
for goods, information technology, services, and construction, as
follows:

(1) In solicitations where an award is to be made to the lowest
responsible bidder meeting specifications, the preference to small
business and microbusiness shall be 5 percent of the lowest
responsible nonsmall business bidder meeting specifications. The
preference to nonsmall business bidders that provide for small
business or microbusiness subcontractor participation shall be, up
to a maximum of 5 percent of the lowest responsible nonsmall
business bidder meeting specifications, determined according to
rules and regulations established by the Department of General
Services.

(2) In solicitations where an award is to be made to the highest
scored bidder based on evaluation factors in addition to price, the
preference to small business or microbusiness shall be 5 percent
of the highest responsible bidder’s total score. The preference to
nonsmall business bidders that provide for small business or
microbusiness subcontractor participation shall be up to a
maximum 5 percent of the highest responsible bidder’s total score,
determined according to rules and regulations established by the
Department of General Services.

(3) The preferences under paragraphs (1) and (2) shall not be
awarded to a noncompliant bidder and shall not be used to achieve
any applicable minimum requirements.

(4) The preference under paragraph (1) shall not exceed three
hundred fifty thousand dollars ($350,000) for any contract award,
and the combined cost of preferences granted pursuant to paragraph
(1) and any other provision of law shall not exceed four hundred
thousand dollars ($400,000). For contract awards in which the
state has reserved the right to make multiple awards, this three
hundred fifty thousand dollar ($350,000) maximum preference
cost shall be applied, to the extent possible, so as to maximize the
dollar participation of small businesses, including microbusinesses,
in the contract award.

(c) Give special consideration to small businesses and
microbusinesses by both:

(1) Reducing the experience required.

(2) Reducing the level of inventory normally required.

(d) Give special assistance to small businesses and
microbusinesses in the preparation and submission of the
information requested in Section 14310.

(e) Under the authorization granted in Section 10163 of the
Public Contract Code, make awards, whenever feasible, to small
business and microbusiness bidders for each project bid upon
within their prequalification rating. This may be accomplished by
dividing major projects into subprojects so as to allow a small
business or microbusiness contractor to qualify to bid on these
subprojects.

(f) Small business and microbusiness bidders qualified in
accordance with this chapter shall have precedence over nonsmall
business bidders in that the application of a bidder preference for
which nonsmall business bidders may be eligible under this section
or any other provision of law shall not result in the denial of the
award to a small business or microbusiness bidder. In the event of
a precise tie between the low responsible bid of a bidder meeting
specifications of a small business or microbusiness, and the low
responsible bid of a bidder meeting the specifications of a disabled
veteran-owned small business or microbusiness, the contract shall
be awarded to the disabled veteran-owned small business or
microbusiness. This provision applies if the small business or
microbusiness bidder is the lowest responsible bidder, as well as
if the small business or microbusiness bidder is eligible for award
as the result of application of the small business and microbusiness
bidder preference granted by subdivision (b).