BILL ANALYSIS THIRD READING AB 939 Polanco (D) 8/22/94 in Senate 21 72-0, p. 5119, 1/27/94 (Passed Assembly on Consent) SUBJECT: Public contracts: participation goals SOURCE: Author ____________________________________________________________________________ DIGEST: This bill revises and expands the criteria for determining šgood faith efforts of contract bidders to meet minority, women and disabled šveterans business enterprise goals; and makes other modifications in šrelated provisions. ANALYSIS: Existing law requires all state governmental agencies to šhave statewide minority, women, and disabled-veteran owned business šenterprise (MWDVBE) participation goals of 15 percent, five percent, and šthree percent respectively, on the basis of total annual expenditures for šconstruction, goods, and services contracts. The law requires awarding šdepartments to evaluate the good faith effort of the bidder to meet those šgoals and establishes criteria to that effect. Existing law authorizes local entities to require contracts to meet šparticipation goals for MBE's and WBE's, and to evaluate the good faith šeffort of the bidder to comply with those goals and requirements. This bill: 1. States legislative intent to adopt a uniform standard, for use by state šand local CONTINUED AB 939 Page 2 agencies, for defining criteria to assess a bidder's good faith effort in meeting the existing statewide MWDVBE participation goals of 15 percent, five percent, and three percent, respectively. 2. Conforms local agency criteria for determining good faith effort to the good faith effort criteria for state contracts. 3. Requires awarding departments or agencies that make a determination to waive the MWDVBE participation goals to document, for inclusion in the procurement file, reasons for their decision to adjust the goals. 4. Requires awarding departments to utilize the MWDVBE data base maintained by the Department of Transportation (Caltrans). 5. Revises and expands the criteria for determining good faith efforts of contract bidders to meet the MWDVBE goals and specifies that all awarding departments must evaluate good faith effort based on the following criteria: A. Whether the bidder attended any pre-solicitation or pre-bid meetings to inform MWDVBE's of contract opportunities. B. Whether the bidder selected economically feasible portions of the work to be performed by MWDVBE's. C. Whether the bidder advertised at least 10 days before the bidding opened in specified daily or weekly publications or media. D. Whether the bidder provided written notice of interest in bidding on the contract to the number of MWDVBE's required to be notified. E. Whether the bidder followed up initial solicitations of interest. F. Whether the bidder provided interested MWDVBE firms with information or assistance in reviewing the plans, specifications, etc. G. Whether the bidder negotiated in good faith with the MWDVBE's and did not reject them as unqualified without sound reasons. H. Whether the bidder assisted MWDVBE's in obtaining required bonding, lines of credit, or insurance. I. Whether the bidder requested assistance in the recruitment and placement of MWDVBE's. J. Whether the bidder used MWDVBE's on other contracts during the preceding six-month period. In addition to the above, the bill establishes the following criteria to šdetermine if a bidder for state and local contracts made such a good faith šeffort: Requires all awarding departments and agencies to evaluate good šfaith efforts based on criteria set forth in this bill and to document the š CONTINUED evidence, as specified. Comments This measure would essentially repeal the existing good faith effort šprovisions in the Public Contract Code and replace them with revised and šexpanded elements for assessing a bidder's good faith effort to meet the šgoals. This measure would also conform local agency criteria for šdetermining good faith effort to criteria established for state contracts. The author's office points out that the existing good faith effort practice šhas been widely criticized by prime contractors and the MWDVBE community. šPrime contractors have complained that awarding departments have been šinconsistent in the application of bid review standards established by the šgood faith effort statute. MWDVBE's have alleged that current good faith šeffort criteria is so vague that many primes simply go through the motions šand can still qualify as having made a valid good faith effort. According to the author's office, this bill deals with an issue that has šlong been recognized as a barrier to full participation by MWDVBE firms in špublic contract work for the state. The bill is also intended to enact šrecommendations made by the Little Hoover Commission in a March 1993 report šon the state's public procurement policies entitled, California's $4 šBillion Bottom Line: GettingBest Value Out of Procurement Process. The šreport identified the state's existing "good faith effort" policies as one šof three major problems impending successful implementation of the state's šMWDVBE participation goals. FISCAL EFFECT: Appropriation: No Fiscal Committee: Yes Local: No Fiscal Impact (in thousands) Major Provisions 1994-95 1995-96 1996-97 Fund Contracting agencies Unknown, potentially significant General SUPPORT: (Verified 8/22/94) CalTrans Business Council United Minority Business Entrepreneurs Little Hoover Commission Builders Exchanges Legislative Network Alianza American Institute of Architects OPPOSITION: (Verified 8/22/94) Department of General Services Department of Water Resources California Conservation Corps Department of Finance ARGUMENTS IN SUPPORT: The author's office emphasizes that this bill šaddresses inconsistencies in current law regarding what constitutes "good šfaith effort" and makes the definition of "good faith effort" for state and šlocal agencies alike and consistent with the federal definition contained šin 49 Code of Federal Regulations, Part 23. CONTINUED AB 939 Page 4 ARGUMENTS IN OPPOSITION: The Department of General Services, the šDepartment of Water Resources and the Department of Transportation have šexpressed numerous concerns with the changes to existing law incorporated šin this measure and claim that this bill would result in significant staff šincreases and additional costs. They argue this more extensive process šcould also delay the collective bidding process. NM:ctl 8/22/94 Senate Floor Analyses CONTINUED