AB 1125: State agency contracts: small business.
- Session Year: 2015-2016
- House: Assembly
- Latest Version Date: 2015-05-04
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 $100,000 for any contract award and that the combined cost of preferences granted not exceed $150,000. This bill would require that the $100,000 maximum preference cost be applied in multiple contract awards.
Existing law, the Target Area Contract Preference Act, requires, if the contract is for goods or services in excess of $100,000, except as specified, the state to 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 a specified percentage of the hours will be accomplished at an identified worksite or worksites located in a distressed area by persons with a high risk of unemployment. Existing law also provides that the maximum preference and incentive a bidder may be awarded pursuant to this act 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.
This bill would instead provide, if the bid includes preferences or incentives provided under the Target Area Contract Preference Act and the Small Business Procurement and Contract Act, that the maximum preference and incentive a bidder may be awarded pursuant to these provisions shall not exceed $150,000 for the combined cost of these preferences and incentives and those provided pursuant to any other provision of law.
Existing law, the California Tire Recycling Act, provides, on state purchases of products that are made of, or contains components that can be derived from the recycling of used tires, to suppliers of recycled tire products, a bid preference of 5% of the lowest bid or price quoted by suppliers offering similar products made from nonrecycled components. That law limits the preference to $100,000 each year, or $50,000 if the preference exceeding that amount would preclude an award to a small business that offers a similar product made of nonrecycled tire components and is qualified in accordance with the Small Business Procurement and Contract Act.
This bill would provide, notwithstanding those limitations, if the bid includes the preference authorized in the California Tire Recycling Act and the Small Business Procurement and Contract Act, the combined cost of preferences and incentives granted pursuant to California Tire Recycling Act and any other law is not to exceed $150,000.
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 $100,000 for any contract award and that the combined cost of preferences granted not exceed $150,000. This bill would require that the $100,000 maximum preference cost be applied in multiple contract awards.
(a)(1)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 fifty thousand dollars ($50,000) for any bid, nor shall the combined cost of preferences and incentives granted pursuant to this chapter and any other provision of law exceed one hundred thousand dollars($100,000). In those cases where the 15-percent cumulated preference and incentive cost would exceed the one hundred thousand dollar ($100,000) maximum preference and incentive cost limit, the one hundred thousand dollar ($100,000) maximum preference and incentive cost limit shall apply.
(2)Notwithstanding the one-hundred-thousand-dollar ($100,000) limitation specified in paragraph (1), if the bid includes preferences or incentives under this chapter and Section 14838, the combined cost of preferences and incentives granted pursuant to this chapter and any other law shall not exceed one hundred fifty thousand dollars ($150,000).
(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.
SECTION 1.SEC. 2.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 bidders 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 bidders 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 one hundred thousand dollars ($100,000) for any contract award, and the combined cost of preferences granted pursuant to paragraph (1) and any other provision of law shall not exceed one hundred fifty thousand dollars ($150,000). For contract awards in which the state has reserved the right to make multiple awards, this one hundred thousand dollar ($100,000) 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).
SEC. 3.Section 42893 of the Public Resources Code is amended to read:42893.(a)The combined amount of preference granted pursuant to this section article shall not exceed one hundred thousand dollars ($100,000) each year.
(b)Notwithstanding Section 42892, the recycled tire product preference shall not exceed fifty thousand dollars ($50,000) if a preference exceeding that amount would preclude an award to a small business that offers a similar product made of nonrecycled tire components and is qualified in accordance with Section 14838 of the Government Code. This provision applies regardless of whether the small business is the lowest responsible bidder or is eligible for the contract award on the basis of application of the 5 percent small business preference.
(c)Notwithstanding the one-hundred-thousand-dollar limitation specified in subdivision (a) or the fifty-thousand-dollar ($50,000) limitation specified in subdivision (b), if the bid includes the preference authorized in Section 42891 and Section 14838 of the Government Code, the combined cost of preferences and incentives granted pursuant to this article and any other law shall not exceed one hundred fifty thousand dollars ($150,000).
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 bidders 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 bidders 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 fifty one hundred thousand dollars ($50,000) ($100,000) for any bid, contract award, and the combined cost of preferences granted pursuant to paragraph (1) and any other provision of law shall not exceed one hundred fifty thousand dollars ($100,000). In bids ($150,000). For contract awards in which the state has reserved the right to make multiple awards, this fifty one hundred thousand dollar ($50,000) ($100,000) 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).
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Date
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Status
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| Feb 27, 2015 | Introduced. To print. |
| Mar 1, 2015 | From printer. May be heard in committee March 31. |
| Mar 2, 2015 | Read first time. |
| Mar 19, 2015 | Referred to Com. on J., E.D., & E. |
| Apr 30, 2015 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 0.) (April 21). |
| May 4, 2015 | Read second time and amended. |
| May 5, 2015 | Re-referred to Com. on APPR. |
| May 13, 2015 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| May 28, 2015 | In committee: Held under submission. |
| Jan 31, 2016 | Died pursuant to Article IV, Sec. 10(c) of the Constitution. |
| Feb 1, 2016 | From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. |
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Date
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Description
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Location
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Votes
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| Apr 21, 2015 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Jobs, Economic Development, and the Economy |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
AB 1125
Page 2
Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB 1125
(Weber) – As Amended May 4, 2015
Policy Committee: |
Jobs, Economic Development, and the Economy |
Vote: |
8 - 0 |
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Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill would
increase the maximum dollar value that can be applied using the 5
percent small business preference from $50,000 to $100,000, and the
total combined preferences that include a small business preference
from $100,000 to $150,000. This bill also slightly modifies how
the
5 percent small bid preference is calculated, which is by
basing it on the bid of the lowest responsible non-small business
bidder rather than just the lowest responsible bidder.
FISCAL EFFECT:
It is unknown how many bidders would win a contract based on the new $100,000 maximum small business preference, or $150,000 maximum for combined preferences, provided under this bill, although each occurrence could result in unknown additional costs. However, this expanded bid preference could translate to General Fund and special fund costs in the hundreds of thousands.
COMMENTS:
Purpose. The Department of General Services (DGS) administers the state Small Business Procurement and Contract Act (Small Business Procurement Act), which includes certifying and implementing targeted preference programs for certified small businesses, microbusinesses, and disabled veteran owned business enterprises. For 2013-14 state departments spent over $8.7 billion on contracts, of which over $2.2 billion and 102,480 contracts were awarded to small businesses. The majority of contracts awarded to small businesses are less than $1 million.
The existing small business bid preference has been in place since 1983. Under current law, qualifying certified small businesses receive a 5 percent bid preference, up to $50,000 on a single bid. The $50,000 cap is reached at a $1 million bid (5 percent x $1 million = $50,000).
This bill proposes to increase the bid preference cap amount from $50,000 to $100,000, extending the bid preference cap to bids up to $2 million (5 percent x $2 million = $100,000).
Below is an example of a contract that would fail to win under current law using a small business preference with a cap of $50,000, but would win using a preference with a cap of $100,000 as proposed by this bill.
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Bidder
Bid Amount
5 percent Bid Preference
Bid Amount for Evaluation Purposes
Actual Contract Award (i.e., Bid Amount
Bidder A
(small business)
$3,080,000
$3,000,000 * .05 = $150,000 (the maximum bid preference allowable proposed under this bill is $100,000)
$3,080,000 - $100,000 = $2,980,000
$3,035,000
Bidder B
(large business)
$3,000,000
Ineligible for a small business bid preference
$3,000,000
Did not win
In the example above, if Bidder A (the small business) had been allowed to only apply a $50,000 bid preference, which is the maximum under current law, Bidder A’s bid amount for evaluation purposes would have been $3,030,000, and it would have lost.
The Disabled Veteran Business Alliance and Small Business California are sponsoring this bill in an effort to give California small businesses increased opportunity to win contracts up to $2 million.
Prior Legislation. AB 2278 (Weber) of 2014 increased the maximum amount of a bid preference for small business preferences from $50,000 to $350,000 and increased the maximum financial value of all combined preferences from $100,000 to $400,000 for any bid that includes a small business preference. This bill was held on Suspense in this committee.
Analysis Prepared by: Misty Feusahrens / APPR. / (916) 319-2081
Bill Author
Bill Co-Author(s):
