AB 1445: Public contracts: small business contracts.
- Session Year: 2015-2016
- House: Assembly
- Latest Version Date: 2015-02-27
The Small Business Procurement and Contract Act permits a state agency to award a contract for goods, services, or information technology with a value of between $5,000 and $250,000 to a certified small business, including a microbusiness, or to a disabled veteran business enterprise, without complying with specified competitive bidding requirements.
This bill would increase the upper limit of the value of those contracts to $500,000.
(a)Notwithstanding the advertising, bidding, and protest provisions of Chapter 6 (commencing with Section 14825) of this part and Chapter 2 (commencing with Section 10290) and Chapter 3 (commencing with Section 12100) of Part 2 of Division 2 of the Public Contract Code, a state agency may award a contract for the acquisition of goods, services, or information technology that has an estimated value of greater than five thousand dollars ($5,000), but less than two hundred fifty five hundred thousand dollars ($250,000), ($500,000), to a certified small business, including a microbusiness, or to a disabled veteran business enterprise, as long as the agency obtains price quotations from two or more certified small businesses, including microbusinesses, or from two or more disabled veterans business enterprises.
(b)In carrying out subdivision (a), a state agency shall consider a responsive offer timely received from a responsible certified small business, including a microbusiness, or from a disabled veteran business enterprise.
(c)If the estimated cost to the state is less than five thousand dollars ($5,000) for the acquisition of goods, services, or information technology, or a greater amount as administratively established by the director, a state agency shall obtain at least two price quotations from responsible suppliers whenever there is reason to believe a response from a single source is not a fair and reasonable price.
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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 26, 2015 | Referred to Com. on A. & A.R. |
| Apr 29, 2015 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (April 29). Re-referred to Com. on APPR. |
| Apr 29, 2015 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 9. Noes 0.) (April 29). 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 29, 2015 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Accountability and Administrative Review |
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.
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Organization
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Position
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Date
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| California Asian Pacific Chamber Of Commerce | * Indeterminate | May 13, 2015 |
| California Black Chamber of Commerce | ** Support | May 13, 2015 |
| Disabled Veteran Business Alliance | ** Support | May 13, 2015 |
| National Federation Of Independent Business | ** Support | May 13, 2015 |
| Sacramento Metropolitan Chamber of Commerce | ** Support | May 13, 2015 |
AB 1445
Page 2
Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB 1445
(Brown) – As Introduced February 27, 2015
Policy Committee: |
Accountability and Administrative Review |
Vote: |
9 - 0 |
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Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill increases, from $250,000 to $500,000, the maximum amount for which a state agency can directly contract for goods and services with a certified small business (SB) or a disabled veteran business enterprise (DVBE).
FISCAL EFFECT:
In general, the state's contract costs for goods, services, and information technology would increase to some extent due to reduced competition for contracts between $250,000 and $500,000, as state agencies solicit only two SBs or two DVBEs, rather than allowing all potential vendors, including non-small businesses, to bid competitively for the contracts. Because this type of contracting is optional, the fiscal impact depends on the extent to which departments utilize the expanded authority. DGS notes, however, that some state agencies, including DGS, have an internal “SB/DVBE First” policy which requires the agency to award contracts within the SB/DVBE Option dollar range to be awarded to small businesses and DVBEs whenever possible.
According to DGS, over the last three calendar years, an average of 1,150 contracts, valued at $416 million, have been awarded having a cost between $250,000 and $500,000. If the less competitive nature of this process resulted in 5% higher costs on 20% of the contract awards, the additional costs would exceed $4 million [General Fund and numerous special funds].
Partially offsetting the above costs would be reduced administrative costs associated with streamlined bidding, advertising, and contract awarding procedures.
COMMENTS:
Purpose. Under current law, certain state contracts with SBs and DVBEs for goods, services, or information technology can bypass formal competitive bidding requirements. Specifically, state agencies are allowed to contract directly with a SB or DVBE after obtaining price quotes from at least two firms before awarding the contract. Contracts offered under this streamlined SB/DVBE option are currently limited to between $5,000 and $250,000 in value. (AB 31 (Price), Chapter 212, Statutes of 2009, in part increased the maximum threshold for such contracts from $100,000 to the current $250,000 limit.) This bill increases the maximum amount to $500,000. The author argues this bill will encourage more of SBs/DVBEs to compete because the informal bidding process is less costly.
Prior Legislation. SB 276 (Roth) of 2013, which was identical to this bill, was held on Suspense in Senate Appropriations.
Analysis Prepared by: Chuck Nicol / APPR. / (916) 319-2081
AB 1445
Page 2
Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Rudy Salas, Chair
AB 1445
(Brown) – As Introduced February 27, 2015
SUBJECT: Public contracts: small business contracts
SUMMARY: Increases the amount for which a state agency can directly contract with a certified small business (SB) or a disabled veteran business enterprise (DVBE) from $250,000 to $500,000.
EXISTING
LAW:
Designates the Department of General Services (DGS) as the lead purchasing and procurement agency for the State of California.
Establishes the certified SB/DVBE option in state contracting, which allows a state agency to award a contract for goods, services, or information technology to a certified SB or DVBE without complying with formal advertising and bidding requirements if the following conditions are met:
The contract award is greater than $5,000 and less than $250,000; and,
Quotes are obtained from two or more SBs or from two or more DVBEs.
FISCAL EFFECT: Unknown
COMMENTS:
Under current law, certain state contracts with SBs and DVBEs for
goods, services, or information technology can bypass formal
competitive bidding requirements. Specifically, state agencies are
allowed to contract directly with a SB or DVBE after obtaining price
quotes from at least two firms before awarding the contract.
Contracts offered under this streamlined SB/DVBE option are currently
limited to between $5,000 and $250,000 in value. This bill increases
the maximum amount to $500,000.
According to the author, "Small businesses are the lifeblood of California's economy. Increasing the threshold of the SB/DVBE contracting option to $500,000 will help these businesses expand and hire more workers as they provide valuable services to the state." The author argues that this bill will encourage more of these firms to compete because the informal bidding process is less costly.
DGS
reports, in fiscal year 2013-14, 11,483 contracts were initiated
using the SB/DVBE option. DGS notes that the number of additional
firms that could win contracts if the maximum contract value under
this option was raised to $500,000 is difficult to quantify. Since
formal bidding requirements do not apply under this option, state
agencies could, if they wish, pick specific certified firms with whom
they have done business before and invite them to make offers.
PRIOR
LEGISLATION:
SB 276 (Roth) of 2013 was substantively identical to this bill and held in the Senate Appropriations Committee.
AB 550 (Brown) of 2013 would have made a number of changes to improve state procurement practices relating to SB and DVBE contract participation, including a provision substantively identical to this bill. AB 550 was held in the Assembly Appropriations Committee.
AB 31 (Price), Chapter 212, Statutes of 2009, includes, among other provisions, the increase in the maximum threshold for contracts under the SB/DVBE option from $100,000 to the current $250,000 limit.
REGISTERED SUPPORT / OPPOSITION:
Support
Disabled Veteran Business Alliance (sponsor)
California Black Chamber of Commerce
National Federation of Independent Business
Sacramento Metropolitan Chamber of Commerce
Opposition
None on file
Analysis Prepared by: Cassie Royce / A. & A.R. / (916) 319-3600
Discussed in Hearing
4MIN
Senate Standing Committee on Governance and Finance
2MIN
Assembly Standing Committee on Appropriations
Bill Author
Bill Co-Author(s):