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AB-1445 Public contracting: small business goal.(2017-2018)

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Date Published: 04/18/2017 09:00 PM
AB1445:v97#DOCUMENT

Revised  April 25, 2017
Amended  IN  Assembly  April 18, 2017
Amended  IN  Assembly  March 28, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1445


Introduced by Assembly Member Reyes Members Reyes and Quirk-Silva

February 17, 2017


An act to add Section 14838.8 to the Government Code, relating to public contracts. An act to amend Section 14838 of the Government Code, and to amend Section 10111 of the Public Contract Code, relating to public contracting.


LEGISLATIVE COUNSEL'S DIGEST


AB 1445, as amended, Reyes. Public contracts: small business participation. Public contracting: small business goal.
Existing law requires the Director of the Department of General Services and the directors of other state agencies to establish goals for the 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.
This bill would state findings and declarations of the Legislature related to small business participation in state procurement and contracting.
Existing law requires each state agency that was awarded any contract financed with the proceeds of the infrastructure-related bond acts of 2006 in the previous fiscal year to report to the Director of General Services statistics comparing the small business and microbusiness participation dollars for contracts funded by these bonds to the total contract dollars for contracts funded by the bonds.
This bill would require that the goals established by the agency director for the participation of small businesses, as described above, be reported to the director in that report.
Existing law requires the department to make available a report on contracting that contains information on the level of participation by small businesses in state contracting.
The bill would also require the goals established by the director for the participation of small businesses, as described above, to be included in that report. The bill would also require, to the extent feasible, beginning with the report issued in 2019 covering contracting activity in the 2018–19 fiscal year, that specified information in the report about the participation of small businesses be provided by prime contractor and subcontractor, separately. The bill would define subcontractor and prime contractor for purposes of these provisions. The bill also would require the report to contain, to the extent feasible, beginning with the report issued in 2019 covering contracting activity in the 2018–19 fiscal year, the number of contracts awarded by the department.

The Small Business Procurement and Contract Act requires the Director of General Services and the heads of other state agencies that enter into contracts for the provision of goods, services, and information technology and for the construction of state facilities to establish goals for the participation of small businesses in these contracts, to provide for small business preference in the award of these contracts, to give special consideration and special assistance to small businesses, and, whenever possible, to make awards to small businesses, as specified.

This bill would require all state agencies, departments, boards, and commissions to establish and achieve an annual goal of 25% small business participation in state procurements and contracts, to ensure that the state’s procurement and contract processes are administered in order to meet or exceed the goal, and to report to the director statistics regarding small business participation in the agency’s procurements and contracts.

The bill would require the Department of General Services to monitor the progress of the agencies toward meeting the goal and to provide this information to the Office of Small Business Advocate. The bill also would require a state agency, department, board, or commission that has not achieved the goal by the close of the fiscal year to submit a corrective action plan to the department within 45 days. The bill would require the department, in collaboration with the Office of Small Business Advocate, to undertake reasonable means to assist agencies in improving small business participation in their contracting.

The bill would require all state agencies, departments, boards, and commissions to use a contracting procedure established in the act for specified contracts with small businesses whenever possible. The bill also would require the Office of Small Business Advocate to collaborate with the department to cooperatively enhance the state’s small business program by helping small businesses access capital and other financial resources necessary to successfully fulfill state contracts.

The bill would apply to all state public entities that receive state public funding, including the University of California, the California State University, and the California Community Colleges. In calculating the total amount of contracting covered by this bill, the University of California, the California State University, and the California Community Colleges would only be required to meet the 25% goal for state funding used in contracting.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) California’s dominance in many economic areas is based, in part, on the significant role small businesses play in the state’s $2.4 trillion economy.
(2) Business owners with no employees make up the single largest component of businesses in California, 3.1 million out of an estimated 4 million businesses in 2014.
(3) Nearly 90 percent of all businesses with employees have fewer than 20 employees, employing 37 percent of all workers in 2014.
(4) Research by the United States Census Bureau and the Ewing Marion Kauffman Foundation confirm that job growth is greater among businesses with fewer than 20 employees.
(5) California’s nonemployer and small employer firms create jobs, generate tax revenue, and revitalize communities.

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 construction, including alteration, demolition, repair, or improvement) 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. Each state agency that is required to make a report to the Director of General Services pursuant to subdivision (f) of Section 14838.1 shall include the goals in its report. The director shall also include the goals in the department report made pursuant to Section 10111 of the Public Contract Code.
(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 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 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 fifty thousand dollars ($50,000) for any bid, and the combined cost of preferences granted pursuant to paragraph (1) and any other provision of law shall not exceed one hundred thousand dollars ($100,000). In bids in which the state has reserved the right to make multiple awards, this fifty thousand dollar ($50,000) 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 10111 of the Public Contract Code is amended to read:

10111.
 Commencing January 1, 2007, the department shall make available a report on contracting activity containing the following information:
(a) A listing of consulting services contracts that the state has entered into during the previous fiscal year. The listing shall include the following:
(1) The name and identification number of each contractor.
(2) The type of bidding entered into, the number of bidders, whether the low bidder was accepted, and if the low bidder was not accepted, an explanation of why another contractor was selected.
(3) The amount of the contract price.
(4) Whether the contract was a noncompetitive bid contract, and why the contract was a noncompetitive bid contract.
(5) Justification for entering into each consulting services contract.
(6) The purpose of the contract and the potential beneficiaries.
(7) The date when the initial contract was signed, and the date when the work began and was completed.
(b) The report shall also include a separate listing of consultant contracts completed during that fiscal year, with the same information specified in subdivision (a).
(c) The information specified in subdivisions (a) and (b) shall also include a list of any contracts underway during that fiscal year on which a change was made regarding the following:
(1) The completion date of the contract.
(2) The amount of money to be received by the contractor, if it exceeds 3 percent of the original contract price.
(3) The purpose of the contract or duties of the contractor. A brief explanation shall be given if the change in purpose is significant.
(d) The level of participation, by agency, of disabled veteran business enterprises in statewide contracting and shall include dollar values of contract award for the following categories:
(1) Construction.
(2) Architectural, engineering, and other professional services.
(3) Procurement of materials, supplies, and equipment.
(4) Information technology procurements.
Additionally, the report shall include a statistical summary detailing each awarding department’s goal achievement and a statewide total of those goals.
(e) The level of participation by small business in state contracting including:
(1) Upon request, an up-to-date list of eligible small business bidders by general procurement and construction contract categories, noting company names and addresses and also noting which small businesses also qualify as microbusinesses.
(2) (A) By general procurement and construction contract categories, statistics comparing the small business and microbusiness contract participation dollars to the total state contract participation dollars.
(B) To the extent feasible, beginning with the report issued in 2019 covering contracting activity in the 2018–19 fiscal year, the information required to be included pursuant to subparagraph (A) also shall be provided by prime contractor and subcontractor, separately.
(3) (A) By awarding department and general procurement and construction categories, statistics comparing the small business and microbusiness contract participation dollars to the total state contract participation dollars.
(B) To the extent feasible, beginning with the report issued in 2019 covering contracting activity in the 2018–19 fiscal year, the information required to be included pursuant to subparagraph (A) also shall be provided by prime contractor and subcontractor, separately.
(4) Any recommendations for changes in statutes or state policies to improve opportunities for small businesses and microbusinesses.
(5) A statistical summary of small businesses and microbusinesses certified for state contracting by the number of employees at the business for each of the following categories: 0–5, 26–50, 51–75, and 76–100.
(6) To the extent feasible, beginning with the report issued in 2019 covering contracting activity in the year 2008, 2018–19 fiscal year, the number of contracts awarded by the department in the categories specified in paragraph (5).
(7) The number of contracts and dollar amounts awarded annually pursuant to Section 14838.5 of the Government Code to small businesses, microbusinesses, and disabled veteran business enterprises.
(f) The level of participation of business enterprises, by race, ethnicity, and gender of the owner, in contracts to the extent that the information has been voluntarily reported to the department. In addition, the report shall contain the levels of participation of business enterprises, by race, ethnicity, and gender of the owner, and whether the business is a lesbian, gay, bisexual, or transgender owned business for the following categories of contracts, to the extent that the information has been voluntarily reported to the department:
(1) Construction.
(2) Purchases of materials, supplies, or equipment.
(3) Professional services.
(g) In the years 2011 For purposes of this section, “subcontractor” and 2012, any errors reported to “prime contractor” shall have the department by an awarding agency same meaning as required by Sections 10302, 10344, and 12104.5, those terms are defined in the previous fiscal year. Section 4113.
(h) The amendments made to this section by Chapter 861 of the act adding this subdivision Statutes of 2012 shall apply on and after January 1, 2013.

SECTION 1.Section 14838.8 is added to the Government Code, to read:
14838.8.

(a)In order to encourage small business participation in state contracts, all state agencies, departments, boards, and commissions shall establish and achieve an annual goal of 25-percent small business participation in state procurements and contracts.

(b)Notwithstanding any other provision of this chapter, the heads of all state agencies, departments, boards, and commissions shall ensure that the state’s procurement and contract processes are administered in order to meet or exceed the 25-percent small business participation goal, and shall report to the director statistics regarding small business annual participation in his or her agency’s procurements and contracts.

(c)The Department of General Services shall monitor the progress of all state agencies, departments, boards, and commissions toward meeting the 25-percent small business participation goal. The department shall regularly share information with the Office of Small Business Advocate on the progress of each individual agency, department, board, and commission in meeting the annual goal, including, but not limited to, providing copies of corrective action plans.

(d)(1)A state agency, department, board, or commission that has not achieved the 25-percent small business participation goal by the close of the fiscal year shall submit a corrective action plan to the Department of General Services within 45 days.

(2)The Department of General Services, in collaboration with the Office of Small Business Advocate, shall undertake reasonable means to assist agencies in improving small business participation in their contracting, including entering into memoranda of understanding with the agencies that have not met the goal to improve their performance.

(e)All state agencies, departments, boards, and commissions shall use the contracting procedure authorized in Section 14838.5 to contract with small businesses for goods and services contracts under one hundred thousand dollars ($100,000) and construction contracts under one hundred twenty thousand dollars ($120,000) whenever possible.

(f)The Department of General Services shall actively promote small business certification, help small businesses market their products, goods, and services to the state, and promote the use of technologies and other innovative solutions for notifying small businesses of state contracting opportunities, including, but not limited to, the Subscription Outreach Service of the California State Contracts Register.

(g)The Department of General Services shall collaborate with the Office of Small Business Advocate in the office’s work to assist small businesses to access capital and other financial resources necessary to successfully fulfill state contracts.

(h)This section applies to all state agencies, departments, boards, commissions, and other state public entities that receive state funding, including the University of California, the California State University, and the California Community Colleges. In calculating the total amount of contracting covered by this section, the University of California, the California State University, and the California Community Colleges shall only be required to meet the 25-percent goal for state funding used in contracting.

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