Bill Text: CA AB2030 | 2023-2024 | Regular Session | Introduced
Bill Title: Public contracts: small business participation.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced) 2024-05-16 - In committee: Held under submission. [AB2030 Detail]
Download: California-2023-AB2030-Introduced.html
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 2030
| Introduced by Assembly Member Davies |
February 01, 2024 |
An act to amend Sections 14837 and 14838.5 of the Government Code, relating to public contracts.
LEGISLATIVE COUNSEL'S DIGEST
AB 2030, as introduced, Davies.
Public contracts: small business participation.
The Small Business Procurement and Contract Act authorizes a state agency to award a contract for goods, services, or information technology with an estimated value of greater than $5,000 but less than $250,000 to a certified small business, including a microbusiness and a disabled veteran business enterprise, without complying with certain competitive bidding requirements, if the agency obtains price quotations from 2 or more of those businesses, as specified. Existing law requires a state agency to consider a responsive offer timely received from a responsible certified small business, including a microbusiness, or from a disabled veteran business enterprise.
This bill would expand the above-described authorization to permit a state agency to award a contract for goods, services, or information technology with an estimated value of greater than
$5,000 but less than $250,000 to an LGBT business enterprise, a minority business enterprise, or a women business enterprise, as defined. The bill would require a state agency to additionally consider a responsive offer timely received from any of these business enterprises.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 14837 of the Government Code is amended to read:14837.
As used in this chapter:(a) “Department” means the Department of General Services.
(b) “Director” means the Director of General Services.
(c) “Manufacturer” means a business that meets both of the following requirements:
(1) It is primarily engaged in the chemical or mechanical transformation of raw materials or processed substances into new products.
(2) It is classified between Codes 31 to 33, inclusive, of the North American Industry Classification System.
(d) (1) (A) “Small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and which, together with affiliates, has 100 or fewer employees, and average annual gross receipts of ten million dollars ($10,000,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 100 or fewer employees. Commencing January 1, 2019, the average annual gross receipts threshold shall be fifteen million dollars ($15,000,000).
(B) For the purposes of public works contracts, as defined in Section 1101 of the Public Contract Code, and engineering contracts, as described in Section 4525, for public works projects, awarded through competitive bids or otherwise, “small business” means an independently owned and
operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and which, together with affiliates, has 200 or fewer employees, and average annual gross receipts of thirty-six million dollars ($36,000,000) or less over the previous three years. This subparagraph shall become operative on January 1, 2019.
(2) “Microbusiness” is a small business which, together with affiliates, has average annual gross receipts of two million five hundred thousand dollars ($2,500,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 25 or fewer employees. Commencing January 1, 2019, the average annual gross receipts threshold shall be five million dollars ($5,000,000).
(3) (A) The director shall conduct a biennial review
of the average annual gross receipt levels specified in this subdivision and may adjust that level to reflect changes in the California Consumer Price Index for all items.
(B) Commencing January 1, 2019, the director shall conduct the biennial review and make that adjustment. To reflect unique variations or characteristics of different industries, the director may establish, to the extent necessary, either higher or lower qualifying standards than those specified in this subdivision, or alternative standards based on other applicable criteria.
(4) Standards applied under this subdivision shall be established by regulation, in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2, and shall preclude the qualification of businesses that are dominant in their industry. In addition, the standards shall provide that the certified small business
or microbusiness shall provide goods or services that contribute to the fulfillment of the contract requirements by performing a commercially useful function, as defined below:
(A) A certified small business or microbusiness is deemed to perform a commercially useful function if the business does all of the following:
(i) Is responsible for the execution of a distinct element of the work of the contract.
(ii) Carries out its obligation by actually performing, managing, or supervising the work involved.
(iii) Performs work that is normal for its business services and functions.
(iv) Is responsible, with respect to products, inventories, materials, and supplies required for the contract, for
negotiating price, determining quality and quantity, ordering, installing, if applicable, and making payment.
(v) Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices.
(B) A contractor, subcontractor, or supplier will not be considered to perform a commercially useful function if the contractor’s, subcontractor’s, or supplier’s role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of small business or microbusiness participation.
(e) “Disabled veteran business enterprise” means an enterprise that has been certified as meeting the qualifications established by paragraph (7) of subdivision (b) of Section 999 of the Military and Veterans
Code.
(f) “LGBT business enterprise” means a business enterprise that is at least 51-percent owned by a lesbian, gay, bisexual, or transgender person or persons, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more lesbian, gay, bisexual, or transgender persons, and whose management and daily business operations are controlled by one or more of those individuals.
(g) “Minority business enterprise” means a business enterprise that is at least 51-percent owned by a minority group or groups, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more minority groups, and whose management and daily business operations are controlled by one or more of those individuals. The contracting
agency shall presume that minority includes African Americans, Hispanic Americans, Native Americans, and Asian and Pacific Americans.
(h) “Women business enterprise” means a business enterprise that is at least 51-percent owned by a woman or women, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women, and whose management and daily business operations are controlled by one or more of those individuals.
SEC. 2.
Section 14838.5 of the Government Code is amended to read:14838.5.
(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 thousand dollars ($250,000), to a certified small business, including a microbusiness, or to a disabled veteran business(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.
enterprise, an LGBT business enterprise, a minority business enterprise, or women 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.
