BILL NUMBER: SB 734AMENDED BILL TEXT AMENDED IN ASSEMBLY JUNE 27, 2011 AMENDED IN SENATE MAY 31, 2011 AMENDED IN SENATE APRIL 26, 2011 AMENDED IN SENATE APRIL 25, 2011 AMENDED IN SENATE APRIL 14, 2011 INTRODUCED BY Senator Price (Principal coauthor: Assembly Member Galgiani) (Coauthor: Senator Alquist) ( Coauthors: Assembly Members Buchanan, Furutani, Bonnie Lowenthal, and Solorio ) FEBRUARY 18, 2011 An act to amend Section 14838.1 of, and to add Section 14838.6 to, the Government Code, and to amend Section 185033 of , and to add Section 185034.1 to, the Public Utilities Code, relating to small business. LEGISLATIVE COUNSEL'S DIGEST SB 734, as amended, Price. High-Speed Rail Authority: small business program: bidding preferences. Existing law provides for various programs to encourage the participation of small businesses, as certified by the Department of General Services, in state agency contracts, and sets forth the duties of the Director of General Services and the directors of other state agencies in this regard. Existing law, the California High-Speed Rail Act, creates the High-Speed Rail Authority to develop and implement a high-speed rail system in the state, with specified powers and duties. Existing law, pursuant to the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, approved by the voters as Proposition 1A at the November 4, 2008, general election, provides for the issuance of $9.95 billion in general obligation bonds for high-speed rail and related purposes. This bill would require the authority, with the assistance of the Department of General Services, to prepare a small business, microbusiness, and disabled veteran business outreach and retention plan by July 31, 2012, in order to ensure that the percentage of contracts awarded meets the small business participation goals established by Executive Order S-02-06. This bill would require the authority to hold a hearing on the draft plan at least one month before the board meeting at which the authority intends to act on the proposed plan. The bill would require that all bidders' conferences convened by the authority include a presentation of the plan and the state's small business participation goals. The bill would require an additional price preference or score of 2.5% of the bid amount to be granted to qualified state-certified microbusinesses. The bill would state provide that contracts financed by the authority with bond proceeds from the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century shall be subject to the provisions of the Small Business Procurement and Contract Act. Existing law requires the authority to prepare, publish, adopt, and submit to the Legislature a business plan containing specified elements beginning January 1, 2012, and every 2 years thereafter. This bill would require the authority to include in that business plan or in an addendum a strategy for ensuring the participation of California-certified small businesses in contracts awarded by the authority with state or federal funds during all phases of the project. The bill would also require the authority to adopt, by July 31, 2012, a small business, microbusiness, and disabled veteran business enterprise outreach and retention plan. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) In order to keep faith with the promise to promote California jobs following the passage of the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, the state should aid, counsel, assist, and protect, to the maximum extent possible, the interests of small businesses, including microbusinesses. (b) California's microbusinesses are known to bring real diversity to local economies and the state and deserve a fair share of contracts awarded for the high-speed rail project. Although microbusinesses comprise over 80 percent of California's certified small businesses, and while it was the state's intent to afford microbusinesses the same opportunities as other small businesses in competing for state contracts, many microbusiness owners are disadvantaged when competing against their larger small business counterparts. Data compiled by the Department of General Services shows that of the $2.4 billion of contract dollars issued by state agencies to small businesses and microbusinesses in fiscal year 2008-09, microbusinesses were awarded only 37 percent, or $866 million worth of state contracting. Moreover, of the 103,371 contracts issued during the same timeframe, microbusinesses received only 42,140, or 41 percent of the contracts issued by the state. (c) It is beneficial to the state to promote and facilitate the fullest possible participation by California workers to train for new jobs and careers in today's global economy. (d) Therefore, it is essential to ensure that a fair proportion of the total purchases and contracts or subcontracts for property and services for California's high-speed rail system be placed with these microbusinesses. SEC. 2. Section 14838.1 of the Government Code is amended to read: 14838.1. (a) In order to encourage the participation of small businesses in the construction, alteration, demolition, repair, or improvement, of the state's infrastructure, as provided in the infrastructure-related bond acts of 2006 and 2008, as described in subdivision (c) , each state agency awarding contracts financed with the proceeds of these bonds shall do all of the following: (1) Establish a 25 percent small business participation goal in all contracts it financed with the proceeds of the infrastructure-related bond acts of 2006 and 2008 . (2) Advertise , in the California State Contracts Register, all upcoming opportunities to bid on contracts for projects funded by the infrastructure-related bond acts of 2006 and 2008 , described in subdivision (c), in the California State Contracts Register and include in the advertisement an Internet link to information for prospective bidders, including, but not limited to, general bidding procedures and how to properly prepare a bid for those contracts. (3) Provide information to California small businesses regarding training and technical assistance that is available to assist these small businesses in understanding and bidding on contracts for projects funded by the infrastructure-related bond acts of 2006 and 2008 , described in subdivision (c). (b) For purposes of this section, "small business" has the same meaning as set forth in subdivision (d) in Section 14837. (c) For purposes of this section, all of the following measures are deemed to be the infrastructure-related bond acts of 2006 and 2008 : (1) The Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006 (Chapter 12.49 (commencing with Section 8879.20) of Division 1 of the Government Code). (2) The Housing and Emergency Shelter Trust Fund Act of 2006 (Part 12 (commencing with Section 53540) of Division 31 of the Health and Safety Code). (3) The Kindergarten-University Public Education Facilities Bond Act of 2006 (Part 69 (commencing with Section 101000) of the Education Code). (4) The Disaster Preparedness and Flood Prevention Bond Act of 2006 (Chapter 1.699 (commencing with Section 5096.800) of Division 5 of the Public Resources Code). (5) The Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006 (Division 43 (commencing with Section 75001) of the Public Resources Code). (6) The Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century (Chapter 20 (commencing with Section 2704) of Division 3 of the Streets and Highways Code). (d) For the purposes of this section, "state agency" includes each agency provided for in Section 12800 and each state entity included in Section 10335.7 of the Public Contract Code in which the head of the agency is appointed by the Governor. For the purposes of this section, "state agency" also includes the High-Speed Rail Authority. (e) This section does not require the expenditure of the proceeds of the sale of the bonds described in this section, except as permitted by the measure authorizing the issuance of the bond. (f) On or before August 1, 2009, and annually thereafter, each state agency that has awarded any contract financed with the proceeds of the infrastructure-related bond acts of 2006 and 2008 in the previous fiscal year shall 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 these bonds. If an agency did not meet its participation goal, then the agency shall include in its report a plan of action to meet its participation goal during the current fiscal year. SEC. 3. Section 14838.6 is added to the Government Code , to read: 14838.6. (a) The High-Speed Rail Authority, with the assistance of the department, shall prepare a small business, microbusiness, and disabled veteran business enterprise outreach and retention plan in order to ensure that the percentage of contracts awarded meets the small business participation goal established by Executive Order S-02-06. In developing the plan, the authority shall consider examples of existing small business programs used by other public agencies in California. (b) The plan required by this section shall be adopted by July 31, 2012. Prior to the adoption of the plan, the authority shall hold a hearing on the draft plan at a monthly board meeting held at least one month before the board meeting at which the authority intends to act on the proposed plan. Both the draft plan and the adopted plan shall be posted on the homepage of the authority's Internet Web site. The authority shall include in all its procurement documents a summary of the plan and a link to the entire plan on its Internet Web site and shall implement the outreach strategy. (c) All bidders' conferences convened by the authority shall include a presentation of the plan and the state's small business participation goals. The authority shall request a representative of the department to attend all bidders' conferences and to answer all questions regarding this chapter. (d) In addition to the preferences otherwise required by this chapter, the authority shall grant an additional price preference or score of 2.5 percent of the bid amount to qualified state-certified microbusinesses. SEC. 2. SEC. 4. Section 185033 of the Public Utilities Code is amended to read: 185033. (a) The authority shall prepare, publish, adopt, and submit to the Legislature, not later than January 1, 2012, and every two years thereafter, a business plan. At least 60 days prior to the publication of the plan, the authority shall publish a draft business plan for public review and comment. The draft plan shall also be submitted to the Senate Committee on Transportation and Housing, the Assembly Committee on Transportation, the Senate Committee on Budget and Fiscal Review, and the Assembly Committee on Budget. The business plan shall identify all of the following: the type of service the authority anticipates it will develop, such as local, express, commuter, regional, or interregional; a description of the primary benefits the system will provide; a forecast of the anticipated patronage, operating and maintenance costs, and capital costs for the system; an estimate and description of the total anticipated federal, state, local, and other funds the authority intends to access to fund the construction and operation of the system; and the proposed chronology for the construction of the eligible corridors of the statewide high-speed train system. The business plan shall also include a discussion of all reasonably foreseeable risks the project may encounter, including, but not limited to, risks associated with the project's finances, patronage, right-of-way acquisition, environmental clearances, construction, equipment, and technology, and other risks associated with the project's development. The plan shall describe the authority's strategies, processes, or other actions it intends to utilize to manage those risks. (b) (1) In addition to the requirements of subdivision (a), the business plan shall include, but need not be limited to, all of the following elements: (A) Using the most recent patronage forecast for the system, develop a forecast of the expected patronage and service levels for the Phase 1 corridor as identified in paragraph (2) of subdivision (b) of Section 2704.04 of the Streets and Highways Code and by each segment or combination of segments for which a project level environmental analysis is being prepared for Phase 1. The forecast shall assume a high, medium, and low level of patronage and a realistic operating planning scenario for each level of service. Alternative fare structures shall be considered when determining the level of patronage. (B) Based on the patronage forecast in subparagraph (A), develop alternative financial pro formas for the different levels of service, and identify the operating break-even points for each alternative. Each pro forma shall assume the terms of subparagraph (J) of paragraph (2) of subdivision (c) of Section 2704.08 of the Streets and Highways Code. (C) Identify the expected schedule for completing environmental review, and initiating and completing construction for each segment of Phase 1. (D) Identify the source of federal, state, and local funds available for the project that will augment funds from the bond act and the level of confidence for obtaining each type of funding. (E) Identify written agreements with public or private entities to fund components of the high-speed rail system, including stations and terminals, any impediments to the completion of the system, such as the inability to gain access to existing railroad rights-of-way. (F) Identify alternative public-private development strategies for the implementation of Phase 1. (2) To the extent feasible, the business plan should draw upon information and material developed according to other requirements, including, but not limited to, the preappropriation review process and the preexpenditure review process in the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century pursuant to Section 2704.08 of the Streets and Highways Code. The authority shall hold at least one public hearing on the business plan and shall adopt the plan at a regularly scheduled meeting. When adopting the plan, the authority shall take into consideration comments from the public hearing and written comments that it receives in that regard, and any hearings that the Legislature may hold prior to adoption of the plan. (c) In the business plan to be submitted on January 1, 2012, or as an addendum to that plan to be submitted on March 1, 2012, the authority shall include a strategy for ensuring the participation of California-certified small businesses in contracts awarded by the authority with state or federal funds during all phases of the project. SEC. 3. Section 185034.1 is added to the Public Utilities Code, to read: 185034.1. (a) The High-Speed Rail Authority, with the assistance of the Department of General Services, shall prepare a small business, microbusiness, and disabled veteran business enterprise outreach and retention plan in order to ensure that the percentage of contracts awarded for architectural, engineering, manufacturing, and construction activities meets the small business participation goal established by Executive Order S-02-06. In developing the plan, the authority shall consider examples of existing small business programs used by other public agencies in California. (b) When preparing the plan, the authority shall be guided by the provisions of the Small Business Procurement and Contract Act (Chapter 6.5 (commencing with Section 14835) of Part 5.5 of Division 3 of Title 2 of the Government Code). (c) The plan required by this section shall be adopted by July 31, 2012. Prior to the adoption of the plan, the authority shall hold a hearing on the draft plan at a monthly board meeting held at least one month before the board meeting at which the authority intends to act on the proposed plan. Both the draft plan and the adopted plan shall be posted on the homepage of the authority's Internet Web site. The authority shall include in all its procurement documents a summary of the plan and a link to the entire plan on its Internet Web site and shall implement the outreach strategy. (d) All bidders' conferences convened by the authority shall include a presentation of the plan and the state's small business participation goals. The authority shall request a representative of the Department of General Services to attend all bidders' conferences and to answer all questions regarding the Small Business Procurement and Contract Act. (e) The authority shall be subject to the provisions of the Small Business Procurement and Contract Act (Chapter 6.5 (commencing with Section 14835) of Part 5.5 of Division 3 of Title 2 of the Government Code). All contracting preferences granted by the authority shall be consistent with Section 14838 of the Government Code. (f) An additional price preference or score of 2.5 percent of the bid amount shall be granted to qualified state-certified microbusinesses. (g) As used in this section, the following terms have the following meanings: (1) "Disabled veteran business enterprise" means an enterprise that has been certified as meeting the qualifications established by subdivision (g) of Section 999 of the Military and Veterans Code. (2) "Microbusiness" means a microbusiness as defined in paragraph (2) of subdivision (d) of Section 14837 of the Government Code. (3) "Small business" means a small business as defined in paragraph (1) of subdivision (d) of Section 14837 of the Government Code.