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AB 2019 (Petrie-Norris) — Assembly Committee on Jobs, Economic Development, and the Economy (April 26, 2022)

Summary

This is the Assembly Committee on Jobs, Economic Development, and the Economy analysis of AB 2019 (Petrie-Norris), as introduced February 14, 2022, for a hearing on April 26, 2022, with Sabrina Cervantes as Chair. The subject is small and disadvantaged business enterprises. The summary says AB 2019 codifies a 25% small business goal for state procurement and proposes actions to include small businesses, disadvantaged business enterprises (DBEs), and disabled veteran business enterprises (DVBEs) in state contracting. It also authorizes a preference for public works contracts that include a disadvantaged business enterprise of 5% of the highest responsible bidder's total score. The registered support list includes the California Chamber of Commerce, the National Federation of Independent Business (NFIB) and Small Business Majority, with no opposition on file.

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“AB 2019 (Petrie-Norris) — Assembly Committee on Jobs, Economic Development, and the Economy (April 26, 2022).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-04-26-ab-2019-jede-analysis-90283e8eb8/, SHA-256 9fc394f38944c973e5f6a12cafb29fd1c75facb584098e3fc25fa216495e50ae.

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                                                                                                   AB 2019
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Date of Hearing: April 26, 2022

    ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY
                                Sabrina Cervantes, Chair
                AB 2019 (Petrie-Norris) – As Introduced February 14, 2022

SUBJECT: Small and disadvantaged business enterprises

POLICY FRAME: California’s dominance in many economic areas is based, in part, on the significant
role small businesses play in the state’s $3.1 trillion economy. Two separate studies, one by the US
Census Bureau and another by the Kaufman Foundation, found that net job growth was strongest among
businesses with less than 20 employees. Among their many other advantages, small businesses play a
pivotal role within the state’s domestic and international supply chain, meet the niche needs of California
businesses and consumers, and provide many women and people of color with avenues to upward
mobility and economic independence.

In the most recent Survey of Small Business Owners, there was a 27.5% increase in women-owned
businesses between 2007 and 2012, compared to a 7.9% increase in businesses owned by men and a -
45.8% decrease in firms owned equally by men and women. Women-owned businesses also experienced
the greatest increase in the number of people they employed and wages paid. Hispanic women had the
greatest increase in the number of business owners (89%), followed by female Black-Owned businesses
(67.5%) and female Asian American-owned businesses (44.3%).

While the number of women and minority-owned businesses are increasing, it has not seen a comparable
shift in the demographic make-up of the state’s procurement participants. For example, according to the
most recent report, business owners who self-identified their gender as “Male” received the most dollars
in all contracting categories receiving $82 million (74.5%) in contracts. Business-owners who self-
identified their race as “White” reported receiving the largest contract dollars overall, receiving nearly
$79 million. Free enterprise is dependent on fair and robust competition. It is to the state’s advantage to
have as many qualified businesses as possible compete for contracts.

AB 2019 proposes a number of actions to solidify California’s small business participation in state
contracting and use a federal targeted procurement program to increase minority and women participation
in state contracting.

The analysis includes information on the California small business economy, state rulemaking practices,
and studies on the cost of regulations to small businesses. There is no known opposition to this bill.
Suggested amendments are included in Comment 11.

SUMMARY: AB 2019 codifies a 25% small business goal for state procurement and proposes a number
of actions to enhance the ability and commitment of state agencies to include small businesses,
disadvantaged business enterprises (DBEs), and disabled veteran business enterprises (DVBEs) in state
contracting. Specifically, this bill:

1) Legislative Findings: Makes legislative finds and declarations:
   a) The positive fiscal impact of small businesses and minority-owned businesses on California’s
      overall economic health and stability, the fifth-largest economy in the world, cannot be
      underestimated or overlooked – where the entire California economy is predicated on the
      continual success and growth of all small businesses.
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   b) Given that the size of the California budget is the largest of all states in the entire country, the
      California budget contributes one-seventh of the country’s gross domestic product (GDP), and
      that, pre-COVID-19, small businesses totaled 3.9 million, or 99.8% of all California businesses,
      and 1.6 million were minority-owned.
   c) Small businesses not only contribute significantly to the tax base of the State of California but also
      account for approximately 7 million employees or 48.8% of all employment in the state.
   d) Therefore, it is incumbent upon the State of California to ensure that a fair share of procurement
      spending is directed and dedicated to small and minority-owned small businesses.
   e) The State of California must carefully consider and provide guidance to all state departments,
      agencies, bureaus, and other state entities as to reflect small and minority-owned businesses as a
      priority when determining procurement decisions.
   f) As the economy pivots to recover and rebound post the COVID-19 economic collapse, it is
      imperative for the state to assert that procurement goals include not only small businesses but also
      minority-owned businesses, also known as “disadvantaged business enterprises” (DBEs), as is
      referenced in federal procurement policies.
   g) A means of economic recovery for the financial base of California would include codifying the
      previously expressed intent of the executive and legislative branches, respectively, of the state to
      achieve a goal of procurement spending of 25 percent to SBs and DBE.
   h) It is the intent of the Legislature that California small businesses and DBEs are prioritized and
      uplifted by means of economic equity as it pertains to a percentage of state procurement dollars
      going to these entities.

2) Economic Equity First Action Plan: Expands the duties of the small business liaison, who is
   already tasked with assisting agencies in meeting a 25% small business procurement participation
   goal, to also develop an “economic equity first” action plan and policy for their respective agency.
   a) Specifies that the “economic equity first” action plan and policy are intended to provide, among
      other things, direction, recommendations, and strategies to best ensure that disadvantaged business
      enterprises that also qualify as certified small businesses, are effectively involved in, and
      benefiting from, the procurement process of the agency.
   b) Specifies that the “economic equity first” action play may include, but is not limited to, education
      and outreach, DBE stakeholder engagement, and intentional expansion of DBE suppliers, which
      also qualify as a certified small business, for the agency.
   c) Requires the economic equity first action plan and policy to be submitted to the agency secretary,
      department director, or executive officer by January 1, 2024.
   d) Requires the “economic equity first” action plan to be adopted by January 1, 2025.

3) Annual Report of the Small Business Advocate: Expands the content of the Small Business
   Advocate’s annual report to include details regarding the 25% procurement goal for small businesses,
   microbusinesses, DBEs, and disabled veteran business enterprise (DVBE) participation, as well as
   compliance and implementation of relative “economic equity first” action plans and policies, as
   specified, by state agency liaisons and advocates.
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4) Content on the GO-Biz Homepage: Requires information on how to receive assistance in certifying
   as a DVBE and DBE and participating in state procurement opportunities from the homepage of the
   GO-Biz website. Existing law requires information on small business certification to be posted on
   either the GO-Biz website or the Office of the Small Business Advocate website. This bill requires all
   certification information to be moved to the main page of the GO-Biz website.

5) Diversity of Small Business Owners: Declares that in supporting the success of California small
   businesses, the state economy is strengthened by the diversity and resiliency of its small businesses
   and that it is essential to ensure all small businesses can participate in domestic and global supply
   chains, including, but not limited to businesses owned by women, disabled individuals, people who
   identify as LGBQ, immigrants, and socially and economically disadvantaged individuals.

6) Maximum Gross Receipt Limit for Small Businesses: Requires the Department of General
   Services (DGS) to communicate and coordinate with the Small Business Advocate on the biennial
   review and possible adjustment of the average annual gross receipt levels. This review impacts the
   eligibility of a small business and a microbusiness to participate in state contracting.

7) New Definition: Defines a “disadvantaged business enterprise,” a socially and economically
   disadvantaged individual” as it is defined in specified federal law and regulation.

8) Codification of the Small Business Goal: Requires contracting departments and agencies to
   establish a minimum small business procurement participation goal of 25%.

9) New 5% Preference for Disadvantaged Businesses: Authorizes preference for public works
   contracts that include a disadvantaged business enterprise of 5% of the highest responsible bidder’s
   total score.

10) Update Legislative Findings: Deletes old (1990s) and provides more current legislative findings,
    including both of the following:
   a) The onset of COVID-19 and the subsequent economic downturn and recession has laid bare
      considerable social and economic inequities. Overall, nearly one-half of all small businesses face
      permanent closure, with DBEs facing even higher foreclosure thresholds.
   b) The current economic recession due to COVID-19 is causing an economic crisis in California,
      hitting our minority and disadvantaged communities the hardest.

11) Small Business/DVBE Option: Authorizes the use of the Small Business/DVBE Option to a DBE on
    construction contracts, as specified. The Small Business/DVBE Option allows a contracting
    department to by-pass the competitive bid process for construction contracts between $5,000 and the
    maximum cost limit set by DGS and, instead, award a contract for the certified small business or
    DVBE, as long as the agency obtains price quotations from two or more certified small businesses, or
    from two or more disabled veterans business enterprises. The current maximum price limit is
    $388,000.

12) DGS Office of Small Business and DVBE Services: Expands the duties of the Office of Small
    Business and Disabled Veteran Business Enterprise Services at DGS to include making
    recommendations to DGS and other state agencies for simplification of specifications and terms in
    order to increase the procurement opportunities for DBE.
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13) Fast Track Small Business Certification: Requires DGS to establish a fast track small business
    certification process for business enterprises that hold a current federal certification for a DBE.

14) Remedial Action for Poor Performing Departments: Requires DGS to consider appropriate
    remedial actions to be taken in regards to mandatory reporting agencies that failed in three out of five
    years to meet their small business or disabled veteran business enterprise goals, including, but not
    limited to, the removal of the department’s delegated contract authority or the placement of additional
    restrictions on contracting activity. The department is required to set forth its actions related to this
    subdivision within the department’s consolidated annual report.

15) Consolidated Report: Expands the information in the Consolidated Report to include information on
    the level of participation of dual-certified small businesses and DBE in statewide contracting. The
    reporting is to be by an agency and include dollar values of contract awards for the following
    categories:
   a) Construction.
   b) Architectural, engineering, and other professional services.
   c) Procurement of materials, supplies, and equipment.
   d) Information technology procurements.
   e) By general procurement and construction contract categories, statistics comparing the dual
      certified small business and DBE contract participation dollars to the total state contract
      participation dollars.
   f) By awarding department and general procurement and construction categories, statistics
      comparing the dual certified small business and DBEs contract participation dollars to the total
      state contract participation dollars.

16) Includes a crimes and infractions disclaimer.

EXISTING FEDERAL LAW

1) Federal Agencies: Requires certain federal agencies with US Department of Transportation-assisted
   contracts to have a DBE program, including the US Highway Administration, Federal Transportation
   Administration, and Federal Aviation Administration.

2) Statute: Defines a “socially and economically disadvantaged individual” as the following:
   a) Socially disadvantaged individuals have been subjected to racial or ethnic prejudice or cultural
      bias within American society because of their identities as members of groups and without regard
      to their individual qualities. The social disadvantage must stem from circumstances beyond their
      control. This includes individuals whose ability to compete in the free enterprise system has been
      impaired due to diminished capital and credit opportunities, as compared to others in the same line
      of business and competitive market area.
   b) There is a rebuttable presumption that the following individuals are socially disadvantaged: Black
      Americans; Hispanic Americans; Native Americans (Alaska Natives, Native Hawaiians, or
      enrolled members of a Federally or State recognized Indian Tribe); Asian Pacific Americans; and
      members of other groups designated from time to time by SBA, as specified. Being born in a
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       country does not, by itself, suffice to make the birth country an individual's country of origin for
       purposes of being included within a designated group.
   c) An individual who is not a member of one of the groups presumed to be socially disadvantaged in
      paragraph (b) must establish individual social disadvantage by a preponderance of the evidence.
      Evidence of individual social disadvantage must include the following elements:
       i) At least one objective distinguishing feature that has contributed to social disadvantages, such
          as race, ethnic origin, gender, physical handicap, long-term residence in an environment
          isolated from the mainstream of American society, or other similar causes not common to
          individuals who are not socially disadvantaged;
       ii) The individual's social disadvantage must be rooted in treatment they have experienced in
           American society, not in other countries;
       iii) The individual's social disadvantage must be chronic and substantial, not fleeting or
            insignificant; and
       iv) The individual's social disadvantage must have negatively impacted their entry into or
           advancement in the business world. Relevant evidence in assessing this element may include
           experiences relating to education and employment, and business history.

3) Federal Statute: Defines a ‘‘socially or economically disadvantaged business concern’’ to mean a
   for-profit business enterprise that is not less than 51 percent owned by one or more socially or
   economically disadvantaged individuals and the management and daily business operations of which
   are controlled by one or more socially or economically disadvantaged individuals.

4) Federal Regulation: Defines “socially and economically disadvantaged individuals,” as described in
   Section 26.67 of Title 49 of the Code of Federal Regulations and Section 8(a) of the Small Business
   Act of 1953.
   a) The disadvantaged individual must be a US citizen (or resident alien) and be a member of a
      socially and economically disadvantaged group. Presumptive groups include women, Black
      Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent
      Asian-Americans, or any individual found to be socially and economically disadvantaged on a
      case-by-case basis.
   b) The disadvantaged individual applying must have a personal net worth (PNW) of less than
      $1,320,000. Items excluded from personal net worth calculation include an individual's ownership
      interest in the applicant firm and their equity in their primary. Also, if an individual demonstrates
      that they can accumulate substantial wealth, the individual's claim of economic disadvantage may
      be denied, even though the individual's PNW is less than $1.32 million.
   c) A firm (including affiliates) must be a small business as defined by the US Small Business
      Administration. Depending on the primary business activity, a firm (including its affiliates) must
      not have average annual gross receipts over the previous three fiscal years in excess of
      $26,290,000 ($56,420,000 for airport concessionaires in general with some exceptions). Lower
      size standards may apply depending on business activity determination.
   d) The firm must be a for-profit small business where socially and economically disadvantaged
      owner(s) own at least 51% interest and have managerial and operational control of the business
      operations; the firm must not be tied to another firm in such a way as to compromise its
      independence and control.
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   e) The socially and economically disadvantaged business enterprise owner(s) must possess the power
      to direct or cause the direction of the firm’s management and policies and make day-to-day and
      long-term decisions on matters of management, policy, and operations.
   f) If state or local law requires the individual to have a particular license or other credentials in order
      to own and/or control a certain type of firm, then the socially and economically disadvantaged
      individual who owns and controls a potential disadvantaged business enterprise firm of that type
      must possess the required license or credential.

EXISTING STATE LAW:

1) Designates DGS as the lead agency implementing the state Small Business Procurement and Contract
   Act and administrator of the Office of the Small Business and DVBE Services, which includes
   certifying and implementing targeted preference programs for certified small businesses,
   microbusinesses, and DVBEs.

2) Requires state agencies to set a small business participation goal consistent with guidlines set by the
   DGS Office of Small Business and DVBE Procurement.

3) Authorizes a 5% procurement preference for certified small business bidders or nonsmall business
   bidders that provide for small business and microbusiness participation in the contract.

4) Defines a “small business” as an independently owned and operated business that is not dominant in
   its field of operation; in addition, 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,
   with an average annual gross receipt of $10 million or less over the previous three years.
   a) For a small business in the manufacturing sector, the limitation on an annual gross receipt is $15
      million.
   b) For a small business bidding on a public works contract, as defined, the maximum number of jobs
      is 200 or fewer employees, and the limitation on the average annual gross receipt is $36 million.
   c) A “microbusiness” is a small business with an average annual gross receipt limitation of $5
      million or a manufacturer with 25 or fewer employees.

5) Applies the 3% DVBE participation goal on each awarding state agency, department, and officer that
   enters into a contract for materials, supplies, equipment, alteration, repair, or improvement. This
   requirement can be waived on a specific contract with the approval of the department director or
   another designated person.

6) Authorizes a streamlined small business procurement option (Small Business/DVBE Option) for state
   contracts over $50,000 and under $250,000. Under this process, the contract is not put out for bid;
   instead, the contracting agency can award the contract to a certified small business after obtaining two
   price quotes from two certified small businesses. Similar provisions may be used to contract with a
   DVBE and after obtaining two additional DVBE price quotes.

7) Authorizes a 5% preference to the lowest responsible bidder or highest-scoring responsible meeting
   specifications who provides for certified small business or microbusiness subcontractor participation;
   this applies to state contracts for goods, information technology, services, and construction, as
   specified.
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8) Defines a “DVBE” as a business certified as a sole proprietorship, corporation, or partnership with its
   home office located in the US, which is not a branch or subsidiary of a foreign corporation, foreign
   firm, or other foreign-based business. In addition, a DVBE meets all of the following:
   a) The disabled veteran is a veteran of the military, naval, or air service of the US, including, but not
      limited to, the Philippine Commonwealth Army, Regular Scouts, “Old Scouts,” Special Philippine
      Scouts, “New Scouts,” and those who have at least a 10% service-connected disability and are
      domiciled in the state.
   b) The management and control of the daily business operations are by one or more disabled
      veterans. The disabled veterans who exercise management and control are not required to be the
      same disabled veterans as the owners of the business.
   c) The DVBE’s ownership of the business meets the following criteria:
       i) If the DVBE is a sole proprietorship, it is at least 51% owned by one or more disabled
          veterans.
       ii) If the DVBE is a publicly owned business, at least 51% of its stock is unconditionally owned
           by one or more disabled veterans.
       iii) If the DVBE is a subsidiary, it is wholly owned by a parent corporation, but only if one or
            more disabled veterans unconditionally own at least 51% of the voting stock of the parent
            corporation.
       iv) If the DVBE is a joint venture, it is an entity in which at least 51% of the joint venture’s
           management, control, and earnings are held by one or more disabled veterans.

FISCAL EFFECT: Unknown

COMMENTS & CONTEXT:

1) Small Business Procurement and Contract Act: California has a 40-year history of utilizing state
   contracting to support business development within targeted business populations. The statute sets an
   annual 3% DVBE procurement participation goal, and a 2006 executive order sets a 25% small
   businesses and microbusinesses participation goal for state agencies, departments, boards, and
   commissions.

   While encouraging small business participation furthers the state’s interest in having a robust small
   business sector, the Small Business Procurement and Contract Act also establishes the policy
   foundation for DVBE contract participation. The DVBE procurement program is intended to
   recognize the sacrifices of California’s disabled military veterans and address the specific needs of
   disabled veterans seeking rehabilitation and training through entrepreneurship.

   To assist state agencies in reaching these targeted procurement participation goals, state law
   authorizes:
      A procurement preference of 5% for bids using a certified small business as a prime or
       subcontractor.
      A streamlined alternative procurement process for smaller size contracts (between $5,000 and
       $250,000), known as the Small Business/DVBE Option, whereby an awarding department can
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       contract directly with a certified small business or DVBE after comparing the bid against two
       other similar businesses.
      A DVBE incentive allows an awarding department to set an incentive percentage between 1% and
       5% for a particular transaction.

   In the state’s experience, a majority of DVBEs are smaller size firms, with 86% having dual
   certifications, including 56.5% of all DVBEs also holding microbusiness certificates, 25.6% having a
   small business certification, and 0.6% having a small business public works certification. The
   remaining 14% of DVBEs operate with only a single DVBE certification.

   DGS has a range of responsibilities relating to the implementation of the Small Business and DVBE
   program, including:
      Certification of DVBEs (36 new and renewed DVBEs certified in 2019-20, which brings the total
       of certified DVBEs in 2020-21 to 2,070);
      Certification of small businesses and microbusinesses (773 new and renewed certifications
       bringing the total number of certified small businesses and microbusinesses in 2020-21 to 20,460);
      Outreach to the potential small business and DVBE bidders (132 events, including 110 events to
       the veteran community in 2020-21);
      Marketing of the DVBE program to state agencies;
      Partnering with CalVet on meetings with departments that are not meeting participation goals;
      Consulting with the California Procurement Contracting Academy on the DVBE training of state
       contracting staff;
      Preparation of an annual consolidated report on DVBEs, small businesses, and microbusinesses’
       participation within state contracting activities; and
      Program oversight to identify abuses by bidders and failures performed by state departments and
       agencies.

   DGS reports that it is also developing an online survey to increase the voluntary reporting of
   Ethnicity, Race, Gender, and Sexual Orientation information by business owners contracting with the
   state, in accordance with Public Contract Code Section 10111. According to DGS, this new online
   ERGSO survey will be designed to ensure the confidentiality of responses and make it easier for
   business owners to complete this voluntary survey.

2) Tracking Small Business and DVBE Procurement: Given the importance of small businesses to
   California's economy, these procurement preferences play a key role in distributing state expenditures
   throughout the state and among a variety of business types. The charts below (Charts 1 and 2)
   display small business and DVBE procurement participation for the most recent four fiscal years for
   which data is available.

                     Chart 1– Small Business and Microbusiness Contracting Activity of
                                 Mandated Reporters (dollars in millions)
                                           Total Small
                       Total Contract
    Fiscal Year                           Business and       Total Percent     Total Number of Contracts
                          Dollars
                                          Microbusiness
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                                          Contract Dollars
    2019-20               $11,988             $2,840                   23.7%                         97,515
    2018-19               $10,531             $2,168                  20.58%                         96,345
    2017-18                $8,361             $2,720                  32.50%                        110,864
    2016-17                $6,329             $1,683                  26.60%                        117,624
    2015-16                $5,855             $2,112                  36.08%                        116,169
    2014-15                $8,117             $2,079                  25.61%                        482,707
    2013-14                $7,101             $2,013                  28.35%                         90,784
    2012-13                $7,616             $1,801                  23.66%                        105,617
    2011-12                $7,399             $1,796                  24.28%                        165,523
                                             Source: DGS Statewide Consolidated Annual Reports for the contracting periods

         Chart 2 – DVBE Five-Year Contracting Activity of Mandated Reporters (dollars in millions)
                        Total Contract      Total DVBE             Total DVBE
    Fiscal Year                                                                             Total DVBE Contracts
                           Dollars            Dollars                Percent
    2019-20                $11,988              $464                  3.87%                          22,894
    2018-19                $10,531              $340                  3.23%                          23,782
    2017-18                 $8,314              $387                   4.7%                          19,174
    2016-17                 $6,329              $259                   4.1%                          19,823
    2015-16                 $5,855              $274                   4.6%                          18,638
    2014-15                 $8,105              $314                   3.8%                          16,192
    2013-14                 $6,566              $241                   3.6%                          12,777
    2012-13                 $7,151              $216                   3.0%                          14,907
    2011-12                 $7,173              $340                   4.7%                          16,246
                                             Source: DGS Statewide Consolidated Annual Reports for the contracting periods


   Based on the charts’ data, aside from 2019-20, the state appeared to nearly meet its 25% small
   business target and exceeded the 3% DVBE procurement participation goal. These official numbers
   are, however, only part of the program assessment. DGS prepares an extensive annual report on state
   procurement activities, the California Consolidated Report. In addition to reporting the number and
   dollar amounts of contracts with small businesses and DVBEs, these reports also provide information
   on outreach activities and other information to provide a framework for understanding the state’s
   targeted procurement activities.

   Although DGS works diligently to gather and aggregate this information, the California Consolidated
   Report also highlights potential data irregularities, including the inconsistent reporting by state
   agencies and the failure of some state agencies to even make a report. As an example, in 2012-13,
   only 79% of the mandatory reporting entities reported their contracting activity to DGS. In 2019-20,
   94% of the mandatory reporting agencies submitted data.

   The data also provides only a partial look at contracting activities, as it reflects the amount contracted
   for and not the amounts actually received by a small business or DVBE. A state audit of the DVBE
   program, released in 2019, suggests that very few state agencies have implemented practices to
   monitor and report DVBE procurement participation violations for follow-up by DGS. The
   Legislature passed three measures to address the deficiencies identified in the audit, described in
   Comment 10. However, the impact of those changes will not be known until procurement data for
   2021-22 are released.

3) COVID-19 Procurement Opportunities: On March 4, 2020, Governor Newsom issued an
   emergency proclamation due to the COVID-19 pandemic, which suspended statutory requirements for
   competitive bidding, advertising, and other state purchasing requirements for the procurement of
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goods and services needed to address the effects of the pandemic. With the state government
operating under a state of emergency, state agencies are authorized to use contracting protocols that
allow for little or no small business and DVBE participation. Many small business groups have
expressed concern to the Assembly Jobs Committee over the lack of access to new procurement
opportunities since April of 2020.

Small business participation in state procurement was below 25% in 2018-19 and 2019-20. One of
the reasons for these lower participation levels in small businesses is the increased use of emergency
contracting authority. DGS releases an annual California Consolidated Report, which tracts small
business, micro business, and DVBE procurement participation. In the 2018-19 report, DGS states
that the “primary reason departments gave for not meeting the Small Business or DVBE participation
goals was the large number of emergency contracts related to the 2018 wildfires, such as the Camp
Fire.”

For the 2019-20 report, DGS prepared Chart 3, which compares small business and DVBE
participation with and without emergency contracting activity.

        Chart 3 - Participation with and without Emergency Purchases (dollars in millions)
                           Total
                                         SB/Micro       SB/Micro                           DVBE
     Departments         Contract                                      DVBE Dollars
                                          Dollars        Percent                           Percent
                          Dollars
 Total State Award       $11,988          $2,840         23.70%             $464            3.87%
 Without Emergencies      $7,339          $2,661         36.27%            $407.3           5.54%
 Only Emergencies         $4,650           $179           3.85%            $56.7            1.22%
                                                         Source: 2019-20 California Consolidated Report

To combat this trend, DGS reports that its Office of Small Business and DVBE Services has taken a
number of steps to address the impact of large emergency/disaster-related contracts on small
businesses and DVBEs. A few highlights from their 2018-19 and 2019-20 California Consolidated
Report are provided below:
   New Register of Certified Firms for Emergency-related Contracts: Working with departments
    that make large disaster-related contracts, DGS identified approximately 32 activity/supplies
    categories for which small businesses and DVBEs will be able to register. Categories include but
    are not limited to debris removal, energy generators, equipment rentals, rescue supplies, medical
    supplies, respiratory products, sanitation, food, and fuel. The Emergency Registry went live in
    October 2021.
   Leveraged Procurement Agreements for Emergency Purchases: DGS finalized and expanded
    the Master Service Agreement (MSA) and California Multiple Award Schedule contracting
    opportunities for emergency procurement. This included the debris removal MSA related to
    recovery efforts from the fires. DGS will also continue to provide SB/DVBE participation
    language to be used in emergency MSAs and provide targeted outreach to certified businesses to
    connect them with emergency contracting opportunities.
   Targeted Outreach for Emergency Purchases: DGS is encouraging and in some cases requiring,
    departments to reach out to DGS when conducting emergency procurements. DGS has committed
    to assisting awarding departments with identifying certified small businesses and DVBEs to meet
    their needs. Examples of targeted SB/DVBE outreach for emergency purchases include:
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       o Distributing emergency specific communication to certified firms
       o Assisting certified businesses with strengthening their certification profile keywords and
         UNSPSC and taking advantage of the search functionality of the Financial Information System
         for California (FI$Cal).
       o Offering certification workshops and individual assistance to interested businesses and will
         continue to do so moving forward.
       o Collecting business information from SB/DVBEs who reported they could provide COVID-
         related goods and services and distributed their information to all state advocates and Cal OES.

   DGS believes that these changes will show improvements in the 2021-22 contract activities.

4) Ethnicity, Race, Gender, and Sexual Orientation (ERGSO): Existing law encourages businesses
   contracting with the state to voluntarily provide information on the business owner’s ethnicity, race,
   gender, and sexual orientation. ERGSO data is captured for goods, services, and construction.

   Awarding departments continue to report to DGS that contractors fail to complete the voluntary
   surveys. As noted earlier in the analysis, DGS is updating the survey and putting it online to make it
   easier for businesses to report. In 2019-20, only 40% of departments had ERGSO data to share. A
   few highlights from the report:

      Contracts by Ethnicity:
       o Business-owners who self-identified their ethnicity as “Hispanic” reported the largest dollars
         awarded overall at $7.8 million, of which 86% was in service-related contracts.
       o Business-owners who self-identified their ethnicity as “Other” and “Asian-Indian” reported
         receiving $7 million each, with the majority of dollars awarded in Services.

                        Chart 4 - 2019-20 Contract Activity – Ethnic Classifications
    Ethnicity
                                 Goods                  Services             Construction                Totals
    Classifications
    Asian-Indian               $554,153                $4,509,541              $1,870,491              $6,934,184
    Black                        $5,724                 $875,926                $125,000               $1,006,650
    Hispanic                   $460,759                $6,747,566               $606,066               $7,814,392
    Native American             $18,516                 $226,448                 $90,000                $334,965
    Pacific-Asian             $1,382,019               $1,621,927                  $0                  $3,003,946
    Other                     $1,896,617               $4,529,720               $518,064               $6,944,401
    TOTALS                    $4,317,788              $18,511,128              $3,209,621             $26,038,537
                                         Source: DGS Consolidated Report 2019-20 based on 40% of departments responding


      Contracts by Race:
       o Business-owners who self-identified their race as “White” reported receiving the largest
         amount of contract dollars overall at nearly $79 million, of which $44 million was in
         Construction.
       o Business-owners who self-identified their race as “Asian” received the third-highest amount of
         contract dollars overall, which was reported at almost $10 million, of which more than half,
         $4.7 million, was in Services.
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    o Business-owners who self-identified their race as “African American” received just under $1
      million overall, of which 87% was in Services.

    o Business-owners who self-identified their race as “Other” received $20 million in contracts, of
      which $18 million was in Services.

                       Chart 5 - 2019-20 Contract Activity – Race Classifications
Race Classifications         Goods                   Services             Construction                Totals
American Indian or
                             $20,755                 $569,621               $229,350                $819,726
Alaska Native
Asian                       $599,418                $4,724,052              $4,012,855             $9,336,325
Black or African
                             $5,724                  $866,426               $125,000                $997,150
American
Native Hawaiian or
Other Pacific                $5,003                  $263,662                   $0                  $268,665
Islander
White                      $11,344,111             $23,099,700             $44,508,808            $78,952,618
Other                       $1,400,903             $18,092,999              $593,162              $20,087,065
TOTALS                     $13,375,914             $47,616,460             $49,469,175            $110,461,549
                                      Source: DGS Consolidated Report 2019-20 based on 40% of departments responding


   Contracts by Gender and Sexual Orientation:
    o Business-owners who self-identified their gender as “Male” received the most dollars in all
      contracting categories for $82 million, with $36 million in service-related contracts and $39
      million in construction-related contracts.
    o Business-owners who self-identified their gender as “Female” received $28 million in contract
      dollars overall, with $10.2 million in service-related contracts and $11.6 million in
      construction-related contracts.
    o Business-owners who self-identified themselves as “Transgender” received $613,000 in
      service-related contracts.

                       Chart 6 - 2019-20 Contract Activity – Race Classifications
Gender
                             Goods                   Services             Construction                Totals
Classifications
Male                        $6,584,152             $36,516,490             $39,109,917            $82,210,560
Female                      $6,069,156             $10,296,262             $11,682,187            $28,047,604
Transgender                     $0                  $613,049                   $0                   $613,049
TOTALS                     $12,653,308             $47,425,801             $50,792,104            $110,871,213
                                      Source: DGS Consolidated Report 2019-20 based on 40% of departments responding


    o Business-owners who self-identified their sexual orientation as “Lesbian” received nearly $3
      million in contracts, with $2.9 million of those contract awards being for goods-related
      contracts. This was the highest amount of dollars among individuals who self-identified as
      either Gay, Lesbian, or Bisexual.
    o Business-owners who self-identified their sexual orientation as “Bisexual” received the highest
      amount of service-related dollars at $349,500.

                         Chart 7 - 2019-20 State Contracting – Sexual Orientation
Sexual Orientation
                             Goods                   Services            Construction                Totals
Classifications
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    Lesbian                   $2,935,964              $63,706                 $0                  $2,999,670
    Gay                        $19,227               $105,654               $13,634                $138,515
    Bisexual                   $19,950               $349,548                 $0                   $369,498
    TOTALS                    $2,975,141             $518,908               $13,634               $3,507,683
                                      Source: DGS Consolidated Report 2019-20 based on 40% of departments responding


5) Highlights of State Outreach Activities: Below are highlights of DGS outreach activities from the
   2019-20 Consolidated Report:

      Established 12 new strategic partnerships and maintained 35 existing relationships with diverse
       organizations that support and help DGS to fulfill the SB/DVBE program mission, including but
       not limited to CA Black Chamber of Commerce, CA Hispanic Chamber of Commerce, CA Asian
       Chamber of Commerce, CA American Indian Chamber of Commerce, Western Regional Minority
       Supplier Development Council, Veteran in Business Network, and LGBTQ Golden Gate Business
       Association.
      Continued to support ongoing DGS-led design-build construction projects to find and use SB and
       DVBE subcontractors.
      Implemented a FI$Cal-generated notification to be sent upon the awarding of a contract or
       purchase order to all listed SB and DVBE subcontractors as well as prime contractors. This
       notification makes certified firms aware of their participation and provides helpful details about
       the contract for the prime contractor, SB/DVBE advocate, and OSDS.
      Facilitated the DGS Small Business Advisory Council’s biennial strategic planning meeting and
       the establishment of three committees within the council. The Processes Committee, Commercial
       Useful Function Committee, and Outreach, Education and Legislation
      Held the 20th annual State Agency Recognition Awards, which honors state departments and
       employees for their best practices, innovation, and outstanding achievements to advance
       California’s SB and DVBE programs.
      Continued to support SBs and DVBEs on their journey toward doing business with the state of
       California by providing web resources available at: https://www.dgs.ca.gov/PD-SB-DVBE-
       Resources. New training videos and resource documents continue to be developed and uploaded,
       including:
       o On-demand training videos for the business community.
       o An "Acquisition Methods" flyer describing common acquisition methods that state
         departments can use to do business with certified SBs/DVBEs.
       o A "Certification Benefits" postcard highlighting what the state buys and the benefits of
         SB/DVBE certification.
       o A UNSPSC (code used to categorize goods and services) and keywords training handout to
         assist businesses with selecting codes and descriptions for their Cal eProcure SB/DVBE
         certification profiles.
      Granted automatic one-year certification extensions to certified Small and Disabled Veteran
       businesses to mitigate COVID-19 impact.
      Established a 2021 strategic goal to translate OSDS documents and videos to Spanish. Spanish
       document translation began in August 2020. A total of 24 outreach resources and certification
       documents have been translated, and six video tutorials have been closed-captioned in Spanish.
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6) Small Business Public Works: In 2019, DGS implemented a new small business certification
   category - Small Business Certification for the Purpose of Public Works [SB 605, Chapter 673,
   Statute of 2017]. This new certification includes small businesses in the public works arena with
   three-year annual average gross receipts not exceeding $36 million and fewer than 200 employees.

   At the end of 2018-19 (six months after the bill took effect), 422 firms had applied for and received
   the small business-public works certification. Of those 422, 292 were exclusively SB-PWs, while 130
   others added this certification to other certifications they used in applying for state contracts. In
   addition to a new certification category, SB 605 also increased and codified the certification eligibility
   threshold for firms based on their three-year average of gross annual receipts. The microbusiness
   designation was increased to $5 million, and $15 million was set for the small business certification
   cap. Chart 8 displays data on the number of California- certified small businesses and DVBEs in all
   certification categories for 2019-20.

                                                                                           Percent of
       Chart 8 - Small Business, Micro Firms, and DVBE by                                                  Percent
                                                                          Firm Count         Small
                        Certification Type                                                                of DVBEs
                                                                                           Businesses
    DVBE (only)                                                                247              --         13.76%
    Small Business                                                            1,998          11.50%
       Dual Certifies Small Business and DVBE                                   82            0.47%         4.57%
       Dual Certified Small Business and Small Business-Public Works           164            0.94%           --
    Small Business Micro                                                     12,014          69.15%           --
       Dual Certified Small Business Micro and Small Business–Public
                                                                              1,311          7.55%            --
    Works
       Dual Certified Small Business Micro and DVBE                           1,283          7.38%         71.48%
    Small Business–Public Works                                                339           1.95%            --
       Dual Certified Small Business–Public Works and DVBE                      21           0.12%          8.36%
    Triple Certified Small Business, DVBE, and Small Business–Public
                                                                               12            0.07%          0.07%
    Works
    Triple Certified Small Business (Micro), Small Business–Public
                                                                              150            0.86%          1.17%
    Works and DVBE
    Total Small Business, Micro Businesses, and Public Works                 17,374           100%             --
    Total DVBEs                                                               1,795             --           100%
                                                                       Source: 2019-20 California Consolidated Report

   AB 2019 adds a new category for reporting on state procurement activities, the certified DBE, which
   is currently only used in federal transportation funding. The bill requires DGS to establish a fast-track
   small business certification for businesses with a DBE certification. This could be an effective
   method for expanding and diversifying the pool of qualified small businesses in the state. Nothing in
   this bill sets a goal or requires a state agency to contract with a DBE.

7) Equal Protection Clause and Prop 209: In March of 1998, the Ninth Circuit Court of Appeals
   determined in Monterey Mechanical Co. v. Wilson, that the provisions of Public Contract Code
   Section 10115 et seq., which held that statutory requirements to achieve minority and women business
   enterprise procurement participation goals or related good faith efforts were unconstitutional and
   violate the Equal Protection Clause of the Fourteenth Amendment of the US Constitution.

   Article 1 of the Fourteenth Amendment states, “All persons born or naturalized in the United States,
   and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they
   reside. No state shall make or enforce any law which shall abridge the privileges or immunities of
   citizens of the United States; nor shall any state deprive any person of life, liberty, or property,
                                                                                                    AB 2019
                                                                                                    Page 15

   without due process of law; nor deny to any person within its jurisdiction the equal protection of the
   laws.”

   The central issues of the case were whether the mandate to classify certain contractors differently
   according to their ethnicity and sex violated the equal protection clause or had the state constructed “a
   narrowly tailored remedy to account for past discrimination. In the Monterey Mechanical case, the
   court stated, upon reviewing the legislative intent of the women and minority business contracting
   statute, that California had “made no attempt to justify the ethnic and sex discrimination it imposed”.

   Prior to the Monterey Mechanical decision (1996), California voters had passed Proposition 209 (Prop
   209), which more comprehensively blocked the state’s ability to operate women and minority
   procurement programs. Under Prop 209, which added Section 31 to Article 1 of the California
   Constitution, the “state is prohibited from discriminating against, or granting preferential treatment to,
   any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of
   public employment, public education or public contracting”.

   As a result of these two cases, Governor Wilson issued Executive Order W-172-98, which stated, in
   part, that every state department was to cease any enforcement of the minority and women business
   enterprise participation goals or any related good faith effort requirements associated with Public
   Contract Code Section 10115 et seq. with respect to any non-federally funded state contracts or
   amendments on or after March 10, 1998.

   In implementing the executive order, the California Department of Transportation (Caltrans) issued
   instructions that DBEs would only be required in projects that were funded in part or in whole by
   federal Department of Transportation dollars and would be optional for projects funded by local or
   private entities. The Local Assistance Program Guidelines issued by Caltrans in April 1998
   specifically retained the requirement that “DBE program requirements must be included if Caltrans
   awards and administers the construction contract.”

   The Monterey Mechanical decision did not address, and therefore it is generally recognized that it
   does not apply to, the DVBE provisions in state law. Further, Prop 209 specifically excludes the use
   of disadvantaged business enterprises in contracts where their inclusion is necessary to draw-down
   federal funds. Subdivision (e) of Section 31 of Article 1 of the California Constitution states,
   “Nothing in this section shall be interpreted as prohibiting action which must be taken to establish or
   maintain eligibility for any federal program, where ineligibility would result in a loss of federal funds
   to the state.”

   Committee staff checked with the Author’s office, and a cover letter was not issued by the Office of
   the Legislative Counsel’s Office when this measure was drafted.

8) California Certifies DBEs: As a recipient of certain federal transportation funding, state and local
   agencies are responsible to:
      Certify DBE eligibility of businesses to participate in contracts that include certain federal
       transportation funding.
      Establish narrowly-tailored goals for the participation of DBEs; and
      Evaluate their federal transportation funded contracts throughout the year and establish contract-
       specific DBE subcontracting goals as necessary to achieve the agency’s overall goal. The level of
                                                                                                          AB 2019
                                                                                                          Page 16

       DBE subcontracting goals may vary; however, by the end of the year, the amount of
       contract/subcontract awards to DBEs must be consistent with the overall goal.

   To participate in the DBE program, a small business owned and controlled by socially and
   economically disadvantaged individuals must receive certification from a designated state agency, the
   Uniform Certification Program.

   To be regarded as economically disadvantaged, an individual must have a personal net worth that does
   not exceed $1.32 million. To be seen as a small business, a firm must meet SBA size criteria and have
   average annual gross receipts not to exceed $28.48 million. Size limits for the airport concessions
   certification are higher.

   Caltrans and nine other government agencies in California provide DBE certification under the
   California Unified Certification Program, including Los Angeles County Metropolitan Transit
   Authority, San Diego County Regional Airport Authority, San Francisco Bay Area Rapid Transit
   District, San Francisco International Airport, San Francisco Municipal Transportation Agency, San
   Mateo County Transit District, Santa Clara Valley Transportation Authority, City of Los Angeles, and
   the City of Fresno.

   Caltrans provides a fairly robust set of resources, including a searchable database for vendors looking
   for DBE subcontractors, as well as free training. DBEs are also included in the Caltrans SB 1 Small
   Business Outreach Plan and Implementation Report, which is applied to the state’s $54 billion
   transportation infrastructure investment plan.

9) DBEs, Small Businesses, and DVBEs: As noted previously, the federal government uses the DBE
   program to ensure that federally assisted contracts for highway, transit and aviation projects are made
   available for small business concerns owned and controlled by socially and economically
   disadvantaged individuals.

   In general, DBE requirements allow for larger businesses to participate in state procurement activities
   than those allowed under the state Small Business certification. The DBE certification revenue limits,
   however, are less than those applied to state-certified Small Business-Public Works. The DBE
   employment and revenue standards are based on the business’ industry sector and are set through
   regulation by the federal Small Business Administration.

              Chart 9 - Comparison of Selected Elements of the State and Federal Designations
                                            Can You Get       Located in
                                                                              Employee Limits    Revenue Limits
                                          Certified in CA     California
     CA Microbusiness                           Yes              Yes       None                  $5 million
     CA Microbusiness Manufacturer              Yes              Yes       25 or fewer           None
     CA Small Business                          Yes              Yes       100 or fewer          $15 million
     CA Small Manufacturers                     Yes              Yes       100 or fewer          None
     CA Small Business - Public Works           Yes              Yes       200 or fewer          $36 million
     DBE                                     CalTrans+           No        Various by industry   $26.2 million
     CA DVBE                                    Yes              Yes       None                  None
     *For a complete view DGS certification requirements: Government Code Section 14837(d) for small business
     requirements and Military and Veterans Code 999(b) and 999(B)(7)(A) for DVBE requirements
                                                                                                    AB 2019
                                                                                                    Page 17

   While certification is offered through CalTrans and certain local agencies, the DBE program is
   national. This means that DBEs participating in state contracts are not necessarily, headquartered in
   California as required for the state’s Small Business and DVBE certifications.

   As of April 9, 2022, there were 4,626 DBEs out of 5,525 firms in the CalTrans database listed as
   being in California. A business is not required to be in the DBE database to participate; the business
   just needs to be a certified DBE. To address concerns over providing a 5% procurement incentive to
   out-of-state businesses, proposed committee amendments require the DBE to have dual-certification
   as a small business (all categories) or DVBE in order to receive a 5% procurement incentive.

10) The Role of Small Businesses within the California Economy: California’s dominance in many
    economic areas is based, in part, on the significant role small businesses play in the state’s $3.1
    trillion economy. Two separate studies, one by the US Census Bureau and another by the Kaufman
    Foundation, found that net job growth was strongest among businesses with less than 20 employees.
    Among other advantages, small businesses are crucial in the state’s international competitiveness, and
    they are an important means for dispersing the positive economic impacts of trade within the
    California economy.
      In 2018 (most recent full set of data), of the 4.4 million firms in California, there were 3.4 million
       nonemployer firms as compared to 954,632 employer firms.
      Total revenues for nonemployer sole proprietorships, across all industry sectors, were $189 billion
       in receipts in 2017.
      Businesses with less than five employees are classified as microenterprises. In 2017, there were
       473,641 microenterprises that had one or more employees.
      Microenterprises, including both nonemployer and up-to-5-employee businesses, comprise the
       single largest segment of the California business community, representing 89.0% (3.9 million) of
       all businesses in the state.

   Microenterprises have many unique features and provide important benefits to local communities,
   according to a recent study from the Microenterprise Fund for Innovation, Effectiveness, Learning,
   and Dissemination (FIELD) at the Aspen Institute. These benefits include:
      Providing products and services tailored to meet local and neighborhood needs.
      Stimulating an inflow of revenues to and within local communities.
      Serving as catalysts for neighborhood reengagement.
      Revitalizing neighborhoods that may otherwise have vacant storefronts.
      Providing role models and support for future entrepreneurs.

   Excluding sole proprietorships, businesses with less than 20 employees comprise over 88.6% of all
   businesses and employ approximately 17.4% of all workers. Businesses with less than 100 employees
   represent 97.3% of all businesses and employ 34.5% of the workforce.

   The chart below displays 2018 data (the most recent full set of data) on California employer
   businesses, including payrolls, employment, and a number of firms, which may be comprised of one
   or more establishments.
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                         Chart 10 - 2018 Business Profile by Size (excludes nonemployer firms)
          Area          Employment       Number of        Percent of         Employees       Percent of Jobs        Annual
      Description            Size           Firms           Firms                                               Payroll ($1,000)
     United States     Total             6,075,937                        130,881,471                          $7,097,310,272
     California        Total             779,825        12.8%             15,223,664         11.6%             $1,020,958,926
                                                        U.S. Firms                           U.S. Jobs

     United States     0-4               3,757,163      61.8% of          5,967,955          4.5% of           $287,379,518
                                                        U.S. Firms                           U.S. Jobs
     California        0-4               485,387        62.2% of          746,240            4.9% of           $46,663,550
                                                        CA Firms                             CA Jobs

     United States     <20               5,411,180      89.0% of          21,337,272         16.3% of          $898,874,051
                                                        U.S. Firms                           U.S. Jobs
     California        <20               692,139        88.7% of          2,650,204          17.4% of          $130,748,308
                                                        CA Firms                             CA Jobs

     United States     0-99              5,962,057      98.1% of          42,918,809         32.7% of          $1,859,572,577
                                                         U.S. Firms                          U.S. Jobs
     California        0-99              759,654        97.4% of          5,214,752          34.2% of          $261,490,973
                                                        CA Firms                             CA Jobs

     United States     <500              6,055,421      99.6% of          61,244,031         46.7% of          $2,819,089,905
                                                        U.S Firms                            U.S. Jobs
     California        <500              773,386        99.1% of          7,339,390          48.2% of          $395,286,015
                                                        CA Firms                             CA Jobs

     United States     500+              20,516        0.33% of         69,637,440            53.2% of         $4,278,220,367
                                                       U.S. Firms                             U.S. Jobs
     California        500+              6,439         0.82% of         7,884,274             51.7% of         $625,672,911
                                                       CA Firms                               CA Jobs
     Source: https://www.census.gov/data/tables/2018/econ/nonemployer-statistics/2018... l

   Excluding sole proprietorships, businesses with less than 20 employees comprise over 88.6% of all
   businesses and employ approximately 17.4% of all workers. Businesses with less than 100 employees
   represent 97.3% of all businesses and employ 34.5% of the workforce.

   These nonemployer and small employer firms create jobs, generate taxes, support important industry
   sectors, and revitalize communities. While their small size allows them to be more flexible in meeting
   niche foreign and domestic market needs, it also results in certain market challenges. These
   challenges include having difficulty meeting the procedural requirements of the state’s complex
   regulatory structure and the traditional credit and collateral requirements of mainstream financial
   institutions. Specialized technical assistance, access to credit enhancements, and targeting of state
   procurement activities help many small businesses overcome or at least minimize these difficulties.

11) Proposed Amendments: Below is a list of amendments the committee members may wish to review
    when considering the bill.
   a) Clarify that the Small Business Advocate’s report on activities undertaken to increase state
      procurement participation by DBEs, means those DBEs that also qualify as a small business,
      microbusiness, or DVBE.
   b) Modify the 5% DBE preference on public works contracts to require that the DBEs is also a
      certified small business, microbusiness, or DVBE.
   c) Include a severability clause.
                                                                                                   AB 2019
                                                                                                   Page 19

   d) Make related technical amendments.

12) Related Legislation: Below is a list of bills from the current and prior sessions.
   a) AB 31 (Price) Public Contracts: Small Business Procurement and Contract Act: This bill
      increases the maximum contract threshold amount for awards to small businesses (SME),
      including microbusinesses, and DVBEs under the state’s streamlined procurement process, from
      $100,000 to $250,000, as specified. This bill requires contractors to report the contract amount
      allocated to SMEs and DVBEs with which they made contract commitments. Status: Signed by
      the Governor, Chapter 212, Statutes of 2009.

   b) AB 309 (Price) Public Contracts: Small Business Participation: This bill would have required
      the establishment of a 25% small business participation goal for all state entities and directed DGS
      to monitor each agency’s progress in meeting this goal. The bill would have required that the
      Office of the Small Business Advocate received the same progress report information as state
      entities and directed DGS and the Office of the Small Business Advocate to work collaboratively
      to assist state entities in meeting their goals. This goal is currently provided for in Executive
      Order (EO) D-37-01 and EO S-02-06. Status: Held on the Suspense File of the Assembly
      Committee on Appropriations, 2010.
   c) AB 550 (Brown) State Procurement Procedures for Small Businesses: This bill would have
      required the establishment of a 25% small business participation goal for all state entities and
      directed DGS to monitor each agency’s progress in meeting this goal. The bill would have
      required that the Office of the Small Business Advocate receive the same progress report
      information as state entities and directed DGS and the Office of the Small Business Advocate to
      work collaboratively to assist state entities in meeting their goal. This goal is currently provided
      for in Executive Order (EO) D-37-01 and EO S-02-06. Status: Held on the Suspense File of the
      Assembly Committee on Appropriations, 2013.
   d) AB 657 (Cunningham) State Government Small Business Liaisons: This bill requires certain
      state agencies to prominently display the name and contact information of the small business
      liaison on the agencies’ websites and to notify the Governor’s Office of Business and Economic
      Development and the Department of General Services of liaison position vacancies, as specified.
      Status: Signed by the Governor, Chapter 81, Statutes of 2017.
   e) AB 915 (Chiu and Holden) Small Business, DVBE, and DBE Participation: This bill codifies a
      25% small business goal for state procurement and proposes a number of actions to enhance the
      ability and commitment of state agencies to include small businesses, disadvantaged business
      enterprises (DBEs), and disabled veteran business enterprises (DVBEs) in state contracting.
      Status: Held in the Senate Committee on Appropriations, 2021.
   f) AB 1365 (Quirk-Silva and Reyes) Small Business Procurement Goal: This bill would have
      expressed the Legislature’s intent that all California government agencies should have a 25% goal
      for small business participation in state procurement and contracting activities. Status: Held on
      the Suspense File of the Assembly Committee on Appropriations, 2018.
   g) AB 1734 (Jones-Sawyer) Public Contracts: Small Business Participation: Disabled Veterans:
      This bill would have required each state agency to establish and achieve a 25% small business
      participation goal and increased the annual procurement participation goal for disabled veteran
      business enterprises from 3% to 5% of the value of state contracts. In addition, the bill required
      greater reporting and accountability of DVBE program information. Status: Held on the Suspense
      File in the Assembly Committee on Appropriations, 2014.
                                                                                                 AB 2019
                                                                                                 Page 20

   h) AB 1635 (Quirk-Silva) Public Contracts and Small Business Participation: This bill would have
      required specified state agencies to establish and achieve a 25% small business participation goal
      within their annual state contracting and permitting activities. The bill would have also required
      DGS and the state Small Business Advocate to take reasonable steps to assist state agencies in
      meeting this goal. The Assembly Committee on Jobs, Economic Development, and the Economy
      was the sponsor of this bill. Status: Died in the Assembly Committee on Appropriations, 2017.
   i) AB 2905 (Assembly Jobs Committee) Small Business Procurement Goal: This bill would have
      expressed the Legislature’s intent that all California government agencies should have a 25% goal
      for small business participation in state procurement and contracting activities. To assist in
      furthering the state goal, the bill would have required each state department to disclose its small
      business participation goal when making its annual procurement report. Status: Held on the
      Suspense File of the Assembly Committee on Appropriations, 2016.
   j) SB 67 (Price) Small Business Participation in Public Contracts: This bill would have authorized
      DGS to direct all state entities to establish an annual goal of achieving no less than 25% small
      business participation in state procurement contracts, as specified. This goal is currently provided
      for in Executive Order (EO) D-37-01 and EO S-02-06. Status: Held on the Suspense File of the
      Assembly Committee on Appropriations, 2011.
REGISTERED SUPPORT / OPPOSITION:

Support
Asian Business Association of Los Angeles
Asian Business Association of San Diego
Asian Pacific Islander American Public Affairs Association (APAPA)
Avvento Consulting
CA African American Chamber of Commerce
California African American Chamber of Commerce
California Asian Pacific Chamber of Commerce (CAPCC)
California Chamber of Commerce
California Charter Schools Association
California Charter Schools Association (CCSA)
California Forward
California Forward Action Fund
California Hispanic Chamber of Commerce
California Retailers Association
California State Treasurer
California State Treasurer Fiona Ma
Cameo - California Association for Micro Enterprise Opportunity
Correct Direct Marketing
Gentlemen Health
Greater Sacramento Economic Council
Intel Consulting Management LLC
Los Angeles County Business Federation (BIZ-FED)
Los Angeles County Business Federation (BIZFED)
National Association of Women Business Owners (NAWBO)
National Federation of Independent Business (NFIB)
Sac Valley Translations INC.
Sacramento Area Council of Governments
                                                                       AB 2019
                                                                       Page 21

Sacramento Asian Pacific Chamber of Commerce
Sacramento Metropolitan Chamber of Commerce
Small Business California
Small Business Majority
Valley Vision

Opposition
None on File

Analysis Prepared by: Toni Symonds / J., E.D., & E. / (916) 319-2090


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