BILL ANALYSIS
AB 2548
Page 1
Date of Hearing: May 3, 2000
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
John Longville, Chair
AB 2548 (Cox) - As Amended: April 10, 2000
SUBJECT : Municipal utility districts: purchase of supplies and
materials
SUMMARY : Authorizes the board of the Sacramento Municipal
Utility District (SMUD) to procure supplies and materials on the
basis of best value criteria. Specifically, this bill :
1)Authorizes the board of SMUD to purchase supplies and
materials when the expenditure exceeds $50,000, in accordance
with best value acquisition policies, as defined, adopted by
the board.
2)Permits the board to authorize the general manager to act for
the board in determining the best value bidder in accordance
with best value acquisition, as defined, policies and to award
a contract to that bidder.
3)Defines the best value acquisition as a competitive
procurement process that may take into consideration any of
the following factors:
a) The total cost of the district for its use or
consumption of supplies and materials;
b) The operational cost or benefit incurred by the district
as a result of contract award;
c) The value to the district of value-added services;
d) The quality, effectiveness, and innovation of supplies,
materials and services;
e) The reliability of delivery or installation schedules;
f) The terms and conditions of product warranties and
vendor guarantees;
g) The vendor's financial stability, quality assurance
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programs, and experience with the provision of supplies,
material, and services.
h) The consistency of the vendor's proposed supplies,
materials, and services with the district's overall
supplies and material procurement program.
) Requires SMUD to submit a report to the Legislature not later
than three years from the date on which it commences the best
value procurement practices.
EXISTING LAW :
1)Allows, under the Municipal Utility District Act of 1921 (MUD
Act), municipal utility districts (MUDs) to provide various
utility services, including water supply, sewage treatment,
power and light, transportation and communications to areas
that include more than one county. There are a total of 5
MUDs in California.
2)Provides that the purchase of all supplies and materials by
any MUD with a population of 250,000 or more shall be let by
contract to the lowest responsible bidder when the required
expenditure exceeds $50,000. For all other MUDs, expenditures
in excess of $25,000 shall be let by contract to the lowest
responsible bidder.
3)Provides that the dollar limits shall be annually adjusted to
reflect the percentage change in the U.S. Department of
Commerce's Implicit Price Deflator for state and local
government purchases of goods and services.
FISCAL EFFECT : None
COMMENTS :
1)The MUD Act requires that all contracts for the procurement of
supplies and materials must be awarded strictly on the basis
of which supplier is deemed the "lowest responsible bidder" by
the district's general manager.
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2)According to the sponsor, SMUD, the argument against awarding
contracts solely based on price is that non-price attributes
or "value-added services" (e.g. vendor financial stability,
reliability of supply, delivery and vendor warranties and
guarantees) are ignored in lieu of the rationale that the
cheapest bid is the best bid. According to the sponsor of
this bill, the "best value" procurement practice that this
bill proposes will enable SMUD to lower the cost of
electricity to customers and improve the quality of service.
3)AB 2548 gives SMUD statutory authority to use best value
procurement practices so that it can enter into strategic
alliances with vendors of supplies and materials in order to
reduce operating costs and improve overall operating
efficiencies. According to the sponsor, through strategic
alliances, vendors provide value to the customer beyond the
commodity in the area of services, product enhancement,
information, process improvements, and training and positive
community impact.
4)AB 2548 requires SMUD, upon completion of the first three
years of the best value procurement practice, to submit a
report to the Legislature summarizing and comparing it against
the traditional "lowest responsible bidder" method.
REGISTERED SUPPORT / OPPOSITION :
Support
Sacramento Municipal Utility District [SPONSOR]
Opposition
None on file
Analysis Prepared by : Frances Chacon / L. GOV. / (916)
319-3958