BILL ANALYSIS AB 2548 Page 1 ASSEMBLY THIRD READING AB 2548 (Cox) As Amended May 15, 2000 Majority vote UTILITIES & COMMERCE 9-0 LOCAL GOVERNMENT 9-0 ----------------------------------------------------------------- |Ayes:|Wright, Pescetti, |Ayes:|Longville, Robert | | |Cardenas, Frusetta, | |Pacheco, Corbett, | | |Maddox, Mazzoni, Papan, | |Kaloogian, Kuehl, | | |Reyes, Wesson | |Thompson, Thomson, | | | | |Torlakson, Wiggins | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : Authorizes a municipal utility district (MUD) to procure supplies and materials on the basis of best value criteria. Specifically, this bill : 1)Authorizes the MUD board to purchase supplies and materials, when the expenditure exceeds $50,000, in accordance with best value acquisition policies adopted by the board. 2)Permits the board to authorize the general manager to act for the board in determining a best value bidder in accordance with best value acquisition policies and to award a contract to that bidder. 3)Defines best value acquisition as a competitive procurement process that may take into consideration any of the following factors: a)The total cost to the MUD of its use or consumption of supplies and materials; b)The operational cost or benefit incurred by the MUD as a result of contract award; c)The value to the MUD of value-added services; d)The quality, effectiveness, and innovation of supplies, materials and services; AB 2548 Page 2 e)The reliability of delivery or installation schedules; f)The terms and conditions of product warrantees and vendor guarantees; g)The vendor's financial stability, quality assurance program, and experience with the provision of supplies, material, and services; and, h)The consistency of the vendor's proposed supplies, materials, and services with the district's overall supplies and material procurement program. 4)Requires MUDs that adopt best value acquisition policies to submit a report to the Legislature not later than three years from the date on which the MUD commences those procurement practices. The report shall include a summary of the costs and benefits of best value acquisition compared to traditional low bid procurement practices, the effect of best value procurement practices on small businesses, the nature of any disputes arising from the use of best value procurement practices, and the status of those disputes. EXISTING LAW : 1)Authorizes MUDs to provide a variety of utility services, including electricity, water, sewage and garbage disposal, lighting, transportation, and communications. 2)Provides that the purchase of all supplies and materials, by any MUD with a population of 250,000 or more, when the required expenditure exceeds $50,000, shall be let by contract to the lowest responsible bidder. For all other MUDs, expenditures in excess of $25,000 shall be by contract let to the lowest responsible bidder. 3)Provides that the dollar limits shall annually be adjusted to reflect the percentage change in the Implicit Price Deflator for state and local government purchases of goods and services, as published by the United States Department of Commerce. FISCAL EFFECT : Unknown COMMENTS : There are five MUDs in California: 1) East Bay MUD; AB 2548 Page 3 2) Lassen MUD; 3) Sacramento MUD (SMUD); 4) South Placer MUD; and, 5) Southern San Joaquin MUD. Each MUD is governed by an elected board of directors and a general manager appointed by the board. When purchasing supplies and materials, MUDs are required to solicit bids and award contracts to the lowest responsible bidder when the expenditure exceeds $25,000. For MUDs with populations in excess of 250,000 the bidding threshold is $50,000. This bill authorizes a MUD to purchase supplies and materials on the basis of best value criteria, as defined. The utilization of the best value process would be at the discretion of the board of directors and may be delegated to the general manager. The specific criteria for best value procurement would require board approval. The best value procurement process is similar to the lowest responsible bidder process insofar as it includes the development of a solicitation, and a Request for Proposal (RFP) with minimum requirements and evaluation factors. The key difference is that vendors are selected because they provide the best overall value, and not simply the lowest price for the commodity. The evaluation criteria for best value procurement may include: 1) total cost of ownership, including price; 2) service levels and reliability of supply; 3) quality and innovation of supply; 4) vendor-provided value-added services; and, 5) supplier development programs. This bill would provide MUDs with statutory authority to use best value procurement practices to enter into strategic alliances with vendors of supplies and materials in order to reduce operating costs and improve overall operating efficiencies. This bill requires MUDs that adopt best value acquisition policies to submit a report to the Legislature within three years of the date the MUD commences those procurement practices. The report would include a summary of the costs and benefits of best value acquisition compared to traditional low bid procurement practices, the effect of best value procurement practices on small businesses, the nature of any disputes arising from the use of best value procurement practices, and the status of those disputes. AB 2548 Page 4 Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083 FN: 0004512