BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2548
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          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;









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             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;  








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          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
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           Analysis Prepared by  :  Joseph Lyons / U. & C. / (916) 319-2083
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