BILL ANALYSIS
AB 2548
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GOVERNOR'S VETO
AB 2548 (Cox)
As Amended August 18, 2000
2/3 vote
ASSEMBLY: (May 18, 2000) SENATE:
29-3(August 23, 2000)
ASSEMBLY: 75-2 (August 24, 2000)
Original Committee Reference: U. & C.
SUMMARY : Authorizes a municipal utility district (MUD) to
procure supplies and materials on the basis of "best value at
lowest cost" criteria when the expenditure exceeds $50,000.
The Senate amendments :
1)Define "best value" as any factor or criterion established by
a district to ensure that its business needs and goals are
effectively met and that the district obtains the most value
for an authorized acquisition.
2)Require that all businesses have a fair and equitable
opportunity to compete for, and participate in, district
contracts awarded pursuant to its provisions and would
prohibit discrimination in the award and performance of those
contracts.
3)Require that, when a district elects to purchase supplies and
materials in accordance with these provisions, and submits a
specified report to the Legislature relating to the costs and
benefits of the acquisition, the report shall also include
statistics showing the number of contracts awarded to small,
minority-owned businesses and the number of years each
contract awardee had been in business.
EXISTING LAW :
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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.
AS PASSED BY THE ASSEMBLY , this bill authorized a municipal
utility district (MUD) to procure supplies and materials on the
basis of best value criteria.
FISCAL EFFECT : None
COMMENTS : There are five MUDs in California: 1) East Bay MUD;
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 at the lowest cost
acquisition criteria, as defined. The utilization of the best
value process is at the discretion of the board of directors and
requires 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)
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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 provides 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 at the lowest cost
acquisition policies to submit a report to the Legislature on or
before January 1, 2004. The report should summarize 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, statistics showing
the number of contracts awarded to small minority-owned
businesses, and the nature of any disputes arising from the use
of best value procurement practices, and the status of those
disputes.
GOVERNOR'S VETO MESSAGE :
"This bill would permit a board of a municipal utility
district (MUD) to procure supplies and materials in excess
of $50,000 on the basis of "best value at lowest cost"
criteria rather than selecting the lowest bid.
"This bill replaces the current objective standard with a
subjective standard that could result in increased costs
to the ratepayers. Therefore, I am vetoing it."
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083
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