Draconian procurement legislation passes Senate Judiciary Committee

By CMTA Staff

Capitol Update, June 26, 2008 Share this on FacebookTweet thisEmail this to a friend

On June 24th, the Senate Judiciary Committee passed legislation that would have a dramatic, negative impact on the state and local government procurement process and cause significant harm to the state’s large business community engaged in public procurement.

AB 730 (Kevin De León, D-Los Angeles) seeks to prohibit any vendor found liable for any breach of an information-technology contract worth more than $1 million – resulting in a judgment of more than $250,000 – from bidding on any new business with the state or local governments for five years.

Currently, a public entity already has discretion to determine whether a contractor's failure on a past contract reflects an inability to perform on a contract being awarded. Reasons for past failures could vary widely, and could involve contributing factors by the procuring state or local agency.  AB 730 will likely result in a flood of litigation costs to the state and local agencies as vendors, worried about the loss of future business opportunities in California and elsewhere, would want to formally highlight any action by the state or local entity that contributed to the vendor’s inability to comply with the contract. This bill will significantly increase the number of disputes and decrease the likelihood that any dispute will be settled outside of court.

Given the additional risk vendors would incur as a result of contracting with state or local entities, AB 730 would likely raise the cost of government projects, delay procurements and reduce or completely eliminate the number of bidders for any particular procurement project.

The bill would reduce competition that public contracting agencies need to ensure quality and low-cost in their contracts.  CMTA is opposed to this type of over-reaching legislation and urges members to contact their State Senator.

Capitol updates archive 989898989