Chiu Bill to Prioritize Small Businesses for State Contracts Advances

Legislation would establish economic equity policy in state contracting

For immediate release:

Sacramento, CA—Legislation authored by Assemblymembers David Chiu (D-San Francisco) and Chris Holden (D-Pasadena) to provide greater opportunity for California small businesses in state contracting passed the Assembly Jobs, Economic Development, and the Economy Committee today. AB 915 would ensure 25 percent of state contracts and procurement go to small businesses and minority-owned small businesses. 

“Our small businesses, particularly minority-owned small businesses, have been hit especially hard by the pandemic,” said Assemblymember Chiu. “This bill uses the state’s enormous purchasing power to help uplift our small businesses when they need it most.”

The COVID pandemic has presented enormous, unprecedented challenges for small businesses across the nation. The disproportionate impact of the pandemic on communities of color has compounded the challenges facing small business owners from diverse backgrounds. 

While California has recently invested significant resources in emergency small business grants, the state has additional avenues to aid small and diverse businesses for the long term. California spends between $8-10 billion annually on state contracts and procurement. The state can harness its immense purchasing power to support small businesses by prioritizing them for state contracting opportunities.

In 2006, Governor Arnold Schwarzenegger signed an executive order directing all state agencies, departments, board, and commissions to achieve a minimum goal of 25 percent small business participation in state procurements and contracts. Unfortunately, this executive order has largely been ignored. Only 12 of the 231 state agencies have adopted a small business procurement policy.

AB 915 would codify that executive order and mandate that 25 percent of state contracts and procurement go towards small businesses and disadvantaged business enterprises (DBEs). The bill requires each agency to adopt an “Economic Equity First” policy and creates a standard certification, in line with federal contracting definitions, for DBEs. DBEs are defined as women-owned, LGBTQ-owned, or minority-owned small businesses.

To achieve compliance, AB 915 requires agencies to submit annual reports to the legislature on progress to the 25 percent procurement goal. If an agency fails to meet the 25 percent contracting threshold by 2027, that agency would be audited by the Department of General Services. Additionally, the bill requires the Office of the Small Business Advocate to maintain a public list of small business liaisons at each state agency so that contracting opportunities are more accessible to the public.

The California Asian Pacific Chamber of Commerce, California African American Chamber of Commerce, and California Hispanic Chambers of Commerce are cosponsoring AB 915.

"The AAPI community has waited long enough for equity when it comes to procurement with the State of California,” said Pat Fong Kushida, President and CEO of the CalAsian Chamber. “I am proud of this piece of legislation which will not only raise the priority of all small businesses seeking contracts with the State but elevate the importance of minority-owned businesses in the State's procurement process. And I am especially grateful for Assemblymember David Chiu's leadership and willingness to carry this important legislation. It is my hope that this bill will be the first of many which proactively offer real-life solutions for the millions of business owners across California."

"Equity for small business owners has long eluded the African American and Black communities of this State,” said Edwin A. Lombard III, President and CEO of the California African American Chamber of Commerce. “We are the backbone of the State's economy and we should be fairly recognized when it comes to State small business procurement. Passing this bill proves to the forgotten Black and minority business communities, that they will be forgotten no more."

"The 25% small business procurement goal is a simple ask of the Legislature and the Governor,” said Julian Canete, CEO of the California Hispanic Chambers of Commerce. “It will codify a principle that has been around for 15 years now. Small businesses need as much support from the State as possible. The Legislature must finally establish this small business procurement goal into law."

AB 915 will now move on for a hearing in the Assembly Appropriations Committee.

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