Copyright© 1999 by School Services of California, Inc.

October 1, 1999

Governor Vetoes AB 214, the "Buy California Products" Bill

Governor Davis today vetoed AB 214 (Wiggins, D-Santa Rosa) which would have required public agencies to use materials of California origin in public works projects with a value exceeding $50,000. Preference would have been given to California materials as long as they cost no more than 5% more than other competing products. The California Association of School Business Officials (CASBO), in its request that the Governor veto the bill, cited the magnitude of a potential 5% increase in the cost of school construction projects and the increases in financing costs attendant to that increase.

CASBO cited an example that illustrated that the cost of a typical elementary school could increase by $400,000 because of the increased material and financing costs. This, in addition to the added bureaucracy and paperwork involved, made the bill an onerous burden on school districts. We appreciate the Governor hearing the CASBO message. However, Governor Davis stated in his veto message that he supports the intent of the sponsors of the legislation, but this legislation is too broad and would cost California businesses and workers much more than it would gain. The Governor indicated that AB 214 highlights a serious problem that deserves action. As a result of current procurement practices that favor the lowest bidder, foreign-made steel of questionable quality is being used in public work projects. Some of this steel has failed to meet California safety standards in major public facilities including bridges.

In an attempt to appease the sponsors of AB 214 and to ensure that public works projects meet the highest level of safety standards Governor Davis issued an Executive Order, after his veto of the bill. The Executive Order will:

• Require all contracting agencies, including CalTrans, to use the highest quality standards for materials permissible in pre-qualifying bidders for all public works projects.
  
• Direct the Department of General Services to evaluate and recommend legislative language for introduction in 2000 to broaden California's reciprocal preference laws to include additional products and services.
  
• Direct the Department of General Services to evaluate and recommend whether "best value" contracting practices should be expanded beyond current statutory authority.

The concepts included in AB 214 do not appear to be a dead issue after the Governor's veto; new legislation could be introduced in 2000. Public schools and local government will need to be on the alert regarding the fiscal impact of any new regulations that get the approval of Governor Davis.

The Governor has until October 10 to take final action on the proposed legislation.

-- Ron Bennett and Arnold Bray