SECTIONS 12100-12113 - California Statutes

PUBLIC CONTRACT CODE

SECTION 12100-12113

12100. The Legislature finds that the unique aspects of information
technology, as defined in Section 11702 of the Government Code, and
its importance to state programs warrant a separate acquisition
authority. The Legislature further finds that this separate authority
should enable the timely acquisition of information technology goods
and services in order to meet the state's needs in the most
value-effective manner.
All contracts for the acquisition of information technology goods
or services, whether by lease or purchase, shall be made by or under
the supervision of the Department of General Services.

12100.5. The Regents of the University of California, the Trustees
of the California State University, and the Board of Governors of the
California Community Colleges shall not be subject to this chapter
except that the trustees shall develop policies and procedures
maintained in its state university administrative manual and the
board shall adopt policies and procedures maintained in its
administrative manual that further the legislative policies for
contracting expressed in this chapter but without the involvement of
the Director of Finance and the Director of General Services or the
Department of Finance and the Department of General Services.

12100.6. The Trustees of the California State University are
subject to Article 1.5 (commencing with Section 10115) of Chapter 1.
The contents of any report that the trustees are required to submit
to the Governor and the Legislature pursuant to that article shall be
organized so that, whenever applicable, each campus is individually
featured.

12100.7. As used in this chapter:
(a) "Department" means the Department of General Services.
(b) "Director" means the Director of General Services.
(c) "Information technology" shall have the same definition as set
forth in Section 11702 of the Government Code.
(d) "Multiple award schedule" (MAS) is an agreement established
between the General Services Administration of the United States and
certain suppliers to do business under specific prices, terms, and
conditions for specified goods, information technology, and services.
(e) "Multiple award" means a contract of indefinite quantity for
one or more similar goods, information technology, or services to
more than one supplier.
(f) "Office" means the office in the department, by whatever name
it may be called, which is responsible for contracting for goods and
information technology, and is headed by the state procurement
officer.
(g) "Procedures" means the specific methods or courses of action
to implement policies for information technology procurement.
(h) For purposes of this chapter, "policies" may be defined as
setting general principles and standards for the acquisition of
information technology.
(i) For purposes of this chapter, "value-effective acquisition"
may be defined to include, but not be limited to, the following:
(1) The operational cost that the state would incur if the bid or
proposal is accepted.
(2) Quality of the product or service, or its technical
competency.
(3) Reliability of delivery and implementation schedules.
(4) The maximum facilitation of data exchange and systems
integration.
(5) Warranties, guarantees, and return policy.
(6) Supplier financial stability.
(7) Consistency of the proposed solution with the state's planning
documents and announced strategic program direction.
(8) Quality and effectiveness of business solution and approach.
(9) Industry and program experience.
(10) Prior record of supplier performance.
(11) Supplier expertise with engagements of similar scope and
complexity.
(12) Extent and quality of the proposed participation and
acceptance by all user groups.
(13) Proven development methodologies and tools.
(14) Innovative use of current technologies and quality results.

12101. It is the intent of the Legislature that policies developed
by the California Technology Agency and procedures developed by the
Department of General Services in accordance with Section 12102
provide for the following:
(a) The expeditious and value-effective acquisition of information
technology goods and services to satisfy state requirements.
(b) The acquisition of information technology goods and services
within a competitive framework.
(c) The delegation of authority by the Department of General
Services to each state agency that has demonstrated to the department'
s satisfaction the ability to conduct value-effective information
technology goods and services acquisitions.
(d) The exclusion from state bid processes, at the state's option,
of any supplier having failed to meet prior contractual requirements
related to information technology goods and services.
(e) The review and resolution of protests submitted by any bidders
with respect to any information technology goods and services
acquisitions.

12101.2. Commencing on January 1, 1994, the department shall
prenegotiate the repetitively used terms and conditions in the state'
s model contract with each interested vendor who bids or proposes on
electronic data processing or telecommunications procurements. The
contract language shall be kept on file, as a matter of public
record, and shall remain operational until either the state or the
vendor provides 30 days' notice to the other party that new
negotiations are deemed appropriate.
If, for a particular procurement, the state seeks to make any
further changes to either the negotiated or the standard contract
language, or both, it shall identify those changes to each bidder or
proposer prior to the due date for the bid or proposal. If for a
particular procurement, a bidder or proposer seeks to propose a
negotiated change or standard contract language change, it shall make
this identification within the timeframe identified in the
solicitation document.

12101.5. (a) It is the intent of the Legislature that agencies of
the state use an acquisition method that is compatible with their
short- and long-term fiscal needs in contracts relating to
commodities and information technology goods and services. State
agencies should be able to specify their anticipated life cycle
requirements that would become one of the criteria for contractor
selection. These agencies should be given the choice of suppliers to
meet statewide standardization needs, unique service requirements,
application requirements, and long-term satisfaction criteria. There
is a need for the state to enter into long-term contracts with annual
cancellation and fund-out clauses, as required, to protect the state'
s interests as well as provide the option for multiyear renewals to
encourage suppliers to develop higher levels of service and support
throughout the contracts.
(b) The state may utilize multiple awards, including federal
General Service Administration Multiple Awards Schedules and master
agreements or contracts for goods, information technology, services,
or consulting services. For purposes of this subdivision, a multiple
award is an award of an indefinite quantity contract for one or more
similar goods, information technology, or services to more than one
supplier. Except for possible multiple awards as permitted by this
subdivision, and except as described in subdivision (d), all the
requirements of this chapter pertaining to other types of information
technology acquisitions shall be followed. The department shall
ensure that multiple award schedules are in compliance with all other
applicable statutes.
(c) Notwithstanding any other provision of law, state agencies, in
exercising their contracting authority delegated by the department,
may contract with suppliers who have multiple award schedules with
the General Services Administration of the United States on the same
terms, conditions, and prices if the supplier is willing to do so.
The department may also develop multiple award schedules or
agreements for use by state agencies in the same manner. The
department shall determine the delegation contracting authority for
agencies wishing to use multiple award schedules.
(d) For contracts related to information technology integration or
development projects that generate revenues or achieve savings over
a quantifiable baseline of existing costs, state agencies shall
consider and may incorporate performance-based or share-in-savings
contract terms to manage risks and create incentives for successful
contract performance. Performance-based or share-in-savings contracts
may have the following characteristics, among others:
(1) Contract terms that specify business outcomes to be achieved,
not the solution to be provided.
(2) Contract terms that structure the contract to maintain maximum
vendor commitment to project success and minimize risk to the state
by sharing risk with the private sector.
(3) Utilization of "best value" evaluation methods, which means to
select the solution that will achieve the best result based on
business performance measures, not necessarily the lowest price.
(4) Contract terms that base payments to the vendor primarily on
achieving predefined performance measures.

12101.7. (a) Notwithstanding the sealed bidding provisions of this
chapter, reverse auctions may be utilized for the acquisition of
information technology, in accordance with the procedures set forth
in Section 10290.3.
(b) For purposes of this section, "reverse auction" means a
competitive online solicitation process for fungible information
technology in which vendors compete against each other online in real
time in an open and interactive environment.

12102. The Department of General Services shall maintain, in the
State Administrative Manual, policies and procedures governing the
acquisition and disposal of information technology goods and
services.
(a) Acquisition of information technology goods and services shall
be conducted through competitive means, except when the Director of
General Services determines that (1) the goods and services proposed
for acquisition are the only goods and services which can meet the
state's need, or (2) the goods and services are needed in cases of
emergency where immediate acquisition is necessary for the protection
of the public health, welfare, or safety. The acquisition mode to be
used and the procedure to be followed shall be approved by the
Director of General Services. The Department of General Services
shall maintain, in the State Administrative Manual, appropriate
criteria and procedures to ensure compliance with the intent of this
chapter. These criteria and procedures shall include acquisition and
contracting guidelines to be followed by state agencies with respect
to the acquisition of information technology goods and services.
These guidelines may be in the form of standard formats or model
formats.
(b) Contract awards for all large-scale systems integration
projects shall be based on the proposal that provides the most
value-effective solution to the state's requirements, as determined
by the evaluation criteria contained in the solicitation document.
Evaluation criteria for the acquisition of information technology
goods and services, including systems integration, shall provide for
the selection of a contractor on an objective basis not limited to
cost alone.
(1) The Department of General Services shall invite active
participation, review, advice, comment, and assistance from the
private sector and state agencies in developing procedures to
streamline and to make the acquisition process more efficient,
including, but not limited to, consideration of comprehensive
statements in the request for proposals of the business needs and
governmental functions, access to studies, planning documents,
feasibility study reports and draft requests for proposals applicable
to solicitations, minimizing the time and cost of the proposal
submittal and selection process, and development of a procedure for
submission and evaluation of a single proposal rather than multiple
proposals.
(2) Solicitations for acquisitions based on evaluation criteria
other than cost alone shall provide that sealed cost proposals shall
be submitted and that they shall be opened at a time and place
designated in the solicitation for bids and proposals. Evaluation of
all criteria, other than cost, shall be completed prior to the time
designated for public opening of cost proposals, and the results of
the completed evaluation shall be published immediately before the
opening of cost proposals. The state's contact person for
administration of the solicitation shall be identified in the
solicitation for bids and proposals, and that person shall execute a
certificate under penalty of perjury, which shall be made a permanent
part of the official contract file, that all cost proposals received
by the state have been maintained sealed and under lock and key
until the time cost proposals are opened.
(c) The acquisition of hardware acquired independently of a system
integration project may be made on the basis of lowest cost meeting
all other specifications.
(d) The 5 percent small business preference provided for in
Chapter 6.5 (commencing with Section 14835) of Part 5.5 of Division 3
of Title 2 of the Government Code and the regulations implementing
that chapter shall be accorded to all qualifying small businesses.
(e) For all transactions formally advertised, evaluation of
bidders' proposals for the purpose of determining contract award for
information technology goods shall provide for consideration of a
bidder's best financing alternatives, including lease or purchase
alternatives, if any bidder so requests, not less than 30 days prior
to the date of final bid submission, unless the acquiring agency can
prove to the satisfaction of the Department of General Services that
a particular financing alternative should not be so considered.
(f) Acquisition authority may be delegated by the Director of
General Services to any state agency that has been determined by the
Department of General Services to be capable of effective use of that
authority. This authority may be limited by the Department of
General Services. Acquisitions conducted under delegated authority
shall be reviewed by the Department of General Services on a
selective basis.
(g) To the extent practical, the solicitation documents shall
provide for a contract to be written to enable acquisition of
additional items to avoid essentially redundant acquisition processes
when it can be determined that it is economical to do so.
Further, it is the intent of the Legislature that, if a state
information technology advisory committee or a state
telecommunications advisory committee is established by the Governor,
or the Director of General Services, the policies and procedures
developed by the Director of General Services in accordance with this
chapter shall be submitted to that committee, including supplier
representatives, for review and comment, and that the comment be
considered by both departments prior to the adoption of any policy or
procedure. It is also the intent of the Legislature that this
section shall apply to the Department of General Services Information
Technology Customer Council.
(h) Protest procedures shall be developed to provide bidders an
opportunity to protest any formal, competitive acquisition conducted
in accordance with this chapter. The procedures shall provide that
protests must be filed no later than five working days after the
issuance of an intent to award. Authority to protest may be limited
to participating bidders. The Director of General Services, or a
person designated by the director, may consider and decide on initial
protests. A decision regarding an initial protest shall be final. If
prior to the last day to protest, any bidder who has submitted an
offer files a protest with the department against the awarding of the
contract on the ground that his or her bid or proposal should have
been selected in accordance with the selection criteria in the
solicitation document, the contract shall not be awarded until either
the protest has been withdrawn or the State Board of Control has
made a final decision as to the action to be taken relating to the
protest. Within 10 calendar days after filing a protest, the
protesting bidder shall file with the State Board of Control a full
and complete written statement specifying in detail the grounds of
the protest and the facts in support thereof.
(i) Information technology goods that have been determined to be
surplus to state needs shall be disposed of in a manner that will
best serve the interests of the state. Procedures governing the
disposal of surplus goods may include auction or transfer to local
governmental entities.
(j) A supplier may be excluded from bid processes if the supplier'
s performance with respect to a previously awarded contract has been
unsatisfactory, as determined by the state in accordance with
established procedures that shall be maintained in the State
Administrative Manual. This exclusion may not exceed 36 months for
any one determination of unsatisfactory performance. Any supplier
excluded in accordance with this section shall be reinstated as a
qualified supplier at any time during this 36-month period, upon
demonstrating to the department's satisfaction that the problems that
resulted in the supplier's exclusion have been corrected.

12103. In addition to the mandatory requirements enumerated in
Section 12102, the acquisition policies developed and maintained by
the California Technology Agency and procedures developed and
maintained by the Department of General Services in accordance with
this chapter may provide for the following:
(a) Price negotiation with respect to contracts entered into in
accordance with this chapter.
(b) System or equipment component performance, or availability
standards, including an assessment of the added cost to the state to
receive contractual guarantee of a level of performance.
(c) Requirement of a bond or assessment of a cost penalty with
respect to a contract or consideration of a contract offered by a
supplier whose performance has been determined unsatisfactory in
accordance with established procedures maintained in the State
Administrative Manual as required by Section 12102.

12103.5. Beginning January 1, 2007, for those information
technology purchases for which the department determines that a
request for proposal (RFP) is appropriate, the department shall
identify and document the following, with respect to information
technology procurements, prior to releasing the RFP:
(a) Identify the legislative mandate, state business, or
operational reason for the information technology procurement.
(b) Identify the existing business processes currently used to
accomplish the legislative mandate, state business, or operational
reason.
(c) Identify the most important priorities for the information
technology project to accomplish.
(d) Identify what current technology is being used and how it is
being used.
(e) If the data used in a proposed information technology system
comes from multiple sources, identify the existing business processes
or technical systems that produce and maintain the source data to
ensure interoperability.
(f) Identify how the new information technology project leverages
existing technology investments while accomplishing its business
objectives.

12104. (a) (1) Commencing on or before January 1, 2007, the State
Contracting Manual shall set forth all procedures and methods that
shall be used by the department when seeking to obtain bids for the
acquisition of information technology.
(2) Revisions to the manual must be publicly announced, including,
but not limited to, postings on the department's Internet homepage.
(b) The department, in consultation with the California Technology
Agency, shall develop, implement, and maintain standardized methods
for the development of information technology requests for proposals.
(c) All information technology requests for proposals shall be
reviewed by the California Technology Agency and the Department of
General Services prior to release to the public.

12104.5. (a) All rules and requirements governing an information
technology acquisition, for which the department determines that a
request for proposal (RFP) is appropriate, shall be communicated in
writing to all vendors that have expressed an intent to bid and shall
be posted in a public location. Any changes to the rules and
requirements governing that RFP shall be communicated in writing to
all vendors that have expressed an intent to bid and shall be posted
in a public location. No requirements other than those provided by
law or outside of the published RFP and posted addendums shall be
used by the department to score bids.
(b) (1) All requests for proposals shall contain the following
statement:
"It is unlawful for any person engaged in business within this
state to sell or use any article or product as a "loss leader" as
defined in Section 17030 of the Business and Professions Code."
(2) On and after March 31, 2010, and until December 31, 2011, if a
request for proposal does not contain the statement required by
paragraph (1), the awarding agency shall report this error to the
department within 30 days of the date the awarding agency discovers
this error.
(3) The department shall post in the State Contracting Manual
instructions for including the statement required by paragraph (1) in
all affected contracts.
(4) The statement required by paragraph (1) shall be deemed to be
part of a request for proposal even if the statement is inadvertently
omitted from the request for proposal.
(c) The requirements of this section shall be in addition to any
other requirement provided by law.

12105. The Department of General Services and the California
Technology Agency shall coordinate in the development of policies and
procedures that implement the intent of this chapter. The California
Technology Agency shall have the final authority in the
determination of any general policy and the Department of General
Services shall have the final authority in the determination of any
procedures.

12106. The Department of General Services may, in addition to
fulfilling the mandatory requirements enumerated in Section 12102,
adopt such rules and regulations as are necessary for the purposes of
this chapter.

12108. Until the time that the Department of General Services has
published in the State Administrative Manual the procedures required
in accordance with Section 12102, acquisitions of information
technology goods and services shall be accomplished in accordance
with either existing State Administrative Manual procedures for the
acquisition of information technology goods and services, or Article
2 (commencing with Section 14790) of Chapter 6 of Part 5.5 of
Division 3 of Title 2 of the Government Code, as determined by the
Department of General Services.

12109. The Director of General Services may make the services of
the department under this chapter available, upon the terms and
conditions that may be deemed satisfactory, to any tax-supported
public agency in the state, including a school district, for
assisting the agency in the acquisition of information technology
goods or services.

12112. (a) Any contract for information technology goods or
services, to be manufactured or performed by the contractor
especially for the state and not suitable for sale to others in the
ordinary course of the contractor's business may provide, on the
terms and conditions that the department deems necessary to protect
the state's interests, for progress payments for work performed and
costs incurred at the contractor's shop or plant, provided that not
less than 10 percent of the contract price is required to be withheld
until final delivery and acceptance of the goods or services.
Notwithstanding this subdivision, if the department determines that
lesser withholding levels are appropriate based upon an evaluation of
risk determined under subdivision (b) and the contract price is ten
million dollars ($10,000,000) or more, the department shall withhold
no less than 5 percent of the contract price until final delivery and
acceptance of the goods or services. If the department determines
that lesser withholding levels are appropriate based on an evaluation
of risk determined under subdivision (b) and the contract price is
less than ten million dollars ($10,000,000), the department shall
withhold no less than 3 percent of the contract price until final
delivery and acceptance of the goods or services.
(b) The department, in consultation with the Department of
Finance, shall develop and maintain criteria for the evaluation of
risk to the state that results from the acquisition of information
technology. This risk analysis shall determine the need for financial
protection that is in the best interest of the state, including, but
not limited to, any of the following:
(1) An acceptable performance bond as described in Chapter 2
(commencing with Section 995.010) of Title 14 of Part 2 of the Code
of Civil Procedure.
(2) Any surety as defined in Section 2787 of the Civil Code.
(3) A letter of credit as described in Division 5 (commencing with
Section 5101) of the Commercial Code.
(4) Protection in the form of contract terms.
(5) Any other form of security or guaranty of performance in an
amount sufficient to protect the state in the case of default by the
contractor providing information technology, or any other breach or
malfunction of the goods or services, or both.
(c) The department shall, on or before June 1, 2008, submit the
criteria developed and maintained pursuant to subdivision (b) to the
Joint Legislative Budget Committee and to the State Chief Information
Officer.
(d) The State Chief Information Officer shall, on or before July
1, 2012, do both of the following:
(1) Review and report to the Legislature on all contracts approved
pursuant to this section on and after January 1, 2008.
(2) Report to the Legislature any recommendations for changes to
this section or changes to the criteria developed and maintained by
the department pursuant to subdivision (b).
(e) For purposes of this section, "information technology" means
information technology goods or services, or both, as appropriate.
(f) This section shall become inoperative on July 1, 2013, and
shall be repealed on January 1, 2014.

12112. (a) Any contract for information technology goods or
services, to be manufactured or performed by the contractor
especially for the state and not suitable for sale to others in the
ordinary course of the contractor's business may provide, on the
terms and conditions that the department deems necessary to protect
the state's interests, for progress payments for work performed and
costs incurred at the contractor's shop or plant, provided that not
less than 10 percent of the contract price is required to be withheld
until final delivery and acceptance of the goods or services, and
provided further, that the contractor is required to submit a
faithful performance bond, acceptable to the department, in a sum not
less than one-half of the total amount payable under the contract
securing the faithful performance of the contract by the contractor.
(b) This section shall become operative on July 1, 2013.

12113. (a) Notwithstanding any other provision of law, state and
local agencies may enter into agreements to pay for
telecommunications services to be utilized beyond the current fiscal
year. "Telecommunications services" for purposes of this section
shall include, but not be limited to, central office-based leased
communications systems equipped with primary station lines, capable
of receiving in-dialed voice and data communications and capable of
out-dialing voice and data communications and any customer premised
equipment, software and installation costs necessary for utilization
by the state or local agency.
(b) State and local agencies may enter into financing agreements
for the acquisition of telecommunications services whenever the state
or local agency may derive monetary benefit and greater services as
a result of its ability to acquire capital at lower interest cost
than the supplier of those services can provide directly to the
agency or whenever the state or local agency may obtain a reduced
cost of service based on length of agreement if offered by the
supplier of telecommunications service.
(c) Acquisition requirements for financing of telecommunications
goods and services shall be considered to have been met whenever the
financing is within the scope of public sector requests for proposals
or whenever the financing is offered by a sole source provider or
that provider's assignee.
(d) The provisions of this section shall not be construed to alter
or circumvent any existing acquisition procedure or requirement, nor
to alter or circumvent the acquisition authority of any state or
local agency.