12100-12113
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.