FISCAL NOTE
Date Requested: February 18, 2022
Time Requested: 11:51 AM |
| Agency: |
Puchasing Division |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2231 |
Introduced |
HB4372 |
|
|---|
| CBD Subject: |
Finance and Administration |
|---|
|
FUND(S):
N/A
Sources of Revenue:
Other Fund N/A
Legislation creates:
Increases Existing Expenses, Creates New Program
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
This program will require the Purchasing Division to expend significant resources to establish and maintain the small business certification, set aside award, and post contract review and monitoring. Additional staff will be required to administer this program. Additionally, it is likely that achieving the stated goals will require contracting agencies to consent to higher prices.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
200,000 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The Purchasing Division will be required to hire additional staff to administer this program.
Memorandum
This legislation will not achieve its intended goal due to its placement in Chapter 5A, Article 3. Any agency with an express statutory exemption from Chapter 5A, Article 3 will not be required to comply with this law. Examples include the Division of Natural Resources, Corrections, State Police, the Department of Economic Development, the Department of Tourism, and many others.
The law requires that contracts be set aside for small businesses unless the contracts are "at or below fair market value." Currently, fair market value is determined by the bidding process, with the lowest bidder establishing fair market value. One way to look at this new law is that unless the small business is the low bidder, fair market value has not be achieved and the small business will not get the contract.
A much better approach for this would be to provide a preference to small businesses. In other words, the small business gets the contract if they are no more than 5% above the lowest bid.
Running this program on the basis of a preference, rather than a set-aside, would likely not require additional staff.
Person submitting Fiscal Note: Samantha Knapp
Email Address: samantha.s.knapp@wv.gov