New law will give small businesses more opportunities to compete for Valley Water contracts

Small businesses will soon have increased opportunities to acquire contracts from Valley Water.

On Sept. 6, Gov. Gavin Newsom signed into law Assembly Bill 707, which will raise the threshold on competitive formal bidding for Valley Water projects from $25,000 to $50,000.

Starting Jan. 1, 2020, Valley Water projects estimated to cost $50,000 or less can be awarded through a more informal process in which quotes are solicited from known responsible contractors, and the project awarded to the lowest responsible bidder.

Small businesses often don’t have the staffing and expertise needed to respond to a formal bid request. By increasing the cost threshold under which a simpler bid process is used at Valley Water, small businesses will be able to compete for more minor public works projects.

AB707, authored by State Assemblymember Ash Kalra (D-San Jose), was unanimously passed by the State Assembly and State Senate in August.

“This bill allows Valley Water to deliver small projects at a lower cost while offering more contracting opportunities for small businesses and women and minority owned businesses,” Assemblymember Kalra said.  “I want to thank Governor Newsom for his support, and the team at Valley Water whose hard work helped make this outcome a reality.”

The informal process is more workable for small businesses, including those owned by women and minorities. With the informal bid process, these businesses need only be registered with the state Department of Industrial Relations, comply with prevailing wage law, and submit an informal bid.

Raising the threshold on competitive bids to $50,000 also aligns Valley Water with many other public agencies, including park and open space districts and other water agencies. The new law does not affect larger public works projects that are appropriately subject to a formal bidding process.

Valley Water’s formal bidding threshold was last updated in 1998. Since that time, inflation has eroded the purchasing power of the $25,000 threshold to the extent that even simple projects such as erecting a fence or installing a warehouse garage door require a costly and time-consuming formal bidding process. AB 707 will help Valley Water deliver more small projects faster and at a lower cost through the efficient informal bid process.

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