By Tanu Henry

On Jan. 30, State Controller Malia Cohen announced that she is requiring that 25% of all procurement contracts signed by her department are with small and minority-owned businesses.

Cohen stated in a letter that her action is necessary to meet the objectives of Assembly Bill (AB) 2019. The law, which took effect on Jan. 1, 2023, requires state agencies to establish goals for including small businesses and microbusinesses among their contracted suppliers.

“January 1 is now behind us and there still appears to be some uncertainty as to which agencies and or procurements are covered by AB 2019,” Cohen stated. “One of my statutory duties is to recommend to the legislature ways to improve the public revenues. I plan to ask the legislature to remove any ambiguities in the law and to make it applicable to all agencies,” Cohen added.

Under the AB 2019, agencies are required to develop an “economic equity first” action plan and policy for the agency to provide, among other things, direction, recommendations, and strategies to ensure that small businesses, as specified, are effectively involved and benefiting from the agency’s procurement process.

According to the Controller, “small businesses not only contribute significantly to the tax base of the State of California” but also account for approximately seven million employees, or 48.8 %, of all employment in the state.

“This is a win-win for all involved. Making an equitable distribution of dollars to small and minority-owned businesses and allowing this sector to grow will expand state revenues without increasing taxes,” stated Cohen.