BILL NUMBER: SB 1008	CHAPTERED
	BILL TEXT

	CHAPTER  632
	FILED WITH SECRETARY OF STATE  SEPTEMBER 30, 2003
	APPROVED BY GOVERNOR  SEPTEMBER 30, 2003
	PASSED THE SENATE  SEPTEMBER 10, 2003
	PASSED THE ASSEMBLY  SEPTEMBER 8, 2003
	AMENDED IN ASSEMBLY  SEPTEMBER 5, 2003
	AMENDED IN ASSEMBLY  SEPTEMBER 3, 2003
	AMENDED IN ASSEMBLY  AUGUST 26, 2003
	AMENDED IN ASSEMBLY  AUGUST 18, 2003
	AMENDED IN ASSEMBLY  JUNE 18, 2003
	AMENDED IN SENATE  MAY 20, 2003
	AMENDED IN SENATE  APRIL 21, 2003

INTRODUCED BY   Senator Machado

                        FEBRUARY 21, 2003

   An act to amend Sections 999.2, 999.5, 999.7, and 999.9 of the
Military and Veterans Code, and to add Section 10115.9 to the Public
Contract Code, relating to veterans.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1008, Machado.  Veterans:  contracts:  disabled veteran
business enterprises.
   Under existing law, any state governmental entity that awards
contracts for professional bond services and for construction and
certain related purposes has annual statewide participation goals of
not less than 3% for disabled veteran business enterprises, as
defined.  For purposes of these provisions, existing law defines a
"disabled veteran" as a veteran, as specified, with a
service-connected disability who is a resident of the state.
   This bill would specify that a limited liability company may be
certified as a disabled veteran business enterprise for these
purposes if that company is wholly owned by one or more disabled
veterans.
   This bill would deem any disabled veteran business enterprise that
rents equipment to an awarding department to be an equipment broker,
as defined, unless one or more certified disabled veterans have 51%
ownership of the equipment and evidence is submitted in support of
that fact.  The bill would also prohibit state funds expended for
equipment rented from equipment brokers, as specified, from being
credited toward the 3% goal.
   This bill would require a disabled veteran business enterprise
that is a broker, as defined, and that obtains a contract under these
provisions to make certain disclosures to the awarding department.
   The bill would also require a disabled veteran business enterprise
and its owners to submit copies of the enterprise's federal income
tax returns, as specified, or be subject to certain penalties for
noncompliance.
   Existing law requires the administering agency and the awarding
department to establish methods of monitoring adherence to the
participation goals.
   This bill would additionally prohibit an awarding department from
relying on the administering agency's certification of a disabled
veteran business enterprise if that department knows that the
disabled veteran business enterprise does not maintain the
certification requirements.  The bill would also prohibit state funds
expended on a contract with a disabled veteran business enterprise
that does not meet and maintain the certification requirements from
being credited toward the 3% goal.
   Existing law imposes a civil penalty with respect to, among other
things, fraudulently obtaining certification as a disabled veteran
business enterprise.
   This bill would provide, among other things, that it is unlawful
to knowingly and with intent to defraud, fraudulently represent
participation of a disabled veteran business enterprise in order to
obtain or retain a bid preference or a state contract.  It would make
it unlawful to establish, or knowingly aid in the establishment of,
or exercise control over, a firm found to have violated the foregoing
prohibitions.  It would also make it unlawful to willfully and
knowingly make or prepare any statement or document that is
fraudulent or false as to any material matter.  The bill would, in
addition to civil penalties, make it a misdemeanor to violate all of
the foregoing prohibitions, thereby imposing a state-mandated local
program.
   The bill would also require a defendant to pay all of the
plaintiff's costs and attorneys' fees in a civil action brought for
violations of these provisions.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 999.2 of the Military and Veterans Code is
amended to read:
   999.2.  (a) Notwithstanding any other provision of law, contracts
awarded by any state agency, department, officer, or other state
governmental entity, including school districts when they are
expending state funds for construction, professional services (except
those subject to Chapter 6 (commencing with Section 16850) of Part 3
of Division 4 of Title 2 of the Government Code), materials,
supplies, equipment, alteration, repair, or improvement shall have
statewide participation goals of not less than 3 percent for disabled
veteran business enterprises.  These goals apply to the overall
dollar amount expended each year by the awarding department.
   (b) For purposes of this section:
   (1) "Broker" or "agent" means any individual or entity, or any
combination thereof, that does not have title, possession, control,
and risk of loss of materials, supplies, services, or equipment
provided to an awarding department, unless one or more certified
disabled veterans has 51 percent ownership of the quantity and value
of the materials, supplies, services, and of each piece of equipment
provided under the contract.
   (2) "Equipment" means any piece of equipment that is used or
provided for rental to any state agency, department, officer, or
other state governmental entity, including equipment for which
operators are provided.
   (3) "Equipment broker" means any broker or agent who rents
equipment to an awarding department.
   (c) A disabled veteran business enterprise that rents equipment to
an awarding department shall be deemed to be an equipment broker
unless one or more disabled veterans has 51-percent ownership of the
quantity and the value of each piece of equipment.  If the equipment
is owned by one or more disabled veterans, each disabled veteran
owner shall, prior to performance under any contract, submit to the
awarding department a declaration signed by the disabled veteran
owner stating that the owner is a disabled veteran and providing the
name, address, telephone number, and tax identification number of the
disabled veteran owner.  Each disabled veteran owner shall submit
his or her federal income tax returns to the administering agency
pursuant to subdivision (g) as if he or she were a disabled veteran
business enterprise.  The disabled veteran business enterprise of a
disabled veteran owner who fails to submit his or her tax returns
will be deemed to be an equipment broker.
   (d) A disabled veteran business enterprise that rents equipment to
an awarding department shall, prior to performing the contract,
submit to the awarding department a declaration signed by each
disabled veteran owner and manager of the enterprise stating that the
enterprise obtained the contract by representing that the enterprise
was a disabled veteran business enterprise meeting and maintaining
all of the requirements of a disabled veteran business enterprise.
The declaration shall include the name, address, telephone number,
and tax identification number of the owner of each piece of equipment
identified in the contract.
   (e) State funds expended for equipment rented from equipment
brokers pursuant to contracts awarded under this section shall not be
credited toward the 3-percent goal.
   (f) A disabled veteran business enterprise that is a broker or
agent and that obtains a contract pursuant to subdivision (a) shall,
prior to performing the contract, disclose to the awarding department
that the business is a broker or agent.  The disclosure shall be
made in a declaration signed and executed by each disabled veteran
owner and manager of the enterprise, declaring that the enterprise is
a broker or agent, and identifying the name, address, and telephone
number of the principal for whom the enterprise is acting as a broker
or agent.
   (g) (1) A disabled veteran business enterprise, and each owner
thereof, shall, at the time of certification, submit to the
administering agency complete copies of the enterprise's federal
income tax returns for the three previous tax years.
   (2) A disabled veteran business enterprise, and each owner
thereof, shall submit to the administering agency complete copies of
the enterprise's federal income tax returns that have a
postcertification due date, on or before the due date, including
extensions.
   (3) A disabled veteran business enterprise that, and each owner
thereof who, has not submitted to the administering agency complete
copies of the enterprise's federal income tax returns for the three
tax years preceding certification nor for each postcertification tax
year for which a return was required to be filed, shall have 90 days
to submit those returns.
   (4) A disabled veteran business enterprise that fails to comply
with any provision of this subdivision shall be prohibited from
participating in any state contract until the disabled veteran
business enterprise complies with the provisions of this subdivision.
  Funds expended involving a disabled veteran business enterprise
during any period in which that enterprise is not in compliance with
the provisions of this subdivision shall not be credited toward the
awarding department's 3-percent goal.
   (h) A disabled veteran business enterprise that fails to maintain
the certification requirements set forth in this article shall
immediately notify the awarding department and the administering
agency of that failure by filing a notice of failure that states with
particularity each requirement the disabled veteran business
enterprise has failed to maintain.
  SEC. 2.  Section 999.5 of the Military and Veterans Code is amended
to read:
   999.5.  (a) The administering agency shall establish a method of
monitoring adherence to the goal specified in Section 999.1,
including requiring a followup report from all contractors upon the
completion of any sale of bonds.
   (b) The awarding department shall establish a method of monitoring
adherence to the goals specified in Section 999.2.
   (c) An awarding department shall not credit toward the department'
s 3 percent goal state funds expended on a contract with a disabled
veteran business enterprise that does not meet and maintain the
certification requirements.
   (d) The administering agency shall adopt rules and regulations,
including standards for good faith efforts, for the purpose of
implementing this section.  Emergency regulations consistent with
this section may be adopted.
  SEC. 3.  Section 999.7 of the Military and Veterans Code is amended
to read:
   999.7.  (a) (1) On January 1 of each year, each awarding
department shall report to the Governor, the Legislature, the
Department of General Services, and the Department of Veterans
Affairs on the level of participation by disabled veteran business
enterprises in contracts identified in this article for the previous
fiscal year.
   (2) If the awarding department has not met the established goals
for that year, the awarding department shall report to the
Legislature, the Department of General Services, and the Department
of Veterans Affairs the reasons for the awarding department's
inability to achieve the goals and shall identify steps it shall take
in an effort to achieve the goals.
   (b) On April 1 of each year, the Department of General Services
shall prepare for the Governor, the Legislature, and the Department
of Veterans Affairs a statewide statistical summary detailing each
awarding department's goal achievement and a statewide total of those
goals.
  SEC. 4.  Section 999.9 of the Military and Veterans Code is amended
to read:
   999.9.  (a) It shall be unlawful for a person to:
   (1) Knowingly and with intent to defraud, fraudulently obtain,
retain, attempt to obtain or retain, or aid another in fraudulently
obtaining or retaining or attempting to obtain or retain,
certification as a disabled veteran business enterprise for the
purpose of this article.
   (2) Willfully and knowingly make a false statement with the intent
to defraud, whether by affidavit, report, or other representation,
to a state official or employee for the purpose of influencing the
certification or denial of certification of any entity as a disabled
veteran business enterprise.
   (3) Willfully and knowingly obstruct, impede, or attempt to
obstruct or impede, any state official or employee who is
investigating the qualifications of a business entity that has
requested certification as a disabled veteran business enterprise.
   (4) Knowingly and with intent to defraud, fraudulently obtain,
attempt to obtain, or aid another person in fraudulently obtaining or
attempting to obtain, public moneys, contracts, or funds expended
under a contract, that are awarded by any state agency, department,
officer, or other state governmental agency, to which the person is
not entitled under this article.
   (5) Knowingly and with intent to defraud, fraudulently represent
participation of a disabled veteran business enterprise in order to
obtain or retain a bid preference or a state contract.
   (6) Willfully and knowingly make or subscribe to any statement,
declaration, or other document that is fraudulent or false as to any
material matter, whether or not that falsity or fraud is committed
with the knowledge or consent of the person authorized or required to
present the declaration, statement, or document.
   (7) Willfully and knowingly aid or assist in, or procure, counsel,
or advise, the preparation or presentation of a declaration,
statement, or other document that is fraudulent or false as to any
material matter, regardless of whether that falsity or fraud is
committed with the knowledge or consent of the person authorized or
required to present the declaration, statement, or document.
   (8) Willfully and knowingly fail to file any declaration or notice
with the awarding agency that is required by Section 999.2.
   (9) Establish, or knowingly aid in the establishment of, or
exercise control over, a firm found to have violated any of
paragraphs (1) to (8), inclusive.
   (b) Any person who violates any of the provisions of subdivision
(a) shall be guilty of a misdemeanor punishable by imprisonment in
the county jail not exceeding six months or by a fine not exceeding
one thousand dollars ($1,000), or by both.  In addition, the person
shall be liable for a civil penalty of not less than ten thousand
dollars ($10,000) nor more than thirty thousand dollars ($30,000) for
the first violation, and a civil penalty of not less than thirty
thousand dollars ($30,000) nor more than fifty thousand dollars
($50,000) for each additional or subsequent violation. A defendant
who violates any of the provisions of subdivision (a) shall pay all
costs and attorney's fees incurred by the plaintiff in a civil action
brought pursuant to this section.
   (c) (1) The Department of General Services shall suspend any
person who violates subdivision (a) from bidding on, or participating
as either a contractor, subcontractor, or supplier in, any state
contract or project for a period of not less than three years, and if
certified as a disabled veteran business enterprise, the department
shall revoke the business' certification for a period of not less
than three years.  An additional or subsequent violation shall extend
the periods of suspension and revocation for a period of not less
than five years.  The suspension and revocation shall apply to the
principals of the business and any subsequent business formed or
financed by, or affiliated with, those principals.
   (2) The Department of General Services shall prohibit any business
or person who fails to satisfy the penalties, costs, and attorney's
fees imposed pursuant to subdivision (b) from further contracting
with the state until the penalties are satisfied.
   (d) The awarding department shall report all alleged violations of
this section to the Department of General Services.  The Department
of General Services shall subsequently report all alleged violations
to the Attorney General who shall determine whether to bring a civil
action against any person or firm for violation of this section.
   (e) The Department of General Services shall monitor the status of
all reported violations and shall maintain and make available to all
state departments a central listing of all firms and persons who
have been determined to have committed violations resulting in
suspension.
   (f) No awarding department shall enter into any contract with any
person suspended for violating this section during the period of the
person's suspension.  No awarding department shall award a contract
to any contractor utilizing the services of any person as a
subcontractor suspended for violating this section during the period
of the person's suspension.
   (g) The awarding department shall check the central listing
provided by the Department of General Services to verify that the
person or contractor to whom the contract is being awarded, or any
person being utilized as a subcontractor or supplier by that person
or contractor, is not under suspension for violating this section.
  SEC. 5.  Section 10115.9 is added to the Public Contract Code, to
read:
   10115.9.  A limited liability company may be certified as a
disabled veteran business enterprise pursuant to this article if the
limited liability company is wholly owned by one or more disabled
veterans.
  SEC. 6.  No reimbursement is required by this act pursuant to
Section 6 XIII B of the California Constitution because the only
costs that may be incurred by a local agency or school district will
be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.