BILL NUMBER: AB 2249	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 24, 2010
	AMENDED IN ASSEMBLY  MAY 11, 2010
	AMENDED IN ASSEMBLY  APRIL 28, 2010
	AMENDED IN ASSEMBLY  APRIL 13, 2010

INTRODUCED BY   Assembly Member Ruskin

                        FEBRUARY 18, 2010

   An act to add Section 14840 to the Government Code, and to amend
 Section  Sections 999 and  999.2 of the
Military and Veterans Code, relating to state government.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2249, as amended, Ruskin. State government: small business or
disabled veteran business enterprise certification.
   Existing law, the Small Business Procurement and Contract Act,
encourages the participation of a small business enterprise,
including, but not limited to, a microbusiness, or a disabled veteran
business enterprise that is certified by the Department of General
Services in state contracts. Existing law requires those business
enterprises to submit certain information under penalty of perjury.
   Existing law, the California Disabled Veterans Business Enterprise
Program, establishes a disabled veteran business enterprise
participation goal of 3% for certain state procurement contracts.
Existing law requires a disabled veteran business enterprise to
provide the administering agency with prescribed information,
including, but not limited to, federal income tax returns and whether
the enterprise is an equipment broker, as defined.
   This bill would restate provisions related to the 3% participation
goal for disabled veteran business enterprises, and would 
require   , during the process of certifying and
determining the eligibility of  a small business or a disabled
veteran business enterprise  , require an applicant or certified
firm  to submit to the department a written declaration, under
penalty of perjury, that all information submitted, including the
additional information for disabled veteran business enterprises, is
true and correct, and would authorize the department to require, in
certain cases, the  owner of the  enterprise  or small
business, the applicant, or the certified firm  to complete and
submit to the department a specified federal tax form requesting a
transcript of a tax return. By expanding the definition of the
existing crime of perjury, this bill would impose a state-mandated
local program. 
   Existing law defines "disabled veteran business enterprise" for
purposes of the California Disabled Veterans Business Enterprise
Program to mean a business certified by the administering agency as
meeting specified requirements, including, among other things, in the
case of a publicly owned business, that at least 51% of its stock be
owned by one or more disabled veterans, or in the case of a
subsidiary that is wholly owned by a parent corporation, that at
least 51% of the voting stock of the parent corporation be owned by
one or more disabled veterans.  
    This bill would instead specify that at least 51% of the stock or
voting stock be unconditionally owned by disabled veterans. 
   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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 14840 is added to the Government Code, to read:

   14840.  (a)  (1)    In the process of certifying
and determining the eligibility of a disabled veteran business
enterprise or a small business enterprise,  including, but
not limited to,   including  a microbusiness, the
department shall require the  enterprise  
applicant or certified firm  to submit a written declaration,
under penalty of perjury, that the information submitted to the
department pursuant to this chapter, and in the case of a disabled
veteran enterprise all information submitted to the department
pursuant to subdivision (c), is true and correct. 
   (b) (1) 
    (2)     (A)    If the
department determines that just cause exists, it may require the
 enterprise   owner of the disabled veteran
business enterprise or small business, the applicant, or the 
 certified firm  to complete and submit to the department a
federal Form 4506-T from the Internal Revenue Service, United States
Department of the Treasury, requesting a transcript of a tax return.

   (2) 
    (B)  For the purposes of this  subdivision
  paragraph  , "just cause" means either of the
following circumstances exists: 
   (A) 
    (i)  The department receives a complaint regarding the
 disabled veteran business enterprise  
certified firm  . 
   (B) 
    (ii)  The department determines, based on its findings
during the course of any  audit of the disabled veteran
business enterprise,  certification eligibility review
of the applicant or certified firm,  that the action described
in  paragraph (1)   subparagraph (A)  is
necessary. 
   (c) 
    (b)  (1) Notwithstanding any other 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), 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.
   (2) For purposes of this subdivision:
   (A) "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.
   (B) "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.
   (C) "Equipment broker" means any broker or agent who rents
equipment to an awarding department.
   (3) 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 paragraph (7) 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
shall be deemed to be an equipment broker.
   (4) 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.
   (5) State funds expended for equipment rented from equipment
brokers pursuant to contracts awarded under this subdivision shall
not be credited toward the 3-percent goal.
   (6) A disabled veteran business enterprise that is a broker or
agent and that obtains a contract pursuant to paragraph (1) 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.
   (7) (A) 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.
   (B) 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.
   (C) 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.
   (D) A disabled veteran business enterprise that fails to comply
with any provision of this paragraph shall be prohibited from
participating in any state contract until the disabled veteran
business enterprise complies with the provisions of this paragraph.
Funds expended involving a disabled veteran business enterprise
during any period in which that enterprise is not in compliance with
the provisions of this paragraph shall not be credited toward the
awarding department's 3-percent goal.
   (8) A disabled veteran business enterprise that fails to maintain
the certification requirements set forth in Article 6 (commencing
with Section 999) of Chapter 6 of Division 4 of the Military and
Veterans Code, 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 of the   Military and
Veterans Code   is amended to read: 
   999.  (a) This article shall be known as, and may be cited as, the
California Disabled Veteran Business Enterprise Program. The
California Disabled Veteran Business Enterprise Program is
established to address the special needs of disabled veterans seeking
rehabilitation and training through entrepreneurship and to
recognize the sacrifices of Californians disabled during military
service. It is the intent of the Legislature that every state
procurement authority honor California's disabled veterans by taking
all practical actions necessary to meet or exceed the disabled
veteran business enterprise participation goal of a minimum of 3
percent of total contract value.
   (b) As used in this article, the following definitions apply:
   (1) "Administering agency" means the Treasurer in the case of
contracts for professional bond services, and the Department of
General Services' Office of Small Business and Disabled Veteran
Business Enterprise Services, in the case of contracts governed by
Section 999.2.
   (2) "Awarding department" means a state agency, department,
governmental entity, or other officer or entity empowered by law to
issue bonds or enter into contracts on behalf of the state.
   (3) "Bonds" means bonds, notes, warrants, certificates of
participation, and other evidences of indebtedness issued by, or on
behalf of, the state.
   (4) "Contract" includes any agreement or joint agreement to
provide professional bond services to the State of California or an
awarding department. "Contract" also includes any agreement or joint
development agreement to provide labor, services, materials,
supplies, or equipment in the performance of a contract, franchise,
concession, or lease granted, let, or awarded for, and on behalf of,
the state.
   (5) (A) "Contractor" means any person or persons, regardless of
race, color, creed, national origin, ancestry, sex, marital status,
disability, religious or political affiliation, age, or any sole
proprietorship, firm, partnership, joint venture, corporation, or
combination thereof that submits a bid and enters into a contract
with a representative of a state agency, department, governmental
entity, or other officer empowered by law to enter into contracts on
behalf of the state. "Contractor" includes any provider of
professional bond services who enters into a contract with an
awarding department.
   (B) "Disabled veteran business enterprise contractor,
subcontractor, or supplier" means any person or entity that has been
certified by the administering agency pursuant to this article and
that performs a "commercially useful function," as defined below, in
providing services or goods that contribute to the fulfillment of the
contract requirements:
   (i) A person or an entity is deemed to perform a "commercially
useful function" if a person or entity does all of the following:
   (I) (aa) Is responsible for the execution of a distinct element of
the work of the contract.
   (ab) Carries out the obligation by actually performing, managing,
or supervising the work involved.
   (ac) Performs work that is normal for its business services and
functions.
   (II) Is not further subcontracting a portion of the work that is
greater than that expected to be subcontracted by normal industry
practices.
   (ii) A contractor, subcontractor, or supplier will not be
considered to perform a "commercially useful function" if the
contractor's, subcontractor's, or supplier's role is limited to that
of an extra participant in a transaction, contract, or project
through which funds are passed in order to obtain the appearance of a
disabled veteran business enterprise participation.
   (6) "Disabled veteran" means a veteran of the military, naval, or
air service of the United States, including, but not limited to, the
Philippine Commonwealth Army, the Regular Scouts, "Old Scouts," and
the Special Philippine Scouts, "New Scouts," who has at least a
10-percent service-connected disability and who is domiciled in the
state.
   (7) (A) "Disabled veteran business enterprise" means a business
certified by the administering agency as meeting all of the following
requirements:
   (i) It is a sole proprietorship at least 51 percent owned by one
or more disabled veterans or, in the case of a publicly owned
business, at least 51 percent of its stock is  unconditionally
 owned by one or more disabled veterans; a subsidiary that is
wholly owned by a parent corporation, but only if at least 51 percent
of the voting stock of the parent corporation is 
unconditionally  owned by one or more disabled veterans; or a
joint venture in which at least 51 percent of the joint venture's
management, control, and earnings are held by one or more disabled
veterans.
   (ii) The management and control of the daily business operations
are by one or more disabled veterans. The disabled veterans who
exercise management and control are not required to be the same
disabled veterans as the owners of the business.
   (iii) It is a sole proprietorship, corporation, or partnership
with its home office located in the United States, which is not a
branch or subsidiary of a foreign corporation, foreign firm, or other
foreign-based business.
   (B) Notwithstanding subparagraph (A), after the death or the
certification of a permanent medical disability of a disabled veteran
who is a majority owner of a business that qualified as a disabled
veteran business enterprise prior to that death or certification of a
permanent medical disability, and solely for purposes of any
contract entered into before that death or certification, that
business shall be deemed to be a disabled veteran business enterprise
for a period not to exceed three years after the date of that death
or certification of a permanent medical disability, if the business
is inherited or controlled by the spouse or child of that majority
owner, or by both of those persons.
   (8) "Foreign corporation," "foreign firm," or "foreign-based
business" means a business entity that is incorporated or has its
principal headquarters located outside the United States of America.
   (9) "Goal" means a numerically expressed objective that awarding
departments and contractors are required to make efforts to achieve.
   (10) "Management and control" means effective and demonstrable
management of the business entity.
   (11) "Professional bond services" include services as financial
advisers, bond counsel, underwriters in negotiated transactions,
underwriter's counsel, financial printers, feasibility consultants,
and other professional services related to the issuance and sale of
bonds.
   SEC. 2.   SEC. 3.   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.
   (i) The department shall require a disabled veteran business
enterprise to file with the department a completed Form 4506-T from
the federal Internal Revenue Service, United States Department of the
Treasury, also known as a Request for Transcript of Tax Return, if
either of the following circumstances exists:
   (1) The department receives a complaint regarding the disabled
veteran business enterprise.
   (2) The department determines, based on its findings during the
course of any audit of the disabled veteran business enterprise, that
it is necessary to require a Request for Transcript of Tax Return.
   SEC. 3.   SEC. 4.   No reimbursement is
required by this act pursuant to Section 6 of Article 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.