BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2249
                                                                  Page  1

          Date of Hearing:   May 19, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    AB 2249 (Ruskin) - As Amended:  May 11, 2010 

          Policy Committee:                              Jobs, Econ.  
          Development and the Economy                   Vote: 6 - 0 

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill makes changes to the laws governing state contracting  
          and disabled veterans business enterprises (DVBE). Specifically,  
          this bill: 

          1)Requires that a small business enterprise or a DVBE submit a  
            written declaration, under penalty of perjury, that the  
            information submitted for a state procurement contract is true  
            and correct. 

          2)Requires that a DVBE seeking certification with the state  
            submit completed copies of the enterprise's federal tax  
            returns, for the three previous years.

          3)States that a DVBE that fails to comply with the federal tax  
            return requirement shall be prohibited from participating in  
            any state contract until the requirements are met. 

          4)Requires DVBEs to file a completed Internal Revenue Service  
            tax form 4506-T to the contracting agency under certain  
            circumstances. 

          5)Restates provisions related to the 3% participation goal for  
            DVBEs. 

           FISCAL EFFECT  

          There are no significant costs associated with this legislation.  


           COMMENTS  








                                                                  AB 2249
                                                                  Page  2


           1)Rationale . This bill is intended to strengthen the provisions  
            surrounding the rules pertaining to the 3% DVBE state  
            contracting requirement, in order to provide the Department of  
            General Services (DGS) with the tools they need to determine  
            whether or not a business claiming to be a DVBE is legitimate.  
             

            The author has expressed concern that some DVBE applicants are  
            being certified when there are indications that they should  
            not be, such as the applicant not being domiciled in  
            California or the applicant for certification not being the  
            true owner of certain equipment.  

           2)DVBE Certification  . Under the provisions of the DBVE program,  
            each state agency is required, when awarding contracts  
            throughout the year, to include DVBEs by taking all practical  
            actions necessary to meet or exceed the annual 3% DVBE  
            participation goal.  In order to become a certified DVBE, the  
            business must adhere to several requirements.  For example,  
            businesses must be owned, at a minimum of 51% by a disabled  
            veteran, must be a California resident and the DVBEs home  
            office must be located in the U.S. 
           
             As part of the DVBE certification process, DVBE businesses  
            must re-apply for certification on a yearly basis.  At the  
            time of re-certification, the business must submit an  
            application along with copies of the DVBE's income tax returns  
            for the previous three years.  

           3)Related Legislation  . AB 2627 (Nielsen) limits the portion of  
            state funds that count toward the Disabled Veteran Business  
            Enterprise (DVBE) goal to a broker's commission fees, if the  
            funds were awarded through a broker. That bill is currently  
            pending on the Assembly Floor. 

           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916)  
          319-2081