BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2181
                                                                  Page  1

          Date of Hearing:   March 27, 2012

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER 
                                     PROTECTION
                                 Mary Hayashi, Chair
                AB 2181 (Galgiani) - As Introduced:  February 23, 2012
           
          SUBJECT  :   State government: prompt payment of claims.

           SUMMARY  :   Clarifies that the California High-Speed Rail 
          Authority (Authority) must promptly pay certified small 
          businesses engaged in the development, design, and construction 
          of California's high-speed rail system or pay a late payment 
          penalty under the California Prompt Payment Act (Act).  

           EXISTING LAW  :  

          1)Establishes the Act, which requires state agencies acquiring 
            property or services pursuant to a business contract, 
            including any change order or contract amendment, to pay the 
            person or business on the date required by the contract, or be 
            subject to a late payment penalty. 

          2)Defines "State" to mean the State and any office, officer, 
            department, division, bureau, board, commission or agency of 
            the State claims against which are paid by warrants drawn by 
            the Controller. 

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           Purpose of this bill  .  According to the author's office, "This 
          bill seeks to clarify the prompt payment act to include small 
          businesses contracting with the Authority.  The current language 
          for Government Code Section 927 states that the Act applies to 
          all state agencies." 

           Background  .  The Act requires state agencies to submit payment 
          for items or services contractually delivered by a person or 
          business no later than the date required by contract between the 
          agency and entity being contracted with.  The author's office 
          contends that language clarifies that state agencies would 
          include the Authority.









                                                                  AB 2181
                                                                  Page  2

          The Controller's office, which makes payments to vendors on 
          behalf of state agencies, has already begun making payments on 
          behalf of the Authority for design services and land parcels and 
          has stated that the Act would extend to the Authority and that 
          small businesses entering into a contract with the Authority 
          would be paid late penalty fees, if applicable. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file. 

           Opposition 
           
          None on file. 
           
          Analysis Prepared by  :    Joanna Gin / B.,P. & C.P. / (916) 
          319-3301