BILL ANALYSIS Ó 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