BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 861|
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THIRD READING
Bill No: SB 861
Author: Corbett (D)
Amended: 5/31/11
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 9-1, 4/12/11
AYES: Wright, Anderson, Corbett, De León, Evans,
Hernandez, Strickland, Wyland, Yee
NOES: Berryhill
NO VOTE RECORDED: Calderon, Cannella, Padilla
SENATE APPROPRIATIONS COMMITTEE : 6-3, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Emmerson, Runner
SUBJECT : Public contracts: ineligibility of scrutinized
companies
SOURCE : Author
DIGEST : This bill prohibits a scrutinized company, as
defined, from entering into a contract with a state agency
for goods or services. A scrutinized company is a person
that has been found to be in violation of Section 13(p) of
the Securities Exchange Act of 1934 by final judgment or
settlement entered in a civil or administrative action
brought by the securities and Exchange Commission and the
person has not remedied or cured the violation in a manner
accepted by the commission on or before final judgment or
settlements. A person shall cease to be regarded as a
CONTINUED
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scrutinized company when the person is no longer deemed to
be in violation of Section 13(p) of the Securities Exchange
Act of 1934, or after three years from the date of final
judgment or settlement, whichever is earlier.
ANALYSIS : Existing law authorizes contracting between
state agencies and private contractors and sets forth
requirements for the procurement of goods and services by
state agencies and the various responsibilities of state
agencies and the Department of General Services in
implementing state contracting procedures and policies.
This bill prohibits a scrutinized company, as defined, from
entering into a contract with a state agency for goods or
services. A "scrutinized company" is a person that has
been found to be in violation of Section 13(p) of the
Securities Exchange Act of 1934 by final judgment or
settlement entered in a civil or administrative action
brought by the securities and Exchange Commission and the
person has not remedied or cured the violation in a manner
accepted by the commission on or before final judgment or
settlements. A person shall cease to be regarded as a
scrutinized company when the person is no longer deemed to
be in violation of Section 13(p) of the Securities Exchange
Act of 1934, or after three years from the date of final
judgment or settlement, whichever is earlier.
Background
On July 21, 2010, the President signed into law the
Dodd-Frank Wall Street Reform and Consumer Protection Act
(Act). Section 1502 of the Act directs the SEC to
promulgate new disclosure rules for SEC reporting companies
for whom "conflict minerals are necessary to the
functionality or production of a product manufactured by
such persons." The new disclosure rules are to include
submission of annual disclosure to the SEC and a more
detailed report that will be subject to audit. The SEC is
required to promulgate rules to implement these disclosure
requirements by April 17, 2011, although the SEC has
announced that it won't meet that deadline.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
State contract prohibitionUnknown, potentially increased
General/
costs for specific state goods and
Special
services. To the extent
restrictions
Prohibit companies from bidding,
costs
May increase due to reduced
competition
State contract oversightUnknown costs ongoing to
General/
administer a potentially more
Special
complex contracting process,
including
costs to determine if a bidder is
a
scrutinized company; increased
protests and rebidding
SUPPORT : (Verified 5/31/11)
Action Evangelique En Prison, Democratic Republic of the
Congo
Africa Faith and Justice Network
Amnesty International
California Coalition Against Sexual Assault
California Commission on the Status of Women
California National Organization for Women
Coalition for Free and Democratic Elections in Congo
Coalition to Abolish Slavery and Trafficking
Consumer Federation of California
Earth Rights International
Enough!
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4
Falling Whistles
Feminist Majority
Free the Slaves
Global Witness
Human Rights Watch
Program for Torture Victims
Responsible Sourcing Network
St. Mark Presbyterian Church, Newport Beach
Stop Genocide Now
Union for Democracy and Social Progress
ARGUMENTS IN SUPPORT : The author's office notes that
embedded in the financial reform measure that President
Obama signed was a truly historic regulatory provision
pertaining to the DRC. In an effort to choke off funding
for the armed thugs and rebel militias who have killed more
than five million people and turned the Congo into the rape
capital of the world, federal law now requires publicly
traded companies to disclose whether their products contain
minerals from rebel-controlled mines in the Congo. Greed
for the Congo's mineral wealth has been a prime cause of
the atrocities and conflict, and multiple armed groups use
mass rape as a strategy to intimidate and control
communities as they profit from the illicit trade of
conflict minerals. Many of these same conflict minerals
end up in our electronic devices such as cell phones,
laptops, and digital cameras.
PQ:do 5/31/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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