BILL NUMBER: SB 1510	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 27, 2012

INTRODUCED BY   Senator Wright
   (Coauthor: Assembly Member Perea)

                        FEBRUARY 24, 2012

   An act to amend Section 14837 of the Government Code, relating to
the Department of General Services.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1510, as amended, Wright. Department of General Services: small
business contracts.
   The Small Business Procurement and Contract Act requires the
Director of General Services and the heads of other state agencies
that enter into contracts for the provision of goods, services, and
information technology and for the construction of state facilities
to establish goals for the participation of small businesses in these
contracts, to provide for a small business preference in the award
of these contracts, to give special consideration and special
assistance to small businesses, and, whenever possible, to make
awards to small businesses, as specified. The act authorizes the
director to set standards, established by regulation, for 
qualifications for participating businesses, and requires those
standards to include a provision that  a certified small
business or microbusiness  provide goods or services that
  to  contribute to the fulfillment of  a
 contract  requirements  by performing a
commercially useful function, as defined.
   This bill would expand the definition to include additional
conditions under which a certified small business or microbusiness is
deemed to perform a commercially useful function.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Section 14837 of the Government Code is amended to
read:
   14837.  As used in this chapter:
   (a) "Department" means the Department of General Services.
   (b) "Director" means the Director of General Services.
   (c) "Manufacturer" means a business that meets both of the
following requirements:
   (1) It is primarily engaged in the chemical or mechanical
transformation of raw materials or processed substances into new
products.
   (2) It is classified between Codes 31 to 33, inclusive, of the
North American Industry Classification System.
   (d) (1) "Small business" means an independently owned and operated
business that is not dominant in its field of operation, the
principal office of which is located in California, the officers of
which are domiciled in California, and which, together with
affiliates, has 100 or fewer employees, and average annual gross
receipts of ten million dollars ($10,000,000) or less over the
previous three years, or is a manufacturer, as defined in subdivision
(c), with 100 or fewer employees.
   (2) "Microbusiness" is a small business which, together with
affiliates, has average annual gross receipts of two million five
hundred thousand dollars ($2,500,000) or less over the previous three
years, or is a manufacturer, as defined in subdivision (c), with 25
or fewer employees.
   (3) The director shall conduct a biennial review of the average
annual gross receipt levels specified in this subdivision and may
adjust that level to reflect changes in the California Consumer Price
Index for all items. To reflect unique variations or characteristics
of different industries, the director may establish, to the extent
necessary, either higher or lower qualifying standards than those
specified in this subdivision, or alternative standards based on
other applicable criteria.
   (4) Standards applied under this subdivision shall be established
by regulation, in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2, and shall preclude
the qualification of businesses that are dominant in their industry.
In addition, the standards shall provide that the certified small
business or microbusiness shall provide goods or services that
contribute to the fulfillment of the contract requirements by
performing a commercially useful function, as defined below:
   (A) A certified small business or microbusiness is deemed to
perform a commercially useful function if the business does all of
the following:
   (i) (I) Is responsible for the execution of a distinct element of
the work of the contract.
   (II) Carries out its obligation by actually performing, managing,
or supervising the work involved.
   (III) Performs work that is normal for its business services and
functions.
   (IV) Is responsible, with respect to materials and supplies
required for the contract, for negotiating price, determining quality
and quantity, ordering material, installing, if applicable, and
paying for the material  itself  .
   (V) Is responsible for the accounts receivable of the business
 if   and  the accounts receivable of the
business are not directly or indirectly controlled by a prime
contractor.
   (ii) Is not further subcontracting a portion of the work that is
greater than that expected to be subcontracted by normal industry
practices.
   (B) 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
small business or microbusiness participation.
   (e) "Disabled veteran business enterprise" means an enterprise
that has been certified as meeting the qualifications established by
subdivision (g) of Section 999 of the Military and Veterans Code.