BILL NUMBER: SB 1510 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 23, 2012
PASSED THE ASSEMBLY AUGUST 22, 2012
AMENDED IN ASSEMBLY AUGUST 20, 2012
AMENDED IN ASSEMBLY AUGUST 7, 2012
AMENDED IN ASSEMBLY JUNE 12, 2012
AMENDED IN SENATE MAY 2, 2012
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, and to amend
Section 999 of the Military and Veterans Code, relating to
contracts.
LEGISLATIVE COUNSEL'S DIGEST
SB 1510, Wright. Contracts.
(1) 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 a certified
small business or microbusiness to contribute to the fulfillment of
contract requirements by performing a commercially useful function,
as defined.
This bill would modify the definition to include additional
conditions under which a certified small business or microbusiness is
deemed to perform a commercially useful function.
(2) The California Disabled Veteran Business Enterprise Program
addresses the special needs of disabled veterans by assisting state
procurement authorities in meeting or exceeding the disabled veteran
enterprise participation goal of 3% for procurement contracts. The
program defines terms for its purposes, including, but not limited
to, the term "commercially useful function."
This bill would modify the definition to include additional
conditions, as specified.
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) 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 products, inventories,
materials, and supplies required for the contract, for negotiating
price, determining quality and quantity, ordering, installing, if
applicable, and making payment.
(v) 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.
SEC. 2. Section 999 of the Military and Veterans Code is amended
to read:
999. (a) This article shall be known as, and may be cited as, the
California Disabled Veteran Business Enterprise Program. The
California Disabled Veteran Business Enterprise Program is
established to address the special needs of disabled veterans seeking
rehabilitation and training through entrepreneurship and to
recognize the sacrifices of Californians disabled during military
service. It is the intent of the Legislature that every state
procurement authority honor California's disabled veterans by taking
all practical actions necessary to meet or exceed the disabled
veteran business enterprise participation goal of a minimum of 3
percent of total contract value.
(b) As used in this article, the following definitions apply:
(1) "Administering agency" means the Treasurer in the case of
contracts for professional bond services, and the Department of
General Services' Office of Small Business and Disabled Veteran
Business Enterprise Services, in the case of contracts governed by
Section 999.2.
(2) "Awarding department" means a state agency, department,
governmental entity, or other officer or entity empowered by law to
issue bonds or enter into contracts on behalf of the state.
(3) "Bonds" means bonds, notes, warrants, certificates of
participation, and other evidences of indebtedness issued by, or on
behalf of, the state.
(4) "Contract" includes any agreement or joint agreement to
provide professional bond services to the State of California or an
awarding department. "Contract" also includes any agreement or joint
development agreement to provide labor, services, materials,
supplies, or equipment in the performance of a contract, franchise,
concession, or lease granted, let, or awarded for, and on behalf of,
the state.
(5) (A) "Contractor" means any person or persons, regardless of
race, color, creed, national origin, ancestry, sex, marital status,
disability, religious or political affiliation, age, or any sole
proprietorship, firm, partnership, joint venture, corporation, or
combination thereof that submits a bid and enters into a contract
with a representative of a state agency, department, governmental
entity, or other officer empowered by law to enter into contracts on
behalf of the state. "Contractor" includes any provider of
professional bond services who enters into a contract with an
awarding department.
(B) "Disabled veteran business enterprise contractor,
subcontractor, or supplier" means any person or entity that has been
certified by the administering agency pursuant to this article and
that performs a "commercially useful function," as defined below, in
providing services or goods that contribute to the fulfillment of the
contract requirements:
(i) A person or an entity is deemed to perform a "commercially
useful function" if a person or entity does all of the following:
(I) Is responsible for the execution of a distinct element of the
work of the contract.
(II) Carries out the 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 products, inventories,
materials, and supplies required for the contract, for negotiating
price, determining quality and quantity, ordering, installing, if
applicable, and making payment.
(V) Is not further subcontracting a portion of the work that is
greater than that expected to be subcontracted by normal industry
practices.
(ii) 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 a
disabled veteran business enterprise participation.
(6) "Disabled veteran" means a veteran of the military, naval, or
air service of the United States, including, but not limited to, the
Philippine Commonwealth Army, the Regular Scouts, "Old Scouts," and
the Special Philippine Scouts, "New Scouts," who has at least a
10-percent service-connected disability and who is domiciled in the
state.
(7) (A) "Disabled veteran business enterprise" means a business
certified by the administering agency as meeting all of the following
requirements:
(i) It is a sole proprietorship at least 51 percent owned by one
or more disabled veterans or, in the case of a publicly owned
business, at least 51 percent of its stock is unconditionally owned
by one or more disabled veterans; a subsidiary that is wholly owned
by a parent corporation, but only if at least 51 percent of the
voting stock of the parent corporation is unconditionally owned by
one or more disabled veterans; or a joint venture in which at least
51 percent of the joint venture's management, control, and earnings
are held by one or more disabled veterans.
(ii) The management and control of the daily business operations
are by one or more disabled veterans. The disabled veterans who
exercise management and control are not required to be the same
disabled veterans as the owners of the business.
(iii) It is a sole proprietorship, corporation, or partnership
with its home office located in the United States, which is not a
branch or subsidiary of a foreign corporation, foreign firm, or other
foreign-based business.
(B) Notwithstanding subparagraph (A), after the death or the
certification of a permanent medical disability of a disabled veteran
who is a majority owner of a business that qualified as a disabled
veteran business enterprise prior to that death or certification of a
permanent medical disability, and solely for purposes of any
contract entered into before that death or certification, that
business shall be deemed to be a disabled veteran business enterprise
for a period not to exceed three years after the date of that death
or certification of a permanent medical disability, if the business
is inherited or controlled by the spouse or child of that majority
owner, or by both of those persons.
(8) "Foreign corporation," "foreign firm," or "foreign-based
business" means a business entity that is incorporated or has its
principal headquarters located outside the United States of America.
(9) "Goal" means a numerically expressed objective that awarding
departments and contractors are required to make efforts to achieve.
(10) "Management and control" means effective and demonstrable
management of the business entity.
(11) "Professional bond services" include services as financial
advisers, bond counsel, underwriters in negotiated transactions,
underwriter's counsel, financial printers, feasibility consultants,
and other professional services related to the issuance and sale of
bonds.