BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 399|
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THIRD READING
Bill No: SB 399
Author: Wright (D)
Amended: 5/14/13
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 9-0, 4/23/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De Le�n, Hernandez, Lieu
NO VOTE RECORDED: Galgiani, Padilla
SENATE APPROPRIATIONS COMMITTEE : 6-0, 5/20/13
AYES: De Le�n, Walters, Gaines, Hill, Padilla, Steinberg
NO VOTE RECORDED: Lara
SUBJECT : California Prompt Payment Act
SOURCE : Author
DIGEST : This bill includes a contractor performing emergency
work or remedial measures related to the accidental or unplanned
release of toxic substances within the list of entities entitled
to the late payment penalty of 10% above the United States Prime
Rate.
ANALYSIS :
Existing law:
1. The California Prompt Payment Act subjects a state agency
that acquires property or services pursuant to a contract
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with a business to a late penalty payment, if it fails to
make payment to the person or business on the date required
by the contract.
2. Provides that the penalty payable to a certified small
business, a nonprofit organization, a nonprofit public
benefit corporation, or a small business or nonprofit
organization that provides services or equipment under the
Medi-Cal program is 10% above the United States Prime Rate on
June 30 of the prior fiscal year.
3. Under the State Contract Act prescribes the procedures and
requirements applicable to various state agency contracts,
and exempts from these procedures and requirements specified
contracts for required emergency work or remedial measures
related to the accidental or unplanned release of toxic
substances.
This bill includes a contractor performing emergency work or
remedial measures related to the accidental or unplanned release
of toxic substances within the list of entities entitled to the
late payment penalty of 10% above the United States Prime Rate.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, there are
unknown, likely minor to moderate state costs to pay a higher
penalty on late payments for emergency work or remedial measures
performed under contract with state agencies. Actual costs
depend on the volume of uncontested payments for emergency or
remedial work performed by certain businesses, the volume of
contract dollars that are paid after the 45 day grace period,
and the average number of days between the due date and the
payment date.
SUPPORT : (Verified 5/23/13)
California Chapter of the American Fence Association
California Fence Contractors' Association
California Landscape Contractors Association
Engineering Contractors' Association
Flasher Barricade Association
Marin Builders Association
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ARGUMENTS IN SUPPORT : According to the author's office, there
has been difficulty getting prompt payment for emergency
services rendered to the state from the Department of General
Services. The California Prompt Payment Act provides that a
state agency that fails to make a timely payment for goods or
services acquired pursuant to a contract with a specified
business or organization is subject to a late payment penalty.
Currently, companies contracted in an emergency are not subject
to the Prompt Payment Act. This bill will include emergency
contractors under the Prompt Payment Act.
MW:d 5/23/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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