Senate Bill No. 733

Introduced by Senator Block

February 22, 2013

An act to add Section 999.4 to the Military and Veterans Code, and to repeal Section 10115.15 of the Public Contract Code, relating to state contracts.

LEGISLATIVE COUNSEL’S DIGEST

SB 733, as introduced, Block. State contracts: disabled veteran business enterprise statewide participation goals: business utilization plan value.

Existing law establishes a 3% statewide participation goal for disabled veteran business enterprises for certain types of state contracts. Existing law requires an awarding department to award the contract to the lowest responsible bidder meeting specified statewide participation goals for disabled veteran business enterprises, and allows an awarding department to accept submission of a disabled veteran business enterprise utilization plan meeting certain requirements to meet this goal, as specified.

This bill would delete the provisions allowing the awarding department to accept submission of a disabled veteran business enterprise utilization plan. The bill would instead specify that the statewide participation goal for disabled veteran business enterprises may be met by the business utilization plan value of a business utilization plan partner, as defined, established by payments between the partner and a disabled veteran business enterprise, as specified. The bill would require the Department of General Services to certify persons meeting certain requirements as a business utilization plan partner, as defined, and would require a business utilization plan partner and a disabled veteran business enterprise to report information relating to the business utilization plan value, as provided.

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 999.4 is added to the Military and
Veterans Code, to read:

999.4.  

(a) For purposes of this section, the following terms
have the following meanings:

(1) “Business utilization plan partner” or “partner” means a
person that bids for or intends to bid for the award of a contract
by a state agency, department, officer, or other state governmental
entity, including school districts when they are expending state
funds for construction, professional services (except those subject
to Chapter 6 (commencing with Section 16850) of Part 3 of
Division 4 of Title 2 of the Government Code), materials, supplies,
equipment, alteration, repair, or improvement, that has paid money
to a disabled veteran business enterprise in the previous fiscal year,
and that has been certified as a business utilization plan partner
by the department pursuant to paragraph (1) of subdivision (c).

(2) “Business utilization plan value” means the amount
established by the department pursuant to paragraph (2) of
subdivision (d) that has been paid by a business utilization plan
partner to a disabled veteran business enterprise in the previous
fiscal year for construction, professional services (except those
subject to Chapter 6 (commencing with Section 16850) of Part 3
of Division 4 of Title 2 of the Government Code), materials,
supplies, equipment, alteration, repair, or improvement, even if
those contract expenditures were not part of a contract awarded
by a state agency, department, officer, or other state governmental
entity.

(3) “Department” means the Department of General Services.

(b) The statewide participation goal for disabled veteran business
enterprises set forth in Section 999.2 and in subdivision (d) of
Section 10115 of the Public Contract Code may be met using the
business utilization plan value of a business utilization plan partner
established for the previous fiscal year, except that the business
utilization plan value in excess of 3 percent of the amount of the
contract or contracts awarded to the partner by the state agency,
department, officer, or other state governmental entity, including
school districts when they are expending state funds for
construction, professional services (except those subject to Chapter
6 (commencing with Section 16850) of Part 3 of Division 4 of
Title 2 of the Government Code), materials, supplies, equipment,
alteration, repair, or improvement shall not be used to meet the
statewide participation goal for disabled veterans.

(c) (1) The Department of General Services shall certify as a
business utilization plan partner a person or firm that has submitted
documentation from the person or firm and from a disabled veteran
business enterprise demonstrating that the person or firm is a
business utilization plan partner, including documentation
confirming the amount paid to the disabled veteran business
enterprise by the partner in the previous fiscal year.

(2) The department shall establish a partner’s business utilization
plan value using copies of invoices submitted to the department
by the partner and the disabled veteran business enterprise to
substantiate the business utilization plan value.

(d) (1) When a partner is awarded a contract with a state agency,
department, officer, or other state governmental entity for which
the business utilization plan value will be used to meet the
statewide participation goal for disabled veteran business
enterprises as authorized by this section, the business utilization
plan value being used shall be reported to the department by both
the partner and the disabled veteran business enterprise, and shall
be subtracted by the department from the business utilization plan
value remaining that may be utilized by the partner to qualify as
meeting the goals of this article for purposes of Section 999.2 and
of Section 10115.2 of the Public Contract Code. Until a report is
made pursuant to this paragraph, no further business utilization
plan value of the partner may be used pursuant to this section.

(2) When the full business utilization plan value of a partner
that is eligible for use pursuant to this section has been used
pursuant to this section, a conotification letter signed by both the
partner and the disabled veteran business enterprise shall be
submitted to the department confirming that the full business
utilization plan value has been used.

(e) (1) The department shall suspend any person who willfully
violates the reporting requirements of this section from bidding
on, or participating as either a contractor, subcontractor, or supplier
in, any state contract or project for a period of two years, and, if
certified as a disabled veteran business enterprise, the department
shall revoke the business’ certification for a period of two years.
The department shall prohibit any business or person who willfully
violates the reporting requirements of this section from bidding
on, or participating as either a contractor, subcontractor, or supplier
in, any state contract or project, and, if certified as a disabled
veteran business enterprise, the department shall permanently
revoke the business’ certification.

(2) No awarding department shall enter into any contract with
any person suspended under this subdivision during the period of
the person’s suspension or with any person prohibited from
contracting under this subdivision. No awarding department shall
award a contract to any contractor utilizing the services of any
person as a subcontractor suspended under this subdivision for the
period of the person’s suspension or utilizing the services of any
person or contractor prohibited from contracting under this
subdivision.

(3) The awarding department shall check a central listing
provided by the department to verify that the person or contractor
to whom the contract is being awarded, or any person being utilized
as a subcontractor or supplier by that person or contractor, is not
under suspension for violating this section or is not prohibited
from contracting under this section.

(4) This subdivision does not apply to any contract necessary
for the protection of the public health, safety, or welfare.

(f) Section 999.9 shall not be applicable to violations of this
section.

SEC. 2.  

Section 10115.15 of the Public Contract Code is
repealed.

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10115.15.  

(a) Notwithstanding Section 10115.2, when
awarding contracts for materials, supplies, or equipment, including
electronic data processing goods and services, an awarding
department shall accept the submission by a bidder of a minority,
women, and disabled veteran business enterprise utilization plan
that has been approved prior to the solicitation due date by the
Department of General Services. A business utilization plan shall
be considered approved by the Department of General Services as
of the date submitted to the department so long as the plan meets
the minimum criteria established in paragraphs (1) to (12),
inclusive, and shall be valid for a period of one year, unless the
department has audited the utilization plan, as authorized under
subdivision (b), and disapproves it for reasons specified under
subdivision (c). The decision of whether to establish a minority,
women, and disabled veteran business enterprise utilization plan
shall be at the option of the vendor. If a bidder cites an approved
utilization plan in response to the minority, women, and disabled
veteran business enterprise participation requirements of a
solicitation that calls for 15 percent minority-owned, 5 percent
women-owned, and 3 percent disabled veteran-owned business
participation, then that utilization plan shall be considered
responsive to the participation goals of the solicitation document.
If a solicitation specifies higher participation goals than those in
the bidder’s utilization plan, the bidder shall meet the goals in the
solicitation. At a minimum, the utilization plan shall include the
following information:

(1) A statement of the vendor’s minority, women, and disabled
veteran business enterprise utilization plan, including the primary
objectives of the utilization plan.

(2) An explanation showing sufficient business reasons why
the vendor did not meet minority, women, and disabled veteran
business enterprise participation goals set forth in the vendor’s
minority, women, and disabled veteran business utilization plan
submitted to, and approved by, the Department of General Services
in the previous year, if applicable. Further, if the vendor did not
meet the minority, women, and disabled veteran business
participation goals in the previous year, the vendor shall also
identify remedial steps it will take to meet the goals in the current
utilization plan.

(3) A statement of the vendor’s minority, women, and disabled
veteran business utilization goals for the succeeding year. At a
minimum, these utilization goals shall be equal to the statewide
participation goals set forth in subdivision (c) of Section 10115.

(4) Estimated total dollars to be subcontracted by the vendor
for sales within the United States for the succeeding year.

(5) Estimated total dollars to be subcontracted by the vendor
for sales within the State of California for the succeeding year.

(6) Total dollars expressed as a percentage of the amount
estimated pursuant to paragraph (4), intended to be subcontracted
with each of the following:

(A) Minority business enterprises.

(B) Women business enterprises.

(7) Total dollars, expressed as a percentage of the amount
estimated pursuant to paragraph (5), intended to be subcontracted
with disabled veteran-owned business enterprises.

(8) A representative listing of the products and services that the
vendor anticipates subcontracting, including an identification of
the types of subcontracting planned for minority, women, and
disabled veteran business enterprises.

(9) The name of the individual employed by the vendor who
will administer the vendor’s utilization plan, including a description
of the duties of the individual.

(10) A description of the efforts that the vendor will undertake
to ensure that minority, women, and disabled veteran business
enterprises will have an equitable opportunity to compete for
contracts.

(11) A listing of the records and reports that the vendor will
maintain to demonstrate the practices and procedures that have
been adopted to comply with the requirements and goals of the
utilization plan.

(12) Affirmation that the vendor met the statewide minority,
women, and disabled veteran business enterprise utilization goals
for the previous year, if applicable.

(b) The Department of General Services shall conduct random
audits of the submitted utilization plans to determine compliance
with this article, and shall retain on file all submitted utilization
plans for auditing purposes. During any audit of a submitted
utilization plan, the Department of General Services may ask a
vendor to submit a list of all the minority, women, and disabled
veteran business enterprises included as subcontractors in the
vendor’s plan for the previous year. This information shall remain
confidential. Nothing in this section shall be construed to require
the Department of General Services to audit all of the minority,
women, and disabled veteran business enterprise utilization plans
submitted by individual vendors. The Department of General
Services may establish appropriate fees to cover the actual costs
of conducting random audits and retaining on file all submitted
plans.

(c) (1) At any time, the Department of General Services may
disapprove a vendor’s minority, women, and disabled veteran
business enterprise utilization plan for any of the following reasons:

(A) The utilization plan fails to evidence a vendor’s intention
to comply fully with the statewide minority, women, and disabled
veteran business enterprise goals for the succeeding year, as
indicated by failure of the utilization plan to contain the information
specified in subdivision (a).

(B) The utilization plan fails to evidence sufficient business
reasons for failure to achieve the minority, women, and disabled
veteran business enterprise goals set forth in a utilization plan
submitted in the previous year, if applicable.

(C) The utilization plan fails to evidence sufficient remedial
steps the vendor will take if the vendor did not meet the minority,
women, and disabled veteran business participation goals in the
previous year, if applicable.

(2) If a vendor’s utilization plan is disapproved, the vendor may
not submit a new utilization plan to the department for a period of
one year from the date of disapproval. Prior to disapproval of a
vendor’s utilization plan, the vendor shall be entitled to a public
hearing and to five days’ notice of the time and place thereof. The
notice shall state the reasons for the hearing.

(3) A vendor that submits a minority, women, and disabled
veteran business utilization plan that is approved by the Department
of General Services, and that is subsequently awarded a contract
to which the vendor would not otherwise have been entitled, and
who fails to evidence intention to fully comply with the minority,
women, and disabled veteran business enterprise goals in the
utilization plan, or fails to evidence sufficient business reasons for
failing to achieve the minority, women, and disabled veteran
business enterprise goals set forth in the utilization plan, shall:

(A) Pay to the state any difference between the contract amount
and what the state’s cost would have been if the contract had been
properly awarded.

(B) In addition to the amount specified in subparagraph (A), be
assessed a penalty in an amount of not more than 10 percent of
the amount of the contract involved.

(C) Be ineligible to transact any business with the state for a
period of not less than three months and not more than 24 months.

Prior to imposition of any sanction under this chapter, the
contractor or vendor shall be entitled to a public hearing and to
five days’ notice of the time and place thereof. The notice shall
state the reasons for the hearing.

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