BILL NUMBER: AB 413 CHAPTERED
BILL TEXT
CHAPTER 513
FILED WITH SECRETARY OF STATE OCTOBER 6, 2015
APPROVED BY GOVERNOR OCTOBER 6, 2015
PASSED THE SENATE SEPTEMBER 1, 2015
PASSED THE ASSEMBLY SEPTEMBER 2, 2015
AMENDED IN SENATE JUNE 30, 2015
AMENDED IN SENATE JUNE 16, 2015
AMENDED IN ASSEMBLY MAY 7, 2015
AMENDED IN ASSEMBLY MARCH 16, 2015
INTRODUCED BY Assembly Member Chávez
(Coauthors: Assembly Members Brough, Kim, and Mathis)
FEBRUARY 19, 2015
An act to amend Section 999 of the Military and Veterans Code,
relating to veterans.
LEGISLATIVE COUNSEL'S DIGEST
AB 413, Chávez. California Disabled Veteran Business Enterprise
Program.
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.
Existing law, under the program, authorizes a child or spouse to
continue to operate a disabled veteran business enterprise for 3
years after the death or the certification of a permanent medical
disability of a disabled veteran who was the majority owner of that
enterprise, but only for purposes of any contract entered into before
his or her death or certification of disability.
This bill would delete the provision that only allows a child or
spouse to operate the business for purposes of the contracts entered
into before death or certification of disability. The bill would
clarify the scope and purpose of the provision authorizing a child or
spouse to continue to operate a disabled veteran business enterprise
for 3 years after the death or the certification of a permanent
medical disability of a disabled veteran who was the majority owner
of that enterprise. The bill would also set forth a statement of
legislative intent.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) It is the intent of the Legislature that the
certification created by this act not conflict with the intended
purpose of the California Disabled Veteran Business Enterprise
Program, which is, as stated in subdivision (a) of Section 999 of the
Military and Veterans Code, "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."
(b) The Legislature finds and declares all of the following:
(1) Allowing a person who is not a "disabled veteran," as defined
in paragraph (6) of subdivision (b) of Section 999 of the Military
and Veterans Code, to perform the role of a "disabled veteran" within
the California Disabled Veteran Business Enterprise Program, would
conflict with the intended purpose of the program by placing that
person in competition with a "disabled veteran" for program benefits
intended to meet the special needs of disabled veterans.
(2) The spouse or child of a disabled veteran may participate in
the program without conflicting with the program's intended purpose,
if their participation is limited to either fulfilling existing
contracts or providing for the orderly and equitable disposition of a
certified disabled veteran business enterprise following the death
or permanent medical disability of the business' majority owner.
(3) Three years is sufficient time for the orderly and equitable
disposition of a certified disabled veteran business enterprise
following the death or permanent medical disability of the majority
owner.
(c) It is the intent of the Legislature that the certification
created by this act shall not establish any business advantage other
than to permit the spouse or child of the majority owner of a
disabled veteran business enterprise to temporarily control and fully
operate that business upon the death or permanent medical disability
of the majority owner.
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 a 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 a provider of professional
bond services who enters into a contract with an awarding
department.
(B) "Disabled veteran business enterprise contractor,
subcontractor, or supplier" means a person or entity that has been
certified by the administering agency pursuant to this article and
that performs a commercially useful function, as defined in clause
(i), 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, 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 the majority owner, or by both of those persons.
A business is a disabled veteran business enterprise pursuant to this
subparagraph under either of the following circumstances:
(i) For the duration of any contract entered into prior to the
death or certification of permanent medical disability for the sole
purpose of fulfilling the requirements of that contract.
(ii) After the date of the majority owner's death or certification
of permanent medical disability established by this subparagraph for
the sole purpose of providing sufficient time to make orderly and
equitable arrangements for the disposition of the business, except
that the business shall not enter into any new contract as a disabled
veteran business enterprise for purposes of the program if the
contract would not be completed within the three-year period.
(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.