BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 413|
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THIRD READING
Bill No: AB 413
Author: Chávez (R), et al.
Amended: 6/30/15 in Senate
Vote: 21
SENATE VETERANS AFFAIRS COMMITTEE: 5-0, 6/23/15
AYES: Nielsen, Hueso, Allen, Nguyen, Roth
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/27/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 78-0, 5/14/15 (Consent) - See last page for
vote
SUBJECT: California Disabled Veteran Business Enterprise
Program California Disabled Veteran Business
Enterprise Program.
SOURCE: Author
DIGEST: This bill amends the Disabled Veteran Business
Enterprise (DVBE) program by authorizing that following the
death or permanent disability of the disabled veteran majority
owner of a certified DVBE, a surviving spouse or child may enter
into additional state contracts during the three-year period
following the death or disability, provided that the contracts
can be completed within the three-year period.
ANALYSIS:
Existing law:
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1)Establishes the DVBE program for the purposes of addressing
the special needs of disabled veterans seeking rehabilitation
and training through entrepreneurship, and recognizing the
sacrifices California's disabled veterans made during their
military service.
2)Establishes an annual 3% DVBE procurement participation goal
for each state agency, department, and officer that enters
into a contract for materials, supplies, equipment,
alteration, repair, or improvement.
3)Designates the Department of General Services (DGS) as the
administering agency for the DVBE program, including managing
the certification of individual DVBE firms.
4)Establishes criteria for certification eligibility, including
ownership and operation by one or more disabled veterans, as
defined.
5)Extends "certified DVBE" status to the spouse or child of a
disabled veteran majority owner, upon the owner's death or
upon receipt of certification of the owner's permanent medical
disability, for up to three years for the sole purpose of
completing any contracts entered into prior to the owner's
death or certification.
This bill:
1)Authorizes - following the death or permanent disability of
the disabled veteran majority owner of a certified DVBE - a
surviving spouse or child to enter into additional state
contracts during the three year period following the death or
disability, provided that the contracts can be completed
within the three-year period.
2)Offers intent language and makes findings and declarations:
a) It is the intent of the Legislature that the
certification created by this act not conflict with the
intended purpose of the DVBE program, which is, as stated
in subdivision (a) of Section 999 of the Military and
Veterans Code (MVC), "to address the special needs of
disabled veterans seeking rehabilitation and training
through entrepreneurship and to recognize the sacrifices of
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Californians disabled during military service."
b) Allowing any person who is not a "disabled veteran," as
defined in paragraph (6) of subdivision (b) of Section 999
of the MVC, to perform the role of a "disabled veteran"
within the DVBE 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.
c) The spouse or child of disabled veterans 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.
d) 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.
e) It is the intent of the Legislature that the
certification created by this act shall not establish any
business advantage other than to permit certain family
members 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.
Background
California is home to nearly two million of the nation's 22
million veterans. Many are disabled and would qualify to
participate as DVBE entrepreneurs. The demographics of the
state's veteran population is changing rapidly due to the
passing away of older generations and new growth generated by
the ongoing downsizing our nation's active duty armed forces.
Many of the newer, younger veterans have disabilities from
serving in the conflicts in Iraq and Afghanistan or other
service-connected causes.
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The program's purpose and philosophical orientation are
established in MVC Section 999(a):
The DVBE 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.
Ownership and operation. Under existing law, a DVBE must meet
certain standards in order to be certified by DGS, including the
following requirements for ownership and operation:
1)Ownership:
a) Sole proprietorship: At least 51% owned by one or more
disabled veterans;
b) Publicly owned business: At least 51% of its stock
unconditionally owned by one or more disabled veterans;
c) Subsidiary that is wholly owned by a parent corporation:
Only if at least 51% of the voting stock of the parent
corporation is unconditionally owned by one or more
disabled veterans; or
d) Joint venture: At least 51% of the joint venture's
management, control, and earnings are held by one or more
disabled veterans.
2)Control and Operation:
a) 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.
b) It has a home office located in the U.S., which is not a
branch or subsidiary of a foreign corporation, foreign
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firm, or other foreign-based business.
Survivorship. Existing law provides that, if the disabled
veteran majority owner dies or incurs a permanent medical
disability, an inheriting spouse and/or child may retain the
firm's certification and continue to operate as a DVBE for three
years, for the sole purpose of fulfilling the terms of any
contract entered into prior to the disabled veteran's death or
permanent disability. However, the spouse/child certification
may not be used to enter into any new contracts during the
three-year period.
The above provision was added via AB 409 (Dickerson, Chapter
767, Statutes of 1999) due to concerns about the fate of the
veteran's spouse, who, in most cases, relies totally or
primarily on the income generated the DVBE operation.
Related/Prior Legislation
AB 409 (Dickerson, Chapter 767, Statutes of 1999) requires (1)
that certification of a DVBE be continued for up to three years
after the death or certification of permanent medical disability
of the disabled veteran owning the enterprise; and (2) that the
California Department of Veterans Affairs appoint an advocate,
who would be responsible for overseeing implementation of the
bill and general DVBE participation goals in state contracting.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
The aggregate impact of this bill on state contracts is
unknown, and would reflect various factors. Some of these
factors would potentially increase state costs, while others
would likely lead to a reduction in state costs.
DGS would incur minor and absorbable costs related to
rulemaking.
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SUPPORT: (Verified 8/27/15)
American Legion - Department of California
AMVETS - Department of California
California Asian Pacific Chamber of Commerce
California Association of County Veterans Service Officers
California State Commanders Veteran Council
Military Officers Association of America - California Council of
Chapters
Veterans of Foreign Wars - Department of California
Vietnam Veterans of American - California State Council
Numerous individual DVBEs
OPPOSITION: (Verified8/27/15)
DVBE Investigations
Service Disabled Veteran Owned Small Businesses Network
Numerous individual DVBEs
ARGUMENTS IN SUPPORT: According to the author, this bill does
not expand the program, but merely provides the surviving,
eligible spouse/child with time and ability to generate enough
cash flow for the spouse/child to transform the business model,
sell the business, close the business down, or otherwise dispose
of it.
ARGUMENTS IN OPPOSITION:Opponents say that this bill, by
allowing the inheriting spouse/child to enter into new contracts
during the three-year period, places them into direct
competition with other DVBEs owned by fully eligible disabled
veterans, which is inconsistent with the program purpose.
ASSEMBLY FLOOR: 78-0, 5/14/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low,
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Maienschein, Mathis, Mayes, McCarty, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Linder, Medina
Prepared by:Wade Cooper Teasdale / V.A. / (916) 651-1503
8/30/15 19:42:11
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