Amended in Senate July 7, 2015

Amended in Assembly April 23, 2015

Amended in Assembly April 14, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1218

Introduced by Assembly Member Weber

(Principal coauthor: Assembly Member Eduardo Garcia)

begin insert

(Principal coauthor: Senator Nielsen)

end insert begin insert

(Coauthor: Assembly Member Kim)

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February 27, 2015

An act to amend Sections 999.1, 999.2, 999.5, and 999.12 begin delete of end delete begin insert of, and to add Section 999.4 to, end insert the Military and Veterans Code, and to amend Section 10111 of the Public Contract Code, relating to public contracts.

LEGISLATIVE COUNSEL’S DIGEST

AB 1218, as amended, Weber. Public contracts: disabled veteran business enterprise.

Existing law requires a state agency, department, officer, or other state governmental entity, to meet an annual statewide participation goal of not less than 3% for disabled veteran business enterprises for specified contracts entered into by the awarding department during the year. The administering agency for the California Disabled Veteran Business Enterprise Program is the Department of General Services. Existing law requires the Director of General Services to adopt written policies and guidelines establishing a uniform process for state contracting that provides a disabled veteran business enterprise participation incentive to bidders.

This bill would require a greater participation incentive to be provided to a prime contractor who owns a disabled veteran business enterprise, as specified, begin insert and has not previously entered into any contracts with the state as a prime contractor, end insert and to a disabled veteran business enterprise that employs a workforce that is more than 50% veterans or that has not previously entered into any contracts with the state. begin insert The bill would require an awarding department to consider whether greater disabled veteran business enterprise participation in excess of 3% should be required on its contracts. end insert

Existing law requires the Department of Veterans Affairs to maintain complete records of its promotional efforts to promote the program and to establish a system to track the effectiveness of its promotional efforts.

This bill would require the department to maintain additional information relating to its promotional efforts, as specified.

Existing law requires a prime contractor who entered into a subcontract with a disabled veteran business enterprise to make certain disclosures to the awarding department after completion of the contract.

This bill would require the awarding department that receives this information to maintain those records for a minimum of 5 years, as specified. The bill would require every awarding department to establish a procedure to ensure the accuracy and completeness of those records. begin insert The bill would further require a contractor who subcontracts with disabled veteran business enterprises to comply with additional requirements when providing its certification of expenditures to an awarding department, as specified. end insert

Existing law requires each awarding department to appoint an agency Disabled Veteran Business Enterprise Program Advocate. Existing law requires the agency Disabled Veteran Business Enterprise Program Advocate to, among other things, assist certified disabled veteran business enterprises in participating in that agency’s contracting process.

This bill would additionally require the advocate to maintain records of the promotional efforts hosted or attended by the advocate, as specified.

Existing law requires a department, as defined under the State Contract Act, to report on contracting activity containing specified information.

This bill would require a department, as defined, to establish guidelines for reporting multiyear contracts. The bill would make other minor, technical changes to the reporting requirements under the program.

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 999.1 of the Military and Veterans Code
is amended to read:

999.1.  

(a) (1) Notwithstanding any other law, each awarding
department shall have annual statewide participation goals of not
less than 3 percent for disabled veteran business enterprises for
contracts entered into by the awarding department during the year
for professional bond services. This section shall not apply if a
contract for professional bond services of an underwriter is to be
obtained by competitive bid. However, each awarding department
shall establish goals for contracts to be obtained by competitive
bid for professional bond services.

(2) These goals shall apply to the overall dollar amount begin delete awarded
and end delete expended by the awarding department with respect to the
contracts for professional bond services relating to the issuance of
bonds by the awarding department, including amounts spent as
underwriter’s discounts.

(b) In attempting to meet the goals set forth in subdivision (a),
the awarding department shall consider establishing cocounsel,
joint venture, and subcontracting relationships, including disabled
veteran business enterprises, in all contracts for professional bond
services. It shall be the responsibility of the head of each awarding
department to be supportive of the Treasurer’s program for
assigning representative portions of professional bond services
contracts for purposes of meeting the goals established pursuant
to this section. However, nothing in this article shall preclude the
awarding department from achieving the goals set forth in this
section without requiring joint ventures, cocounsel, or
subcontracting arrangements.

(c) This section shall not limit the ability of any awarding
department to meet a goal higher than those set forth in subdivision
(a) for the participation of disabled veteran business enterprises
in contracts awarded by the awarding department.

begin insert

(d) In order to meet the 3-percent annual goal set forth in
paragraph (1) of subdivision (a), an awarding department shall
consider whether greater disabled veteran business enterprise
participation in excess of 3 percent should actually be required
on contracts entered into pursuant to this section for professional
bond services.

end insert

SEC. 2.  

Section 999.2 of the Military and Veterans Code is
amended to read:

999.2.  

(a) Notwithstanding any other law, contracts awarded
by any 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 have statewide participation goals of not less than 3 percent
for disabled veteran business enterprises. These goals apply to the
overall dollar amount begin delete awarded and end delete expended each year by the
awarding department.

(b) For purposes of this section:

(1) “Broker” or “agent” means any individual or entity, or any
combination thereof, that does not have title, possession, control,
and risk of loss of materials, supplies, services, or equipment
provided to an awarding department, unless one or more certified
disabled veterans has 51-percent ownership of the quantity and
value of the materials, supplies, services, and of each piece of
equipment provided under the contract.

(2) “Equipment” means any piece of equipment that is used or
provided for rental to any state agency, department, officer, or
other state governmental entity, including equipment for which
operators are provided.

(3) “Equipment broker” means any broker or agent who rents
equipment to an awarding department.

(c) A disabled veteran business enterprise that rents equipment
to an awarding department shall be deemed to be an equipment
broker unless one or more disabled veterans has 51-percent
ownership of the quantity and the value of each piece of equipment.
If the equipment is owned by one or more disabled veterans, each
disabled veteran owner shall, prior to performance under any
contract, submit to the awarding department a declaration signed
by the disabled veteran owner stating that the owner is a disabled
veteran and providing the name, address, telephone number, and
tax identification number of the disabled veteran owner. Each
disabled veteran owner shall submit his or her federal income tax
returns to the administering agency pursuant to subdivision (g) as
if he or she were a disabled veteran business enterprise. The
disabled veteran business enterprise of a disabled veteran owner
who fails to submit his or her tax returns will be deemed to be an
equipment broker.

(d) A disabled veteran business enterprise that rents equipment
to an awarding department shall, prior to performing the contract,
submit to the awarding department a declaration signed by each
disabled veteran owner and manager of the enterprise stating that
the enterprise obtained the contract by representing that the
enterprise was a disabled veteran business enterprise meeting and
maintaining all of the requirements of a disabled veteran business
enterprise. The declaration shall include the name, address,
telephone number, and tax identification number of the owner of
each piece of equipment identified in the contract.

(e) State funds expended for equipment rented from equipment
brokers pursuant to contracts awarded under this section shall not
be credited toward the 3-percent goal.

(f) A disabled veteran business enterprise that is a broker or
agent and that obtains a contract pursuant to subdivision (a) shall,
prior to performing the contract, disclose to the awarding
department that the business is a broker or agent. The disclosure
shall be made in a declaration signed and executed by each disabled
veteran owner and manager of the enterprise, declaring that the
enterprise is a broker or agent, and identifying the name, address,
and telephone number of the principal for whom the enterprise is
acting as a broker or agent.

(g) (1) A disabled veteran business enterprise, and each owner
thereof, shall, at the time of certification, submit to the
administering agency complete copies of the enterprise’s federal
income tax returns for the three previous tax years.

(2) A disabled veteran business enterprise, and each owner
thereof, shall submit to the administering agency complete copies
of the enterprise’s federal income tax returns that have a
postcertification due date, on or before the due date, including
extensions.

(3) A disabled veteran business enterprise that, and each owner
thereof who, has not submitted to the administering agency
complete copies of the enterprise’s federal income tax returns for
the three tax years preceding certification nor for each
postcertification tax year for which a return was required to be
filed, shall have 90 days to submit those returns.

(4) A disabled veteran business enterprise that fails to comply
with any provision of this subdivision shall be prohibited from
participating in any state contract until the disabled veteran
business enterprise complies with the provisions of this subdivision.
Funds expended involving a disabled veteran business enterprise
during any period in which that enterprise is not in compliance
with the provisions of this subdivision shall not be credited toward
the awarding department’s 3-percent goal.

(h) A disabled veteran business enterprise that fails to maintain
the certification requirements set forth in this article shall
immediately notify the awarding department and the administering
agency of that failure by filing a notice of failure that states with
particularity each requirement the disabled veteran business
enterprise has failed to maintain.

begin insert

(i) In order to meet the 3-percent annual goal set forth in
subdivision (a), an awarding department shall consider whether
greater disabled veteran business enterprise participation in excess
of 3 percent should actually be required on contracts entered into
pursuant to this section for goods and services.

end insert

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begin insert SEC. 3. end insert   

end insert

begin insert Section 999.4 is added to the end insert begin insert Military and Veterans
Code end insert begin insert , to read: end insert

begin insert

begin insert 999.4. end insert   

A contractor that is not a disabled veteran business
enterprise that subcontracts with disabled veteran business
enterprises pursuant to this article shall, when submitting its
certification of expenditures to the awarding department, comply
with either of the following:

(a) Provide on the certification of expenditures to the awarding
department, the signature of any disabled veteran business
enterprise that performed work for the contractor acknowledging
the authenticity of the expenditures.

(b) Provide the certification of expenditures to any disabled
veteran business enterprise that performed work for the contractor
and proof of any amount of expenditures provided to that
subcontractor, such as by providing copies of checks issued to the
subcontractor or wire transfer notices.

end insert

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Section 999.5 of the Military and Veterans Code is
amended to read:

999.5.  

(a) The administering agency for the California Disabled
Veteran Business Enterprise Program is the Department of General
Services, except in the case of contracts for professional bond
services. The Department of General Services shall consult with
the California Disabled Veteran Business Enterprise Program
Advocate, appointed by the Secretary of the Department of
Veterans Affairs pursuant to Section 999.11, on all matters relating
to the California Disabled Veteran Business Enterprise Program.

(b) (1) The Director of General Services shall adopt written
policies and guidelines establishing a uniform process for state
contracting that would provide a disabled veteran business
enterprise participation incentive to bidders. Pursuant to that
process, a greater participation incentive shall be provided to the
following:

(A) A prime contractor who owns a disabled veteran business
enterprise begin insert and who has not previously entered into any contracts
with the state as a prime contractor, end insert rather than to a prime
contractor who commits to entering into subcontracts with disabled
veteran business enterprises.

(B) A disabled veteran business enterprise that employs a
workforce that is more than 50 percent veterans.

(C) A disabled veteran business enterprise that has not
previously entered into any contracts with the state.

(2) The incentive program shall be used by all state agencies
when awarding contracts.

(c) The Department of Veterans Affairs shall do all of the
following:

(1) Establish a method of monitoring adherence to the goals
specified in Sections 999.1 and 999.2.

(2) Promote the California Disabled Veteran Business Enterprise
Program to the fullest extent possible.

(3) Maintain complete records of its promotional efforts,
including a list that identifies the name, location, number, and type
of businesses by size and industry sector attending or participating
in a promotional effort.

(4) Establish a system to track the effectiveness of its efforts to
promote the California Disabled Veteran Business Enterprise
Program, which shall, at a minimum, include an annual comparison
of the list of businesses participating in promotional efforts during
the current and prior two years with the list of those businesses
that become newly certified as disabled veteran business enterprises
and those businesses that become a prime contractor or
subcontractor with the state under the program. The result of the
annual comparison shall be one performance measure as to the
success of the promotional activities.

(d) An awarding department shall not credit toward the
department’s 3-percent goal state funds expended on a contract
with a disabled veteran business enterprise that does not meet and
maintain the certification requirements.

(e) Upon completion of an awarded contract for which a
commitment to achieve a disabled veteran business enterprise goal
was made, an awarding department shall require the prime
contractor that entered into a subcontract with a disabled veteran
business enterprise to certify to the awarding department all of the
following:

(1) The total amount the prime contractor received under the
contract.

(2) The name and address of the disabled veteran business
enterprise that participated in the performance of the contract.

(3) The amount each disabled veteran business enterprise
received from the prime contractor.

(4) That all payments under the contract have been made to the
disabled veteran business enterprise. An awarding department shall
keep that certification on file. A person or entity that knowingly
provides false information shall be subject to a civil penalty for
each violation in the minimum amount of two thousand five
hundred dollars ($2,500) and the maximum amount of twenty-five
thousand dollars ($25,000). An action for a civil penalty under this
subdivision may be brought by any public prosecutor in the name
of the people of the State of California and the penalty imposed
shall be enforceable as a civil judgment.

(f) An awarding department shall maintain records of the
information provided by the prime contractor pursuant to
subdivision (e), including, but not limited to, the name of the prime
contractor and subcontractors under subdivision (e) and the amount
awarded to, and the amount paid to, each prime contractor and
subcontractor under subdivision (e). Awarding departments shall
establish review procedures to ensure the accuracy and
completeness of the award amounts and the paid amounts reported.

(g) A prime contractor may, subject to the approval of the
Department of General Services, replace a disabled veteran
business enterprise identified by the prime contractor in its bid or
offer, pursuant to subdivision (a) of Section 999.10, with another
disabled veteran business enterprise.

(h) The administering agency shall adopt rules and regulations,
including standards for good faith efforts, for the purpose of
implementing this section. Emergency regulations consistent with
this section may be adopted.

(i) The records collected and maintained pursuant to subdivision
(f) shall be retained for a minimum of five years after collection.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section 999.12 of the Military and Veterans Code is
amended to read:

999.12.  

Each awarding department shall appoint an agency
Disabled Veteran Business Enterprise Program Advocate. This
person shall be the same individual appointed pursuant to Section
14846 of the Government Code. The agency Disabled Veteran
Business Enterprise Program Advocate shall do all of the
following:

(a) Assist certified disabled veteran business enterprises in
participating in that agency’s contracting process.

(b) Assist contract officers in seeking disabled veteran business
enterprises to participate in the agency’s contract and procurement
activities by performing outreach efforts to recruit disabled veteran
business enterprises to offer their services as either a prime
contractor or subcontractor on any contract proposed by the
awarding department that requires disabled veteran business
enterprise participation, and by other feasible means.

(c)  Meet regularly with the California Disabled Veteran
Business Enterprise Program Advocate and contract and
procurement staffs of their departments to disseminate information
about the California Disabled Veteran Business Enterprise
Program.

(d) Serve as an advocate for the disabled veteran business
enterprises that are utilized as the agency’s contractors or
subcontractors.

(e) Report to the Office of Small Business and Disabled Veteran
Business Enterprise Services regarding any violation of this article.

(f) Coordinate and meet, on a regular basis, with the California
Disabled Veteran Business Enterprise Program Advocate at the
Department of Veterans Affairs in an effort to meet the statewide
3-percent goal provided for in Section 999.2.

(g) Maintain records of the promotional efforts hosted by, or
attended by, the advocate, including, but not limited to, a list that
identifies the name, location, number, and type of businesses by
size and industry sector attending or participating in an event. The
record shall also indicate any specific outcomes from the
promotional event, including, but not limited to, the number of
disabled veteran business enterprises who were certified and which
disabled veteran business enterprises entered in a state contract as
either a prime contractor or subcontractor for a contract awarded
by his or her agency within the two years following the promotional
efforts hosted or attended by the advocate.

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

Section 10111 of the Public Contract Code is amended
to read:

10111.  

Commencing January 1, 2007, the department shall
make available a report on contracting activity containing the
information in subdivisions (a) to (f), inclusive:

(a) A listing of consulting services contracts that the state has
entered into during the previous fiscal year. The listing shall
include the following:

(1) The name and identification number of each contractor.

(2) The type of bidding entered into, the number of bidders,
whether the low bidder was accepted, and if the low bidder was
not accepted, an explanation of why another contractor was
selected.

(3) The amount of the contract price.

(4) Whether the contract was a noncompetitive bid contract,
and why the contract was a noncompetitive bid contract.

(5) Justification for entering into each consulting services
contract.

(6) The purpose of the contract and the potential beneficiaries.

(7) The date when the initial contract was signed, and the date
when the work began and was completed.

(b) The report shall also include a separate listing of consultant
contracts completed during that fiscal year, with the same
information specified in subdivision (a).

(c) The information specified in subdivisions (a) and (b) shall
also include a list of any contracts underway during that fiscal year
on which a change was made regarding the following:

(1) The completion date of the contract.

(2) The amount of money to be received by the contractor, if it
exceeds 3 percent of the original contract price.

(3) The purpose of the contract or duties of the contractor. A
brief explanation shall be given if the change in purpose is
significant.

(d) The level of participation, by agency, of disabled veteran
business enterprises as a prime contractor or a subcontractor in
statewide contracting and the dollar values of contract award and
the amount of the contract paid for the following categories:

(1) Construction.

(2) Architectural, engineering, and other professional services.

(3) Procurement of materials, supplies, and equipment.

(4) Information technology procurements.

Additionally, the report shall include a statistical summary
detailing each awarding department’s goal achievement and a
statewide total of those goals.

(e) The level of participation by small business in state
contracting including:

(1) Upon request, an up-to-date list of eligible small business
bidders by general procurement and construction contract
categories, noting company names and addresses and also noting
which small businesses also qualify as microbusinesses.

(2) By general procurement and construction contract categories,
statistics comparing the small business and microbusiness contract
participation dollars to the total state contract participation dollars.

(3) By awarding department and general procurement and
construction categories, statistics comparing the small business
and microbusiness contract participation dollars to the total state
contract participation dollars.

(4) Any recommendations for changes in statutes or state
policies to improve opportunities for small businesses and
microbusinesses.

(5) A statistical summary of small businesses and
microbusinesses certified for state contracting by the number of
employees at the business for each of the following categories:
0-5, 26-50, 51-75, and 76-100.

(6) To the extent feasible, beginning in the year 2008, the
number of contracts awarded by the department in the categories
specified in paragraph (5).

(7) The number of contracts and dollar amounts awarded
annually pursuant to Section 14838.5 of the Government Code to
small businesses, microbusinesses, and disabled veteran business
enterprises.

(f) The level of participation of business enterprises, by race,
ethnicity, and gender of the owner, in contracts to the extent that
the information has been voluntarily reported to the department.
In addition, the report shall contain the levels of participation of
business enterprises, by race, ethnicity, and gender of the owner,
and whether the business is a lesbian, gay, bisexual, or transgender
owned business for the following categories of contracts, to the
extent that the information has been voluntarily reported to the
department:

(1) Construction.

(2) Purchases of materials, supplies, or equipment.

(3) Professional services.

(g) The department shall establish guidelines for reporting
multiyear contracts.