AB 2270, as introduced, Bonta. Public contracts: business development: statewide bonding program.
Existing law requires that public contracts with state agencies provide for the filing of separate performance and payment bonds by the contractor in the form of bonds executed by an admitted surety insurer, as provided.
This bill would establish, in the Department of General Services, a statewide contractor bonding program, to be administered by the Office of Small Business and Disabled Veteran Business Enterprise Services, for the purpose of enabling participating contractors to meet any applicable bid, payment, or performance bonding requirements for public contracts with state agencies. This bill would authorize the office to act as guarantor on surety bonds for participating contractors on contracts with state agencies and require the office to provide specified technical assistance to participating contractors. The bill would authorize the office to charge participating contractors fees for the provision of these services, not to exceed the amount necessary to cover the costs incurred in the administration of these provisions.
This bill would require the office to establish a request for the proposals process by which contractors may participate in the program as a participating contractor and to give preference to contractors that are disadvantaged business enterprises, small business enterprises, or disabled veteran business enterprises, as specified. The bill would authorize the office to terminate a contractor’s participation after a reasonable period of time if the contractor is no longer in compliance with the requirements of the program or suspend a participating contractor that defaults on a bond from transacting any business with the state for a period of not less than 3 years and not more than 10 years.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Article 3 (commencing with Section 14848) is
2added to Chapter 6.5 of Part 5.5 of Division 3 of Title 2 of the 3Government Code, to read:
4
As used in this article, the following definitions shall
8apply:
9(a) “Office” means the Office of Small Business and Disabled
10Veteran Business Enterprise Services established within the
11department pursuant to Section 14839.
12(b) “Program” means the statewide contractor bonding program
13established pursuant to this chapter.
14(c) “Participating contractor” means a person seeking to bid on
15a contract with a state agency that is required by law, including,
16but not limited to, Sections 10221 to 10225, inclusive, of the Public
17Contract Code, to acquire bonds to participate in those contracts
18and participate in the
program.
There is in the department a statewide contractor
20bonding program for the purpose of enabling participating
21contractors to meet any applicable bid, payment, or performance
22bonding requirements for public contracts with state agencies. The
23office shall be the entity to administer this program.
The office may act as guarantor on a surety bond
25for a participating contractor on a contract with a state agency.
(a) The office shall establish a request for proposals
2process by which contractors may participate in the program as
3participating contractors pursuant to this chapter.
4(b) In considering requests for proposals for assistance pursuant
5to this article, the department shall give preference to contractors
6that are any of the following:
7(1) A disadvantaged business enterprise, as defined in Section
82051 of the Public Contract Code.
9(2) A small business enterprise certified pursuant to Article 1
10(commencing with Section 14835).
11(3) A disabled veteran
business enterprise, as defined in Section
12999 of the Military and Veterans Code.
13(c) (1) The office may terminate a contractor’s participation in
14the program after a reasonable period of time if the contractor is
15no longer in compliance with the requirements of the program.
16(2) The office may suspend a participating contractor that
17defaults on a bond issued pursuant to this article from transacting
18any business with the state either directly as a prime contractor or
19indirectly as a subcontractor, for a period of not less than three
20years and not more than 10 years. A contractor that was previously
21a participating contractor but was suspended pursuant to this
22paragraph may resume participation in the bonding program at the
23end of his or her suspension upon approval by the office.
The office shall provide technical assistance to a
25participating contractor. Technical assistance provided pursuant
26to this section shall include, but is not limited to, all of the
27following:
28(a) Assessment and identification of the particular barriers facing
29the participating contractor and development of solutions to those
30barriers. Activities pursuant to this subdivision may include the
31following:
32(1) Assessments by surety and construction experts.
33(2) Development of a business plan.
34(3) Workshops addressing the following topics:
35(A) Basic information pertaining to contractor bonding.
36(B) Understanding the surety process and underwriting.
37(C) The process for bidding on state projects.
38(D) Addressing stop notices.
39(E) Strategies for accessing capital.
40(F) Prevailing wages.
P4 1(G) Job safety and the Occupational Safety and Health
2Administration.
3(H) Certification.
4(I) Any other topics that would be beneficial to the participating
5contractor.
6(4) Project field support.
7(b) Identification of and assistance in obtaining other financial
8support and resources. Activities pursuant to this subdivision may
9include the following:
10(1) Linkages with accountants, brokers, and surety companies
11committed to helping contractors build bonding and organizational
12capacity.
13(2) Pre-qualifications for additional assistance.
14(3) Collateral guarantees.
15(c) Monitoring and reporting on the progress of the participating
16contractor, including the following:
17(1) Collaboration with other programs.
18(2) Progress on any project for which a bond is issued pursuant
19to this article.
20(3) Defaults on a bond issued pursuant to this article.
21(4) Funds administration. Notwithstanding subdivision (b) of
22Section 14848.50, the office shall not charge a participating
23contractor fees for the purpose of this paragraph.
(a) The department shall adopt rules and regulations
25necessary to implement the provisions of this article.
26(b) The office may charge a participating contractor fees for the
27provision of services pursuant to this article. The fees shall not
28exceed the amount necessary to cover the costs incurred in the
29administration of this article.
Section 10221 of the Public Contract Code is amended
31to read:
Every contract shall provide for the filing of separate
33performance and payment bonds by the contractor in the form of
34bonds executed bybegin insert eitherend insert an admitted surety insurerbegin insert or the Office
35of Small Business and Disabled Veteran Business Enterprise
36Services pursuant to Section 14848.20 of the Government Codeend insert
37 and not deposits in lieu of bond, subject to the approval of the
38department.
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