BILL ANALYSIS Ó
AB 2844
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Cristina Garcia, Chair
AB 2844
(Bloom) - As Amended April 12, 2016
SUBJECT: Public contracts: California Combating the Boycott,
Divestment, and Sanctions of Israel Act of 2016
SUMMARY: Prohibits a public entity from contracting with a
company that is participating in a boycott of Israel, as
specified. Specifically, this bill:
1)Makes a number of legislative findings and declarations,
including the following:
a) California and Israel have established collaborative
partnerships in a variety of subject areas;
b) Boycotts of Israel by companies doing business in
California undermine the policy and purpose of encouraging
trade, business, and academic cooperation between
California and Israel; and,
c) The provisions of this bill address the political nature
of contracting with a company that is participating in the
boycott of Israel and the need for the government of
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California to respond to the policies of Israel in a
uniform fashion.
2)Prohibits companies identified as engaging in a boycott of
Israel, as specified, from bidding on, submitting a proposal
for, or entering into or renewing a contract with a public
entity for goods, services, information technology or
construction.
3)Requires the Department of General Services (DGS) to develop,
or contract to develop, a list of companies it determines are
engaging in a boycott of Israel, using information from a
federal report containing a list of companies that have
decided to boycott Israel.
4)Requires DGS to update the list every 180 days.
5)Requires DGS to provide a company with 90 days written notice
of its intent to include the company on the list compiled in
3) above and to provide an opportunity for the company to
subsequently appeal its inclusion on the list, as specified.
6)Directs DGS to make every effort to avoid erroneously
including a company on the list.
7)Directs public entities to require prospective companies to
certify that they are not on the list, as specified.
8)Provides that if the awarding entity determines that a company
has submitted a false certification, the company shall be
subject to civil penalties, termination of existing contracts,
and ineligible to bid on contracts for the next three years.
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9)Specifies that this bill does not create or authorize a
private right of action or enforcement of the penalties
prescribed in this bill.
10)Defines "boycott Israel" or "boycott of Israel" to mean
refusing to deal with, terminating business activities with,
or taking other actions that are intended to penalize, inflict
economic harm, or otherwise limit commercial relations with
Israel or persons or entities incorporated in Israel or doing
business in Israel for reasons other than business,
investment, or commercial reasons.
11)Excludes from the definition of "boycott" the following:
a) A decision based on business or economic reasons; or,
b) Termination or prohibition of commercial activity within
a particular jurisdiction that is required by federal or
state law.
12)Exempts from the provisions of this bill the following:
a) Contracts valued under $10,000; and,
b) Contracts for which the state agency makes a formal
written determination that there is only one source that
can provide the goods or services the entity requires to
perform its functions from the provisions of this bill.
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EXISTING LAW:
1)Requires the President of the United States, under federal
H.R.644 (Public Law 114-125), known as the Trade Facilitation
and Trade Enforcement Act of 2015, to submit a report to
Congress, by August 2016, that lists foreign companies,
including corporate entities and state-affiliated financial
institutions, that have decided to limit or prohibit economic
relations with Israel or persons doing business in Israel or
in any territory controlled by Israel.
2)Establishes, pursuant to AB 1650 (Feuer), Chapter 573,
Statutes of 2010, the Iran Contracting Act which prohibits all
public entities in the state from renewing or entering into
contracts of $1 million or more with companies identified by
DGS that have substantial business in Iran's energy sector.
3)Requires DGS to develop, or contract to develop, a list of
companies with energy activities in Iran that are prohibited
from contracting with public agencies in California.
4)Creates, pursuant to AB 498 (Hernandez), Chapter 272, Statutes
of 2008, the Darfur Contracting Act which generally precludes
state agencies from contracting with "scrutinized" companies
that do business in the African nation of Sudan, of which the
Darfur region is a part.
5)Defines a "scrutinized company" as a company in Sudan that is
involved in power production activities, mineral extraction
activities, oil-related activities, or the production of
military equipment, with specified exceptions.
FISCAL EFFECT: Unknown
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COMMENTS: This bill seeks to impose a state contracting ban
against companies involved in boycotting Israel for
non-commercial or non-economic reasons. According to the
author, this bill "asserts the State's right and responsibility
of doing business with fiscally stable firms which are able to
fulfill the duties, demands, and obligations of a contract with
the State. Firms that prioritize arbitrary and discriminatory
economic interests put the State and its fiduciary obligations
at risk. This bill manages and mitigates that risk by
protecting the State from doing business with fiscally unstable
firms."
Under current law, companies involved in specified business
activities in Iran or Sudan are banned from entering into
contracts with state entities for goods and services and a
prospective bidder is required to certify that his or her
company is not engaged in such activities. Companies must be
given written notice of their right to challenge their
disqualification for prohibited activities and those that cease
the prohibited activities are fully eligible to contract with
the state and other public entities. Companies that are found
by an awarding entity to have submitted a false certification
incur civil penalties, face termination of the contract, and are
deemed ineligible to bid on public contracts for three years.
DGS is required to create and maintain a list of companies with
business activities in Iran's energy sector that are prohibited
from contracting with public entities in California "using
credible information available to the public," as specified in
the Iran Contract Act. The list currently identifies 21
companies. To enforce the Darfur Contracting Act, DGS includes
a form in bidding documents that requires prospective bidders to
certify that their company is not a scrutinized company doing
business in Sudan. Scrutinized companies are ineligible to, and
cannot bid on, or submit a proposal for, a contract with a state
agency.
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This bill would apply the contract prohibitions and bidder
certification requirements in current law to companies involved
in a boycott of Israel. Rather than task DGS with compiling a
list of prohibited companies based on 'credible public
information', this bill would direct DGS to reference the
federal list required by H.R. 644.
The current state contracting bans were enacted under specific
circumstances against two countries with well-documented human
rights violations. The foreign policy surrounding this
particular bill is more contentious and remains subject to
intense debate. The Committee may wish to consider whether it
is appropriate for the State of California to take any action at
this time given the ongoing international controversy.
RELATED LEGISLATION: AB 1552 (Allen), pending in the Assembly
Rules Committee, prohibits state and local government entities
from entering into contracts with businesses that engage in
boycotts of a person or entity based on the race, color,
religion, gender, or nationality of the targeted person or
entity.
DOUBLE REFERRAL: This bill has been double referred. Should it
pass this committee, it will be referred to the Assembly
Judiciary Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
30 Years After
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Agudath Israel of California
Alpha Epsilon Pi Fraternity, Inc.
Alpha Epsilon Pi, California Polytechnic State University, San
Luis Obispo
Alpha Epsilon Pi, Chapman University
Alpha Epsilon Pi, Claremont Colleges
Alpha Epsilon Pi, CSU, Chico
Alpha Epsilon Pi, CSU, Fullerton
Alpha Epsilon Pi, CSU, Northridge
Alpha Epsilon Pi, CSU, San Jose
Alpha Epsilon Pi, UC Berkeley
Alpha Epsilon Pi, UC Davis
Alpha Epsilon Pi, UC Irvine
Alpha Epsilon Pi, UCLA
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Alpha Epsilon Pi, UC Riverside
Alpha Epsilon Pi, UC Santa Cruz
Alpha Epsilon Pi, UC Santa Barbara
Alpha Epsilon Pi, UC San Diego
Alpha Epsilon Pi, San Diego State University
Alpha Epsilon Pi, San Francisco State University
American Jewish Committee
California Teamsters Public Affairs Council
Chabad of San Diego State University
Democrats for Israel Los Angeles
Israeli-American Council
Israeli-American Nexus
Jewish Public Affairs Committee of California
Simon Wiesenthal Center
StandWithUs
Opposition
Center for Constitutional Rights
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Israel/Palestine Task Force of the California Nevada Conference
of United Methodists
National Lawyers Guild
Palestine Legal
Analysis Prepared by:Cassie Royce / A. & A.R. / (916) 319-3600