BILL NUMBER: SB 944	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Escutia

                        FEBRUARY 23, 2001

   An act to add Section 7115 to the Public Contract Code, relating
to public contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 944, as introduced, Escutia.  Public contracts:  notice of
settlements.
   Under existing law, a contract involving a public entity is
voidable if it was entered into in violation of the prohibition
against public officials and employees participating in contracts in
which they have a financial interest.
   This bill would require a person, as defined, who contracts with a
public entity to disclose an obligation to pay $100,000 or more to
another public entity in connection with a settlement or judgment
involving a legal dispute with the other public entity, and would
permit the public entity to declare the contract void on that basis.
For contracts in existence prior to January 1, 2002, settlements or
other obligations of $100,000 or more with a public entity during the
preceding 5 years must be reported but are not a basis for the
public entity declaring the contract void.  The bill would also
authorize a public entity to void a contract for failure to give the
required notice.
   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 7115 is added to the Public Contract Code, to
read:
   7115.  A person who has a contract in effect with a public entity,
as defined by Section 1100, shall give notice to that public entity
whenever that person is obligated to pay one hundred thousand dollars
($100,000) or more to another public entity in connection with a
settlement or judgment involving a legal dispute with the other
public entity.
   (a) For any contract entered into on or after January 1, 2002, a
person subject to this section shall give notice to the public entity
within 30 days of entering into the settlement agreement or being
subject to an obligation described in subdivision (d).  Within one
year of receiving that notice, the public entity may, in its
discretion, declare the contract void.  The public entity may also
declare the contract void, in its discretion, within one year of the
discovery of the failure to give the notice required by this section.

   (b) (1) For any contract entered into prior to January 1, 2002,
that is in effect on that date, a person shall, by April 1, 2002,
give notice of all settlements and obligations described in
subdivision (d) subject to this section entered into or that occurred
in the preceding five years.
   (2) Except as provided in paragraph (3), a settlement or
obligation described in subdivision (d) entered into or that occurred
prior to January 1, 2002, may not be the basis for the public entity
declaring the contract void.
   (3) The public entity may declare the contract void, in its
discretion, within one year of April 1, 2002, for failure to give the
notice required by this section.
   (c) The notice required by this section shall be in writing and
sent by certified mail.
   (d) For purposes of this section, the following definitions apply:

   (1) "Settlement" means amounts of one hundred thousand dollars
($100,000) or more owed to a public entity pursuant to an agreement
under which the public entity gives up the right to pursue a civil or
criminal proceeding in exchange for the person's agreement to pay
the amount owed.  In determining the amount of the settlement,
amounts owed to the person by the public entity pursuant to a
contract may not be considered as offsets reducing the amount of the
settlement.
   (2) The amount the person is otherwise obligated to pay in
connection with a legal dispute includes a judgment for damages,
fines, or penalties in favor of the public entity that is obtained in
a judicial or arbitration proceeding.
   (3) "Person" means any individual, corporation, partnership,
business entity, joint venture, or association, or any other
organization or any combination thereof.
   (e) This section does not impose an obligation to report a
settlement of less than one hundred thousand dollars ($100,000).
   (f) The provisions of this section are in addition to, and do not
supersede, any other remedies provided by law or contract that are
consistent with this section.