BILL ANALYSIS
AB 177
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 177 (Ruskin and V. Manuel Perez)
As Amended August 11, 2010
Majority vote
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|ASSEMBLY: |67-0 |(January 25, |SENATE: |33-0 |(August 18, |
| | |2010) | | |2010) |
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Original Committee Reference: J., E.D. & E.
SUMMARY : Increases and conforms penalties for persons who
falsely engage in activities relating to the Small Business
Procurement and Contract Act (SBA), including small businesses,
microbusinesses, and disabled veteran-owned business enterprises
(DVBEs).
The Senate amendments :
1)Add specificity to the type of costs that are required to be
repaid to the state when certain fraudulent activities are
found to have occurred.
2)Require reimbursement of specified state costs as a
precondition to entering to any new state contracting
opportunities for any business found to have undertaken
certain fraudulent activities related to the SBA.
3)Make it unlawful to:
a) Willfully and knowingly make, or subscribe to, any
statement that is fraudulent or false, as specified;
b) Willfully and knowingly aid in, or procure, counsel, or
advise in, the preparation or presentation of a statement
that is fraudulent or false, as specified; and,
c) Establish or knowingly aid in the establishment of, or
exercise control over, a firm found to have violated
certain provisions of the SBA.
4)Remove the penalty that required that any business found to
have violated certain SBA prohibitions to have their business
license revoked.
AB 177
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5)Authorize, rather than require, that all existing state
contracts would be terminated if a business was found to have
violated certain SBA prohibitions.
6)Authorize the Department of General Services to pursue
administrative actions and penalties irrespective of whether
the Attorney General chooses to bring a civil action.
AS PASSED BY THE ASSEMBLY , this bill increased and conformed
penalties for persons who falsely engaged in activities relating
to the SBA, including small businesses, microbusinesses, and
DVBEs. Specifically, this bill :
1)Extended revocation of small business certification and
prohibition on further state business for certain specified
fraudulent activities.
2)Added a new penalty for making false statements on DVBE
participation in contracts.
3)Extended revocation of DVBE certification and prohibition on
further state business for certain specified fraudulent
activities.
4)Terminated other state contracts for certain specified
fraudulent activities related to small business, including
microbusiness, and DVBE procurement.
5) Authorized the Department of General Services (DGS) and the
awarding department to recover costs incurred during their
investigation into specified violations under the Small
Business Act.
FISCAL EFFECT : This bill was withdrawn from the Senate
Appropriations Committee pursuant to Senate Rule 28.8.
COMMENTS :
1)The purpose of this bill is to address fraudulent behavior by
individuals and businesses who seek to improperly obtain or
retain small business and DVBE certification, bidding
preferences or participation in state contracts.
Testimony in legislative hearings by DGS, small business
AB 177
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groups and DVBE advocates has reported that some current and
prospective state contractors have fraudulently represented
that they are a certified small business, DVBE, or that they
will be utilizing the services of a certified small business
or DVBE subcontractor.
In other reported cases, individuals and businesses have made
false statements in order to assist an ineligible business to
become certified or to help them retain their improperly
obtained certification once the business is being investigated
by state officials. Still other individuals and businesses
have fraudulently submitted bid packages that commit to using
a certified DVBE or small business, but in actuality the
subcontract is never let or the contracted work is
inconsequential and only included in order to obtain a bid
preference.
Existing law contains penalties for contractors which
fraudulently bid; however, examples of contractor abuses in
the small business and DVBE programs are increasing. This
bill would substantially increase penalties for a variety of
fraudulent behaviors, including extending the term of
revocations of certification and suspensions from applying for
or participating in state contracts.
2)These provisions were originally included in SB 1942 (Ruskin)
from the 2007-08 Session, which was vetoed. According to the
Governor's message, "The historic delay in passing the
2008-2009 State Budget has forced me to prioritize the bills
sent to my desk at the end of the year's legislative session.
Given the delay, I am only signing bills that are the highest
priority for California. This bill does not meet that
standard and I cannot sign it at this time."
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0005404