BILL NUMBER: AB 1853 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 28, 2010
INTRODUCED BY Assembly Member Huffman
( Coauthors: Assembly Members
Jones and Torlakson )
FEBRUARY 12, 2010
An act to add Chapter 2.3 (commencing with Section 2030) to Part 1
of Division 2 of the Public Contract Code, relating to public
contracts.
LEGISLATIVE COUNSEL'S DIGEST
AB 1853, as amended, Huffman. Public contracts: bid preferences:
employee health care expenditures.
Existing law imposes various requirements with respect to
contracting by public entities.
This bill would require a state agency awarding a public works
contract to provide a 2% bid preference to a bidder whose
employee health care expenditures, and those of its subcontractors,
are at least 6.5% of the aggregate social security wages paid to its
employees in California or subcontractor meeting
specified criteria related to providing employee health care coverage
. This bill would require a bidder and its subcontractors to
submit statements certifying that they qualify for the bid
preference, would require the bidder and contractors to continue to
make employee health care expenditures, as specified, and would
impose civil penalties in connection therewith, as provided. This
bill would become operative on January 1, 2011
2012, and would not apply to contracts advertised for bid on or
after January 1, 2017 .
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. Chapter 2.3 (commencing with Section 2030) is added to
Part 1 of Division 2 of the Public Contract Code, to read:
CHAPTER 2.3. EMPLOYEE HEALTH CARE EXPENDITURE
COVERAGE BID PREFERENCE
2030. The Legislature finds and declares that the state and the
state's political subdivisions incur substantial direct and indirect
expenses when employers do not pay for employee health care expenses.
Accordingly, it makes economic sense for state agencies to offer a
bid preference to contractors that pay for employee health care
expenses for employees in California.
2031. Whenever a statute requires a state agency to award a
public works contract to the lowest bidder or lowest responsible
bidder, the state agency shall provide a 2-percent bid preference to
a bidder that qualifies for the employee health care expenditure bid
preference. This preference shall be calculated by reducing the bid
by 2 percent of the amount of the bid for purposes of comparing the
bid with competing bids.
2032. A bidder shall be entitled to claim the employee health
care expenditure bid preference only if the bidder and all of the
bidder's listed subcontractors each qualify for the bid preference.
2033. (a) A bidder, or a subcontractor, qualifies for the
employee health care expenditure bid preference if, during the
12-month period immediately preceding submission of the bid,
the bidder's, or subcontractor's, aggregate California employee
health care expenditures were at least equal to 6.5 percent of the
bidder's, or subcontractor's, aggregate California social security
wages the bidder, or subcontractor, provided credible
health care coverage . A bidder, or a subcontractor, that
employed employees in California for more than three months but fewer
than 12 months immediately preceding submission of the bid qualifies
for the employee health care expenditure bid preference if, during
that period of time, the bidder's, or subcontractor's,
aggregate California employee health care expenditures were at least
equal to 6.5 percent of the bidder's, or subcontractor's, aggregate
California social security wages.
(b) The bidder, or subcontractor, shall spend at least 6.5 percent
of the bidder's, or subcontractor's, aggregate California social
security wages on health care for its employees for not less than
period of time, the bidder, or subcontractor, provided
credible health care coverage.
(b) The bidder, or subcontractor, shall
provide credible health care coverage for not less than one
year following acceptance of the bid.
(c) In the event of the failure of a bidder, or subcontractor, to
comply with subdivision (b), that bidder, or subcontractor, shall pay
the state agency an amount equal to twice the cost that the bidder,
or subcontractor, would have incurred for health care, if it had
complied with the provisions of subdivision (b). A bidder shall
not be liable for a subcontractor's failure to comply with
subdivision (b).
2034. (a) A bidder may claim an employee health care expenditure
bid preference by submitting separate statements from the bidder and
all of the bidder's listed subcontractors, each certifying that it
qualifies for the bid preference. The Department of General Services,
working with the Department of Industrial Relations, shall develop a
form for this purpose, and a bidder that seeks the bid preference
under this chapter, and all the bidder's listed subcontractors, shall
use that form.
(b) A person or entity that knowingly provides false information
in the certification required by this section 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 section may be brought by any public prosecutor in the
name of the people of the State of California.
2035. (a) If the winning bidder has claimed
an employee health care expenditure bid preference, at the request
of the state agency, the bidder and the bidder's listed
subcontractors shall supply to the state agency records sufficient to
show that the bidder is entitled to the preference. The failure to
supply the records within a reasonable time shall result in denial of
the bid preference.
(b) If the winning bidder is denied the employee health care
expenditure bid preference because of the failure of a listed
subcontractor to establish its entitlement to the bid preference, the
winning bidder shall be granted 14 days to substitute a new
subcontractor that is entitled to the bid preference, and the
original subcontractor shall be liable to the winning bidder for any
reasonable increase in the cost of the new subcontract.
2036. For purposes of this chapter, the following terms have the
following meanings:
(a) "Aggregate California employee health care expenditures" means
all amounts paid by the bidder, or a subcontractor, to the bidder's,
or subcontractor's, employees in California or to a third party on
behalf of the bidder's, or subcontractor's, employees in California,
for the purpose of providing health care services to the employees or
reimbursing the cost of those services for the employees, including,
but not limited to, all of the following:
(1) Contributions on behalf of employees to a health savings
account, as defined under Section 223 of the Internal Revenue Code,
or to any other account having substantially the same purpose or
effect without regard to whether the contributions qualify for a tax
deduction or are excludable from employee income.
(2) Reimbursement to employees for expenses incurred in the
purchase of health care services.
(3) Payments to a third party for the purpose of providing health
care services for employees.
(4) Payments pursuant to a collective bargaining agreement for the
purpose of providing health care services for employees.
(5) Costs incurred in the direct delivery of health care services
to employees.
(b) "Aggregate California social security wages" means the
aggregate amount of wages paid to all of the bidder's, or
subcontractor's, employees in California, not including any wages
that are above the federal social security contribution and benefit
base, sometimes referred to as the social security wage base, for the
year in which they are paid.
(c) "Health care services" means medical care, services, or goods
that may qualify as tax deductible medical care expenses under
Section 213 of the Internal Revenue Code, or medical care, services,
or goods having substantially the same purpose or effect as those
deductible expenses.
(a) "Credible health care coverage" means any group policy,
contract, or program that is written or administered by a disability
insurer, health care service plan, fraternal benefits society,
self-insured employer plan, or any other entity, in this state or
elsewhere, and that arranges or provides medical, hospital, and
surgical coverage not designated to supplement other private or
governmental plans.
(d)
(b) "State agency" means a department, division, board,
bureau, commission, or agency of the executive branch of government.
2037. This chapter shall become operative on January 1, 2012.
2038. This chapter shall not apply to contract advertised for bid
on or after January 1, 2017.