BILL NUMBER: AB 2627	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 15, 2010
	AMENDED IN SENATE  JUNE 17, 2010
	AMENDED IN ASSEMBLY  APRIL 8, 2010

INTRODUCED BY   Assembly Member Nielsen

                        FEBRUARY 19, 2010

   An act to amend Sections 10115.1, 10115.4, 10115.10, and 10115.15
of the Public Contract Code, relating to state contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2627, as amended, Nielsen. State contracts: participation
goals.
   Existing law establishes participation goals for certain state
contracts with minority business enterprises, women business
enterprises, and disabled veteran business enterprises. These
provisions, with respect to minority and women business enterprises,
were held unconstitutional on the basis of not meeting equal
protection requirements.
   The bill would also revise the requirements imposed on disabled
veteran business enterprises to, among other changes, require a
disabled veteran to have at least a 10% service-connected disability
and require a disabled veteran business enterprise to submit
specified income tax information to the Office of Small Business and
Disabled Veteran Business Enterprise Services.
   Existing law further requires an awarding state department for
contracts for materials, supplies, or equipment to accept the
submission by a bidder of a minority, women, or disabled veteran
business enterprise utilization plan that has been approved prior to
the solicitation due date by the Department of General Services in
accordance with certain criteria.
   This bill would revise the minimum criteria for a business
utilization plan to be approved by the Department of General
Services, as specified. The bill would also expand the types of
contracts to which these provisions apply to include contracts for
commodities, property, goods, professional services, construction
work, or equipment, including information technology goods and
services.
   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 10115.1 of the Public Contract Code is amended
to read:
   10115.1.  As used in this article, the following definitions
apply:
   (a) "Awarding department" means any state agency, department,
governmental entity, or other officer or entity empowered by law to
enter into contracts on behalf of the State of California.
   (b) "Contract" includes any agreement or joint development
agreement to provide labor, services, material, supplies, or
equipment in the performance of a contract, franchise, concession, or
lease granted, let, or awarded for and on behalf of the State of
California.
   (c) "Contractor" means any person or persons, regardless of race,
color, sex, ethnic origin or ancestry, or any firm, partnership,
corporation, or combination thereof, whether or not a minority or
women business enterprise, who submits a bid and enters into a
contract with a representative of a state agency, department,
governmental entity, or other officer empowered by law to enter into
contracts on behalf of the State of California.
   (d) "Disabled veteran" means a veteran of the United States
military, naval, or air service who has a service-connected
disability of at least 10 percent or more and who is domiciled in
this state.
   (e) "Disabled veteran business enterprise" means a business that
meets all of the following criteria:
   (1) The business is at least 51 percent owned by one or more
disabled veterans, except that if the business is a limited liability
company, it is wholly owned by one or more disabled veterans.
   (2) The daily business operations are managed and controlled by
one or more disabled veterans. For purposes of this paragraph, the
disabled veteran who manages and controls the business is not
required to be the owner of the disabled veteran business enterprise.

   (3) The home office of the business is located in the United
States and is not a branch or subsidiary of a foreign corporation,
foreign firm, or other foreign-based business.
   (4) The business has submitted the following income tax
information, as applicable, to the Office of Small Business and
Disabled Veteran Business Enterprise Services:
   (A) Complete copies of its federal income tax returns for the
previous year after initial approval by the Department of General
Services. If in operation for less than three years, the business
shall submit its federal income tax returns for each year that it has
operated as a business.
   (B) A business that is not a sole proprietorship and rents
equipment to the state shall provide its federal income tax returns
for each disabled veteran owner or the firm shall be deemed to be an
equipment broker.
   (f) "Minority," for purposes of this section, means a citizen or
lawful permanent resident of the United States who is an ethnic
person of color and who is: Black (a person having origins in any of
the Black racial groups of Africa); Hispanic (a person of Mexican,
Puerto Rican, Cuban, Central or South American, or other Spanish or
Portuguese culture or origin regardless of race); Native American (an
American Indian, Eskimo, Aleut, or Native Hawaiian); Pacific-Asian
(a person whose origins are from Japan, China, Taiwan, Korea,
Vietnam, Laos, Cambodia, the Philippines, Samoa, Guam, or the United
States Trust Territories of the Pacific including the Northern
Marianas); Asian-Indian (a person whose origins are from India,
Pakistan, or Bangladesh); or any other group of natural persons
identified as minorities in the respective project specifications of
an awarding department or participating local agency.
   (g) "Minority business enterprise" means a business concern that
meets all of the following criteria:
   (1) The business is an individual proprietorship, partnership,
corporation, or joint venture at least 51 percent owned by one or
more minorities or, in the case of any business whose stock is
publicly held, at least 51 percent of the stock is owned by one or
more minorities.
   (2) A business whose management and daily operations are
controlled by one or more minorities who own the business.
   (3) A business concern with its home office located in the United
States which is not a branch or subsidiary of a foreign corporation,
firm, or other business.
   (h) "Women business enterprise" means a business concern that
meets all of the following criteria:
   (1) The business is an individual proprietorship, partnership,
corporation, or joint venture at least 51 percent owned by one or
more women or, in the case of any business whose stock is publicly
held, at least 51 percent of the stock is owned by one or more women.

   (2) A business whose management and daily operations are
controlled by one or more women who own the business.
   (3) A business concern with its home office located in the United
States which is not a branch or subsidiary of a foreign corporation,
firm, or other business.
   (i) "Goal" means a numerically expressed objective that awarding
departments and contractors are required to make efforts to achieve.
  SEC. 2.  Section 10115.4 of the Public Contract Code is amended to
read:
   10115.4.  In implementing this article, the awarding department
shall utilize existing resources such as the Office of Small Business
and Disabled Veteran Business Enterprise Services, the federal
Minority Business Development Agency, and the federal Small Business
Administration.
  SEC. 3.  Section 10115.10 of the Public Contract Code is amended to
read:
   10115.10.  (a) It shall be unlawful for a person or firm to:
   (1) Knowingly and with intent to defraud, fraudulently obtain,
retain, attempt to obtain or retain, or aid another in fraudulently
obtaining or retaining or attempting to obtain or retain, acceptance
or certification as a minority, women, or disabled veteran business
enterprise, for the purposes of this article.
   (2) Willfully and knowingly make a false statement with the intent
to defraud, whether by affidavit, report, or other representation,
to a state official or employee for the purpose of influencing the
acceptance or certification or denial of acceptance or certification
of any entity as a minority, women, or disabled veteran business
enterprise.
   (3) Willfully and knowingly obstruct, impede, or attempt to
obstruct or impede, any state official or employee who is
investigating the qualifications of a business entity which has
requested acceptance or certification as a minority, women, or
disabled veteran business enterprise.
   (4) Knowingly and with intent to defraud, fraudulently obtain,
attempt to obtain, or aid another person or firm in fraudulently
obtaining or attempting to obtain, public moneys to which the person
is not entitled under this article.
   (5) Establish, or cooperate in the establishment of, or exercise
control over, a firm found to have violated any of paragraphs (1) to
(4), inclusive. Any person or firm who violates this paragraph is
guilty of a misdemeanor and shall be liable for a civil penalty not
to exceed fifty thousand dollars ($50,000) for the first violation,
and a civil penalty not to exceed two hundred thousand dollars
($200,000) for each additional, or subsequent violation.
   (6) This section shall not apply to minority and women business
enterprise programs conducted by public utility companies pursuant to
the California Public Utilities Commission's General Order 156.
   (b) Any person who violates paragraphs (1) to (4), inclusive, of
subdivision (a) is guilty of a misdemeanor and shall be liable for a
civil penalty not to exceed five thousand dollars ($5,000) for the
first violation, and a civil penalty not to exceed twenty thousand
dollars ($20,000) for each additional or subsequent violation.
   (c) Any person or firm that violates subdivision (a) shall, in
addition to the penalties provided for in subdivision (b), be
suspended from bidding on, or participating as either a contractor,
subcontractor, or supplier in, any state contract or project for a
period of not less than 30 days and not more than one year. However,
for an additional or subsequent violation the period of suspension
shall be extended for a period of up to three years. Any person or
firm that fails to satisfy the penalties imposed pursuant to
subdivisions (b) and (c) shall be prohibited from further contracting
with the state until the penalties are satisfied.
   (d) The awarding department shall report all alleged violations of
this section to the Office of Small Business and Disabled Veteran
Business Enterprise Services. The Office of Small Business and
Disabled Veteran Business Enterprise Services shall subsequently
report all alleged violations to the Attorney General who shall
determine whether to bring a civil action against any person or firm
for violation of this section.
   (e) The Office of Small Business and Disabled Veteran Business
Enterprise Services shall monitor the status of all reported
violations and shall maintain and make available to all state
departments a central listing of all firms and persons who have been
determined to have committed violations resulting in suspension.
   (f) No awarding department shall enter into any contract with any
person or firm suspended for violating this section during the period
of the person's or firm's suspension. No awarding department shall
award a contract to any contractor utilizing the services of any
person or firm as a subcontractor suspended for violating this
section during the period of the person's or firm's suspension.
   (g) The awarding department shall check the central listing
provided by the office to verify that the person, firm, or contractor
to whom the contract is being awarded, or any person or firm being
utilized as a subcontractor by that person, firm, or contractor, is
not under suspension for violating this section.
  SEC. 4.  Section 10115.15 of the Public Contract Code is amended to
read:
   10115.15.  (a) Notwithstanding Section 10115.2, when awarding
contracts for commodities, materials, property, goods, supplies,
professional services, construction work, or equipment, including
information technology goods and services, an awarding department
shall accept the submission by a bidder of a minority, women, and
disabled veteran business enterprise utilization plan that has been
approved prior to the solicitation due date by the Department of
General Services. A business utilization plan shall be considered
approved by the Department of General Services as of the date
submitted to the department so long as the plan meets the minimum
criteria established in paragraphs (1) to (11), inclusive, and shall
be valid for a period of one year, unless the department has audited
the utilization plan, as authorized under subdivision (b), and
disapproves it for reasons specified under subdivision (c). The
decision of whether to establish a minority, women, and disabled
veteran business enterprise utilization plan shall be at the option
of the vendor. If a bidder cites an approved utilization plan in
response to the minority, women, and disabled veteran business
enterprise participation requirements of a solicitation that calls
for 15 percent minority-owned, 5 percent women-owned, and 3 percent
disabled veteran-owned business participation, then that utilization
plan shall be considered responsive to the participation goals of the
solicitation document. If a solicitation specifies higher
participation goals than those in the bidder's utilization plan, the
bidder shall meet the goals in the solicitation or submit an
amendment to increase the percentage of specified goals. At a
minimum, the utilization plan shall include the following
information:
   (1) A statement of the vendor's minority, women, and disabled
veteran business enterprise utilization plan, including the primary
objectives of the utilization plan.
   (2)  If applicable, an   An  explanation
showing sufficient business reasons why the vendor did not meet
 minority, women, and disabled veteran  
minority or women  business enterprise participation goals set
forth in the vendor's  minority, women, and disabled veteran
  minority or women  business utilization plan
submitted to, and approved by, the Department of General Services in
the previous year. Further, if the vendor did not meet the 
minority, women, and disabled veteran   minority or
women  business participation goals in the previous year, the
vendor shall also identify remedial steps it will take to meet the
goals in the current utilization plan.
   (3) A statement of the vendor's minority, women, and disabled
veteran business utilization goals for the succeeding year. At a
minimum, these utilization goals shall be equal to the statewide
participation goals set forth in subdivision (c) of Section 10115.
   (4) Estimated total dollars to be contracted by the vendor with
the State of California.
   (5) Total dollars, expressed as a percentage of the amount
estimated pursuant to paragraph (4), intended to be subcontracted
with each of the following:
   (A) Minority business enterprises.
   (B) Women business enterprises.
   (C) Disabled veteran business enterprise.
   (6) A representative listing of the products and services that the
vendor anticipates subcontracting, including direct and indirect
funding. An identification of the types of subcontracting and
overhead costs planned for minority, women, and disabled veteran
business enterprises.
   (7) Direct and indirect costs, as related to disabled veteran
business enterprise participation, may be applied to business
utilization plan goals. For purposes of this paragraph:
   (A) "Direct subcontract awards" are subcontracts that are directly
attributable to a specific state contract.
   (B) "Indirect costs" are those which, because incurred for common
or joint purposes, are not directly related to a specific contract.
These indirect costs include, but are not limited to, overhead,
general, and administrative costs, such as employee fringe benefits,
health insurance, retirement contributions, janitorial expenses,
office supplies, landscaping, travel costs, accounting, and security
costs. These indirect costs shall not be used for services and
commodities of any direct subcontract award.
   (8) The name of the individual employed by the vendor who will
administer the vendor's utilization plan, including a description of
the duties of the individual.
   (9) A description of the efforts that the vendor will undertake to
ensure that minority, women, and disabled veteran business
enterprises will have an equitable opportunity to compete for
contracts.
   (10) A listing of the records and reports that the vendor will
maintain to demonstrate the practices and procedures that have been
adopted to comply with the requirements and goals of the utilization
plan.
   (11) Affirmation that the vendor met the statewide minority,
women, and disabled veteran business enterprise utilization goals for
the previous year, if applicable.
   (b) The Department of General Services shall conduct random audits
of the submitted business utilization plans to determine compliance
with this article, and shall retain on file all submitted business
utilization plans for auditing purposes. During any audit of a
submitted business utilization plan, the Department of General
Services may ask a vendor to submit a list of all the minority,
women, and disabled veteran business enterprises included as
subcontractors in the vendor's business utilization plan for the
previous year. This information shall remain confidential. Nothing in
this section shall be construed to require the Department of General
Services to audit all of the minority, women, and disabled veteran
business enterprise utilization plans submitted by individual
vendors. The Department of General Services may establish appropriate
fees to cover the actual costs of conducting random audits and
retaining on file all submitted plans.
   (c) (1) At any time, the Department of General Services may
disapprove a vendor's minority, women, and disabled veteran business
enterprise utilization plan for any of the following reasons:
   (A) The business utilization plan fails to evidence a vendor's
intention to comply fully with the statewide minority, women, and
disabled veteran business enterprise goals for the succeeding year,
as indicated by failure of the business utilization plan to contain
the information specified in subdivision (a).
   (B) The business utilization plan fails to evidence sufficient
business reasons for failure to achieve the minority, women, and
disabled veteran business enterprise goals set forth in a business
utilization plan submitted in the previous year, if applicable.
   (C) The business utilization plan fails to evidence sufficient
remedial steps the vendor will take if the vendor did not meet the
minority, women, and disabled veteran business participation goals in
the previous year  , if applicable  .
   (2) If a vendor's business utilization plan is disapproved, the
vendor may not submit a new business utilization plan to the
department for a period of one year from the date of disapproval.
Prior to disapproval of a vendor's business utilization plan, the
vendor shall be entitled to a public hearing and to five days' notice
of the time and place thereof. The notice shall state the reasons
for the hearing.
   (3) A vendor that submits a minority, women, and disabled veteran
business utilization plan that is approved by the Department of
General Services, and that is subsequently awarded a contract to
which the vendor would not otherwise have been entitled, and that
fails to evidence intention to fully comply with the minority, women,
and disabled veteran business enterprise goals in the business
utilization plan, or fails to evidence sufficient business reasons
for failing to achieve the minority, women, and disabled veteran
business enterprise goals set forth in the business utilization plan,
shall:
   (A) Pay to the state any difference between the contract amount
and what the state's cost would have been if the contract had been
properly awarded.
   (B) In addition to the amount specified in subparagraph (A), be
assessed a penalty in an amount of not more than 10 percent of the
amount of the contract involved.
   (C) Be ineligible to transact any business with the state for a
period of not less than three months and not more than 24 months.
   Prior to imposition of any sanction under this chapter, the
contractor or vendor shall be entitled to a public hearing and to
five days' notice of the time and place thereof. The notice shall
state the reasons for the hearing.