BILL ANALYSIS �
SB 861
Page 1
SENATE THIRD READING
SB 861 (Corbett)
As Amended July 13, 2011
Majority vote
SENATE VOTE :33-2
BUSINESS & PROFESSIONS 8-0 ECONOMIC DEVELOPMENT 6-0
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|Ayes:|Hayashi, Bill Berryhill, |Ayes:|V. Manuel P�rez, Grove, |
| |Allen, Butler, | |Beall, Block, |
| |Eng, Hill, Ma, Smyth | |Hueso, Morrell |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Hall, Hill, Lara, | | |
| |Mitchell, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | |
| |Nielsen, Norby, Wagner | | |
| | | | |
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SUMMARY : Prohibits a scrutinized company, as defined, using
conflict minerals from the Democratic Republic of Congo (DRC)
from bidding on a state goods or services contract.
Specifically, this bill :
1)Prohibits a scrutinized company from bidding on a state goods
or services contract if it must comply with the disclosures
relating to conflict minerals originating in the DRC, as
specified in the Securities Exchange Act of 1934 (Act).
2)Defines "scrutinized company" to mean a person found to be in
violation of Section 13(p) of the Act by final judgment or
settlement entered in a civil or administrative action brought
by Securities Exchange Commission (SEC) and the person has not
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remedied or cured the violation in a manner accepted by the
SEC on or before final judgment or settlement.
3)Deems that a person is no longer regarded as a scrutinized
company when the person no longer in violation of the Act, an
amended or correct filing is made with the SEC, or three years
from the date of final judgment or settlement, whichever is
earlier.
4)Requires the Department of General Services (DGS) to establish
policies and procedures for state entities to implement the
provisions of this bill in the State Administrative Manual or
the State Contracting Manual.
5)Defines "goods or services" to include types of tangible
personal property, including materials, supplies, and
equipment, and information technology and telecommunication
goods and services, as specified.
6)Makings legislative findings and declarations.
EXISTING LAW :
1)Authorizes contracting between state agencies and private
contractors and sets forth the requirements for the
procurement of goods and services and for the solicitation and
evaluation of bids and the awarding of contracts by public
entities.
2)Prohibits persons engaging in investment activities in Iran's
energy sector, as specified, from bidding or entering into
contracts with a public entity for goods or services.
3)Prohibits companies involved in specified business activities
in Sudan from entering into a state goods and services
contract.
EXISTING FEDERAL LAW :
1)Establishes the 2006 Democratic Republic of Congo Relief,
Security, and Democracy Promotion Act (DRCRSDP Act). The
DRCRSDP Act stated that it is the policy of the United States
(U.S.) to work for peace and security throughout the DRC by
supporting efforts to protect civilians, disarm illegal armed
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groups, and hold accountable individuals and entities working
to destabilize the country.
2)Establishes the 2010 Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act), pertaining to the
trade of minerals associated with the DRC conflict. The
Dodd-Frank Act was signed into law adding, amongst other
things, Section 13(p) to the Act, and directing the SEC to
publish new disclosure rules by April 17, 2011, for publically
traded companies reporting to the SEC for whom "conflict
minerals" are necessary to the functionality or production of
a product manufactured by such persons.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)To the extent this bill reduces the number of prospective
bidders on some state contracts, due to a company or companies
being found in violation of the DRC-related provisions of the
Dodd-Frank Act, there will be less competition for those
contracts, which tends to increase state costs. The overall
impact of this bill is unknown, and would depend on the number
of companies unable to submit bids, but given the
multi-billion volume of state contracting, costs could exceed
$150,000 in any fiscal year. Because the bill is narrowly
drawn, however, particularly when compared to recent similar
legislation, the annual cost would likely not be significant.
2)DGS will incur minor one-time costs to establish the relevant
policies and procedures and minor ongoing costs to monitor SEC
rulings regarding violations of Dodd-Frank and to inform state
agencies about companies ineligible to submit bids and when
these companies regain eligibility to submit bids.
COMMENTS : The Legislature has recently heard legislation
prohibiting specified "scrutinized companies" from bidding on
public contracts on humanitarian grounds and in conjunction with
federal efforts.
The DRC is Africa's third largest nation, and it is the eastern
portion, Kivu, that has been the site of conflict. Illegally
armed militia groups have been responsible for human rights
abuses, sexual exploitation, acts of violence, and other
atrocities in order to mine the mineral-rich Kivu. The Act
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defines "conflict materials" as columbite-tantalite (coltan),
cassiterite, gold, wolframite, or their derivatives. These
materials, in turn, are used to produce tungsten, tin, steel, or
some other component that results in the manufacture of light
bulb filaments, electrical components, computer chips and
processors, cell phones, and other technology products. In
addition, other conflict materials mentioned in the Dodd-Frank
Act, such as gold, are manufactured into jewelry and sold in the
U.S.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0002219