BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 399|
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VETO
Bill No: SB 399
Author: Wright (D)
Amended: 6/26/13
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 9-0, 4/23/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De Le�n, Hernandez, Lieu
NO VOTE RECORDED: Galgiani, Padilla
SENATE APPROPRIATIONS COMMITTEE : 6-0, 5/20/13
AYES: De Le�n, Walters, Gaines, Hill, Padilla, Steinberg
NO VOTE RECORDED: Lara
SENATE FLOOR : 39-0, 5/28/13 (Consent)
AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella,
Corbett, Correa, De Le�n, DeSaulnier, Emmerson, Evans, Fuller,
Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff,
Jackson, Knight, Lara, Leno, Lieu, Liu, Monning, Nielsen,
Padilla, Pavley, Price, Roth, Steinberg, Torres, Walters,
Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Vacancy
ASSEMBLY FLOOR : 78-0, 8/22/13 (Consent) - See last page for
vote
SENATE FLOOR : 38-0, 8/30/13
AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella,
Corbett, Correa, De Le�n, DeSaulnier, Emmerson, Evans, Fuller,
Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff,
Jackson, Knight, Lara, Leno, Lieu, Liu, Monning, Nielsen,
Padilla, Pavley, Roth, Steinberg, Torres, Vidak, Walters,
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SB 399
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2
Wright, Wyland, Yee
NO VOTE RECORDED: Wolk, Vacancy
SUBJECT : California Prompt Payment Act
SOURCE : Author
DIGEST : This bill includes a contractor performing emergency
work or remedial measures related to the accidental or unplanned
release of toxic substances within the list of entities entitled
to the late payment penalty of 10% above the United States Prime
Rate.
ANALYSIS :
Existing law:
1. The California Prompt Payment Act subjects a state agency
that acquires property or services pursuant to a contract
with a business to a late penalty payment, if it fails to
make payment to the person or business on the date required
by the contract.
2. Provides that the penalty payable to a certified small
business, a nonprofit organization, a nonprofit public
benefit corporation, or a small business or nonprofit
organization that provides services or equipment under the
Medi-Cal program is 10% above the United States Prime Rate on
June 30 of the prior fiscal year.
3. Under the State Contract Act prescribes the procedures and
requirements applicable to various state agency contracts,
and exempts from these procedures and requirements specified
contracts for required emergency work or remedial measures
related to the accidental or unplanned release of toxic
substances.
This bill:
1. Includes a contractor performing emergency work or remedial
measures related to the accidental or unplanned release of
toxic substances within the list of entities entitled to the
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SB 399
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3
late payment penalty of 10% above the United States Prime
Rate.
2. Specifies that contracts for emergency work or remedial
measures are subject to the California Prompt Payment Act.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee:
1. Moderate, ongoing costs, likely less than $100,000 per year
for the Department of General Services (DGS) to assess
whether a contract meets the criteria for the enhanced
penalty and for the costs associated with paying the penalty
to any eligible contractors who are not paid within the
specified time frames.
2. According to DGS, the state paid about $973,000 in late
payment penalties under the Prompt Payment Program in Fiscal
Year 2011-12. DGS further notes that the Public Contract
Code section referenced in this bill (Section 10101 (b)) is
not regularly used as a basis for awarding contracts and is
limited to emergency contracts awarded for emergency work or
remedial measures that are caused by the accidental or
unplanned release of toxic substances. This will likely
significantly limit the impact of this bill.
SUPPORT : (Verified 8/23/13)
Brand Source Pacific Rim
California Asphalt Pavement Association
California Association for Micro Enterprise Opportunity
California Association of Competitive Telecommunications
Companies
California Chapter of the American Fence Association
California Employers Association
California Fence Contractors' Association
California Independent Oil Marketers Association
California Metals Coalition
California Service Station and Automotive Repair Association
Engineering Contractors' Association
Flasher Barricade Association
Fremont Chamber of Commerce
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4
Livermore Chamber of Commerce
Marin Builders Association
Monterey County Business Council
Napa Chamber of Commerce
National Federation of Independent Business
Northern California Independent Booksellers Association
Northern California Minority Supplier Development Council
Pacific Contractors Association
Plumbing Heating and Cooling Contractors of California
Roofing Contractors Association of California
San Francisco Builders Exchange
San Francisco Chamber of Commerce
San Francisco Council of District Merchants Associations
San Francisco Locally Owned Merchants Alliance
San Francisco National Association of Women Business Owners
Small Business Advocates
Small Business California
Small Business Majority
Western Carwash Association
ARGUMENTS IN SUPPORT : According to the author's office, there
has been difficulty getting prompt payment for emergency
services rendered to the state from the Department of General
Services. The California Prompt Payment Act (Act) provides that
a state agency that fails to make a timely payment for goods or
services acquired pursuant to a contract with a specified
business or organization is subject to a late payment penalty.
Currently, companies contracted in an emergency are not subject
to the Act, unless they are small businesses or nonprofit
organizations. This bill will include emergency contractors
under the Act, regardless of the size or structure of the
organization.
GOVERNOR'S VETO MESSAGE:
"I am returning Senate Bill 399 without my signature.
It is the policy of the state to provide for the timely
payment of every state contract - whether the work is
completed on a standard or emergency basis. For the rare
occasion when timely payment does not occur, current law
provides specific safeguards.
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Recognizing the distinct struggles faced by small businesses
and nonprofit organizations, increased safeguards are provided
for these entities, including a higher late payment penalty.
Extending the higher penalty rate to all contracts in a
narrowly defined category - regardless of the size of the
contractor - would be inconsistent with the state's policy of
reserving this additional protection for those that need it
most."
ASSEMBLY FLOOR : 78-0, 8/22/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow,
Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan,
Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,
Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson,
Perea, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon, Salas,
Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Vacancy, Vacancy
MW:dk 1/6/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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