BILL NUMBER: ABX4 21 CHAPTERED
BILL TEXT
CHAPTER 19
FILED WITH SECRETARY OF STATE JULY 28, 2009
APPROVED BY GOVERNOR JULY 28, 2009
PASSED THE SENATE JULY 23, 2009
PASSED THE ASSEMBLY JULY 23, 2009
AMENDED IN SENATE JULY 23, 2009
INTRODUCED BY Assembly Member Evans
JULY 2, 2009
An act to amend Sections 10115.2, 10115.15, 10430, 10472, and
12112 of the Public Contract Code, relating to state contracts, and
declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 21, Evans. State contracts.
(1) Existing law, with regard to certain state contracts, requires
the awarding department to award the contract to the lowest
responsible bidder meeting or making a good faith effort to meet
specified statewide participation goals for disabled veteran business
enterprises. Existing law requires that, if a bidder cites an
approved utilization plan in response to the disabled veteran
business enterprise participation requirements of a solicitation that
calls for specified business participation, and the solicitation
specifies higher participation goals than the utilization plan, the
bidder shall meet the goals in the solicitation or make a good faith
effort to do so.
This bill would instead require the awarding department to award
the contract to the lowest responsible bidder meeting specified
business enterprise statewide participation goals. The bill would
also, if a solicitation specifies higher participation goals than the
bidder's utilization plan, require the bidder to meet the goals in
the solicitation.
Existing law requires that certain contracts awarded by the
Director of Corrections or the Director of the Youth Authority have
specified statewide participation goals for minority business
enterprises, women business enterprises, and disabled veteran
enterprises. Existing law requires the awarding department, in
awarding these contracts to the lowest responsible bidder, to
consider the responsiveness of a bidder to the goals and, if a bidder
fails to demonstrate a good faith effort in attaining these goals,
requires the awarding department to award the contract to the next
lowest responsive and responsible bidder.
This bill would delete the requirement that, if a bidder fails to
demonstrate a good faith effort in attaining these goals, the
awarding department must award the contract to the next lowest
responsive and responsible bidder.
This bill would require that the state agencies report to the
Department of General Services on or before July 1, 2012, and that
the department report to the Legislature on or before January 1,
2013, on the impact of the above provisions upon outreach efforts and
the actual award of contracts to bidders meeting the business
enterprise goals.
(2) Existing law, with specified exceptions, prohibits any person,
firm, or subsidiary thereof who has been awarded a consulting
services contract from submitting a bid for, or being awarded a
contract for, the provision of services, procurement of goods or
supplies, or any other related action that is required, suggested, or
otherwise deemed appropriate in the end product of the consulting
services contract. Existing law provides that this prohibition does
not apply to incidental advice or suggestions made outside of the
scope of a consulting services contract with regard to certain
contracts for the acquisition of information technology goods and
services, as specified.
This bill would also exempt from this authorization a contract
that is part of a single competitive procurement conducted in more
than one stage for information technology goods or services, when the
Director of the Department of General Services and the Chief
Information Officer determine that there is no conflict of interest,
as specified, and that it is in the best interest of the state to
utilize this procurement method. The bill would require the
department to annually post a report on its Internet Web site
describing each determination, as specified, and to provide notice to
the Joint Legislative Budget Committee within 30 days of the posting
of the report.
(3) Existing law requires the Department of General Services, for
any contract for information technology goods or services meeting
specified requirements, to provide that not less than 10% of the
contract price is required to be withheld until final delivery and
acceptance of the goods and services, and requires the department to
conduct a risk evaluation, as specified.
This bill would, until July 1, 2013, require the department, if it
determines that lesser withholding levels are appropriate based on
the evaluation of risk, to withhold no less than 5% of the contract
price, if the contract price is $10,000,000 or more, or no less than
3% of the contract price, if the contract price is less than
$10,000,000, until final delivery and acceptance of the goods or
services.
(4) The California Constitution authorizes the Governor to declare
a fiscal emergency and to call the Legislature into special session
for that purpose. The Governor issued a proclamation declaring a
fiscal emergency, and calling a special session for this purpose, on
July 1, 2009.
This bill would state that it addresses the fiscal emergency
declared by the Governor by proclamation issued on July 1, 2009,
pursuant to the California Constitution.
(5) This bill would declare that it is to take effect immediately
as an urgency statute.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10115.2 of the Public Contract Code is amended
to read:
10115.2. In awarding contracts to the lowest responsible bidder,
the awarding department shall consider the efforts of a bidder to
meet minority business enterprise, women business enterprise, and
disabled veteran business enterprise goals set forth in this article.
The awarding department shall award the contract to the lowest
responsible bidder meeting these goals.
SEC. 2. Section 10115.15 of the Public Contract Code is amended to
read:
10115.15. (a) Notwithstanding Section 10115.2, when awarding
contracts for materials, supplies, or equipment, including electronic
data processing 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 (12), 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. 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) An explanation showing sufficient business reasons why the
vendor did not meet minority, women, and disabled veteran business
enterprise participation goals set forth in the vendor's minority,
women, and disabled veteran business utilization plan submitted to,
and approved by, the Department of General Services in the previous
year, if applicable. Further, if the vendor did not meet the
minority, women, and disabled veteran 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 subcontracted by the vendor for
sales within the United States for the succeeding year.
(5) Estimated total dollars to be subcontracted by the vendor for
sales within the State of California for the succeeding year.
(6) 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.
(7) Total dollars, expressed as a percentage of the amount
estimated pursuant to paragraph (5), intended to be subcontracted
with disabled veteran-owned business enterprises.
(8) A representative listing of the products and services that the
vendor anticipates subcontracting, including an identification of
the types of subcontracting planned for minority, women, and disabled
veteran business enterprises.
(9) 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.
(10) 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.
(11) 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.
(12) 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 utilization plans to determine compliance with this
article, and shall retain on file all submitted utilization plans
for auditing purposes. During any audit of a submitted 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 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 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 utilization plan to contain the
information specified in subdivision (a).
(B) The 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 utilization plan
submitted in the previous year, if applicable.
(C) The 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 utilization plan is disapproved, the vendor may
not submit a new utilization plan to the department for a period of
one year from the date of disapproval. Prior to disapproval of a
vendor's 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 who
fails to evidence intention to fully comply with the minority, women,
and disabled veteran business enterprise goals in the 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 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.
SEC. 3. Section 10430 of the Public Contract Code is amended to
read:
10430. This chapter does not apply to any of the following:
(a) The Regents of the University of California and the Trustees
of the California State University, except that Article 9 (commencing
with Section 10420) shall apply to the Trustees of the California
State University.
(b) (1) Transactions covered under Chapter 3 (commencing with
Section 12100), except that Sections 10365.5, 10410, and 10411 shall
apply to all transactions under that chapter.
(2) Notwithstanding paragraph (1), Section 10365.5 shall not apply
to incidental advice or suggestions made outside of the scope of a
consulting services contract.
(3) (A) Notwithstanding paragraph (1), Section 10365.5 shall not
apply to a contract that is part of a single competitive procurement
conducted in more than one stage for information technology goods or
services, when the Director of the Department of General Services and
the Chief Information Officer determine that there is no conflict of
interest under Section 10365.5 and that it is in the best interest
of the state to utilize this procurement method. Nothing in this
section shall preclude the applicability of Section 12112 to this
procurement method.
(B) The Department of General Services shall annually submit a
report on its Internet Web site describing each determination granted
pursuant to subparagraph (A), listing the basis for the
determination, and disclosing the total amount of money paid or to be
paid to the contractor under the contract that was the subject of
the determination. The department shall provide notice to the Joint
Legislative Budget Committee within 30 days of the posting of the
report.
(C) For purposes of this paragraph, "information technology" means
information technology goods or services, or both, as appropriate.
(c) Except as otherwise provided in this chapter, any entity
exempted from Section 10295. However, the Board of Governors of the
California Community Colleges shall be governed by this chapter,
except as provided in Sections 10295, 10335, and 10389.
(d) Transactions covered under Chapter 10 (commencing with Section
4525) of Division 5 of Title 1 of the Government Code.
(e) Except as provided for in subdivision (c), members of boards
or commissions who receive no payment other than payment for each
meeting of the board or commission, payment for preparatory time, and
payment for per diem.
(f) The emergency purchase of protective vests for correctional
peace officers whose duties require routine contact with state prison
inmates. This subdivision shall remain operative only until January
1, 1987.
(g) Spouses of state officers or employees and individuals and
entities that employ spouses of state officers and employees, that
are vendored to provide services to regional center clients pursuant
to Section 4648 of the Welfare and Institutions Code if the vendor of
services, in that capacity, does not receive any material financial
benefit, distinguishable from the benefit to the public generally,
from any governmental decision made by the state officer or employee.
SEC. 4. Section 10472 of the Public Contract Code is amended to
read:
10472. In awarding contracts to the lowest responsible bidder,
the awarding department shall consider the responsiveness of a bidder
to minority business enterprise and women business enterprise goals
set forth in Section 10471.
SEC. 5. Section 12112 of the Public Contract Code, as amended by
Section 1 of Chapter 736 of the Statutes of 2007, is amended to read:
12112. (a) Any contract for information technology goods or
services, to be manufactured or performed by the contractor
especially for the state and not suitable for sale to others in the
ordinary course of the contractor's business may provide, on the
terms and conditions that the department deems necessary to protect
the state's interests, for progress payments for work performed and
costs incurred at the contractor's shop or plant, provided that not
less than 10 percent of the contract price is required to be withheld
until final delivery and acceptance of the goods or services.
Notwithstanding this subdivision, if the department determines that
lesser withholding levels are appropriate based upon an evaluation of
risk determined under subdivision (b) and the contract price is ten
million dollars ($10,000,000) or more, the department shall withhold
no less than 5 percent of the contract price until final delivery and
acceptance of the goods or services. If the department determines
that lesser withholding levels are appropriate based on an evaluation
of risk determined under subdivision (b) and the contract price is
less than ten million dollars ($10,000,000), the department shall
withhold no less than 3 percent of the contract price until final
delivery and acceptance of the goods or services.
(b) The department, in consultation with the Department of
Finance, shall develop and maintain criteria for the evaluation of
risk to the state that results from the acquisition of information
technology. This risk analysis shall determine the need for financial
protection that is in the best interest of the state, including, but
not limited to, any of the following:
(1) An acceptable performance bond as described in Chapter 2
(commencing with Section 995.010) of Title 14 of Part 2 of the Code
of Civil Procedure.
(2) Any surety as defined in Section 2787 of the Civil Code.
(3) A letter of credit as described in Division 5 (commencing with
Section 5101) of the Commercial Code.
(4) Protection in the form of contract terms.
(5) Any other form of security or guaranty of performance in an
amount sufficient to protect the state in the case of default by the
contractor providing information technology, or any other breach or
malfunction of the goods or services, or both.
(c) The department shall, on or before June 1, 2008, submit the
criteria developed and maintained pursuant to subdivision (b) to the
Joint Legislative Budget Committee and to the State Chief Information
Officer.
(d) The State Chief Information Officer shall, on or before July
1, 2012, do both of the following:
(1) Review and report to the Legislature on all contracts approved
pursuant to this section on and after January 1, 2008.
(2) Report to the Legislature any recommendations for changes to
this section or changes to the criteria developed and maintained by
the department pursuant to subdivision (b).
(e) For purposes of this section, "information technology" means
information technology goods or services, or both, as appropriate.
(f) This section shall become inoperative on July 1, 2013, and
shall be repealed on January 1, 2014.
SEC. 6. (a) Each state agency shall submit a report to the
Department of General Services, on or before July 1, 2012, reporting
the impact of the amendments made by Sections 1, 2, and 4 of this act
upon outreach efforts and upon the actual award of contracts by that
agency to bidders meeting the business enterprise goals set forth in
Article 1.5 (commencing with Section 10115) of Part 2 of Division 2
of the Public Contract Code.
(b) The Department of General Services shall submit a report to
the Legislature, using the data submitted pursuant subdivision (a),
on or before January 1, 2013, reporting the impact of the amendments
made by Sections 1, 2, and 4 of this act upon outreach efforts and
upon the actual award of contracts by the state to bidders meeting
the business enterprise goals set forth in Article 1.5 (commencing
with Section 10115) of Part 2 of Division 2 of the Public Contract
Code.
SEC. 7. It is the intent of the Legislature in amending Sections
10115.2, 10115.15, and 10472 of the Public Contract Code that
contractors be required to meet disabled veterans business enterprise
goals, and to dispense with the option that contractors comply with
these sections by documenting that they have made a good faith effort
to do so. Because these provisions are not currently enforced with
respect to minority business enterprises or women business
enterprises pursuant to Executive Order No. W-172-98 (March 10,
1998), the amendments to these statutes made by this act are not
intended to apply to those business enterprises.
SEC. 8. This act addresses the fiscal emergency declared by the
Governor by proclamation on July 1, 2009, pursuant to subdivision (f)
of Section 10 of Article IV of the California Constitution.
SEC. 9. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to reform specified requirements applicable to state
contracts as soon as possible, it is necessary that this act take
effect immediately.