House Engrossed state contracts; foreign adversary; prohibition State of Arizona House of Representatives Fifty-seventh Legislature First Regular Session 2025 HOUSE BILL 2542 An Act amending title 41, chapter 23, article 3, Arizona Revised Statutes, by adding section 41-2553; relating to the procurement code. (TEXT OF BILL BEGINS ON NEXT PAGE)
House Engrossed state contracts; foreign adversary; prohibition
State of Arizona House of Representatives Fifty-seventh Legislature First Regular Session 2025
HOUSE BILL 2542
House Engrossed
state contracts; foreign adversary; prohibition
State of Arizona
House of Representatives
Fifty-seventh Legislature
First Regular Session
2025
HOUSE BILL 2542
An Act
amending title 41, chapter 23, article 3, Arizona Revised Statutes, by adding section 41-2553; relating to the procurement code.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona: Section 1. Title 41, chapter 23, article 3, Arizona Revised Statutes, is amended by adding section 41-2553, to read: START_STATUTE41-2553. State contracts; foreign adversary company; certification letter; civil penalty; foreign adversary; definitions A. A foreign adversary company may not bid on, submit a proposal for or enter into a contract with a state agency or political subdivision of this state for goods or services. each company that submits a bid or proposal for a state contract for goods or services shall submit a certification letter to the department certifying that the company is not a foreign adversary company. B. If the department determines that a company has submitted a certification letter that is false, all of the following shall occur: 1. The company is liable for a civil penalty of $100,000. 2. The state agency or the department shall terminate the contract with the company. 3. The company may not bid on any state contracts for at least sixty months. C. Notwithstanding subsection a of this section, a state agency may enter into a contract for goods manufactured by a foreign adversary company if both of the following apply: 1. There are no other reasonable options for the procurement of the specific goods.has submitted a CERTIFICATION LETTER TO THE DEPARTMENT CERTIFYING THAT THE COMPANY IS NOT A FOREIGN ADVERSARY COMPANY . 2. Not procuring the specific goods would pose a greater threat to this state than the threat associated with the manufacture of the goods by a foreign adversary company. d. For the purposes of this section: 1. "Company": (a) Means any of the following that exists for the purpose of making a profit: (i) A sole proprietorship. (ii) An organization. (iii) A corporation. (iv) An association. (v) A partnership. (vi) A joint venture. (vii) A limited partnership. (viii) A limited liability partnership. (ix) A limited liability company. (x) Any other entity or business association. (b) Includes any of the following: (i) A wholly owned subsidiary. (ii) A majority owned subsidiary. (iii) A parent company. (iv) An affiliate of any entities or business associations. 2. "Domicile" means any of the following: (a) The country where a company is registered. (b) The country where the company's affairs are primarily completed. (c) The country where the majority of ownership share is held. 3. "Federally banned corporation" includes companies either: (a) banned by any of the following: (i) The federal communications commission. (ii) The United States department of commerce. (iii) The federal acquisition security council. (b) Entities identified by the United States Department of defense as chinese military companies operating in the United states in accordance with section 1260h of the william m. Thornberry national defense authorization act for fiscal year 2021 (p.l. 116-283; 134 stat. 3388). 4. "Foreign adversary": (a) Means a country determined to be a foreign adversary pursuant to 15 code of federal regulations section 791.4. (b) Includes either of the following: (i) any agent or any other entity that is at least fifty-one percent controlled by such a foreign adversary. (ii) any other entity deemed a foreign adversary by the governor. 5. "Foreign adversary company": (a) means any company, other than a U.s. subsidiary as defined in 15 code of federal regulations 772.1, that meets any of the FOLLOWING: (i) is domiciled, incorporated, issued or listed in a foreign adversary. (ii) is headquartered in a foreign adversary. (iii) has its principal place of business in a foreign adversary. (iv) is controlled by the government, military or ruling political party of a foreign adversary. (v) is majority owned by an entity controlled by THE GOVERNMENT, MILITARY OR RULING POLITICAL PARTY OF A FOREIGN ADVERSARY. (b) Includes a federally banned corporation. (c) Does not include a parent COMPANY THAT does not receive more than fifty percent of its total annual global revenue from a foreign adversary. END_STATUTE Sec. 2. Short title This act shall be known as the "Protection Procurement Act".
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 41, chapter 23, article 3, Arizona Revised Statutes, is amended by adding section 41-2553, to read:
START_STATUTE41-2553. State contracts; foreign adversary company; certification letter; civil penalty; foreign adversary; definitions
A. A foreign adversary company may not bid on, submit a proposal for or enter into a contract with a state agency or political subdivision of this state for goods or services. each company that submits a bid or proposal for a state contract for goods or services shall submit a certification letter to the department certifying that the company is not a foreign adversary company.
B. If the department determines that a company has submitted a certification letter that is false, all of the following shall occur:
1. The company is liable for a civil penalty of $100,000.
2. The state agency or the department shall terminate the contract with the company.
3. The company may not bid on any state contracts for at least sixty months.
C. Notwithstanding subsection a of this section, a state agency may enter into a contract for goods manufactured by a foreign adversary company if both of the following apply:
1. There are no other reasonable options for the procurement of the specific goods.has submitted a CERTIFICATION LETTER TO THE DEPARTMENT CERTIFYING THAT THE COMPANY IS NOT A FOREIGN ADVERSARY COMPANY .
2. Not procuring the specific goods would pose a greater threat to this state than the threat associated with the manufacture of the goods by a foreign adversary company.
d. For the purposes of this section:
1. "Company":
(a) Means any of the following that exists for the purpose of making a profit:
(i) A sole proprietorship.
(ii) An organization.
(iii) A corporation.
(iv) An association.
(v) A partnership.
(vi) A joint venture.
(vii) A limited partnership.
(viii) A limited liability partnership.
(ix) A limited liability company.
(x) Any other entity or business association.
(b) Includes any of the following:
(i) A wholly owned subsidiary.
(ii) A majority owned subsidiary.
(iii) A parent company.
(iv) An affiliate of any entities or business associations.
2. "Domicile" means any of the following:
(a) The country where a company is registered.
(b) The country where the company's affairs are primarily completed.
(c) The country where the majority of ownership share is held.
3. "Federally banned corporation" includes companies either:
(a) banned by any of the following:
(i) The federal communications commission.
(ii) The United States department of commerce.
(iii) The federal acquisition security council.
(b) Entities identified by the United States Department of defense as chinese military companies operating in the United states in accordance with section 1260h of the william m. Thornberry national defense authorization act for fiscal year 2021 (p.l. 116-283; 134 stat. 3388).
4. "Foreign adversary":
(a) Means a country determined to be a foreign adversary pursuant to 15 code of federal regulations section 791.4.
(b) Includes either of the following:
(i) any agent or any other entity that is at least fifty-one percent controlled by such a foreign adversary.
(ii) any other entity deemed a foreign adversary by the governor.
5. "Foreign adversary company":
(a) means any company, other than a U.s. subsidiary as defined in 15 code of federal regulations 772.1, that meets any of the FOLLOWING:
(i) is domiciled, incorporated, issued or listed in a foreign adversary.
(ii) is headquartered in a foreign adversary.
(iii) has its principal place of business in a foreign adversary.
(iv) is controlled by the government, military or ruling political party of a foreign adversary.
(v) is majority owned by an entity controlled by THE GOVERNMENT, MILITARY OR RULING POLITICAL PARTY OF A FOREIGN ADVERSARY.
(b) Includes a federally banned corporation.
(c) Does not include a parent COMPANY THAT does not receive more than fifty percent of its total annual global revenue from a foreign adversary. END_STATUTE
Sec. 2. Short title
This act shall be known as the "Protection Procurement Act".