BILL NUMBER: SB 755AMENDED BILL TEXT AMENDED IN SENATE MAY 6, 2009 INTRODUCED BY Senator Negrete McLeod FEBRUARY 27, 2009 An act to amend, repeal, and add Sections 14838.5 and 14839 of, and to add and repeal Chapter 15 (commencing with Section 8899.50) of Division 1 of Title 2 of, the Government Code, and to amend Section 19404 of the Welfare and Institutions Code, relating to state contracts. LEGISLATIVE COUNSEL'S DIGEST SB 755, as amended, Negrete McLeod. State contracts: participation goals: persons with developmental disabilities business enterprises. Existing law establishes participation goals for various enterprises to participate in contracts with state departments awarded for construction, services, materials, supplies, equipment, alterations, repairs, or improvements. This bill would establish statewide participation goals of not less than 1% for persons with developmental disabilities business enterprises to participate in contracts awarded by a state agency for goods and services, and require, until June 30, 2014, that each state agency awarding contracts take specified actions to encourage that participation, as provided. This bill would imposeaspecified civilpenaltypenalties forinitialthe first and subsequent violations of providing false or fraudulent information with respect to the qualification of a persons with developmental disabilities business enterprise, and would prohibit the person or entity that made the false or fraudulent statement from bidding on or participating in state contracts for specified periods of time. 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. Chapter 15 (commencing with Section 8899.50) is added to Division 1 of Title 2 of the Government Code, to read: CHAPTER 15. PERSONS WITH DEVELOPMENTAL DISABILITIES BUSINESS ENTERPRISE PARTICIPATION GOALS FOR STATE CONTRACTS 8899.50. (a) This chapter shall be known, and may be cited, as the Persons with Developmental Disabilities Business Enterprise Program. (b) The Legislature finds and declares all of the following: (1) There were 215,000 persons with developmental disabilities in California in 2006, and of these persons, 86,265 were persons of working age, between the ages of 22 and 61 years. (2) Fewer than 20,000, or 23 percent, of the persons of working age with developmental disabilities engage in any form of employment. (3) Many persons with developmental disabilities have expressed their desire to work and earn wages as productive members of society. (4) Persons with developmental disabilities include persons whose disabilities present significant challenges to locate and secure employment. (5) Often, larger than the challenge of the disability itself, is the lack of recognition by employers of the skills, abilities, and dedication of persons with developmental disabilities to work effectively. (6) The State of California has an opportunity to take proactive steps to contract with companies that are owned, managed, or controlled by, or that employ, persons with developmental disabilities. (c) It is the intent of the Legislature to do all of the following: (1) Recognize the potential contribution of persons with developmental disabilities to the workforce in the state. (2) Encourage state agencies to contract with companies owned, managed, or controlled by, or that employ, persons with developmental disabilities, thereby encouraging greater independence and community involvement. (3) Reduce pressure on the state budget by encouraging persons with developmental disabilities to earn wages, pay taxes, and collect fewer state benefits. (4) Have state agencies take all practical actions to meet or exceed the persons with developmental disabilities business enterprise participation goals of not less than 1 percent of the number of contracts for goods or services awarded by state agencies. 8899.51. As used in this chapter: (a) "Awarding department" means any state agency, department, governmental entity, or other officer or entity empowered by law to enter into contracts for, and on behalf of, the State of California. (b) "Contract" includes any agreement or joint development agreement to provide goods or services in the performance of a contract, franchise, concession, or lease granted, let, or awarded for, and on behalf of, the State of California. "Goods or services" include labor, services, materials, supplies, equipment, or other goods. (c) "Commercially useful function" means a function performed by a persons with developmental disabilities business enterprise in which the persons with developmental disabilities business enterprise does all of the following: (1) Is responsible for the execution of a distinct element of the work of the contract for goods or services. (2) Carries out its obligation by actually performing, managing, or supervising the work involved. (3) Performs work that is normal for its business services and functions. (4) Is not subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practice. A persons with developmental disabilities business enterprise shall not be considered to perform a commercially useful function if its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of participation by a persons with developmental disabilities business enterprise. (d) "Contractor" means any individual, firm, partnership, joint venture, corporation, limited liability company, organization, or other person or entity, or combination thereof, that submits a bid and enters into a contract. A contractor includes a subcontractor or a supplier that provides goods or services with respect to a contract. (e) "Developmental disability" means a disability, specified in subdivision (a) of Section 4512 of the Welfare and Institutions Code, rendering the affected person eligible to participate in programs of rehabilitation, education, or social services conducted by or on behalf of a public agency. (f) "Goal" means a numerically expressed objective that awarding departments and contractors are required to make efforts to achieve. (g) "Persons with developmental disabilities business enterprise" means a business or organization certified pursuant to regulations described in Section 8899.54 as meeting any of the following: (1) A business concern at least 51 percent owned by one or more persons with a developmental disability. (2) A business concern managed by, and the daily business operations controlled by, one or more persons with a developmental disability. (3) A community-based nonprofit organization that employs persons with a developmental disability that meets any of the following conditions: (A) The organization operates under a special certificate issued pursuant to Section 1191.5 of Title 29 of the United States Code. (B) The organization has a special license issued to it under Section 214 of Title 29 of the United States Code. (C) The organization meets the criteria of Chapter 13 (commencing with Section 4850) of Division 4.5 of the Welfare and Institutions Code for providing habilitation services. 8899.52. Notwithstanding any other law, all contracts awarded by an awarding department shall have statewide participation goals of not less than 1 percent for persons with developmental disabilities business enterprises. These goals apply to the total number of contracts granted, let, or awarded each year by the awarding department. 8899.53. In order to encourage the participation of persons with developmental disabilities business enterprises in state contracts for goods or services, each awarding department shall, consistent with Section 14839, do all of the following: (a) Advertise all upcoming opportunities to bid on competitively bid contracts in the California State Contracts Register and include in the advertisement an Internet link to information for prospective bidders, including, but not limited to, general bidding procedures and how to properly prepare a bid for those contracts. (b) Provide information to persons with developmental disabilities business enterprises regarding training and technical assistance that is available to assist these persons with developmental disabilities business enterprises in understanding and bidding on contracts. 8899.54. (a) The Department of General Services shall adopt regulations for the purpose of implementing this chapter. The Department of General Services shall consult with the State Department of Developmental Services with respect to the implementation of this chapter and the adoption of these regulations. Emergency regulations consistent with this section may be adopted without review and approval by the Office of Administrative Law if adopted within 90 days of the effective date of this chapter. (b) The regulations shall include the process and procedures for certifying persons with developmental disabilities business enterprises, consistent with and in coordination with the certification process and procedures for small businesses and disabled veteran business enterprises in Section 14839. (c) The regulations shall require a persons with developmental disabilities business enterprise to provide goods or services that contribute to the fulfillment of the contract requirements by performing a commercially useful function. 8899.55. In implementing this chapter, the awarding department shall utilize existing resources such as the State Department of Developmental Services. 8899.56. (a) A person or entity shall not: (1) Knowingly and with intent to defraud, fraudulently obtain, attempt to obtain, or aid another person or entity in fraudulently obtaining or attempting to obtain, public moneys, contracts, or funds expended under a contract, that are awarded by an awarding department, to which the person or entity is not entitled under this chapter. (2) Knowingly and with intent to defraud, fraudulently represent participation of a persons with developmental disabilities business enterprise in order to obtain or retain a contract. (3) Willfully and knowingly make or subscribe to any statement, declaration, or other document that is fraudulent or false as to any material matter, whether or not that falsity or fraud is committed with the knowledge or consent of the person authorized or required to present the declaration, statement, or document. (4) Willfully and knowingly aid or assist in, or procure, counsel, or advise the preparation or presentation of a declaration, statement, or other document that is fraudulent or false as to any material matter, regardless of whether that falsity or fraud is committed with the knowledge or consent of the person authorized or required to present the declaration, statement, or document. (5) Willfully and knowingly obstruct, impede, or attempt to obstruct or impede, any state official or employee who is investigating the qualifications of a person or entity represented to be a persons with developmental disabilities business enterprise. (6) Establish, or knowingly aid in the establishment of, or exercise control over, a person or entity found to have violated any of paragraphs (1) to (5), inclusive.(b) Any person or entity that violates any of the provisions of subdivision (a) shall be liable for a civil penalty of not less than ten thousand dollars ($10,000) or more than thirty thousand dollars ($30,000) for the first violation, and a civil penalty of not less than thirty thousand dollars ($30,000) or more than fifty thousand dollars ($50,000) for each additional or subsequent violation. A person or entity that violates any of the provisions of subdivision (a) shall pay all costs and attorney's fees incurred by the plaintiff in a civil action brought pursuant to this section, including costs incurred by the awarding department for any investigations that led to the finding of the violation.(c)(b) (1) A person or entity, participating as either a contractor, subcontractor, or supplier, that violates any of the provisions of subdivision (a) shall not bid on a state contract or project for a period of not less than three years. An additional or subsequent violation shall extend the periods of suspension for a period of not less than five years. The suspension shall apply to the principals of the business and any subsequent business formed or financed by, or affiliated with, those principals. (2) A person or entity that fails to satisfy the penalties, costs, and attorney's fees imposed pursuant to subdivision (b) shall be prohibited from further contracting with the state until those amounts are paid.(d)(c) The awarding department shall report all alleged violations of this section to the Attorney General who shall determine whether to bring a civil action against any person or entity for violation of this section. Civil penalties shall not be less than ten thousand dollars ($10,000) or more than thirty thousand dollars ($30,000) for the first violation, and not less than thirty thousand dollars ($30,000) or more than fifty thousand dollars ($50,000) for each additional subsequent violation.(e)(d) An awarding department shall not enter into any contract with a contractor suspended for violating this section during the period of the contractor's suspension. An awarding department shall not award a contract to any contractor utilizing the services of any person or entity suspended for violating this section during the period of the suspension. 8899.57. (a) Each awarding department shall annually report to the Department of General Services on the level of participation by persons with developmental disabilities business enterprises in contracts. The information reported shall include, but not be limited to, the following: (1) The percentage of contracts awarded to persons with developmental disabilities business enterprises, including the number of contracts awarded to each type of business enterprise defined in paragraphs (1) to (3), inclusive, of subdivision (g) of Section 8899.51. (2) A description of each contract, including the number of persons with developmental disabilities employed, the nature of the work performed, the wages paid and other employee benefits provided, and the work setting, including the extent to which the work performed by persons with developmental disabilities was in integrated work as defined in subdivision (o) of Section 4851 of the Welfare and Institutions Code. (3) If the established goal is not being met, the reasons for the awarding department's inability to achieve the standards and the remedial steps to be taken. (b) Beginning January 1, 2011, and on January 1 of each year thereafter, the Department of General Services shall, in consultation with the Department of Developmental Services, report to the Governor and the Legislature, by department, on the level of participation by persons with developmental disabilities business enterprises under this chapter, including the information required by subdivision (a). 8899.58. Notwithstanding any other provision of this chapter, the failure of an awarding department to meet the goals established under this chapter shall not affect the validity or enforceability of any contract subject to this chapter. 8899.59. This chapter shall become inoperative on July 1, 2014, and is repealed as of January 1, 2015. SEC. 2. Section 14838.5 of the Government Code is amended to read: 14838.5. (a) Notwithstanding the advertising, bidding, and protest provisions of Chapter 6 (commencing with Section 14825) of this code and Chapter 2 (commencing with Section 10290) and Chapter 3 (commencing with Section 12100) of Part 2 of Division 2 of the Public Contract Code, a state agency may award a contract for the acquisition of goods, services, or information technology that has an estimated value of greater than five thousand dollars ($5,000), but less than one hundred thousand dollars ($100,000), to a certified small business, including a microbusiness, to a persons with developmental disabilities business enterprise, or to a disabled veteran business enterprise, as long as the agency obtains price quotations from two or more certified small businesses, including microbusinesses, from two or more persons with developmental disabilities business enterprises, or from two or more disabled veterans business enterprises. (b) In carrying out subdivision (a), state agencies shall consider a responsive offer timely received from a responsible certified small business, including a microbusiness, from a persons with developmental disabilities business enterprise, or from a disabled veteran business enterprise. (c) If the estimated cost to the state is less than five thousand dollars ($5,000) for the acquisition of goods, services, or information technology, or a greater amount as administratively established by the director, a state agency shall obtain at least two price quotations from responsible suppliers whenever there is reason to believe a response from a single source is not a fair and reasonable price. (d) This section shall become inoperative on July 1, 2014, and is repealed as of January 1, 2015. SEC. 3. Section 14838.5 is added to the Government Code, to read: 14838.5. (a) Notwithstanding the advertising, bidding, and protest provisions of Chapter 6 (commencing with Section 14825) of this code and Chapter 2 (commencing with Section 10290) and Chapter 3 (commencing with Section 12100) of Part 2 of Division 2 of the Public Contract Code, a state agency may award a contract for the acquisition of goods, services, or information technology that has an estimated value of greater than five thousand dollars ($5,000), but less than one hundred thousand dollars ($100,000), to a certified small business, including a microbusiness, or to a disabled veteran business enterprise, as long as the agency obtains price quotations from two or more certified small businesses, including microbusinesses, or from two or more disabled veteran business enterprises. (b) In carrying out subdivision (a), state agencies shall consider a responsive offer timely received from a responsible certified small business, including a microbusiness, or from a disabled veteran business enterprise. (c) If the estimated cost to the state is less than five thousand dollars ($5,000) for the acquisition of goods, services, or information technology, or a greater amount as administratively established by the director, a state agency shall obtain at least two price quotations from responsible suppliers whenever there is reason to believe a response from a single source is not a fair and reasonable price. (d) This section shall become operative on July 1, 2014. SEC. 4. Section 14839 of the Government Code is amended to read: 14839. There is hereby established within the department the Office of Small Business and Disabled Veteran Business Enterprise Services. The duties of the office shall include: (a) Compiling and maintaining a comprehensive bidders list of qualified small businesses, persons with developmental disabilities business enterprises, and disabled veteran business enterprises, and noting which small businesses also qualify as microbusinesses. (b) Coordinating with the Federal Small Business Administration, the Minority Business Development Agency, and the Office of Small Business Development of the Department of Economic and Business Development. (c) Providing technical and managerial aids to small businesses, microbusinesses, persons with developmental disabilities business enterprises, and disabled veteran business enterprises, by conducting workshops on matters in connection with government procurement and contracting. (d) Assisting small businesses, microbusinesses, persons with developmental disabilities business enterprises, and disabled veteran business enterprises, in complying with the procedures for bidding on state contracts. (e) Working with appropriate state, federal, local, and private organizations and business enterprises in disseminating information on bidding procedures and opportunities available to small businesses, microbusinesses, persons with developmental disabilities business enterprises, and disabled veteran business enterprises. (f) Making recommendations to the department and other state agencies for simplification of specifications and terms in order to increase the opportunities for small business, microbusiness, persons with developmental disabilities business enterprise, and disabled veteran business enterprise participation. (g) Developing, by regulation, other programs and practices that are reasonably necessary to aid and protect the interest of small businesses, microbusinesses, persons with developmental disabilities business enterprises, and disabled veteran business enterprises in contracting with the state. (h) Making efforts to develop, in cooperation with associations representing counties, cities, and special districts, a core statewide small business certification application that may be adopted by all participating entities, with any supplemental provisions to be added as necessary by the respective entities. (i) The information furnished by each contractor requesting a small business or microbusiness preference shall be under penalty of perjury. (j) This section shall become inoperative on July 1, 2014, and is repealed as of January 1, 2015. SEC. 5. Section 14839 is added to the Government Code, to read: 14839. There is hereby established within the department the Office of Small Business and Disabled Veteran Business Enterprise Services. The duties of the office shall include: (a) Compiling and maintaining a comprehensive bidders list of qualified small businesses and disabled veteran business enterprises, and noting which small businesses also qualify as microbusinesses. (b) Coordinating with the Federal Small Business Administration, the Minority Business Development Agency, and the Office of Small Business Development of the Department of Economic and Business Development. (c) Providing technical and managerial aids to small businesses, microbusinesses, and disabled veteran business enterprises, by conducting workshops on matters in connection with government procurement and contracting. (d) Assisting small businesses, microbusinesses, and disabled veteran business enterprises, in complying with the procedures for bidding on state contracts. (e) Working with appropriate state, federal, local, and private organizations and business enterprises in disseminating information on bidding procedures and opportunities available to small businesses, microbusinesses, and disabled veteran business enterprises. (f) Making recommendations to the department and other state agencies for simplification of specifications and terms in order to increase the opportunities for small business, microbusiness, and disabled veteran business enterprise participation. (g) Developing, by regulation, other programs and practices that are reasonably necessary to aid and protect the interest of small businesses, microbusinesses, and disabled veteran business enterprises in contracting with the state. (h) Making efforts to develop, in cooperation with associations representing counties, cities, and special districts, a core statewide small business certification application that may be adopted by all participating entities, with any supplemental provisions to be added as necessary by the respective entities. (i) The information furnished by each contractor requesting a small business or microbusiness preference shall be under penalty of perjury. (j) This section shall become operative on July 1, 2014. SEC. 6. Section 19404 of the Welfare and Institutions Code is amended to read: 19404. Any state agency, city or county, political subdivision, or district of this state may, without advertising or calling for bids, purchase materials and supplies manufactured and services provided by public or private nonprofit California corporations operating community rehabilitation programs serving persons with disabilities who have indicated an interest in supplying those goods and services and may, on an equitable basis apportion the business among the interested community rehabilitation programs, provided the goods or services meet the specifications and needs of the purchasing agency and are purchased at a fair market price, as determinedpursuant to Section 14838.5 of the Government Codeby the appropriate state or local agency , and provided that the public or private nonprofit California corporations comply with all of the following requirements: (a) (1) Contract work obtained under this section shall be performed by a labor force which is comprised primarily of persons with disabilities, as measured by the percentage of person-hours of direct labor devoted to the contract work. (2) For purposes of this subdivision, "primarily" means 75 percent or greater. (3) Agree to make those elections permitted of any nonprofit corporation under the federal Insurance Contributions Act and the California Unemployment Insurance Code in order to provide social security and unemployment and disability benefits for its employees commencing with its first contract or purchase order under this section and continuing thereafter. In the event that the nonprofit corporation ceases to provide those benefits, any existing contract or purchase order under this section with the corporation is terminated and no further contracts or purchase orders shall be awarded to that corporation for the period of two years after the corporation ceases to provide the benefits. For the purposes of this subdivision, a person with a disability shall be considered an employee when performing productive work. (4) Provide in its articles of incorporation that at least two of the directors of its board of directors shall be comprised of persons with disabilities or the parents, guardians, or conservators of individuals with disabilities. Directors who are also employees of the nonprofit corporation shall not participate in or be present at discussions of the board of directors concerned with labor-management contract negotiations. (5) Provide for disabled employees of the nonprofit corporation benefits and other employer-employee agreements substantially equal to those benefits and agreements entered into between each nonprofit corporation and the representatives designated by a majority of the employees. (6) Not commit any unfair labor practices as defined in Section 8 (a) of the National Labor Relations Act. (7) Abide by the provisions of the Federal Fair Labor Standards Act, the Walsh-Healy Public Contract Act, the Wagner O'Day Act, and the regulations of the State Division of Industrial Welfare. (8) Contract work obtained under this section shall be governed by the contracting procedures and limitations in Section 14838.5 of the Government Code. (b) For purposes of this section a "person with a disability" means any person, other than a person who is blind, who is so severely incapacitated by any physical or mental disability that he or she cannot currently engage in normal competitive employment because of the disability.