California Assembly Bill AB365 Latest Draft

 BILL NUMBER: AB 365AMENDED BILL TEXT AMENDED IN ASSEMBLY APRIL 14, 2011 AMENDED IN ASSEMBLY MARCH 31, 2011 AMENDED IN ASSEMBLY MARCH 25, 2011 INTRODUCED BY Assembly Member Galgiani (Principal coauthor: Senator Price) FEBRUARY 14, 2011 An act to add Section 185034.2 to the Public Utilities Code, relating to high-speed rail. LEGISLATIVE COUNSEL'S DIGEST AB 365, as amended, Galgiani. High-speed rail: contracts: small businesses. Existing law, the California High-Speed Rail Act, creates the High-Speed Rail Authority to develop and implement a high-speed rail system in the state, with specified powers and duties. Existing law, pursuant to the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, approved by the voters as Proposition 1A at the November 4, 2008, general election, provides for the issuance of $9.95 billion in general obligation bonds for high-speed rail and related purposes. Under federal law, funding is made available for allocation nationally to high-speed rail and other related projects. Existing law provides for various programs to encourage the participation of small businesses, as certified by the Department of General Services, in state agency contracts, and sets forth the duties of the Director of General Services and the directors of other state agencies in this regard. Existing law imposes various penalties for certain unlawful actions in obtaining classification as a small business or in engaging in other unlawful actions. This bill would enact similar penalties relative to the certification of businesses as small  emerging  business enterprises by the authority and for other unlawful actions. 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. Section 185034.2 is added to the Public Utilities Code, to read: 185034.2. (a) (1) A business that has obtained classification from the authority as a small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise by reason of having furnished incorrect supporting information or by reason of having withheld information, and that knew, or should have known, the information furnished was incorrect or the information withheld was relevant to its request for classification, and that by reason of that classification has been awarded a contract to which it would not otherwise have been entitled, shall do all of the following: (A) Pay to the authority any difference between the contract amount and what the authority's costs would have been if the contract had been properly awarded. (B) Pay to the authority an amount that is equal to the costs incurred for investigating the small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise certification that led to the finding that the contract had been improperly awarded. Costs incurred shall include, but are not limited to, costs and attorney's fees paid by the authority related to hearings and court appearances. (C) In addition to the amounts described in subparagraphs (A) and (B), be assessed a penalty in an amount of not more than 10 percent of the amount of the contract involved. (2) The authority shall suspend any person or firm  who violates   that has been found to have committed a violation as described in  paragraph (1) from transacting any business with the authority either directly as a prime contractor or indirectly as a subcontractor, for a period of not less than three years and not more than 10 years. The authority may reject the bid of a suspended person or firm, or the services or goods, provided by a subcontractor if that subcontractor has been declared ineligible to transact any business with the authority under this section, even though the bidder is a business in good standing. (3) All payments to the authority pursuant to subparagraphs (A) and (B) of paragraph (1) shall be deposited in the fund or funds from which payments on the contract involved were made. (4) All payments to the state pursuant to subparagraph (C) of paragraph (1) shall be deposited in the General Fund. (5) The small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise certification of a person or firm found to have  violated   committed a violation as described in  paragraph (1) shall be revoked by the authority for a period of not less than five years. For an additional or subsequent violation, the period of certification revocation or suspension shall be extended for a period of up to 10 years. The certification revocation shall apply to the principals of the business and any subsequent businesses formed by one or more of those principals. (6) Prior to the imposition of any sanctions under this section, a business shall be entitled to a public hearing and to at least five working days' notice of the time and place thereof. The notice shall state the reasons for the hearing. (7) Any business or person that fails to satisfy any of the amounts specified in subparagraphs (A) to (C), inclusive, of paragraph (1) shall be prohibited from further contracting with the authority until all amounts are satisfied. (b) (1) It shall be unlawful for a person to do any of the following: (A) Knowingly and with intent to defraud, fraudulently obtain, retain, attempt to obtain or retain, or aid another in fraudulently obtaining or retaining or attempting to obtain or retain, certification as a small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise for the purposes of this section. (B) Willfully and knowingly make a false statement with the intent to defraud, whether by affidavit, report, or other representation, to a state official or employee for the purpose of influencing the certification or denial of certification of any entity as a small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise. (C) Willfully and knowingly obstruct, impede, or attempt to obstruct or impede, any state official or employee who is investigating the qualifications of a business entity that has requested certification as a small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise. (D) Knowingly and with intent to defraud, fraudulently obtain, attempt to obtain, or aid another person in fraudulently obtaining or attempting to obtain, public moneys, contracts, or funds expended under a contract, that are awarded by the authority, to which the person is not entitled under this section. (E) Knowingly and with intent to defraud, fraudulently represent certified small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise participation in order to obtain or retain a bid preference or a state contract. (F) Knowingly and with intent to defraud, fraudulently represent that a commercially useful function is being performed by a certified small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise in order to obtain or retain a bid preference or a state contract. (G) 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. (H) 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. (I) Establish, or knowingly aid in the establishment of, or exercise control over, a firm found to have violated any provision of subparagraphs (A) to (H), inclusive. (2) (A) Any person who is found by the authority to have violated any of the provisions of paragraph (1) is subject to a civil penalty of not less than ten thousand dollars ($10,000) nor more than thirty thousand dollars ($30,000) for the first violation, and a civil penalty of not less than thirty thousand dollars ($30,000) nor more than fifty thousand dollars ($50,000) for each additional or subsequent violation. (B) A person who violates any of the provisions of paragraph (1) shall pay all costs incurred by the authority for any investigations that led to the finding of the violation. Costs incurred shall include, but are not limited to, costs and attorney's fees paid by the authority related to hearings and court appearances. All payments to the authority pursuant to this subparagraph shall be deposited in the fund or funds from which payments on the contract involved were made. (3) The authority shall revoke the small  emerging  business enterprise, microbusiness, or disabled veteran business enterprise certification of any person or firm that violates paragraph (1) for a period of not less than five years, and shall, in addition to the penalties provided for in paragraph (2), suspend the person or firm from bidding on, or participating as a contractor, subcontractor, or supplier in, any authority contract or project for a period of not less than three years nor more than 10 years. However, for an additional or subsequent violation, the period of certification revocation or suspension shall be extended for a period of up to three years. The certification revocation shall apply to the principals of the business and any subsequent businesses formed by one or more of those principals. Any business or person who fails to satisfy any of the penalties imposed pursuant to subparagraphs (A) and (B) of paragraph (2) shall be prohibited from further contracting with the authority until the penalties are satisfied. (4) If a contractor, subcontractor, supplier, subsidiary, or affiliate thereof, has been found by the authority to have violated paragraph (1) and that violation occurred within three years of another violation of paragraph (1) found by the authority, the authority shall prohibit that contractor, subcontractor, supplier, subsidiary, or affiliate thereof, from entering into an authority project or contract and from further bidding to the authority, and from being a subcontractor to a contractor for the authority, and from being a supplier to the authority. (5) In addition to the penalties imposed by this section, if a contractor is found to be in violation of subparagraph (F) of paragraph (1), any existing contract between that contractor and the authority may be terminated at the discretion of the authority, and, where payment to the contractor is made directly by the authority, the authority shall set off penalties and costs due to the authority against any payments due to that contractor. In the event that the authority has forwarded the contract and invoices to the Controller for payment, the authority shall reduce the amount due to the contractor as reflected in the claim schedule submitted to the Controller by the amount of the penalties and costs due the authority. In addition, with regard to any penalties and costs due to the authority that the authority has not accounted for by either a set off against payments due to the contractor or a reduction reflected in the claim schedule submitted to the Controller, to the extent that the Controller is making payments to the contractor on behalf of any state agency, the Controller shall set off penalties and costs due against any invoices due to the contractor from any other contract awarded to the contractor.