California Senate Bill SB1510 Amended / Bill

 BILL NUMBER: SB 1510AMENDED BILL TEXT AMENDED IN ASSEMBLY JUNE 12, 2012 AMENDED IN SENATE MAY 2, 2012 AMENDED IN SENATE MARCH 27, 2012 INTRODUCED BY Senator Wright (Coauthor: Assembly Member Perea) FEBRUARY 24, 2012 An act to amend Section 14837 of the Government Code, relating to  the Department of General Services   contracts  . LEGISLATIVE COUNSEL'S DIGEST SB 1510, as amended, Wright. Department of General Services: small business contracts. The Small Business Procurement and Contract Act requires the Director of General Services and the heads of other state agencies that enter into contracts for the provision of goods, services, and information technology and for the construction of state facilities to establish goals for the participation of small businesses in these contracts, to provide for a small business preference in the award of these contracts, to give special consideration and special assistance to small businesses, and, whenever possible, to make awards to small businesses, as specified. The act authorizes the director to set standards, established by regulation, for a certified small business or microbusiness to contribute to the fulfillment of contract requirements by performing a commercially useful function, as defined. This bill would  expand   modify  the definition to include additional conditions under which a certified small business or microbusiness is deemed to perform a commercially useful function. 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 14837 of the Government Code is amended to read: 14837. As used in this chapter: (a) "Department" means the Department of General Services. (b) "Director" means the Director of General Services. (c) "Manufacturer" means a business that meets both of the following requirements: (1) It is primarily engaged in the chemical or mechanical transformation of raw materials or processed substances into new products. (2) It is classified between Codes 31 to 33, inclusive, of the North American Industry Classification System. (d) (1) "Small business" means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and which, together with affiliates, has 100 or fewer employees, and average annual gross receipts of ten million dollars ($10,000,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 100 or fewer employees. (2) "Microbusiness" is a small business which, together with affiliates, has average annual gross receipts of two million five hundred thousand dollars ($2,500,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 25 or fewer employees. (3) The director shall conduct a biennial review of the average annual gross receipt levels specified in this subdivision and may adjust that level to reflect changes in the California Consumer Price Index for all items. To reflect unique variations or characteristics of different industries, the director may establish, to the extent necessary, either higher or lower qualifying standards than those specified in this subdivision, or alternative standards based on other applicable criteria. (4) Standards applied under this subdivision shall be established by regulation, in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2, and shall preclude the qualification of businesses that are dominant in their industry. In addition, the standards shall provide that the certified small business or microbusiness shall provide goods or services that contribute to the fulfillment of the contract requirements by performing a commercially useful function, as defined below: (A) A certified small business or microbusiness is deemed to perform a commercially useful function if the business does all of the following: (i) Is responsible for the execution of a distinct element of the work of the contract. (ii) Carries out its obligation by actually performing, managing, or supervising the work involved. (iii) Performs work that is normal for its business services and functions. (iv) Is responsible, with respect to  products, inventories,  materials  ,  and supplies required for the contract, for negotiating price, determining quality and quantity, ordering  material  , installing, if applicable, and  paying for the material itself   making payment  .  (v) Is responsible for its own accounts receivable, and the accounts receivable of the certified small business or microbusiness are not directly or indirectly controlled by the prime contractor, supplier, or wholesaler.   (v)   (vi)  Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices. (B) A contractor, subcontractor, or supplier will not be considered to perform a commercially useful function if the contractor's, subcontractor's, or supplier's 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 small business or microbusiness participation. (e) "Disabled veteran business enterprise" means an enterprise that has been certified as meeting the qualifications established by subdivision (g) of Section 999 of the Military and Veterans Code.