BILL NUMBER: SB 733INTRODUCED BILL TEXT INTRODUCED BY Senator Block FEBRUARY 22, 2013 An act to add Section 999.4 to the Military and Veterans Code, and to repeal Section 10115.15 of the Public Contract Code, relating to state contracts. LEGISLATIVE COUNSEL'S DIGEST SB 733, as introduced, Block. State contracts: disabled veteran business enterprise statewide participation goals: business utilization plan value. Existing law establishes a 3% statewide participation goal for disabled veteran business enterprises for certain types of state contracts. Existing law requires an awarding department to award the contract to the lowest responsible bidder meeting specified statewide participation goals for disabled veteran business enterprises, and allows an awarding department to accept submission of a disabled veteran business enterprise utilization plan meeting certain requirements to meet this goal, as specified. This bill would delete the provisions allowing the awarding department to accept submission of a disabled veteran business enterprise utilization plan. The bill would instead specify that the statewide participation goal for disabled veteran business enterprises may be met by the business utilization plan value of a business utilization plan partner, as defined, established by payments between the partner and a disabled veteran business enterprise, as specified. The bill would require the Department of General Services to certify persons meeting certain requirements as a business utilization plan partner, as defined, and would require a business utilization plan partner and a disabled veteran business enterprise to report information relating to the business utilization plan value, as provided. 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 999.4 is added to the Military and Veterans Code, to read: 999.4. (a) For purposes of this section, the following terms have the following meanings: (1) "Business utilization plan partner" or "partner" means a person that bids for or intends to bid for the award of a contract by a state agency, department, officer, or other state governmental entity, including school districts when they are expending state funds for construction, professional services (except those subject to Chapter 6 (commencing with Section 16850) of Part 3 of Division 4 of Title 2 of the Government Code), materials, supplies, equipment, alteration, repair, or improvement, that has paid money to a disabled veteran business enterprise in the previous fiscal year, and that has been certified as a business utilization plan partner by the department pursuant to paragraph (1) of subdivision (c). (2) "Business utilization plan value" means the amount established by the department pursuant to paragraph (2) of subdivision (d) that has been paid by a business utilization plan partner to a disabled veteran business enterprise in the previous fiscal year for construction, professional services (except those subject to Chapter 6 (commencing with Section 16850) of Part 3 of Division 4 of Title 2 of the Government Code), materials, supplies, equipment, alteration, repair, or improvement, even if those contract expenditures were not part of a contract awarded by a state agency, department, officer, or other state governmental entity. (3) "Department" means the Department of General Services. (b) The statewide participation goal for disabled veteran business enterprises set forth in Section 999.2 and in subdivision (d) of Section 10115 of the Public Contract Code may be met using the business utilization plan value of a business utilization plan partner established for the previous fiscal year, except that the business utilization plan value in excess of 3 percent of the amount of the contract or contracts awarded to the partner by the state agency, department, officer, or other state governmental entity, including school districts when they are expending state funds for construction, professional services (except those subject to Chapter 6 (commencing with Section 16850) of Part 3 of Division 4 of Title 2 of the Government Code), materials, supplies, equipment, alteration, repair, or improvement shall not be used to meet the statewide participation goal for disabled veterans. (c) (1) The Department of General Services shall certify as a business utilization plan partner a person or firm that has submitted documentation from the person or firm and from a disabled veteran business enterprise demonstrating that the person or firm is a business utilization plan partner, including documentation confirming the amount paid to the disabled veteran business enterprise by the partner in the previous fiscal year. (2) The department shall establish a partner's business utilization plan value using copies of invoices submitted to the department by the partner and the disabled veteran business enterprise to substantiate the business utilization plan value. (d) (1) When a partner is awarded a contract with a state agency, department, officer, or other state governmental entity for which the business utilization plan value will be used to meet the statewide participation goal for disabled veteran business enterprises as authorized by this section, the business utilization plan value being used shall be reported to the department by both the partner and the disabled veteran business enterprise, and shall be subtracted by the department from the business utilization plan value remaining that may be utilized by the partner to qualify as meeting the goals of this article for purposes of Section 999.2 and of Section 10115.2 of the Public Contract Code. Until a report is made pursuant to this paragraph, no further business utilization plan value of the partner may be used pursuant to this section. (2) When the full business utilization plan value of a partner that is eligible for use pursuant to this section has been used pursuant to this section, a conotification letter signed by both the partner and the disabled veteran business enterprise shall be submitted to the department confirming that the full business utilization plan value has been used. (e) (1) The department shall suspend any person who willfully violates the reporting requirements of this section from bidding on, or participating as either a contractor, subcontractor, or supplier in, any state contract or project for a period of two years, and, if certified as a disabled veteran business enterprise, the department shall revoke the business' certification for a period of two years. The department shall prohibit any business or person who willfully violates the reporting requirements of this section from bidding on, or participating as either a contractor, subcontractor, or supplier in, any state contract or project, and, if certified as a disabled veteran business enterprise, the department shall permanently revoke the business' certification. (2) No awarding department shall enter into any contract with any person suspended under this subdivision during the period of the person's suspension or with any person prohibited from contracting under this subdivision. No awarding department shall award a contract to any contractor utilizing the services of any person as a subcontractor suspended under this subdivision for the period of the person's suspension or utilizing the services of any person or contractor prohibited from contracting under this subdivision. (3) The awarding department shall check a central listing provided by the department to verify that the person or contractor to whom the contract is being awarded, or any person being utilized as a subcontractor or supplier by that person or contractor, is not under suspension for violating this section or is not prohibited from contracting under this section. (4) This subdivision does not apply to any contract necessary for the protection of the public health, safety, or welfare. (f) Section 999.9 shall not be applicable to violations of this section. SEC. 2. Section 10115.15 of the Public Contract Code is repealed.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.