BILL NUMBER: AB 2270INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Bonta FEBRUARY 18, 2016 An act to add Article 3 (commencing with Section 14848) to Chapter 6.5 of Part 5.5 of Division 3 of Title 2 of the Government Code, and to amend Section 10221 of the Public Contract Code, relating to public contracts. LEGISLATIVE COUNSEL'S DIGEST AB 2270, as introduced, Bonta. Public contracts: business development: statewide bonding program. Existing law requires that public contracts with state agencies provide for the filing of separate performance and payment bonds by the contractor in the form of bonds executed by an admitted surety insurer, as provided. This bill would establish, in the Department of General Services, a statewide contractor bonding program, to be administered by the Office of Small Business and Disabled Veteran Business Enterprise Services, for the purpose of enabling participating contractors to meet any applicable bid, payment, or performance bonding requirements for public contracts with state agencies. This bill would authorize the office to act as guarantor on surety bonds for participating contractors on contracts with state agencies and require the office to provide specified technical assistance to participating contractors. The bill would authorize the office to charge participating contractors fees for the provision of these services, not to exceed the amount necessary to cover the costs incurred in the administration of these provisions. This bill would require the office to establish a request for the proposals process by which contractors may participate in the program as a participating contractor and to give preference to contractors that are disadvantaged business enterprises, small business enterprises, or disabled veteran business enterprises, as specified. The bill would authorize the office to terminate a contractor's participation after a reasonable period of time if the contractor is no longer in compliance with the requirements of the program or suspend a participating contractor that defaults on a bond from transacting any business with the state for a period of not less than 3 years and not more than 10 years. 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. Article 3 (commencing with Section 14848) is added to Chapter 6.5 of Part 5.5 of Division 3 of Title 2 of the Government Code, to read: Article 3. Statewide Contractor Bonding Program 14848. As used in this article, the following definitions shall apply: (a) "Office" means the Office of Small Business and Disabled Veteran Business Enterprise Services established within the department pursuant to Section 14839. (b) "Program" means the statewide contractor bonding program established pursuant to this chapter. (c) "Participating contractor" means a person seeking to bid on a contract with a state agency that is required by law, including, but not limited to, Sections 10221 to 10225, inclusive, of the Public Contract Code, to acquire bonds to participate in those contracts and participate in the program. 14848.10. There is in the department a statewide contractor bonding program for the purpose of enabling participating contractors to meet any applicable bid, payment, or performance bonding requirements for public contracts with state agencies. The office shall be the entity to administer this program. 14848.20. The office may act as guarantor on a surety bond for a participating contractor on a contract with a state agency. 14848.30. (a) The office shall establish a request for proposals process by which contractors may participate in the program as participating contractors pursuant to this chapter. (b) In considering requests for proposals for assistance pursuant to this article, the department shall give preference to contractors that are any of the following: (1) A disadvantaged business enterprise, as defined in Section 2051 of the Public Contract Code. (2) A small business enterprise certified pursuant to Article 1 (commencing with Section 14835). (3) A disabled veteran business enterprise, as defined in Section 999 of the Military and Veterans Code. (c) (1) The office may terminate a contractor's participation in the program after a reasonable period of time if the contractor is no longer in compliance with the requirements of the program. (2) The office may suspend a participating contractor that defaults on a bond issued pursuant to this article from transacting any business with the state 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. A contractor that was previously a participating contractor but was suspended pursuant to this paragraph may resume participation in the bonding program at the end of his or her suspension upon approval by the office. 14848.40. The office shall provide technical assistance to a participating contractor. Technical assistance provided pursuant to this section shall include, but is not limited to, all of the following: (a) Assessment and identification of the particular barriers facing the participating contractor and development of solutions to those barriers. Activities pursuant to this subdivision may include the following: (1) Assessments by surety and construction experts. (2) Development of a business plan. (3) Workshops addressing the following topics: (A) Basic information pertaining to contractor bonding. (B) Understanding the surety process and underwriting. (C) The process for bidding on state projects. (D) Addressing stop notices. (E) Strategies for accessing capital. (F) Prevailing wages. (G) Job safety and the Occupational Safety and Health Administration. (H) Certification. (I) Any other topics that would be beneficial to the participating contractor. (4) Project field support. (b) Identification of and assistance in obtaining other financial support and resources. Activities pursuant to this subdivision may include the following: (1) Linkages with accountants, brokers, and surety companies committed to helping contractors build bonding and organizational capacity. (2) Pre-qualifications for additional assistance. (3) Collateral guarantees. (c) Monitoring and reporting on the progress of the participating contractor, including the following: (1) Collaboration with other programs. (2) Progress on any project for which a bond is issued pursuant to this article. (3) Defaults on a bond issued pursuant to this article. (4) Funds administration. Notwithstanding subdivision (b) of Section 14848.50, the office shall not charge a participating contractor fees for the purpose of this paragraph. 14848.50. (a) The department shall adopt rules and regulations necessary to implement the provisions of this article. (b) The office may charge a participating contractor fees for the provision of services pursuant to this article. The fees shall not exceed the amount necessary to cover the costs incurred in the administration of this article. SEC. 2. Section 10221 of the Public Contract Code is amended to read: 10221. Every contract shall provide for the filing of separate performance and payment bonds by the contractor in the form of bonds executed by either an admitted surety insurer or the Office of Small Business and Disabled Veteran Business Enterprise Services pursuant to Section 14848.20 of the Government Code and not deposits in lieu of bond, subject to the approval of the department.