| 1 | 1 | | HOUSE BILL NO. 4237 A bill to prohibit units of local government from awarding, extending, or renewing certain procurement contracts; to establish procedures related to the solicitation of certain procurement contracts by units of local government; and to prescribe civil sanctions. the people of the state of michigan enact: Sec. 1. This act may be cited as the "local government contracting act". Sec. 3. As used in this act: (a) "Controlled entity" means an entity to which any of the following apply: (i) The entity is owned by the government of a foreign country of concern. (ii) The government of a foreign country of concern has a controlling interest in the entity. (iii) The entity is organized under the laws of, or has its principal place of business in, a foreign country of concern. (b) "Controlling interest" means the possession of the power to direct or cause the direction of the management or policies of an entity, whether through ownership of securities, by contract, or otherwise. A government that directly or indirectly has the right to vote 25% or more of the voting interests of an entity or is entitled to 25% or more of the entity's profit is presumed to possess a controlling interest. (c) "Foreign country of concern" means any of the following: (i) The People's Republic of China. (ii) The Russian Federation. (iii) The Islamic Republic of Iran. (iv) The Democratic People's Republic of Korea. (v) The Republic of Cuba. (vi) The Venezuelan regime of Nicol?s Maduro. (vii) The Syrian Arab Republic. (viii) An agency of, or any other entity under significant control of, an entity listed in subparagraphs (i) to (vii). (d) "Procurement contract" includes, but is not limited to, a contract for any of the following: (i) The construction, alteration, or repair of any building or other property of a unit of local government. (ii) The acquisition or disposal of supplies, services, or information technology. (e) "Unit of local government" means a political subdivision of this state, including school districts, community college districts, intermediate school districts, cities, villages, townships, counties, and authorities, if the political subdivision has as its primary purpose the providing of a local governmental service for citizens in a geographically limited area of this state and has the power to act primarily on behalf of that area. Sec. 5. (1) Beginning on the effective date of this act, if a procurement contract will give a contractor access to personal identifying information of any individual, an applicant for the procurement contract shall provide the unit of local government with an affidavit signed under penalty of perjury attesting that the applicant is not a controlled entity. The unit of local government may not knowingly enter into the procurement contract with a controlled entity. (2) Beginning July 1, 2026, a unit of local government may not do either of the following: (a) Knowingly extend or renew a procurement contract that gave the contractor access to personal identifying information of any individual unless the contractor provides the unit of local government with an affidavit signed under penalty of perjury attesting that the contractor is not a controlled entity. (b) Knowingly extend or renew a procurement contract that gave the contractor access to personal identifying information of any individual with a controlled entity. (3) If an applicant for a procurement contract or contractor violates this section, both of the following apply: (a) The applicant or contractor may be ordered to pay a civil fine in an amount that is equal to twice the amount of the applied for or awarded contract. (b) The applicant or contractor may be ineligible to enter into, extend, or renew a procurement contract with the unit of local government for not more than 5 years, as determined by the unit of local government. Sec. 7. Beginning on the effective date of this act, a unit of local government may not enter into a procurement contract with a person unless the contract includes an agreement that the person may not use or provide any information or communication technology or service, equipment, component, network, or system to which any of the following apply: (a) The technology or service, equipment, component, network, or system is identified on the list described in section 272 of the management and budget act, 1984 PA 431, MCL 18.1272. (b) A federal agency has prohibited, restricted transactions with, restricted the licensing of, or otherwise limited the technology or service, component, network, or system because of a national security concern. (c) The technology or service, equipment, component, network, or system is designed, developed, manufactured, or supplied by a company or affiliate that is owned by, controlled by, or domiciled in a foreign country of concern, as determined by a state or federal agency. Sec. 9. (1) A unit of local government shall not use or provide any information or communication technology or service, equipment, component, network, or system to which any of the following apply: (a) The technology or service, equipment, component, network, or system is identified on the list described in section 272 of the management and budget act, 1984 PA 431, MCL 18.1272. (b) A federal agency has prohibited, restricted transactions with, restricted the licensing of, or otherwise limited the technology or service, component, network, or system because of a national security concern. (c) The technology or service, equipment, component, network, or system is designed, developed, manufactured, or supplied by a company or affiliate that is owned by, controlled by, or domiciled in a foreign country of concern, as determined by a state or federal agency. (2) A unit of local government shall establish security procedures to ensure that local information and property are not susceptible to exploitation by a foreign country of concern. Enacting section 1. This act does not take effect unless House Bill No. 4236 (request no. H01655'25) of the 103rd Legislature is enacted into law. |
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| 23 | 23 | | HOUSE BILL NO. 4237 |
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| 27 | 27 | | A bill to prohibit units of local government from awarding, extending, or renewing certain procurement contracts; to establish procedures related to the solicitation of certain procurement contracts by units of local government; and to prescribe civil sanctions. |
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| 28 | 28 | | |
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| 29 | 29 | | the people of the state of michigan enact: |
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| 30 | 30 | | |
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| 31 | 31 | | Sec. 1. This act may be cited as the "local government contracting act". |
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| 32 | 32 | | |
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| 33 | 33 | | Sec. 3. As used in this act: |
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| 34 | 34 | | |
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| 35 | 35 | | (a) "Controlled entity" means an entity to which any of the following apply: |
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| 36 | 36 | | |
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| 37 | 37 | | (i) The entity is owned by the government of a foreign country of concern. |
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| 38 | 38 | | |
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| 39 | 39 | | (ii) The government of a foreign country of concern has a controlling interest in the entity. |
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| 40 | 40 | | |
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| 41 | 41 | | (iii) The entity is organized under the laws of, or has its principal place of business in, a foreign country of concern. |
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| 42 | 42 | | |
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| 43 | 43 | | (b) "Controlling interest" means the possession of the power to direct or cause the direction of the management or policies of an entity, whether through ownership of securities, by contract, or otherwise. A government that directly or indirectly has the right to vote 25% or more of the voting interests of an entity or is entitled to 25% or more of the entity's profit is presumed to possess a controlling interest. |
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| 45 | 45 | | (c) "Foreign country of concern" means any of the following: |
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| 47 | 47 | | (i) The People's Republic of China. |
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| 49 | 49 | | (ii) The Russian Federation. |
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| 51 | 51 | | (iii) The Islamic Republic of Iran. |
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| 52 | 52 | | |
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| 53 | 53 | | (iv) The Democratic People's Republic of Korea. |
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| 55 | 55 | | (v) The Republic of Cuba. |
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| 56 | 56 | | |
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| 57 | 57 | | (vi) The Venezuelan regime of Nicol?s Maduro. |
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| 58 | 58 | | |
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| 59 | 59 | | (vii) The Syrian Arab Republic. |
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| 60 | 60 | | |
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| 61 | 61 | | (viii) An agency of, or any other entity under significant control of, an entity listed in subparagraphs (i) to (vii). |
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| 62 | 62 | | |
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| 63 | 63 | | (d) "Procurement contract" includes, but is not limited to, a contract for any of the following: |
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| 65 | 65 | | (i) The construction, alteration, or repair of any building or other property of a unit of local government. |
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| 66 | 66 | | |
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| 67 | 67 | | (ii) The acquisition or disposal of supplies, services, or information technology. |
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| 68 | 68 | | |
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| 69 | 69 | | (e) "Unit of local government" means a political subdivision of this state, including school districts, community college districts, intermediate school districts, cities, villages, townships, counties, and authorities, if the political subdivision has as its primary purpose the providing of a local governmental service for citizens in a geographically limited area of this state and has the power to act primarily on behalf of that area. |
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| 71 | 71 | | Sec. 5. (1) Beginning on the effective date of this act, if a procurement contract will give a contractor access to personal identifying information of any individual, an applicant for the procurement contract shall provide the unit of local government with an affidavit signed under penalty of perjury attesting that the applicant is not a controlled entity. The unit of local government may not knowingly enter into the procurement contract with a controlled entity. |
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| 72 | 72 | | |
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| 73 | 73 | | (2) Beginning July 1, 2026, a unit of local government may not do either of the following: |
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| 74 | 74 | | |
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| 75 | 75 | | (a) Knowingly extend or renew a procurement contract that gave the contractor access to personal identifying information of any individual unless the contractor provides the unit of local government with an affidavit signed under penalty of perjury attesting that the contractor is not a controlled entity. |
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| 76 | 76 | | |
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| 77 | 77 | | (b) Knowingly extend or renew a procurement contract that gave the contractor access to personal identifying information of any individual with a controlled entity. |
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| 78 | 78 | | |
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| 79 | 79 | | (3) If an applicant for a procurement contract or contractor violates this section, both of the following apply: |
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| 80 | 80 | | |
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| 81 | 81 | | (a) The applicant or contractor may be ordered to pay a civil fine in an amount that is equal to twice the amount of the applied for or awarded contract. |
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| 82 | 82 | | |
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| 83 | 83 | | (b) The applicant or contractor may be ineligible to enter into, extend, or renew a procurement contract with the unit of local government for not more than 5 years, as determined by the unit of local government. |
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| 84 | 84 | | |
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| 85 | 85 | | Sec. 7. Beginning on the effective date of this act, a unit of local government may not enter into a procurement contract with a person unless the contract includes an agreement that the person may not use or provide any information or communication technology or service, equipment, component, network, or system to which any of the following apply: |
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| 86 | 86 | | |
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| 87 | 87 | | (a) The technology or service, equipment, component, network, or system is identified on the list described in section 272 of the management and budget act, 1984 PA 431, MCL 18.1272. |
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| 88 | 88 | | |
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| 89 | 89 | | (b) A federal agency has prohibited, restricted transactions with, restricted the licensing of, or otherwise limited the technology or service, component, network, or system because of a national security concern. |
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| 90 | 90 | | |
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| 91 | 91 | | (c) The technology or service, equipment, component, network, or system is designed, developed, manufactured, or supplied by a company or affiliate that is owned by, controlled by, or domiciled in a foreign country of concern, as determined by a state or federal agency. |
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| 92 | 92 | | |
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| 93 | 93 | | Sec. 9. (1) A unit of local government shall not use or provide any information or communication technology or service, equipment, component, network, or system to which any of the following apply: |
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| 94 | 94 | | |
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| 95 | 95 | | (a) The technology or service, equipment, component, network, or system is identified on the list described in section 272 of the management and budget act, 1984 PA 431, MCL 18.1272. |
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| 96 | 96 | | |
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| 97 | 97 | | (b) A federal agency has prohibited, restricted transactions with, restricted the licensing of, or otherwise limited the technology or service, component, network, or system because of a national security concern. |
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| 98 | 98 | | |
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| 99 | 99 | | (c) The technology or service, equipment, component, network, or system is designed, developed, manufactured, or supplied by a company or affiliate that is owned by, controlled by, or domiciled in a foreign country of concern, as determined by a state or federal agency. |
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| 100 | 100 | | |
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| 101 | 101 | | (2) A unit of local government shall establish security procedures to ensure that local information and property are not susceptible to exploitation by a foreign country of concern. |
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| 102 | 102 | | |
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| 103 | 103 | | Enacting section 1. This act does not take effect unless House Bill No. 4236 (request no. H01655'25) of the 103rd Legislature is enacted into law. |
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