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SB-73 State contracts: participation goals.(1999-2000)

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SB73:v96#DOCUMENT

Passed  IN  Assembly  September 03, 1999
Passed  IN  Senate  September 07, 1999

CALIFORNIA LEGISLATURE— 1999–2000 REGULAR SESSION

Senate Bill
No. 73


Introduced  by  Senator Murray

December 07, 1998


An act to add Chapter 7 (commencing with Section 16860) to Part 3 of Division 4 of Title 2 of the Government Code, and to add Section 20103 to, and to add Article 1.6 (commencing with Section 10116) to Chapter 1 of Part 2 of Division 2 of, the Public Contract Code, relating to public contracts.


LEGISLATIVE COUNSEL'S DIGEST


SB 73, Murray. State contracts: participation goals.
(1) Existing law requires any awarding department taking bids in connection with the award of a contract for professional bond services to provide, in the general conditions under which bids will be received, that any person making a bid or offer shall set forth information regarding subcontracts that would be utilized to meet participation goals by various enterprises.
The State Contract Act also requires a state agency to award a contract to the lowest responsible bidder who either meets, or makes a good faith effort to comply with, participation goals for designated business enterprises.
Under existing law, fraudulent conduct in connection with these procedures is punishable as a misdemeanor.
This bill, in addition, would provide for participation programs to increase the amounts expended by awarding departments with respect to contracts with small business enterprises with respect to professional bond services and state contracts, generally. “Small business enterprise” would be defined as having the same meaning as “small-business concern” under specified federal law. By creating a new crime, the bill would impose a state-mandated local program.
(2) The Local Agency Public Construction Act generally sets forth the authority and duties of local agencies in awarding contracts on public works.
This bill would additionally authorize a local agency to establish incentive programs to encourage participation in the contracting process by small business enterprises. (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

The people of the State of California do enact as follows:


SECTION 1.

 Chapter 7 (commencing with Section 16860) is added to Part 3 of Division 4 of Title 2 of the Government Code, to read:
CHAPTER  7. Small Business Enterprise Participation Programs for Professional Bond Services

16860.
 (a) Notwithstanding any other provision of law, each awarding department shall establish a program to substantially increase the overall dollar amount expended by the awarding department with respect to the contracts with small business enterprises for professional bond services relating to the issuance of bonds by the awarding department including amounts spent as underwriter’s discounts.
(b) In attempting to establish the program required in subdivision (a), the awarding department shall consider establishing cocounsel, joint venture, and subcontracting relationships including small business enterprises in all contracts for bonds awarded by the awarding department. However, nothing in this chapter shall preclude the awarding department from achieving the goals of the program required in this section without requiring joint ventures, cocounsel, or subcontracting arrangements.
(c) Nothing in this chapter shall be construed to authorize any awarding department to discriminate in the awarding of any contract on the basis of race, color, sex, ethnic origin, or ancestry.

16861.
 As used in this chapter, the following definitions apply:
(a) “Awarding department” means any agency, department, constitutional officer, governmental entity, or other officer or entity of the state empowered by law to issue bonds on behalf of the State of California.
(b) “Bonds” means bonds, notes, warrants, certificates of participation, and other evidences of indebtedness issued by or on behalf of the State of California.
(c) “Contract” includes any contract, agreement, or joint agreement to provide professional bond services to the State of California or an awarding department.
(d) “Contractor” means any provider of professional bond services who enters into a contract with an awarding department.
(e) “Foreign corporation,” “foreign firm,” or “foreign-based business” means a business entity that is incorporated or has its principal headquarters located outside the United States.
(f) “Management and control” means effective and demonstrable management of the business entity.
(g) “Professional bond services” include services as financial advisers, bond counsel, underwriters in negotiated transactions, underwriter’s counsel, financial printers, feasibility consultants, and other professional services related to the issuance and sale of bonds.
(h) “Small business enterprise” has the same meaning as “small-business concern,” as specified in Section 632 of Title 15 of the United States Code.

16862.
 Notwithstanding Section 16860, if a contract for professional bond services of an underwriter is to be obtained by competitive bid, the awarding department shall, at a minimum, take all of the following actions:
(a) Deliver the notice of sale or other notification of intention to issue the bonds to all small business enterprises that have listed their names with the awarding department for the purpose of this notice and other qualified small business enterprises known to the awarding department.
(b) State in all notices of sale and other notifications of intention to issue bonds that small business enterprises are encouraged to respond.
(c) Require all submitting bidders to certify their awareness of the goals of the awarding department in accordance with this chapter.
(d) Nothing in this section shall be construed to authorize any awarding department to discriminate in the solicitation of bids or in the awarding of contracts on the basis of race, color, sex, ethnic origin, or ancestry.

16865.
 In implementing this chapter, the awarding department shall utilize existing resources such as the Office of Small and Minority Business.

16866.
 Commencing on January 1, 2001, and on January 1 of each year thereafter, each awarding department shall report to the Governor and the Legislature, notwithstanding Section 7550.5, on the level of participation by small business enterprises in contracts as identified in this chapter.

16868.
 (a) It shall be unlawful for a person to do any of the following:
(1) 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, acceptance or certification as a small or disabled veteran business enterprise, for the purposes of this chapter.
(2) 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 acceptance or certification or denial of acceptance or certification of any entity as a small or disabled veteran business enterprise.
(3) 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 acceptance or certification as a small or disabled veteran business enterprise.
(4) Knowingly and with intent to defraud, fraudulently obtain, attempt to obtain, or aid another person in fraudulently obtaining or attempting to obtain, public moneys to which the person or firm is not entitled under this chapter.
(5) Establish, or cooperate in the establishment of, or exercise control over, a firm found to have violated any of paragraphs (1) to (4), inclusive. Any person or firm who violates this paragraph is guilty of a misdemeanor and shall be liable for a civil penalty not to exceed fifty thousand dollars ($50,000) for the first violation, and a civil penalty not to exceed two hundred thousand dollars ($200,000) for each additional or subsequent violation.
(b) Any person who violates paragraphs (1) to (4), inclusive, of subdivision (a) is guilty of a misdemeanor and shall be liable for a civil penalty not to exceed five thousand dollars ($5,000) for the first violation, and a civil penalty not to exceed twenty thousand dollars ($20,000) for each additional or subsequent violation.
(c) Any person or firm that violates subdivision (a) shall, in addition to the penalties provided for in subdivision (b), be suspended from bidding on, or participating as either a contractor or subcontractor in, any contract awarded by the state for a period of not less than 30 days nor more than one year. However, for an additional or subsequent violation, the period of suspension shall be extended for a period of up to three years. Any person or firm that fails to satisfy the penalties imposed pursuant to subdivisions (b) and (c) shall be prohibited from further contracting with the state until the penalties are satisfied.
(d) The awarding department shall report all alleged violations of this section to the Office of Small and Minority Business. The office shall subsequently report all alleged violations to the Attorney General who shall determine whether to bring a civil action against any person or firm for violation of this section.
(e) The office shall monitor the status of all reported violations and shall maintain and make available to all state departments a central listing of all firms and persons who have been determined to have committed violations resulting in suspension.
(f) No awarding department shall enter into any contract with any person or firm suspended for violating this section during the period of the person’s or firm’s suspension. No awarding department shall award a contract to any contractor utilizing the services of any person or firm as a subcontractor suspended for violating this section during the period of the person’s or firm’s suspension.
(g) The awarding department shall check the central listing provided by the office to verify that the person, firm, or contractor to whom the contract is being awarded, or any person, or firm, being utilized as a subcontractor by that person, firm, or contractor, is not under suspension for violating this section.
(h) This section shall not apply to business enterprise programs conducted by public utility companies pursuant to the California Public Utilities Commission’s General Order 156.

16869.
 This chapter shall not apply to any public pension or retirement system governed by a retirement board in which Section 17 of Article XVI of the California Constitution vests plenary authority and fiduciary responsibility for the investment of moneys and administration of the system.

SEC. 2.

 Article 1.6 (commencing with Section 10116) is added to Chapter 1 of Part 2 of Division 2 of the Public Contract Code, to read:
Article  1.6. Small and Disabled Veteran Business Participation Goals for State Contracts

10116.
 (a) The Legislature finds and declares all of the following:
(1) The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, reasonable and just prices, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured. The preservation and expansion of that competition is basic to the economic well-being of this state and that well-being cannot be realized unless the actual and potential capacity of small and disabled veteran business enterprises is encouraged and developed. Therefore, it is the declared policy of the state to aid the interests of small and disabled veteran business enterprises in order to preserve reasonable and just prices and a free competitive enterprise, to ensure that a fair proportion of the total number of contracts or subcontracts for commodities, supplies, technology, property, and services are awarded to small and disabled veteran business enterprises, and to maintain and strengthen the overall economy of the state.
(2) The opportunity for full participation in our free enterprise system by small and disabled veteran business enterprises is essential if this state is to attain social and economic equality for those businesses and improve the functioning of the state economy.
(3) State agencies that have established short- and long-range minority, women, and disabled veteran participation goals are awarding 23 percent or more of their contracts to these business enterprises.
(4) It is in the state’s interest to expeditiously improve the economically disadvantaged position of small and disabled veteran business enterprises.
(5) The economic position of these businesses can be improved by providing long-range substantial goals for procurement by state agencies of commodities, professional services, and construction work from small and disabled veteran businesses.
(6) Procurement by state agencies of goods and services from these businesses also benefits the state agencies and the citizens of the state by encouraging the expansion of the number of vendors for procurements, thereby encouraging competition among the vendors and promoting economic efficiency in the process.
(b) It is the purpose of this article to do all of the following:
(1) Encourage greater economic opportunity for small and disabled veteran business enterprises.
(2) Promote competition among state agencies in order to enhance long-term economic efficiency in the procurement of construction, commodities, and professional services contracts.
(3) Clarify and expand the program for the procurement by state agencies of commodities, professional services, and construction work from small and disabled veteran business enterprises.
(c) Notwithstanding any other provision of law, contracts awarded by any state agency, department, officer, or other state governmental entity for construction, professional services (except those subject to Chapter 6 (commencing with Section 16850) or Chapter 7 (commencing with Section 16860) of Part 3 of Division 4 of Title 2 of the Government Code), materials, supplies, equipment, alteration, repair, or improvement shall have statewide participation goals of not less than 30 percent for small business enterprises and 3 percent for disabled veteran business enterprises. These goals apply to the overall dollar amount expended each year by the awarding department, as defined by Section 10116.1, pursuant to this article.

10116.1.
 As used in this article, the following definitions apply:
(a) “Awarding department” means any state agency, department, governmental entity, or other officer or entity authorized by law to enter into contracts on behalf of the state.
(b) “Contract” includes any agreement or joint development agreement to provide labor, services, material, supplies, or equipment in the performance of a contract, franchise, concession, or lease granted, let, or awarded for and on behalf of the state.
(c) “Contractor” means any person or persons, regardless of race, color, sex, ethnic origin or ancestry, or any firm, partnership, corporation, or combination thereof, whether or not a small business enterprise, who submits a bid and enters into a contract with a representative of a state agency, department, governmental entity, or other officer authorized by law to enter into contracts on behalf of the state.
(d) “Goal” means a numerically expressed objective that awarding departments and contractors are required to make efforts to achieve.
(e) “Small business enterprise” has the same meaning as “small-business concern,” as specified in Section 632 of Title 15 of the United States Code.

10116.2.
 (a) In awarding contracts to the lowest responsible bidder, the awarding department shall consider the efforts of a bidder to meet small business enterprise and disabled veteran business enterprise goals set forth in this article. The awarding department shall award the contract to the lowest responsible bidder meeting or making good faith efforts to meet these goals.
(b) A bidder shall be deemed to have made good faith efforts upon submittal, within time limits specified by the awarding department, of documentary evidence that all of the following actions were taken:
(1) Contact was made with the awarding department to identify small and disabled veteran business enterprises.
(2) Contact was made with other state and federal agencies, and with local small and disabled veteran business enterprise organizations to identify small and disabled veteran business enterprises.
(3) Advertising was published in trade papers and papers focusing on small and disabled veteran business enterprises, unless time limits imposed by the awarding department do not permit that advertising.
(4) Invitations to bid were submitted to potential small and disabled veteran business enterprise contractors.
(5) Available small and disabled veteran business enterprises were considered.

10116.3.
 (a) The awarding department shall establish a method of monitoring adherence to the goals specified in this article.
(b) The awarding department shall adopt rules and regulations for the purpose of implementing this article. Emergency regulations consistent with this section may be adopted.

10116.4.
 In implementing this article, the awarding department shall utilize existing resources such as the Office of Small and Minority Business, the Minority Business Development Agency, and the Small Business Administration.

10116.5.
 (a) On January 1 of each year, each awarding department shall report to the Governor and the Legislature, notwithstanding Section 7550.5 of the Government Code, on the level of participation by small and disabled veteran business enterprises in contracts as identified in this article for the fiscal year beginning July 1 and ending June 30. In addition, the report shall contain the levels of participation by small and disabled veteran business enterprises for the following categories of contracts:
(1) Construction.
(2) Purchases of materials, supplies, and equipment.
(3) Professional services.
(4) All contracts for a dollar amount of less than twenty-five thousand dollars ($25,000).
(b) If the established goals are not being met, the awarding department shall report the reasons for its inability to achieve the standards and identify remedial steps it shall take.

10116.6.
 Notwithstanding any other provision of this article, the failure of an awarding department to meet the goals established under this article shall not affect the validity or enforceability of any contract or any bonds, notes, or other obligations issued by the awarding department to provide for the payment of any contract subject to this article.

10116.7.
 (a) Nothing in this article shall be construed to authorize any awarding department to discriminate in the awarding of any contract on the basis of race, color, sex, ethnic origin, or ancestry.
(b) Nothing in this article shall be construed to authorize any contractor to discriminate in the solicitation or acceptance of bids for subcontracting, or for materials or equipment, on the basis of race, color, sex, ethnic origin, or ancestry.

10116.8.
 If any provision of this article or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect other provisions or applications of the article which can be given effect without the invalid provision or application, and to this end the provisions of this article are severable.

10116.9.
 (a) It shall be unlawful for a person or firm to:
(1) 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, acceptance or certification as a small or disabled veteran business enterprise, for the purposes of this article.
(2) 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 acceptance or certification or denial of acceptance or certification of any entity as a small or disabled veteran business enterprise.
(3) 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 acceptance or certification as a small or disabled veteran business enterprise.
(4) Knowingly and with intent to defraud, fraudulently obtain, attempt to obtain, or aid another person or firm in fraudulently obtaining or attempting to obtain, public moneys to which the person is not entitled under this article.
(5) Establish, or cooperate in the establishment of, or exercise control over, a firm found to have violated any of paragraphs (1) to (4), inclusive. Any person or firm who violates this paragraph is guilty of a misdemeanor and shall be liable for a civil penalty not to exceed fifty thousand dollars ($50,000) for the first violation, and a civil penalty not to exceed two hundred thousand dollars ($200,000) for each additional, or subsequent violation.
(b) Any person who violates paragraphs (1) to (4), inclusive, of subdivision (a) is guilty of a misdemeanor and shall be liable for a civil penalty not to exceed five thousand dollars ($5,000) for the first violation, and a civil penalty not to exceed twenty thousand dollars ($20,000) for each additional or subsequent violation.
(c) Any person or firm that violates subdivision (a) shall, in addition to the penalties provided for in subdivision (b), be suspended from bidding on, or participating as either a contractor, subcontractor, or supplier in, any state contract or project for a period of not less than 30 days nor more than one year. However, for an additional or subsequent violation the period of suspension shall be extended for a period of up to three years. Any person or firm that fails to satisfy the penalties imposed pursuant to subdivisions (b) and (c) shall be prohibited from further contracting with the state until the penalties are satisfied.
(d) The awarding department shall report all alleged violations of this section to the Office of Small and Minority Business. The office shall subsequently report all alleged violations to the Attorney General who shall determine whether to bring a civil action against any person or firm for violation of this section.
(e) The office shall monitor the status of all reported violations and shall maintain and make available to all state departments a central listing of all firms and persons who have been determined to have committed violations resulting in suspension.
(f) No awarding department shall enter into any contract with any person or firm suspended for violating this section during the period of the person’s or firm’s suspension. No awarding department shall award a contract to any contractor utilizing the services of any person or firm as a subcontractor suspended for violating this section during the period of the person’s or firm’s suspension.
(g) The awarding department shall check the central listing provided by the office to verify that the person, firm, or contractor to whom the contract is being awarded, or any person or firm being utilized as a subcontractor by that person, firm, or contractor, is not under suspension for violating this section.
(h) This section shall not apply to business enterprise programs conducted by public utility companies pursuant to the California Public Utilities Commission’s General Order 156.

10116.10.
 (a) Notwithstanding any other provision of this article, statewide participation goals for contracts let by the Department of Corrections shall be exclusive of inmate day labor contracts.
(b) The goals established in this article shall also apply to the overall dollar amount expended each year on contracts let by the California Department of Corrections for the purposes of services, maintenance, and supplies excluding contracts for services for inmate medical needs.

10116.11.
 (a) Any awarding department taking bids in connection with the award of any contract shall provide in the general conditions under which bids will be received, that any person making a bid or offer to perform a contract shall, in his or her bid or offer, set forth the following information:
(1) The name and the location of the place of business of each subcontractor certified as a small or disabled veteran business enterprise who will perform work or labor or render service to the prime contractor in connection with the performance of the contract and who will be used by the prime contractor to fulfill small and disabled veteran business enterprise participation goals.
(2) The portion of work that will be done by each subcontractor under paragraph (1). Except in cases of emergency where a contract is necessary for the immediate preservation of the public health, welfare, or safety, or protection of state property, the prime contractor shall list only one subcontractor for each portion of work as is defined by the prime contractor in his or her bid or offer.
(b) The Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1 shall apply to the information required by subdivision (a) relating to subcontractors certified as small or disabled veteran business enterprises.
(c) For purposes of this section, “subcontractor” and “prime contractor” shall have the same meaning as those terms are defined in Section 4113.
(d) As used in this section, “contract” does not include a contract negotiated pursuant to Chapter 10 (commencing with Section 4525) of Division 5 of Title 1 of the Government Code.

10116.12.
 Notwithstanding any other provision of law, contracts awarded by any state agency, department, officer, or other state governmental entity for the purchase of general public advertisements shall have statewide participation goals of not less than 30 percent for small business enterprises and 3 percent for disabled veteran business enterprises. These goals apply to the overall dollar amount expended each year by the awarding state agency, department, offices, or other state governmental entity.

10116.13.
 (a) Notwithstanding Section 10116.2, 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 small 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 small 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 small and disabled veteran business enterprise participation requirements of a solicitation that calls for 30 percent small business-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 or make a good-faith effort to do so. At a minimum, the utilization plan shall include the following information:
(1) A statement of the vendor’s small 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 small and disabled veteran business enterprise participation goals set forth in the vendor’s small 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 small 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 small 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 10116.
(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 for the succeeding year.
(6) Total dollars expressed as a percentage of the amount estimated pursuant to paragraph (4), intended to be subcontracted with small 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 small 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 small 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 small 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 small 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 small 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 small 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 small 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 small 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 small 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 small 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 small and disabled veteran business enterprise goals in the utilization plan, or fails to evidence sufficient business reasons for failing to achieve the small 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.

10116.14.
 This article shall not apply to any public pension or retirement system governed by a retirement board in which Section 17 of Article XVI of the California Constitution vests plenary authority and fiduciary responsibility for the investment of moneys and administration of the system.

SEC. 3.

 Section 20103 is added to the Public Contract Code, to read:

20103.
 (a) Notwithstanding any other provision of law, a local agency may establish incentive programs to encourage participation in the contracting process by small business enterprises.
(b) This section shall not apply to any public pension or retirement system governed by a retirement board in which Section 17 of Article XVI of the California Constitution vests plenary authority and fiduciary responsibility for the investment of moneys and administration of the system.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.