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AB-1646 California Demonstration of Emerging Market Opportunities Act.(2011-2012)

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AB1646:v95#DOCUMENT

Amended  IN  Senate  June 25, 2012
Amended  IN  Assembly  May 25, 2012
Amended  IN  Assembly  May 02, 2012
Amended  IN  Assembly  April 11, 2012

CALIFORNIA LEGISLATURE— 2011–2012 REGULAR SESSION

Assembly Bill
No. 1646


Introduced  by  Assembly Member Campos
(Coauthor(s): Assembly Member Alejo, V. Manuel Pérez)

February 13, 2012


An act to add and repeal Article 6 (commencing with Section 12099) of Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, relating to state government.


LEGISLATIVE COUNSEL'S DIGEST


AB 1646, as amended, Campos. California Demonstration of Emerging Market Opportunities Act.
The Governor’s Office of Business and Economic Development serves as the Governor’s lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment, and economic growth. The office, among others, makes recommendations to the Governor and the Legislature regarding policies, programs, and actions to advance statewide economic goals.
Commencing January 1, 2014, this bill would require the office to implement and administer the California Demonstration of Emerging Market Opportunities Act, which would allow state agencies to enter into demonstration agreements, as defined, with specified businesses and nonprofit organizations, as defined, to test, evaluate, or demonstrate innovative solutions pursuant to demonstration projects and pilot projects, as defined. The bill would prohibit the office from approving more than 10 demonstration agreements per year. The bill would authorize an agency to assess a fine of up to $10,000 against a business or nonprofit organization that falsifies or fails to disclose information in connection with a project, as specified. These provisions would be repealed as of January 1, 2019.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) California is home to many of the world’s leading technology companies, and the state seeks to spur economic growth, including job growth, by supporting innovation by these companies.
(b) Despite California leading the nation in innovation and the number of patents filed annually, emerging small technology businesses face a myriad of challenges throughout their development process.
(c) In order to achieve the desired growth, innovative businesses require support that reaches beyond traditional business incubators and that streamlines the commercialization of innovative products, services, and processes. The state can provide this support by partnering to provide companies with an opportunity to demonstrate their innovative products, services, and processes while also increasing public awareness of these innovative solutions. This may be accomplished by using underutilized state resources.
(d) The Governor’s Office of Business and Economic Development has launched a new, forward-thinking Innovation Hub (iHub) initiative in an effort to harness and enhance California’s innovative spirit. The iHub initiative improves the state’s national and global competitiveness by stimulating partnerships, economic development, and job creation around specific research clusters through state-designated iHubs. The iHubs will leverage assets, such as research parks, technology incubators, universities, and federal laboratories, to provide an innovation platform for startup companies, economic development organizations, business groups, and venture capitalists.

SEC. 2.

 Article 6 (commencing with Section 12099) is added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, to read:
Article  6. California Demonstration of Emerging Market Opportunities Act

12099.
 (a) Commencing January 1, 2014, the Governor’s Office of Business and Economic Development shall implement and administer the California Demonstration of Emerging Market Opportunities (CalDEMO) Program.
(b) The CalDEMO Program shall be designed to provide businesses and nonprofit organizations with the opportunity to do all of the following:
(1) Experience engaging with the state in the process of planning, deploying, demonstrating, and maintaining their innovation.
(2) Obtain high-profile public exposure for the business or nonprofit organization demonstrating an innovative solution or pilot project.
(3) Obtain data collection on a project’s real-time performance in a public setting.
(4) Demonstrate that their innovation can be deployed, operated, and maintained in a real-world setting.
(5) Demonstrate that their business or nonprofit organization has the capacity to sufficiently plan, deploy, operate, and maintain their innovation in a real-world setting.
(6) Access new markets for innovative products.

12099.1.
 For purposes of this article, the following terms shall be defined as follows:
(a) “Demonstration project” means a project involving a request from a business or nonprofit organization to make state resources available as a forum for testing, evaluating, or demonstrating an innovative solution before being deployed in the marketplace.
(b) “Innovative solution” means a product, process, service, or information technology that is new or improves upon an existing product, process, service, or information technology. An innovative solution shall be expected to deliver identifiable and measurable environmental, economic, or social benefits, enhanced performance, or increases to the overall process reliability or control. An innovative solution shall also consist of a specific and identifiable research component.
(c) “Demonstration agreement” means an agreement between a state agency and a business or nonprofit organization to test, evaluate, or demonstrate an innovative solution pursuant to a demonstration project or pilot project.
(d) “Pilot project” means a project involving a request from a business or nonprofit organization to make state resources available as a forum for testing, evaluating, or demonstrating an innovative solution that is currently available in the marketplace.
(e) “Business or nonprofit organization” means a business or nonprofit organization primarily engaged in activities described in Codes 11, 213111, 213112, 213113, 213114, 213115, 221119, 221122, 221210, 221310, 237110, 237130, 237310, 237990, 48-49, 484110, 485112, 511199, 511210, 512110, 512120, 512240, 512290, 518210, 541310, 541320, 541330, 541340, 541350, 541360, 541370, 541380, 541420, 541430, 541490, 541511, 541512, 541513, 541519, 541614, 541618, 541620, 541690, 541711, 541712, 541720, 541921, 541922, 541930, 541990, 811111, 811112, 811113, 811118, 811121, 811198, 811211, 811212, 811213, 811219, 811310, 811411, 811412, 811420, 811490, 812921, and 812922 of the North American Industry Classification System Manual published by the United States Office of Management and Budget, 2012 edition.

12099.2.
 The Director of the Governor’s Office of Business and Economic Development shall designate an innovation partnership coordinator, who shall do all of the following:
(a) Provide guidance to the office and other state agencies regarding the interpretation and the application of the CalDEMO Program.
(b) Review and assist, as necessary, in the development of proposed demonstration agreements.
(c) Track and report on all approved demonstration agreements. The innovation partnership coordinator shall report to the office regarding the implementation and administration of the CalDEMO Program and the status of all approved demonstration agreements.
(d) Serve as a contact person for inquiries about the CalDEMO Program and serve as a liaison to connect potential business and nonprofit organization partners with appropriate state agencies.
(e) Develop and issue guidelines that are necessary for the fulfillment of this article.
(f) Establish in the State Administrative Manual policies and procedures for state agencies to engage with the CalDEMO Program.

12099.3.
 (a) (1) The office shall issue a request for proposals from businesses and nonprofit organizations for the CalDEMO Program.
(2) A business or nonprofit organization may, at any time, submit a proposal for a demonstration project or pilot project to the office. If the innovation partnership coordinator has the resources, the coordinator shall review the proposal.
(b) The business’s or nonprofit organization’s proposal shall include, but is not limited to, the following information:
(1) Background on the business or nonprofit organization submitting the proposal.
(2) A description of the proposed project, including whether the proposed project is a pilot project or a demonstration project.
(3) Identification of a problem that the proposed innovative solution seeks to address.
(4) Performance measures that will be used to evaluate the success of the project at the conclusion of the agreement.
(5) A list of requested state resources that could be used to implement the project, including state-owned land, facilities, equipment, rights-of-way, or data that is reasonably necessary.
(6) Certification that the proposed project meets all current applicable industry standards, laws, and applicable regulations.
(7) Any other information deemed relevant by the office, including information necessary for the office to prepare the report as required by this article.
(8) The office shall target the sectors for participation in the CalDEMO Program. The office may limit applicants or applications by any factors it deems appropriate, given the resources available to the office to administer the program.
(c) The office shall provide a preference for startup companies based in California. For purposes of this section, “startup companies based in California” means a small business, as defined in paragraph (1) of subdivision (d) of Section 14837, that has its headquarters in California and produces the innovative solution or pilot project to be demonstrated in California or a business that has an office in California and substantially manufactures the innovative solution or pilot project in California or substantially develops the research for the innovative solution or pilot project to be demonstrated in California.
(d) The office may charge a fee to the business or nonprofit organization to process the proposal that shall not exceed the reasonable costs to the office.
(e) The office may establish guidelines to implement the requirements of this article.

12099.4.
 (a) To ensure the efficient implementation and administration of the CalDEMO Program, the innovation partnership coordinator may do all of the following:
(1) Establish an investment advisory group to review and comment on proposals.
(2) Review proposals, including comments from the advisory group, and make a determination that the proposal meets the threshold requirements of the law and guidelines adopted pursuant to this article.
(3) Upon making the determination in paragraph (2), the innovation partnership coordinator shall identify and refer the proposal to the appropriate state agency or agencies. If the innovation partnership coordinator determines that it is appropriate to refer the proposal to more than one agency, the coordinator shall identify a lead state agency for the purpose of the review.
(4) The innovation partnership coordinator shall convene an initial meeting with the business or nonprofit organization and the appropriate state agency or agencies. Following the initial meeting, the appropriate state agency or the lead state agency, in the case of more than one agency, may hold additional meetings and request information from the business or nonprofit organization. The appropriate state agency or lead agency shall keep the innovation partnership coordinator informed of its discussions with the business or nonprofit organization.
(5) If the appropriate state agency or agencies approve of the proposal, the innovation partnership coordinator shall coordinate and oversee the development of a demonstration agreement between the appropriate state agency and the business or nonprofit organization. A state agency shall act in good faith to assist in the development of a demonstration agreement.
(b) The business or nonprofit organization participating in the program shall, pursuant to guidance provided by the innovation partnership coordinator and appropriate state agencies, develop a scope of work that sets forth details on how the demonstration project or pilot project is to be implemented.
(c) A proposed demonstration agreement shall include, but is not limited to, the following requirements:
(1) The proposed demonstration agreement shall identify the project as a pilot project or demonstration project.
(2) The proposed demonstration agreement shall describe the project, including, but not limited to, a description of the types of activities to be undertaken, facilities and resources to be used, and relevant timelines, including a start and termination date.
(3) The proposed demonstration agreement shall identify the participating state agency or agencies.
(4) The proposed demonstration agreement shall include performance measures that will be used by the business or nonprofit organization to evaluate the project. The data obtained during the implementation of the project may assist the state to better manage its own resources.
(5) The proposed demonstration agreement shall include a provision that the business or nonprofit organization agrees to indemnify the state against any liability or damages that may result from the project.
(6) The proposed demonstration agreement shall include a provision that authorizes the innovation partnership coordinator or the state agency to discontinue the project if it finds that the business or nonprofit organization has falsified or withheld information that should have been disclosed.
(7) The proposed demonstration agreement shall include a provision that the business or nonprofit organization agrees to purchase insurance coverage necessary, as determined by the state, to cover the costs to the state for any risks.
(8) The proposed demonstration agreement shall include a provision that sets the maximum costs that the state can incur, including the methodology used to determine the costs.
(9) The proposed demonstration agreement shall include a certification that the demonstration project or pilot project is safe for state employees and the public.
(10) The proposed demonstration agreement shall include other information or provisions determined by the innovation partnership coordinator to be relevant to the successful and safe undertaking of the project.
(d) For purposes of a proposed demonstration agreement, the state agency may do all of the following:
(1) With approval of the appropriate state agency, authorize the temporary use of state-owned land, facilities, equipment, rights-of-way, or data that are reasonably necessary in conjunction with the project.
(2) To the extent that the state may benefit from a demonstration project or pilot project, the state agency may absorb a portion of the costs to implement the project, in an amount not to exceed the anticipated benefits to the state of participating in the project.
(3) Agree to nondisclosure agreements relating to proprietary information that the state acquires from a business or nonprofit organization during the implementation of a demonstration agreement.
(4) Perform or cause to be performed a safety assessment of the project. If the state agency has reason to believe that the project is unsafe or likely to cause any danger, the state agency shall discontinue the project.

12099.5.
 (a) Demonstration agreements must be approved by all participating state agencies. After receiving approval from the participating state agencies, the office shall provide the final approval of the demonstration agreement.
(b) The office shall not approve more than 10 demonstration agreements per year.

(b)

(c) The office shall post on its Internet Web site a brief description of each demonstration agreement, including information on anticipated outcomes. The office shall not make available any proprietary information that is subject to a nondisclosure agreement under paragraph (3) of subdivision (d) of Section 12099.4.

(c)

(d) The office shall biennially post on its Internet Web site information on the progress of the program.

12099.6.
 (a) The office may enter into a partnership with foundations or private sector sponsors to solicit funding for the implementation of the CalDEMO Program. It is the intent of the Legislature that the office seek private sector sponsors and partners and foundations to solicit funding for the implementation of the CalDEMO Program consistent with paragraph (f) of Section 12096.3.
(b) The office may enter into a memorandum of understanding or an interagency agreement to obtain technical, scientific, or administrative services or expertise to support the CalDEMO Program. It is the intent of the Legislature that state agencies with appropriate subject matter expertise provide input to the office when requested.
(c) The office may enter into an agreement, including a memorandum of understanding, with another state agency or organization for the purpose of implementing the CalDEMO Program. The agreement shall be entered into for the purpose of reducing costs to the state, reducing or sharing risk, or obtaining technical, scientific, or administrative services or expertise. The agreement shall also specify, including, but not limited to, the metrics to be evaluated in determining whether the project is successful.

12099.7.
 It is the intent of the Legislature that the state shall not seek to co-own or procure any share of rights in the intellectual property that is developed during participation in the program.

12099.8.
 Any party to a demonstration agreement, including employees or potential subcontractors, shall comply with all applicable laws, regulations, and any other requirements pertaining to the implementation and execution of the demonstration agreement.

12099.9.
 If at any time a representative of a business or nonprofit organization is found by clear and convincing evidence to have falsified or withheld information that should have been disclosed, the state agency may discontinue the project and assess a fine of up to ten thousand dollars ($10,000) against the business or nonprofit organization for a failure to comply with this section.

12100.
 This article shall remain in effect only until January 1, 2019, and as of that date is repealed.