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SB-588 Public contracts: Disabled Veteran Business Enterprise Program.(2019-2020)

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Date Published: 09/14/2020 09:00 PM
SB588:v92#DOCUMENT

Senate Bill No. 588
CHAPTER 80

An act to amend Section 999.5 of, and to add Section 999.7 to, the Military and Veterans Code, relating to public contracts.

[ Approved by Governor  September 11, 2020. Filed with Secretary of State  September 11, 2020. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 588, Archuleta. Public contracts: Disabled Veteran Business Enterprise Program.
Under existing law, the Department of General Services, except in the case of contracts for professional bond services, is the administering agency of the California Disabled Veteran Business Enterprise Program, which requires state agencies and all other state entities contracting for materials, supplies, equipment, alteration, repair, or improvement to have at least 3% participation goals for disabled veteran business enterprises (DVBEs), as defined. Existing law requires an awarding department, upon completion of an awarded contract for which a commitment to achieve a DVBE goal was made, to require the prime contractor that entered into a subcontract with a DVBE to certify to the awarding department specified information relating to amounts paid under the contract, as specified. Existing law subjects a person or entity that knowingly provides false information on this certification to certain criminal and civil penalties, as specified.
This bill would require an awarding department, on a contract entered into on or after January 1, 2021, to withhold $10,000, or the full payment if it is less than $10,000, from the final payment on a contract until that certification is received by the awarding department. The bill would require the awarding department to give a prime contractor that fails to meet those certification requirements 15 to 30 calendar days to cure the defect. The bill would require the awarding department to permanently deduct $10,000 from the final payment, or the full payment if it is less than $10,000, from a contract with a contractor who does not comply with those requirements within the specified time period. The bill would require the Legislative Analyst’s Office to complete an assessment and report of the DVBE program, as specified, and submit that report to the Legislature on or before January 1, 2024.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 999.5 of the Military and Veterans Code is amended to read:

999.5.
 (a) The administering agency for the California Disabled Veteran Business Enterprise Program is the Department of General Services, except in the case of contracts for professional bond services. The Department of General Services shall consult with the California Disabled Veteran Business Enterprise Program Advocate, appointed by the Secretary of the Department of Veterans Affairs pursuant to Section 999.11, on all matters relating to the California Disabled Veteran Business Enterprise Program. The Director of General Services shall adopt written policies and guidelines establishing a uniform process for state contracting that would provide a disabled veteran business enterprise participation incentive to bidders. The incentive program shall be used by all state agencies when awarding contracts.
(b) The Department of Veterans Affairs shall do all of the following:
(1) Establish a method of monitoring adherence to the goals specified in Sections 999.1 and 999.2.
(2) Promote the California Disabled Veteran Business Enterprise Program to the fullest extent possible.
(3) Maintain complete records of its promotional efforts.
(4) Establish a system to track the effectiveness of its efforts to promote the California Disabled Veteran Business Enterprise Program, which shall include regular, periodic surveys of newly certified disabled veteran business enterprises to determine how they learned of the program, why they became certified, and what their experience with awarding departments has been.
(c) An awarding department shall not credit toward the department’s 3-percent goal state funds expended on a contract with a disabled veteran business enterprise that is not certified at the time of the award or does not meet and maintain the certification requirements.
(d) Upon completion of an awarded contract for which a commitment to achieve a disabled veteran business enterprise goal was made, an awarding department shall require the prime contractor that entered into a subcontract with a disabled veteran business enterprise to certify to the awarding department all of the following:
(1) The total amount the prime contractor received under the contract.
(2) The name and address of the disabled veteran business enterprise that participated in the performance of the contract and the contract number.
(3) The amount and percentage of work the prime contractor committed to provide to one or more disabled veteran business enterprises under the requirements of the contract and the amount each disabled veteran business enterprise received from the prime contractor.
(4) That all payments under the contract have been made to the disabled veteran business enterprise. Upon request by the awarding department, the prime contractor shall provide proof of payment for the work.
(e) An awarding department shall keep the certification required pursuant to subdivision (d) on file.
(f) A person or entity that knowingly provides false information shall be subject to a civil penalty for each violation in the minimum amount of two thousand five hundred dollars ($2,500) and the maximum amount of twenty-five thousand dollars ($25,000). An action for a civil penalty under this subdivision may be brought by any public prosecutor in the name of the people of the State of California and the penalty imposed shall be enforceable as a civil judgment.
(g) After being awarded a contract, the prime contractor shall use the disabled veteran business enterprise subcontractors or suppliers proposed in the bid or proposal to the state unless a substitution is requested and approved. The prime contractor shall request the substitution in writing to the awarding department and receive approval from both the awarding department and the Department of General Services in writing prior to the commencement of any work by the proposed subcontractor or supplier. A substitution pursuant to this subdivision shall additionally comply with regulations adopted by the Department of General Services.
(h) The administering agency shall adopt rules and regulations for the purpose of implementing this section.

SEC. 2.

 Section 999.7 is added to the Military and Veterans Code, to read:

999.7.
 (a) The awarding department shall withhold, on a contract entered into on or after January 1, 2021, ten thousand dollars ($10,000) from the final payment, or the full final payment if less than ten thousand dollars ($10,000), until a prime contractor complies with the certification requirements of subdivision (d) of Section 999.5. A prime contractor that fails to comply with the certification requirement shall, after notice, be allowed to cure the defect. Notwithstanding any other law, if, after at least 15 calendar days but not more than 30 calendar days from the date of notice, the prime contractor refuses to comply with the certification requirements, the awarding department shall permanently deduct ten thousand dollars ($10,000) from the final payment, or the full payment if less than ten thousand dollars ($10,000). For contracts awarded for use by multiple state agencies, the Department of General Services may prescribe additional or alternative mechanisms for enforcing the certification requirement.
(b) (1) On or before January 1, 2024, the Legislative Analyst’s Office shall complete a comprehensive assessment of the disabled veteran business enterprise program and submit a report to the Legislature. All other state entities shall assist the Legislative Analyst’s Office in completing its assessment to the greatest extent practicable.
(2) The report submitted pursuant to paragraph (1) shall include, but is not limited to:
(A) Reports of noncompliance with the requirements of the disabled veteran enterprise program.
(B) Whether the Department of General Services is tracking complaints of abuse of the program, and information about those complaints, if available, including the type of abuse, how it was reported or discovered, dates that specific actions were taken on the case, and preventive measures taken by awarding departments.
(C) Whether the awarding departments notified disabled veteran business enterprise subcontractors when they were named on an awarded contract.
(D) Whether prime contractors received approval by the Department of General Services to replace a disabled veteran business enterprise subcontractor identified by the prime contractor in its bid or offer.
(E) Whether withholding payments have deterred prime contractors from failing to provide accurate certifications.
(3) A report to be submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(c) Notwithstanding any other law, an awarding department shall not withhold more than the amount specified in subdivision (a) on the final payment of any disabled veteran business enterprise contract for the purposes of ensuring compliance with the certification requirements of subdivision (d) of Section 999.5.