Today's Law As Amended


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AB-1809 Disabled veteran business enterprises.(2019-2020)



As Amends the Law Today


SECTION 1.
 (a) This act shall be known, and may be cited, as the Procurement Transparency Act of 2019.
(b) It is the intent of the Legislature in enacting this legislation to implement the recommendations of the California State Auditor Report 2018-114 on the California Disabled Veteran Business Enterprise Program, as well as other program improvements brought to the attention of the Assembly Committee on Jobs, Economic Development, and the Economy.
SEC. 2.
 The Legislature finds and declares all of the following:
(a) California’s dominance in many economic areas is based, in part, on the significant role small businesses play in the state’s $2.7 trillion economy.
(b) Two separate studies, one by the United States Census Bureau and another by the Kauffman Foundation, found that net job growth was strongest among businesses with fewer than 20 employees. California firms represented 12.6 percent of all businesses in the United States in 2015, with 88.3 percent of firms having fewer than 20 employees.
(c) The Small Business Procurement and Contract Act, administered through the Department of General Services, was implemented more than 30 years ago to establish a small business preference within the state’s procurement process that would increase the number of contracts between the state and small businesses. In 1998, a disabled veteran business enterprise (DVBE) component was added.
(d) California has a 30-year history of using state contracting to support business development within targeted business populations. State law sets an annual 3 percent DVBE procurement participation goal, and a 2006 executive order sets a 25-percent goal for small businesses and microbusinesses within state agencies, departments, boards, and commissions.
(e) The Small Business Procurement and Contract Act states that it is the policy of the State of California that the state aid the interests of small businesses in order to preserve free competitive enterprise and to ensure that a fair portion of the total purchases and contracts of the state be placed with these enterprises.
(f) California law further states that DVBE participation is strongly encouraged to recognize the sacrifices of California’s disabled military veterans and to address the special needs of disabled veterans seeking rehabilitation and training through entrepreneurship. A majority of DVBEs certified by the state are smaller size firms, with 75.4 percent having dual certifications as a DVBE and microbusiness and 9.6 percent having dual certifications as a DVBE and small business.
(g) Supporting small business development has shown to be a successful inclusive economic growth strategy advantaging businesses throughout the state, including historically underserved business groups including minority, women, and veteran-owned businesses, and hard-to-serve areas of the state, including low-wealth, rural, and disaster-impacted communities.
(h) In order for the state to fully leverage the economic opportunities represented by supporting small businesses and DVBEs, it is the intent of the Legislature that the Department of General Services, the Office of Small Business Advocate, and the department-level and agency-level Small Business Ombudsmen actively promote small business and DVBE certifications, help DVBEs and small businesses market their products, goods, and services to the state, and promote the use of technologies and other innovative solutions for notifying small businesses and DVBEs of state contracting opportunities.

SEC. 3.

 Section 14838.5 of the Government Code is amended to read:

14838.5.
 (a) (1)  Notwithstanding the advertising, bidding, and protest provisions of Chapter 6 (commencing with Section 14825) of this part and Chapter 2 (commencing with Section 10290) and Chapter 3 (commencing with Section 12100) of Part 2 of Division 2 of the Public Contract Code, a state agency may award a contract for the acquisition of goods, services, or information technology that has an estimated value of greater than five thousand dollars ($5,000), but less than two hundred fifty thousand dollars ($250,000), to a certified small business, including a microbusiness, or to a disabled veteran business enterprise, as long as the agency obtains price quotations from two or more certified small businesses, including microbusinesses, or from two or more disabled veterans business enterprises.
(2) On and after March 1, 2020, and until March 1, 2024, for the purposes of contracts for services and information technology, a state agency may, notwithstanding the advertising, bidding, and protest provisions of Chapter 6 (commencing with Section 14825) and of Chapter 2 (commencing with Section 10290) and Chapter 3 (commencing with Section 12100) of Part 2 of Division 2 of the Public Contract Code, award a contract that has an estimated value greater than five thousand dollars ($5,000) but less than five hundred thousand dollars ($500,000) to a certified small business, including a microbusiness, or to a disabled veteran business enterprise, as long as the agency obtains price quotations from two or more certified small businesses, including microbusinesses, or from two or more disabled veterans business enterprises.
(b) In carrying out subdivision (a), a state agency shall consider a responsive offer timely received from a responsible certified small business, including a microbusiness, or from a disabled veteran business enterprise.
(c) If the estimated cost to the state is less than five thousand dollars ($5,000) for the acquisition of goods, services, or information technology, or a greater amount as administratively established by the director, a state agency shall obtain at least two price quotations from responsible suppliers whenever there is reason to believe a response from a single source is not a fair and reasonable price.
(d) A certified small business or disabled veteran business enterprise that submits a bid or cost estimate using the process in subdivision (a) or (c) shall not, on the same bid or cost estimate, also receive the small business preference set forth in subdivision (b) of Section 14838 or the disabled veteran business enterprise participation incentive provided in Section 999.5 of the Military and Veterans Code.

SEC. 4.

 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. In carrying out these duties, the Department of General Services shall do all of the following:
(1) 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.
(2) Establish a method an awarding department shall use to track and report adherence to the goals specified in Sections 999.1 and 999.2.
(3) Provide guidance to awarding departments on how to process complaints regarding abuse of the program, including violations under Section 999.9.
(a) (4)  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  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 California Disabled Veteran Business Enterprise Program Advocate, appointed pursuant to Section 999.11 by the Secretary of Veterans Affairs,  shall do all of the following, as further described in Section 999.11: following: 
(1) Establish a method of monitoring adherence to the goals specified in Sections 999.1 and 999.2.
(2) (1)  Promote and facilitate efforts to implement  the California Disabled Veteran Business Enterprise Program to the fullest extent possible. and the provisions of this article.  
(3) Maintain complete records of its promotional efforts.
(4) (2)  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. may be used by CalVet and other state agencies in meeting the requirements of Section 999.12. The system shall include standards for recordkeeping as necessary to evaluate the effectiveness of promotional activities. 
(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. contract. 
(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) (A)  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. An awarding department shall post a list of its state contracts, by contract number, for which certification has been received, on its internet website for no less than three years. 
(e) An awarding department shall keep the certification required pursuant to subdivision (d) on file.
(f) (B)  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) (e)  After being awarded a contract, the prime contractor shall use the  A prime contractor may, subject to the approval of the Department of General Services, replace a  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. identified by the prime contractor in its bid or offer, pursuant to subdivision (a) of Section 999.10, with another disabled veteran business enterprise. 
(h) (f)  The administering agency shall adopt rules and regulations for  regulations, including standards for good faith efforts, for  the purpose of implementing this section. Emergency regulations consistent with this section may be adopted. 

SEC. 5.

 Section 999.9 of the Military and Veterans Code is amended to read:

999.9.
 (a) It shall be unlawful for a person 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, certification as a disabled veteran business enterprise for the purpose 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 certification or denial of certification of any entity as a 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 certification as a 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, contracts, or funds expended under a contract, that are awarded by any state agency, department, officer, or other state governmental agency, to which the person is not entitled under this article.
(5) Knowingly and with intent to defraud, fraudulently represent participation of a disabled veteran business enterprise in order to obtain or retain a bid preference or a state contract.
(6) Knowingly and with intent to defraud, fraudulently represent that a commercially useful function is being performed by a disabled veteran business enterprise in order to obtain or retain a bid preference or a state contract.
(7) Willfully and knowingly make or subscribe to any statement, declaration, or other document that is fraudulent or false as to any material matter, whether or not that falsity or fraud is committed with the knowledge or consent of the person authorized or required to present the declaration, statement, or document.
(8) Willfully and knowingly aid or assist in, or procure, counsel, or advise, the preparation or presentation of a declaration, statement, or other document that is fraudulent or false as to any material matter, regardless of whether that falsity or fraud is committed with the knowledge or consent of the person authorized or required to present the declaration, statement, or document.
(9) Willfully and knowingly fail to file any declaration or notice with the awarding agency that is required by Section 999.2.
(10) Establish, or knowingly aid in the establishment of, or exercise control over, a firm found to have violated any of paragraphs (1) to (9), inclusive.
(b) A Any  person who violates any of the provisions of subdivision (a) shall be guilty of a misdemeanor punishable by imprisonment in the county jail not exceeding six months or by a fine not exceeding one thousand dollars ($1,000), or by both. In addition, the person shall be liable for a civil penalty of not less than ten thousand dollars ($10,000) nor more than thirty thousand dollars ($30,000) for the first violation, and a civil penalty of not less than thirty thousand dollars ($30,000) nor more than fifty thousand dollars ($50,000) for each additional or subsequent violation. A defendant who violates any of the provisions of subdivision (a) shall pay all costs and attorney’s fees incurred by the plaintiff in a civil action brought pursuant to this section, including costs incurred by the awarding department and the Department of General Services.
(c) (1) The Department of General Services shall suspend any person who violates subdivision (a) 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 three years and not more than 10 years, and, and  if certified as a disabled veteran business enterprise, the department shall revoke the business’s certification, and the small business or microbusiness enterprise certification if the business has both certifications, for a period of not less than five years. An additional or subsequent violation shall extend the periods of suspension and revocation for a period of not less than 10 years. The suspension and revocation of certification shall apply to the principals of the business and any subsequent business formed or financed by, or affiliated with, one or more of those principals.
(2) A person that violates any of the provisions of subdivision (a) shall pay all costs incurred by the awarding department and the Department of General Services for any investigations that led to the finding of the violation. Costs incurred shall include, but are not limited to, costs and attorney’s fees paid by the department or the Department of General Services related to hearings and court appearances.
(3)  The Department of General Services shall prohibit any business or person who fails to satisfy any of the penalties, costs, and attorney’s fees imposed pursuant to subdivisions (b) and (c) from further contracting with the state until all of the penalties, costs, and attorney’s fees are satisfied.
(d) In addition to the penalties imposed by this section, if a contractor is found to be in violation of paragraph (6) of subdivision (a), any existing contract between that contractor and any awarding department may be terminated at the discretion of the awarding department, and, where payment to the contractor is made directly by the state agency, the agency shall set off penalties and costs due to the state against any payments due to that contractor. In the event that the contracting state agency has forwarded the contract and invoices to the Controller for payment, the state agency shall reduce the amount due to the contractor as reflected in the claim schedule submitted to the Controller by the amount of the penalties and costs due the state. In addition, with regard to any penalties and costs due to the state that the state agency has not accounted for by either a set off against payments due to the contractor or a reduction reflected in the claim schedule submitted to the Controller, to the extent that the Controller is making payments to the contractor on behalf of any state agency, the Controller shall set off penalties and costs due against any invoices due to the contractor from any other contract awarded to the contractor.
(e) (1) The awarding department shall report all alleged violations of this section to the Department of General Services. After any review and investigation it deems necessary, the Department of General Services shall subsequently report all allegations that have sufficient grounds to the Attorney General who shall determine whether to bring a civil action against any person or firm for a violation of this section. However, the Department of General Services may pursue administrative action and administrative penalties irrespective of whether the Attorney General chooses to bring a civil action.
(2) (A)  For alleged violations of paragraph (6) of subdivision (a), a civil action may be brought by any city attorney, county attorney or county counsel, district attorney, or the Attorney General  public prosecutor  in the name of the people of the State of California and the penalty imposed shall be enforceable as a civil judgment. A person who violates paragraph (6) of subdivision (a) shall be subject to civil penalties provided for in subdivision (b), including all costs and attorney’s fees incurred by the city attorney, county attorney or county counsel, district attorney, or the Attorney General  public prosecutor  and the costs incurred by the awarding department and the Department of General Services. A public prosecutor, other than the Attorney General, shall not bring an action for a civil penalty under this paragraph if the Department of General Services has concluded an administrative action for the same violation. 
(B) A city attorney, county attorney or county counsel, or district attorney, shall not bring an action for a civil penalty under this paragraph if the Department of General Services has concluded an administrative action for the same violation. This subparagraph does not apply to a civil action brought by the Attorney General.
(C) In no event shall a monetary penalty be imposed through both an administrative action and a civil action for the same violation; however, the Department of General Services may impose any other penalty authorized by this section through an administrative action irrespective of the outcome of a civil action brought pursuant to this subparagraph.
(D) A city attorney, county attorney or county counsel, district attorney, and the Attorney General shall notify the Department of General Services before commencing an action under this paragraph.
(f) The Department of General Services 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.
(g) No awarding department shall enter into any contract with any person suspended for violating this section during the period of the person’s suspension. No awarding department shall award a contract to any contractor utilizing the services of any person as a subcontractor suspended for violating this section during the period of the person’s suspension.
(h) The awarding department shall check the central listing provided by the Department of General Services to verify that the person or contractor to whom the contract is being awarded, or any person being utilized as a subcontractor or supplier by that person or contractor, is not under suspension for violating this section.

SEC. 5.SEC. 6.

 Section 999.10 of the Military and Veterans Code is amended to read:

999.10.
 (a) An awarding department taking bids in connection with the award of a contract shall provide, in the general conditions under which bids will be received, that a person making a bid or offer to perform a contract shall, in the bid or offer, set forth the following information:
(1) The name, disabled veteran business enterprise certification number, contact information, and the location of the place of business of each subcontractor certified as a 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 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 when 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 the contractor’s bid or offer.
(3) A certification, signed under penalty of perjury, that the portion of work that will be done by each subcontractor under paragraph (1) serves a commercially useful function, as defined in clause (i) of subparagraph (B) of paragraph (5) of subdivision (b) of Section 999.
(b) The Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code) shall apply to the information required by subdivision (a) relating to subcontractors certified as 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 of the Public Contract Code.
(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.

SEC. 6.SEC. 7.

 Section 999.11 of the Military and Veterans Code is amended to read:

999.11.
 The Secretary of the Department of Veterans Affairs shall appoint the California Disabled Veteran Business Enterprise Program Advocate. The California Disabled Veteran Business Enterprise Program Advocate shall report directly to the secretary and shall do all of the following:
(a) Promote implementation of the California Disabled Veteran Business Enterprise Program. Serve as a resource for information on this article. 
(b) Support and facilitate the activities of administering agencies and existing and potential disabled veteran business enterprises to achieve the goals specified in Sections 999.1 and 999.2, including, but not limited to, both of the following:
(1) Assisting awarding departments in identifying to identify  certified disabled veteran business enterprises that can offer their services for contracts that contract procurement staff have difficulty in  identifying.
(2) Assisting disabled veteran business enterprises in to  effectively utilizing utilize  certification documents and the state electronic procurement system in identifying  to clearly identify  which products and services businesses have on offer.
(c) Coordinate with the agency California  Disabled Veteran Business Enterprise Program Advocate appointed in all awarding departments pursuant to Section 999.12.
(d) Establish a method of monitoring adherence to the goals specified in Sections 999.1 and 999.2.
(e) Establish and promote a system to track the effectiveness of promotional activities undertaken by state agencies.

SEC. 7.SEC. 8.

 Section 999.12 of the Military and Veterans Code is amended to read:

999.12.
 Each awarding department shall appoint an agency Disabled Veteran Business Enterprise Program Contract  Advocate. This person shall be the same individual appointed pursuant to Section 14846 of the Government Code. The agency Disabled Veteran Business Enterprise Program Contract  Advocate shall do all of the following:
(a) Assist certified disabled veteran business enterprises in participating in that agency’s contracting process.
(b) Assist contract officers in seeking disabled veteran business enterprises to participate in the agency’s contract and procurement opportunities by performing outreach efforts to recruit certified disabled veteran business enterprises to offer their services as either a prime contractor or subcontractor on any contract proposed by the awarding department that requires disabled veteran business enterprise participation, and by other feasible means.
(c) Meet regularly with the contract and procurement staffs of their departments to disseminate information about the California Disabled Veteran Business Enterprise Program, learn of future contracting opportunities, and identify the types of goods, services, and information technology contracts for which the contract and procurement staff is having or anticipates having  may have  difficulty in identifying potential  certified disabled veteran business enterprise contractors or subcontractors.
(d) Serve as an advocate for the disabled veteran business enterprises that are utilized as the agency’s contractors or subcontractors.
(e) Report to the Office of Small Business and Disabled Veteran Business Enterprise Services regarding any violation of this article.
(f) Coordinate and meet, on a regular basis, with the California Disabled Veteran Business Enterprise Program Advocate at the Department of Veterans Affairs in an effort to meet the statewide 3-percent goal provided for in Section 999.2.
SEC. 9.
 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.