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AB-1552 Women, minority, disabled veteran, and LGBT business enterprise procurement: late payment penalties.(2017-2018)

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Date Published: 01/04/2018 09:00 PM
AB1552:v97#DOCUMENT

Amended  IN  Assembly  January 04, 2018
Amended  IN  Assembly  September 12, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1552


Introduced by Assembly Member Quirk-Silva

February 17, 2017


An act to amend Section 8281 of, and to add Section 8287 to, the Public Utilities Code, relating to public utilities.


LEGISLATIVE COUNSEL'S DIGEST


AB 1552, as amended, Quirk-Silva. Women, minority, disabled veteran, and LGBT business enterprise procurement: late payment penalties.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical, gas, water, and telephone corporations. Existing law requires each electrical, gas, water, wireless telecommunications service provider, or telephone corporation with gross annual revenues exceeding $25,000,000, and its commission-regulated subsidiaries and affiliates, to annually submit a detailed and verifiable plan for increasing procurement from women, minority, disabled veteran, and LGBT business enterprises, as defined, and to implement an outreach program to inform and recruit those business enterprises to apply for procurement contracts, as specified. Existing law includes a declaration by the Legislature that each electrical, gas, water, mobile telephony service provider, and telephone corporation that is not required to submit a plan, and each cable television corporation and direct broadcast satellite provider, is encouraged to voluntarily adopt a plan for increasing procurement from those business enterprises. Existing law requires the commission, by rule or order, to adopt criteria for verifying and determining eligibility of women, minority, and LGBT business enterprises for procurement contracts.
This bill would require each electrical, gas, water, mobile telephony service provider, or telephone corporation, with gross annual revenues exceeding $25,000,000, and its commission-regulated subsidiaries and affiliates, to pay an undisputed invoice by its required payment approval date, as defined. If the payment is not made by that date, the bill would require the utility to pay a late payment penalty to a certified small business, as defined, that is a disabled veteran, minority, women, or LGBT business enterprise claimant a penalty claimant, or to a nonsmall business claimant that has committed to having at least 25% of the contracted work undertaken by a certified small business, at a rate of 10% above the United States Prime Rate, and to all other claimants a penalty at a rate of 1% above the Pooled Money Investment Account daily rate, of the amount of the late undisputed invoice, as specified. The bill would provide that a late payment penalty that accrues as a result of a utility’s failure to make a timely payment is not recoverable from its ratepayers. in accord with the contractual agreement. The bill would require each utility of the specified utilities to annually provide the commission with a report of information concerning its late payment penalties. The bill would authorize the commission to open a proceeding to offer further guidance to assist in the implementation of these provisions, and would require the commission to encourage all public utilities to adopt policies and practices that encourage claimants to promptly pay their contractors and suppliers, especially those that are small businesses.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of an order or decision of the commission implementing the requirements of the bill would be a crime, the bill would impose a state-mandated local program by creating a new crime.
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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 (a) The Legislature finds and declares that the both of the following:
(1) The most vulnerable businesses, including women, minority, disabled veteran, and LGBT business enterprises, are often treated differently by the entities with whom they contract, and that those businesses often disproportionately suffer when they do not receive the payments owed to them on time.
(2) Research shows that small businesses face unique challenges in accessing capital.
(b) It is the intent of the Legislature to do both of the following:
(1) To ensure that those businesses receive their payments on time, and that, when those payments are received late, those businesses are adequately compensated for the harm that they suffer.
(2) To enable those businesses to participate equally in their pursuits of the American Dream.

SEC. 2.

 Section 8281 of the Public Utilities Code is amended to read:

8281.
 (a) The Legislature hereby finds and declares that the essence of the American economic system of private enterprise is free, open, and transparent competition. Only through free, open, and transparent 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 ensured. The preservation and expansion of that competition are basic to the economic well-being of this state and that well-being cannot be realized unless the actual and potential capacity of women, minority, disabled veteran, and LGBT business enterprises is encouraged and developed. Therefore, it is the declared policy of the state to aid the interests of women, minority, disabled veteran, and LGBT business enterprises in order to preserve reasonable and just prices and a free competitive enterprise, to ensure that a fair proportion of the total purchases and contracts or subcontracts for commodities, supplies, technology, property, and services for regulated public utilities, including, but not limited to, renewable energy resources, mobile telecommunications, broadband, smart grid, and rail projects, are awarded to women, minority, disabled veteran, and LGBT business enterprises, and to maintain and strengthen the overall economy of the state.
(b) (1) The Legislature finds and declares all of the following:
(A) The opportunity for full participation in our free enterprise system by women, minority, disabled veteran, and LGBT 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.
(B) Public agencies and some regulated public utilities that have established short- and long-range women, minority, disabled veteran, and LGBT business enterprise goals are have resulted in their awarding 30 percent or more of their contracts to these business enterprises.
(C) Women, minority, disabled veteran, and LGBT business enterprises have traditionally received less than a proportionate share of regulated public utility procurement contracts, especially in renewable energy resources, mobile telecommunications, broadband, smart grid, and rail projects. Supplier diversity activities have benefited utilities and their customers by increasing the potential pool of bidders and allowing utilities to enter into best value contracts.
(D) It is in the state’s interest to expeditiously improve the economically disadvantaged position of women, minority, disabled veteran, and LGBT business enterprises. As California becomes an increasingly diverse state, exclusionary procurement policies impair the ability of utilities to meet their primary mission.
(E) The position of these businesses women, minority, disabled veteran, and LGBT business enterprises can be substantially improved by providing long-range substantial goals for procurement by regulated public utilities of technology, equipment, supplies, services, materials, and construction work, especially in renewable energy resources, mobile telecommunications, broadband, smart grid, and rail projects, from women, minority, disabled veteran, and LGBT businesses.
(F) That procurement also benefits the regulated public utilities and consumers of the state by encouraging the expansion of the number of suppliers for procurements, thereby encouraging competition among the suppliers and promoting economic efficiency in the process.
(G) That the long-term economic viability of this state depends substantially upon the ability of renewable energy resources, mobile telecommunications, broadband, smart grid, and rail projects to incorporate women, minority, disabled veteran, and LGBT businesses into those projects.
(2) It is the purpose of this article to do all of the following:
(A) Encourage greater economic opportunity for women, minority, disabled veteran, and LGBT business enterprises.
(B) Promote competition among regulated public utility suppliers in order to enhance economic efficiency in the procurement of electrical, gas, water, mobile telephony service provider, and telephone corporation contracts and contracts of their commission-regulated subsidiaries and affiliates.
(C) Clarify and expand the program for the procurement by regulated public utilities of technology, equipment, supplies, services, materials, and construction work from certified women, minority, disabled veteran, and LGBT business enterprises.
(D) Ensure that regulated public utilities treat certified women, minority, disabled veteran, and LGBT businesses are treated respectfully, including by providing for the prompt payment of valid invoices.

SEC. 3.

 Section 8287 is added to the Public Utilities Code, to read:

8287.
 (a) The following definitions apply to this section:
(1) “Certified small business” means a business certified by the State of California as meeting the requirements of subdivision (d) of Section 14837 of the Government Code.

(1)

(2) “Invoice” means a bill or claim bill, claim, or other document that requests payment on a contract contractual agreement under which a public utility acquires described in paragraph (1) of subdivision (b), agrees to purchase a good or service. If the contractual agreement specifies a specific form or format for invoicing, the invoice shall meet the terms of the contractual agreement.

(2)

(3) “Reasonable cause” means a determination by a public utility described in paragraph (1) of subdivision (b) that any of the following conditions is present:
(A) There is a discrepancy between the invoice or claimed amount and the provisions of the contract contractual agreement for the goods or services.
(B) There is a discrepancy between the invoice or claimed amount and either the goods or services delivered by the claimant to the public utility or the goods or services accepted by the public utility.
(C) The public utility requires the claimant to provide additional evidence supporting the validity of the invoice or claimed amount.
(D) The claimant has improperly executed or needs to correct the invoice.
(E) There is a discrepancy between the refund or other payment due as calculated by the party to whom the money is owed and by the public utility.

(3)

(4) The date an invoice is “received by the public utility” means the date an invoice is delivered to and received by the public utility described in paragraph (1) of subdivision (b) or party specified in the contract.

(4)

(5) “Required payment approval date” means the date on which payment is due as specified in a contract. contractual agreement. If a date is not specified in the contract, contractual agreement, the required payment approval date is 30 calendar days following the date upon which an undisputed invoice is received by the public utility. utility described in paragraph (1) of subdivision (b).
(b) (1) The late payment penalty requirements in this section shall apply only to an electrical, gas, water, mobile telephony service provider, or telephone corporation, with gross annual revenues exceeding twenty-five million dollars ($25,000,000), and its commission-regulated subsidiaries and affiliates.
(2) Other public utilities are encouraged to implement policies that support the prompt payment of contractors.
(c) (1) A utility described in paragraph (1) of subdivision (b) shall pay an undisputed invoice by the required payment approval date.
(2) A utility described in paragraph (1) of subdivision (b) may dispute an invoice submitted by a claimant for reasonable cause if the utility notifies the claimant within 15 working days from receipt of the invoice, or delivery of property goods or services, whichever is later. No employee of the utility shall dispute an invoice on the basis of minor or technical defects to circumvent or avoid the general intent, or any of the specific provisions, of this section.
(d) (1) If a utility described in paragraph (1) of subdivision (b) fails to comply with the requirement of paragraph (1) of subdivision (c), it shall pay a late payment penalty, as described in this subdivision, without requiring the claimant to submit an additional invoice for that amount. The penalty shall cease to accrue on the date the utility issues the payment.

(1)

(2) If the claimant is a disabled veteran, minority, women, or LGBT business enterprise, as defined in this article, the utility certified small business or a nonsmall business that committed to having at least 25 percent of the contracted work undertaken by a certified small business, a utility described in paragraph (1) of subdivision (b) shall pay to the claimant a late payment penalty at a rate of 10 percent above the United States Prime Rate on June 30 of the prior fiscal year of the amount of the late undisputed invoice. The late payment penalty shall cease to accrue on the date full payment or full refund is made. If the amount of the late payment penalty is ten dollars ($10) or less, it shall be waived and not paid by the utility. For any other business claimant, the utility shall adhere to the payment policies set by the terms of the contractual agreement with that claimant.

(2)To all other businesses, the utility shall pay a late payment penalty at a rate of 1 percent above the Pooled Money Investment Account daily rate on June 30 of the prior fiscal year, not to exceed a rate of 15 percent, of the amount of the late undisputed invoice. If the amount of the penalty is twenty-five dollars ($25) or less, the penalty shall be waived and not paid by the utility.

(e) Any late payment penalty that accrues as a result of a failure of a utility described in paragraph (1) of subdivision (b) to make a timely payment, as required by this section, shall not be recoverable from the utility’s ratepayers. be considered by the commission in any ratemaking or other appropriate proceeding involving the utility’s recovery of expenses.
(f) (1) On an annual basis, within 90 calendar days following the end of each fiscal year, a utility described in paragraph (1) of subdivision (b) shall provide the commission with a report of information concerning late payment penalties that it paid to certified disabled veteran, minority, women, or LGBT small business enterprises, in accordance with this section during the preceding fiscal year.
(2) The report information shall include the total dollar amount of contracts paid during the fiscal year and separately identify the both of the following:
(A) The total number, number and dollar amount, amount of late payment penalties paid pursuant to paragraphs (1) and (2) of subdivision (d), to certified disabled veteran, minority, women, or LGBT small business enterprises, disaggregated, at a minimum, by the ownership categories of business enterprises specified in paragraph (1) of subdivision (d) for which each late payment penalty was made. This
(B) The total number and dollar amount of contractual agreements entered into with a certified disabled veteran, minority, women, and LGBT business enterprise which include a 30-day, a 45-day, and a 60-or-more-day payment provision following the submittal of an undisputed invoice.
(3) This information shall be included in the annual plan required by report prepared by the utility pursuant to subdivision (d) of Section 8283.

(g)The commission may open a proceeding to offer further guidance to assist in the implementation of this section.

(h)

(g) The commission shall encourage all public utilities to adopt policies and practices that encourage claimants to promptly pay their contractors and suppliers, especially those claimants that are small businesses. The policies and practices may include, but are not limited to, expedited payment processes and transparent payment practices that allow a contractor to track when the claimant has been paid by a public utility. paid.

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.