Bill Text


PDF |Add To My Favorites |Track Bill | print page

AB-1574 Public contracts: small business liaisons and advocates and disabled veteran business enterprises.(2021-2022)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
Date Published: 04/06/2021 09:00 PM
AB1574:v97#DOCUMENT

Amended  IN  Assembly  April 06, 2021
Amended  IN  Assembly  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1574


Introduced by Committee on Jobs, Economic Development, and the Economy

March 04, 2021


An act to amend Sections 12908.3 12098.3, 14837, 14842.5, 14845, and 14846 of the Government Code, and to amend Sections 999.5, 999.9, 999.10, 999.11, and 999.12 of the Military and Veterans Code, relating to public contracts.


LEGISLATIVE COUNSEL'S DIGEST


AB 1574, as amended, Committee on Jobs, Economic Development, and the Economy. Public contracts: small business liaisons and advocates and disabled veteran business enterprises.
The Small Business Procurement and Contract Act requires the Director of General Services and the heads of other state agencies that enter into contracts for the provision of goods, services, and information technology and for the construction of state facilities to establish goals for the participation of small businesses in these contracts, to provide for small business preferences in the award of these contracts, to give special consideration and special assistance to small businesses, and, whenever possible, to make awards to small businesses, as specified. (PU 20130AB__173498AMD)
Existing law requires each state agency to consolidate its existing staff functions that relate to contract opportunities for small businesses into a single point of contact for small businesses, and to designate a small business advocate as a liaison to small business suppliers. Existing law requires each state agency that significantly regulates small business or significantly impacts small business to designate at least one individual who shall serve as a small business liaison for the agency. Existing law requires the Director of the Office of Small Business Advocate to, among other duties, seek the assistance and cooperation of all state agencies and departments providing services to, or affecting, small business, including the small business liaison, and maintain, publicize, and distribute an annual list of persons serving as small business ombudspersons throughout state government. Existing law also requires the small business advocate to identify potential certified small business and certified disabled veteran business enterprise (DVBE) subcontractors and potential subcontracting opportunities, as well as establish a California multiple award schedule program, as provided.
Under existing law, 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. Existing law requires the Director of General Services to adopt written policies and guidelines establishing a uniform process for state contracting to provide a DVBE participation incentive to bidders, which all state agencies are required to use when awarding contracts. That law requires the Department of Veterans Affairs to carry out specified duties relating to the program, including by maintaining complete records of its promotional efforts. That law requires the Secretary of the Department of Veterans Affairs to appoint the California Disabled Veteran Business Enterprise Program Advocate and for that advocate to carry out certain duties. That law requires each awarding department, as defined, to appoint an agency Disabled Veteran Business Enterprise Program Advocate to carry out certain duties, including by meeting regularly with the California Disabled Veteran Business Enterprise Program Advocate and contract and procurement staffs of their departments to disseminate information about the California Disabled Veteran Business Enterprise Program.
This bill would enact the Small Business and Disabled Veteran Business Enterprise Act of 2021, which would require the Director of the Office of Small Business Advocate to maintain, publicize, and distribute an annual list of persons serving as small business liaisons throughout state government. The bill would require the Director of the Office of Small Business Advocate to collaborate with the California Disabled Veteran Business Enterprise Program Advocate regarding the implementation of the California Disabled Veteran Business Enterprise Program, as provided. The bill would also require the small business advocate to identify potential certified small business and certified DVBE subcontracting opportunities, as well as assist certified small businesses and certified DVBEs to participate in the California multiple award schedule program. The bill would define, for purposes of the Small Business Procurement and Contract Act, limited contracting small business enterprise and new small business enterprise. The bill would make conforming changes to that effect.
The bill would change the duties the California Disabled Veteran Business Enterprise Program Advocate is required to carry out, including by requiring that advocate to establish and promote a system to track the effectiveness of promotional activities undertaken by state agencies. The bill would remove the requirement that an agency Disabled Veteran Business Enterprise Advocate meet regularly with the California Disabled Veteran Business Enterprise Program Advocate and would impose additional duties on an agency Disabled Veteran Business Enterprise Advocate when that advocate meets with the contract and procurement staffs of their departments. The bill would make conforming changes to that effect.
Existing law makes it a crime to fraudulently represent that a commercially useful function is being performed by a DVBE DVBE, certified small business, or microbusiness in order to obtain or retain a bid preference or state contract. Under existing law, a violation of this provision, in addition to other penalties, may result in any existing contract between the contractor and the awarding department being terminated and payment set off by penalties and costs to the state, as specified. Existing law requires that a person making a bid or offer to perform a contract provide specified information in the bid or offer, including the name and the location of the place of business of each subcontractor certified as a DVBE.
This bill would authorize any public prosecutor to bring a civil action for a violation involving a knowing fraudulent representation that a commercially useful function is being performed by a DVBE DVBE, certified small business, or microbusiness in order to obtain or retain a bid preference for a state contract. The bill would prohibit the public prosecutor, other than the Attorney General, from bringing a civil action for that violation if the Department of General Services has concluded an administrative action for the violation. The bill would require the bid or offer to include the DVBE certification number, contact information of the subcontractors certified as DVBEs, and a certification, under penalty of perjury, that the work to be done by each subcontractor serves a commercially useful function, as specified. By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program.
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.

 This act shall be known and may be cited as the Small Business and Disabled Veteran Business Enterprise Act of 2021.

SEC. 2.

 (a) California has a 30-year history of using state contracting to support business development within targeted business populations. Given the economic devastation as a result of the COVID-19 pandemic on small businesses, including veteran-owned businesses, it is important that the state aligns all of its resources to assist these businesses in recovery.
(b) State law sets an annual 3-percent Disabled Veteran Business Enterprise (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.
(c) While encouraging small business participation furthers the state’s interest in having a robust small business sector, the Small Business Procurement and Contract Act also establishes the policy foundation for DVBE contract participation. The DVBE procurement program is intended to both recognize the sacrifices of California’s disabled military veterans, as well as address the special needs of disabled veterans seeking rehabilitation and training through entrepreneurship.
(d) To assist state agencies in reaching these targeted procurement participation goals, state law authorizes a procurement preference for bids using a certified small business or DVBE as a prime or subcontractor and a streamlined alternative procurement process for smaller size contracts that are between $5,000 and $250,000, whereby an awarding department can contract directly with a certified small business or DVBE after comparing the bid against two other similar businesses.
(e) The state also administers a DVBE incentive which allows an awarding department to set an incentive percentage for a particular transaction based upon the department’s business strategy to achieve their annual 3-percent DVBE procurement participation goal. Awarding departments are also required to recognize a 5-percent preference in cases where a bid includes a certified small business.
(f) In the state’s experience, a majority of DVBEs 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. The remaining 15 percent of DVBEs operate with only a single DVBE certification.

SEC. 3.

 Section 12098.3 of the Government Code is amended to read:

12098.3.
 (a) The Small Business Advocate shall be appointed by, and shall serve at the pleasure of, the Governor.
(b) The Governor shall appoint the employees who are needed to accomplish the purposes of this article.
(c) The duties and functions of the advocate shall include all of the following:
(1) Serve as the principal advocate in the state on behalf of small businesses, including, but not limited to, advisory participation in the consideration of all legislation and administrative regulations that affect small businesses, and advocacy on state policy and programs related to small businesses.
(2) Represent the views and interests of small businesses before other state agencies whose policies and activities may affect small business.
(3) Enlist the cooperation and assistance of public and private agencies, businesses, and other organizations in disseminating information about the programs and services provided by state government that are of benefit to small businesses, and information on how small businesses can participate in, or make use of, those programs and services.
(4) Consult with experts and authorities in the fields of small business investment, venture capital investment, and commercial banking and other comparable financial institutions involved in the financing of business, and with individuals with regulatory, legal, economic, or financial expertise, including members of the academic community, and individuals who generally represent the public interest.
(5) Seek the assistance and cooperation of all state agencies and departments providing services to, or affecting, small business, including the small business liaison designated pursuant to Section 11148.5, to ensure coordination of state efforts. The advocate shall fulfill this duty by, among other activities, maintaining, publicizing, and distributing an annual list of persons serving as small business liaisons throughout the state.
(6) Receive and respond to complaints from small businesses concerning the actions of state agencies and the operative effects of state laws and regulations adversely affecting those businesses.
(7) Counsel small businesses on how to resolve questions and problems concerning the relationship of small business to state government.
(8) Collaborate with the Office of Small Business and Disabled Veteran Business Enterprise Services in their activities under the Small Business Procurement and Contract Act (Chapter 6.5 (commencing with Section 14835) of Part 5.5), including, but not limited to, promoting small business certification and undertaking reasonable means to assist state agencies in improving small business participation. Among other activities, the advocate shall maintain, publicize, and distribute an annual list of persons serving as a small business advocate, designated pursuant to Section 14846, throughout state government.
(9) Collaborate with the California Disabled Veteran Enterprise Program Advocate, appointed pursuant to Section 999.11 of the Military and Veterans Code, regarding the implementation of the California Disabled Veteran Business Enterprise Program (Article 6 (commencing with Section 999) of Chapter 6 of Division 4 of the Military and Veterans Code), including, but not limited to, promoting disabled veteran business enterprise certification to veteran entrepreneurs and veteran-owned small businesses and undertaking reasonable means to assist state agencies in improving small business and disabled business enterprise procurement participation. The advocate shall fulfill this duty by, among other activities, publicizing the annual list of persons serving as a Disabled Veteran Business Enterprise Program Advocate, designated pursuant to Section 999.12 of the Military and Veterans Code, throughout the state.

SEC. 4.

 Section 14837 of the Government Code is amended to read:

14837.
 As used in this chapter:
(a) “Department” means the Department of General Services.
(b) “Director” means the Director of General Services.
(c) “Manufacturer” means a business that meets both of the following requirements:
(1) It is primarily engaged in the chemical or mechanical transformation of raw materials or processed substances into new products.
(2) It is classified between Codes 31 to 33, inclusive, of the North American Industry Classification System.
(d) (1) (A) “Small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and which, together with affiliates, has 100 or fewer employees, and average annual gross receipts of ten million dollars ($10,000,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 100 or fewer employees. Commencing January 1, 2019, the average annual gross receipts threshold shall be fifteen million dollars ($15,000,000).
(B) For the purposes of public works contracts, as defined in Section 1101 of the Public Contract Code, and engineering contracts, as described in Section 4525, for public works projects, awarded through competitive bids or otherwise, “small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and which, together with affiliates, has 200 or fewer employees, and average annual gross receipts of thirty-six million dollars ($36,000,000) or less over the previous three years. This subparagraph shall become operative on January 1, 2019.
(2) “Microbusiness” is a small business which, together with affiliates, has average annual gross receipts of two million five hundred thousand dollars ($2,500,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 25 or fewer employees. Commencing January 1, 2019, the average annual gross receipts threshold shall be five million dollars ($5,000,000).
(3) (A) The director shall conduct a biennial review of the average annual gross receipt levels specified in this subdivision and may adjust that level to reflect changes in the California Consumer Price Index for all items.
(B) Commencing January 1, 2019, the director shall conduct the biennial review and make that adjustment. To reflect unique variations or characteristics of different industries, the director may establish, to the extent necessary, either higher or lower qualifying standards than those specified in this subdivision, or alternative standards based on other applicable criteria.
(4) Standards applied under this subdivision shall be established by regulation, in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2, and shall preclude the qualification of businesses that are dominant in their industry. In addition, the standards shall provide that the certified small business or microbusiness shall provide goods or services that contribute to the fulfillment of the contract requirements by performing a commercially useful function, as defined below:
(A) A certified small business or microbusiness is deemed to perform a commercially useful function if the business does all of the following:
(i) Is responsible for the execution of a distinct element of the work of the contract.
(ii) Carries out its obligation by actually performing, managing, or supervising the work involved.
(iii) Performs work that is normal for its business services and functions.
(iv) Is responsible, with respect to products, inventories, materials, and supplies required for the contract, for negotiating price, determining quality and quantity, ordering, installing, if applicable, and making payment.
(v) Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices.
(B) A contractor, subcontractor, or supplier will not be considered to perform a commercially useful function if the contractor’s, subcontractor’s, or supplier’s role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of small business or microbusiness participation.
(e) “Disabled veteran business enterprise” means an enterprise that has been certified as meeting the qualifications established by paragraph (7) of subdivision (b) of Section 999 of the Military and Veterans Code.
(f) “Limited contracting small business enterprise” means a certified small business, as defined in subdivision (d), that has received fewer than five public contracts from the contracting department in the previous two years or has received public contracts from the contracting department totaling less than two hundred fifty thousand dollars ($250,000) in the previous two years.
(g) “New small business enterprise” means a certified small business, as defined in subdivision (d), that has not received a public contract from the contracting department in the previous two years.

SEC. 5.

 Section 14842.5 of the Government Code is amended to read:

14842.5.
 (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, certification as a small business or microbusiness 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 certification or denial of certification of any entity as a small business or microbusiness 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 small business or microbusiness 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 chapter.
(5) Knowingly and with intent to defraud, fraudulently represent certified small business or microbusiness participation 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 certified small business or microbusiness 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) Establish, or knowingly aid in the establishment of, or exercise control over, a firm found to have violated any provision of paragraphs (1) to (8), inclusive.
(b) (1) Any person who is found by the department to have violated any of the provisions of subdivision (a) is subject to 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.
(2) A person who 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 awarding state agency or the department related to hearings and court appearances. All payments to the state pursuant to this paragraph shall be deposited in the fund or funds out of which payments on the contract involved were made, except payments to the department shall be deposited in the Service Revolving Fund.
(c) The department shall revoke the small business or microbusiness certification, and the disabled veteran business enterprise certification if the business has both certifications, of any person that violates subdivision (a) for a period of not less than five years, and shall, in addition to the penalties provided for in subdivision (b), suspend the person from bidding on, or participating as a contractor, a subcontractor, or a supplier in, any state contract or project for a period of not less than three years nor more than 10 years. However, for an additional or subsequent violation, the period of certification revocation or suspension shall be extended for a period of up to three years. The certification revocation shall apply to the principals of the business and any subsequent businesses formed by one or more of those principals. Any business or person who fails to satisfy any of the penalties imposed pursuant to paragraphs (1) and (2) of subdivision (b) shall be prohibited from further contracting with the state until the penalties are satisfied.
(d) If a contractor, subcontractor, supplier, subsidiary, or affiliate thereof, has been found by the department to have violated subdivision (a) and that violation occurred within three years of another violation of subdivision (a) found by the department, the department shall prohibit that contractor, subcontractor, supplier, subsidiary, or affiliate thereof, from entering into a state project or state contract and from further bidding to a state entity, and from being a subcontractor to a contractor for a state entity, and from being a supplier to a state entity.
(e) (1) 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 state agency, 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.
(2) (A) 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.
(B) For alleged violations of paragraph (6) of subdivision (a), a civil action 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. 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 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.

(2)

(3) For purposes of this section:
(A) “Awarding state agency” means any state agency, department, governmental entity, or other officer or entity empowered by law to enter into contracts on behalf of the State of California.
(B) “Contractor” means any person or persons, firm, partnership, corporation, or combination thereof who submits a bid and enters into a contract with a representative of a state agency, department, governmental entity, or other officer empowered by law to enter into contracts on behalf of the State of California.

SEC. 5.SEC. 6.

 Section 14845 of the Government Code is amended to read:

14845.
 Using existing resources, the Department of General Services’ small business advocate shall, at a minimum, provide the following services:
(a) Assist certified small businesses and certified disabled veteran business enterprises by providing information regarding all of the following:
(1) Identification of potential certified small business and certified disabled veteran business enterprise subcontracting opportunities.
(2) Solicitation protest procedures and timelines.
(3) Prompt payment procedures.
(b) Using existing resources, develop and maintain an outreach and education program to assist certified small businesses and certified disabled veteran business enterprises to participate in the California multiple award schedule program. The department shall actively promote the availability of certified small business and certified disabled veteran business enterprise suppliers to deliver or provide a broad range of goods and services to governmental agencies through their participation in the California multiple award schedule program established pursuant to Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code and other types of contracts established by state agencies for repetitively used and commonly needed goods and services.
(c) Whenever the director consolidates the needs of multiple state agencies and establishes a contract for repetitively purchased or commonly needed goods or services, the director shall both encourage bidders to utilize certified small business and certified disabled veteran business enterprise suppliers and subcontractors, and utilize multiple award methods whenever practicable to further ensure that a fair proportion of needed goods and services are obtained from certified small businesses and certified disabled veteran business enterprises.
(d) Using existing resources, establish a training and development program for acquisition professionals, including methods for structuring solicitations to enhance the participation of certified small businesses and certified disabled veteran business enterprises in state contracting.
(e) Using existing resources, the department shall establish a recognition and awards program for state employees who make an outstanding contribution to the state’s overall effort to increase the level of certified small business participation in state contracting or certified disabled veteran business enterprise participation in state contracting.
(f) Prepare, and make available to the public, a directory of certified small business and certified disabled veteran business enterprise suppliers.
(g) In its review of state agency acquisitions, the department, as applicable, shall identify areas where improvements in the level of participation of certified small businesses and certified disabled veteran business enterprises in state contracting can be achieved.

SEC. 6.SEC. 7.

 Section 14846 of the Government Code is amended to read:

14846.
 (a) (1) Using existing resources, each state agency shall consolidate its existing staff functions that relate to contract opportunities for small business into a single point of contact for small businesses, and designate a small business advocate as a liaison to small business suppliers.
(2) Each small business advocate shall, at a minimum, provide for both of the following:
(A) Make information regarding pending solicitations available to, and consider offers from, California small business suppliers capable of meeting the state’s business need, and who have registered with the state for this purpose.
(B) Ensure that payments due on a contract with a small business are made promptly, as provided for in Chapter 4.5 (commencing with Section 927) of Part 3 of Division 3.6 of Title 1.
(3) This subdivision shall not apply to state agencies whose contracting expenditures total less than one hundred thousand dollars ($100,000) annually.
(b) Prior to placing orders under the California multiple awards schedule program, state agencies shall first consider offers from small businesses that have established multiple award schedules whenever practicable.
(c) State agencies shall identify and implement innovative acquisition operating processes, including payment processes, and strategies for small business participation. To maximize the benefits, state agencies shall actively share information about these innovative processes with other state agencies.
(d) State agencies shall prepare solicitations, and any related bid submission requirements, in a manner consistent with the scope, complexity, and anticipated cost of the acquisition. If appropriate, state agencies shall provide bidders with simplified and streamlined tools and methods for responding to solicitations that allow bidders to efficiently, expeditiously, and cost-effectively respond to the contracting opportunity.

SEC. 7.SEC. 8.

 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, as further described in Section 999.11:
(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. 8.SEC. 9.

 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 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 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) For alleged violations of paragraph (6) of subdivision (a), a civil action 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. 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 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.
(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. 9.SEC. 10.

 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. 10.SEC. 11.

 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.
(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 certified disabled veteran business enterprises that can offer their services for contracts that contract procurement staff have difficulty identifying.
(2) Assisting disabled veteran business enterprises in effectively utilizing certification documents and the state electronic procurement system in identifying which products and services businesses have on offer.
(c) Coordinate with the 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. 11.SEC. 12.

 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 Advocate. This person shall be the same individual appointed pursuant to Section 14846 of the Government Code. The agency Disabled Veteran Business Enterprise Program 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 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. 12.SEC. 13.

 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.