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AB-915 Small and disadvantaged business enterprises. (2021-2022)

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Date Published: 02/17/2021 09:00 PM
AB915:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 915

Introduced by Assembly Members Chiu and Holden

February 17, 2021

An act to amend Sections 11148.5, 12098.4, 14836, 14837, 14838, 14838.2, 14838.5, 14839, and 14840 of the Government Code, relating to business development.


LEGISLATIVE COUNSEL'S DIGEST


AB 915, as introduced, Chiu. Small and disadvantaged business enterprises.
(1) Existing law requires each state agency that significantly regulates or impacts small business to designate at least one person to serve as a small business liaison for the agency. Existing law requires the small business liaison to be responsible for, among other things, receiving and responding to complaints received by the agency from small businesses and assisting in ensuring that the procurement and contracting processes of the entity are administered in order to meet or exceed the goal of 25% small business participation.
This bill would also require the small business liaison to develop an “economic equity first” action plan and policy for the agency to provide, among other things, direction, recommendations, and strategies as to how to ensure that disadvantaged business enterprises are effectively involved and benefiting from the procurement process of the agency. The bill would require the action plan and policy to be submitted to the agency secretary, department director, or executive officer by January 1, 2023, and would require adoption of that plan by January 1, 2024.
(2) Existing law establishes the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development, also known as GO-Biz, and prescribes the duties and functions of the Small Business Advocate, who is also the Director of the Office of Small Business Advocate. Existing law requires the advocate to prepare and submit a written annual report to the Governor and the Legislature that describes the activities and recommendations of the office, including an evaluation of the efforts of state agencies and, where appropriate, specific departments, that significantly regulate small businesses to assist minority and other small business enterprises, and make appropriate recommendations to assist the development of these enterprises.
This bill would require the annual report to also include details regarding the 25% procurement goal for small businesses, microbusinesses, disadvantaged business enterprises, and disabled veteran business enterprise participation, as well as compliance and implementation of specified action plans and policies by state agency liaisons and advocates.
Existing law requires the advocate to post certain information on the GO-Biz or the advocate’s internet website, including how to receive assistance in certifying as a small business and identifying and participating in state procurement opportunities.
This bill would require the above-described information to be easily accessible from the homepage of the Go-Biz internet website.
(3) Existing law, the Small Business Procurement and Contract Act, declares that it is essential that opportunity is provided for full participation in our free enterprise system by small business enterprises.
This bill would provide that small business enterprises include, but are not limited to, women-owned, LGBTQ+, and “socially and economically disadvantaged individuals,” as described by specified federal laws.
Existing law also declares that the state should aid, counsel, assist, and protect the interests of small business concerns, including microbusinesses, to preserve free competitive enterprise and ensure a fair proportion of the total purchases and contracts or subcontracts for property and services for the state be placed with these enterprises.
This bill would revise this policy declaration to also state that at least 25% of these purchases be placed with small business enterprises, as described above.
(4) 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 acquisition of goods, services, and information technology and for the construction of state facilities to establish goals for the participation of small businesses and microbusinesses in these contracts, to provide for a small business preference 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.
Existing law defines a “small business” for these purposes as, among other things, an independently owned and operated business that is not dominant in its field of operation that, commencing January 1, 2019, has average annual gross receipts of $15 million, as may be adjusted to reflect changes in the California Consumer Price Index, or less over the previous 3 years. Existing law also defines a “microbusiness” as a small business which, together with affiliates, has average annual gross receipts of, commencing January 1, 2019, $5 million, as may be adjusted to reflect changes in the California Consumer Price Index, or less over the previous 3 years. Existing law requires the director to conduct a biennial review of those average annual gross receipt levels and authorizes the director to adjust the average annual gross receipts threshold to reflect changes in the California Consumer Price Index, as specified.
This bill would require the director to communicate and coordinate with the Small Business Advocate to execute this biennial review. The bill would, for purposes of the act, define “socially and economically disadvantaged individuals” to mean “disadvantaged business enterprises,” as described by federal law.
Existing law requires the directors of the Department of General Services and other state agencies that enter into contracts concerning the provision of goods, information technology, services, and construction of state facilities, to establish goals for the extent of participation of small businesses, including microbusinesses, for those contracts.
This bill would instead require those directors to establish a minimum goal of 25%, as is reasonable per scope of procurement need relative to free market availability to deliver product, good, or service, by a small, disadvantaged, or disabled veteran business enterprise, consistent with goals established by the Office of Small Business and Disabled Veteran Business Enterprise Services, as specified.
The bill would also require each state agency, by January 1, 2027, to provide a compliance report, relative to the 25% goal described above, to the Department of General Services. The bill would require the Director of General Services, by December 31, 2027, to testify to the Legislature on the effectiveness and outcomes of the statewide compliance of the minimum 25% goal of small, disadvantaged, or disabled veteran business enterprise procurement participation, and to annually thereafter provide a written report to the Legislature on compliance with this goal, as specified. The bill would provide that an agency’s failure to meet the minimum goal of 25% by January 1, 2027, would result in the agency having an audit conducted by the Department of General Services, along with a report to the Legislature as to the reasons and justifications for not meeting that goal, by no later than January 1, 2028.
Existing law also requires the directors of the Department of General Services and other state agencies that enter into contracts for the provision of goods, information technology, services to the state, and construction of state facilities, to provide for a small business preference, in the award of contracts, in solicitations where an award is to be made to the highest bidder based on evaluation factors in addition to price, with that amount being 5% of the highest responsible bidder’s total score.
This bill would also require the preference to disadvantaged business enterprises, as defined above, to be a separate 5% of the highest responsible bidder’s total score.
Existing law requires the directors of the Department of General Services and other state agencies, with respect to the preference for small businesses and microbusinesses of 5% of the lowest responsible bidder, to not exceed $50,000 for any bid, and also prohibits the combined cost of preferences granted from exceeding $100,000. Existing law requires, in bids in which the state has reserved the right to make multiple awards, for this $50,000 maximum preference cost to be applied, to the extent possible, so as to maximize the dollar participation of small businesses, including microbusinesses.
This bill would also provide that this preference be applied to the extent possible so as to maximize the dollar participation of disadvantaged business enterprises, as defined above. The bill would also require that special consideration be given to disadvantaged business enterprises by both reducing the experience required and reducing the level of inventory normally required and would update existing legislative findings regarding inequities faced by small businesses and disadvantaged business enterprises.
Existing law authorizes a state agency, notwithstanding specified advertising, budding, and protest provisions, to award a contract for the acquisition of goods, services, or information technology that has an estimated value of greater than $5,000, but less than $250,000 to a certified small business, including a microbusiness or a disabled veteran business, as long as the agency obtains price quotations from 2 or more of these certified businesses or disabled veterans business enterprises.
This bill would include a disadvantaged business enterprise within the above-described contract award provisions.
(5) Existing law establishes the Office of Small Business and Disabled Veteran Business Enterprise Services within the Department of General Services and charges it with specified duties, including making recommendations to the department and other state agencies for simplification of specifications and terms in order to increase the opportunities for small business, microbusiness, and disabled veteran business enterprise participation.
This bill would include, with those recommendations, simplification of specifications and terms in order to increase opportunities for disadvantaged business enterprises.
Existing law requires the department, during the process of certifying and determining the eligibility of a small business or a disabled veteran business enterprise, to require the applicant or certified firm to submit a written declaration, under penalty of perjury, that the information submitted to the department pursuant to specified law is true and correct.
This bill would expand that procedure to apply to determining the eligibility of a disadvantaged business enterprise, as defined. By expanding the crime of perjury, the bill would create a state-mandated local program. The bill would also permit the Department of General Services to apply relevant federal certifications for the business categories and in its delineated procurement authority to other state agencies. The bill would include related legislative findings.
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 all of the following:
(1) The positive fiscal impact of small businesses and minority-owned businesses to the overall economic health and stability of California, the fifth largest economy in the world, cannot be underestimated or overlooked – where in fact the entire California economy is predicated on the continual success and growth of all small businesses.
(2) Given that the size of the California budget is the largest of all states in the entire country, the California budget contributes one-seventh of the country’s gross domestic product (GDP), and that, pre-COVID, small businesses totaled 3.9 million, or 99.8 percent of all California businesses, and 1.6 million were minority owned.
(3) Small businesses not only contribute significantly to the tax base of the State of California but also account for approximately 7 million employees, or 48.8 percent of all employment in the state.
(4) It is therefore incumbent upon the State of California to ensure that a fair share of procurement spending be directed and dedicated to small and minority-owned small businesses.
(5) The State of California must carefully consider and provide guidance to all state departments, agencies, bureaus, and other state entities as to reflect small and minority-owned businesses as a priority when determining procurement decisions.
(6) As the economy pivots to recover and rebound post the COVID economic collapse, it is imperative for the state to assert that procurement goals not only include small businesses (“SBs”), but also minority-owned businesses, also known as “disadvantaged business enterprises” (“DBEs”), as is referenced in federal procurement policies.
(7) A means of economic recovery for the financial base of California would include codifying the previously expressed intent of the executive and legislative branches, respectively, of the state achieving a goal of procurement spending of 25 percent to SBs and DBEs.
(b) It is the intent of the Legislature that California SBs and DBEs are prioritized and uplifted by means of economic equity as it pertains to a percentage of state procurement dollars going to these entities.

SEC. 2.

 Section 11148.5 of the Government Code is amended to read:

11148.5.
 (a) A state agency that significantly regulates small business or that significantly impacts small business shall designate at least one person who shall serve as a small business liaison. The agency shall utilize existing personnel and resources to perform the duties of small business liaison.
(b) A state agency that significantly regulates small business or that significantly impacts small business shall widely publicize the position of small business liaison in appropriate agency publications and by prominently displaying the name and contact information of the small business liaison on the agency’s Web site website if the agency has a Web site. website.
(c) The small business liaison shall be responsible for all of the following:
(1) Receiving and responding to complaints received by the agency from small businesses.
(2) Providing technical advice and assisting small businesses in resolving problems and questions regarding compliance with the agency’s regulations and relevant statutes.
(3) Reporting small business concerns and, if appropriate, reporting recommendations to the agency secretary or to the agency head, as defined in Section 11405.40.
(4) Reviewing and updating, on a semiannual basis, content on the agency Web site website that is accessible through the small business link provided on the State of California Internet portal pursuant to Section 11541.5.
(5) Assisting the agency secretary, department director, or executive officer, as applicable, in ensuring that the procurement and contracting processes of the applicable entity are administered in order to meet or exceed the 25 percent small business participation goal, and developing and sharing innovative procurement and contracting practices from the public and private sectors to increase opportunities for small businesses.
(6) Developing an “economic equity first” action plan and policy for the agency, which will provide, among other things, direction, recommendations, and strategies as to how best ensure that disadvantaged business enterprises are effectively involved in, and benefiting from, the procurement process of the agency. The action plan and policy shall be submitted to the agency secretary, department director, or executive officer by January 1, 2023, and adoption of an “economic equity first” action plan shall occur by January 1, 2024. The action play may include, but is not limited to, education and outreach, disadvantaged business enterprise stakeholder engagement, and intentional expansion of disadvantaged business enterprise suppliers for the agency.
(d) The small business liaison shall not advocate for or against the adoption, amendment, or repeal of any regulation or intervene in any pending investigation or enforcement action.
(e) A state agency that significantly regulates small business or that significantly impacts small business shall notify the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development and the Department of General Services of each of the following:
(1) The name and contact information of the person or persons who have been designated as the agency’s small business liaison, on or before March 1, 2018.
(2) An occurrence of a vacancy in the position of small business liaison, within 15 working days of the occurrence of the vacancy. The state agency shall designate a small business liaison within three months after providing notice of the vacancy.
(f) For purposes of this section, “small business” has the same meaning as set forth in Section 11342.610.

SEC. 3.

 Section 12098.4 of the Government Code is amended to read:

12098.4.
 (a) Each agency of the state shall furnish to the advocate the reports, documents, and information that are public records and that the advocate deems necessary to carry out his or her their functions under this chapter.
(b) (1) The advocate shall prepare and submit a written annual report to the Governor and to the Legislature that describes the activities and recommendations of the office, including an evaluation of the efforts of state agencies and, where appropriate, specific departments, that significantly regulate small businesses to assist minority and other small business enterprises, and making recommendations that may be appropriate to assist the development and strengthening of minority and other small business enterprises.
(2) The annual report prepared by the advocate shall also include details regarding the 25-percent procurement goal for small businesses, microbusinesses, disadvantaged business enterprises, and disabled veteran business enterprise participation, as well as compliance and implementation of relative “economic equity first” action plans and policies, developed pursuant to Section 11148.5, by state agency liaisons and advocates.
(c) (1) The advocate may establish a centralized interactive telephone referral system and Internet Web site internet website to assist small and minority businesses in their operations, including governmental requirements, such as taxation, accounting, and pollution control, and to provide information concerning the agency from which more specialized assistance may be obtained.
(2) The advocate shall post on the GO-Biz Internet Web site internet website or the advocate’s Internet Web site: internet website:
(A) Information on how to receive assistance in identifying and understanding the state’s regulatory requirements. This information shall include:
(i) The name, telephone number, Internet Web site, internet website, and email of the small business liaison designated pursuant to Section 11148.5 to assist small businesses with understanding and adhering to the regulatory requirements of the state entities in which they serve.
(ii) The Internet Web site internet website developed and maintained by GO-Biz to identify licensing, permitting, and registration requirements of state agencies, pursuant to the requirements of Section 12097.1
(B) Information on how to receive assistance in certifying as a small business and identifying and participating in state procurement opportunities. opportunities shall be easily accessible from the homepage of the Go-Biz internet website. This information shall include:
(i) The name, telephone number, Internet Web site, internet website, and email of the small business advocate designated pursuant to Section 14846 to assist small businesses in contracting with the state entities in which they serve.
(ii) Contact information for the Office of Small Business and Disabled Veteran Business Enterprise Services established pursuant to Section 14839.
(C) Information about emergency preparedness, responses to emergencies, and recovery strategies for small businesses. This information shall be developed and updated in consultation with relevant state agencies and emergency responders.
(D) A link to the Energy Upgrade California Internet Web site internet website to assist small business owners in accessing information on the availability of various programs promoting the efficient use of energy.
(E) Information on programs administered through the statewide network of small business financial development corporations. Programs covered shall include loan guarantees, direct lending, surety bond guarantees, and disaster loans. Information shall be presented in a manner appropriate to address the needs of both small businesses and existing and potential financial institutions and financial companies.
(F) Information on how to identify and access services provided through the statewide network of small business technical assistance centers, including, but not limited to, small business development centers, women business centers, veteran business outreach centers, procurement technical assistance centers, and the Manufacturing Extension Partnership.

SEC. 4.

 Section 14836 of the Government Code is amended to read:

14836.
 (a) The Legislature hereby declares that it serves a public purpose, and it is of benefit to the state, to promote and facilitate the fullest possible participation by all citizens in the affairs of the State of California in every possible way. It is also essential that opportunity is provided for full participation in our free enterprise system by small business enterprises. enterprises, which includes, but is not limited to, women-owned, LGBTQ+, and “socially and economically disadvantaged individuals,” as described in Section 26.67 of Title 49 of the Code of Federal Regulations and by Section 8(a) of the Small Business Act of 1953.
(b) Further, it is the declared policy of the Legislature that the state should aid, counsel, assist, and protect, to the maximum extent possible, the interests of small business concerns, as described in subdivision (a), including microbusinesses, in order to preserve free competitive enterprise and to ensure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the state state, by stating that at least 25 percent of these purchases be placed with these enterprises.

SEC. 5.

 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. The director shall communicate and coordinate with the Small Business Advocate to execute this biennial review.
(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) “Socially and economically disadvantaged individuals” mean “disadvantaged business enterprises,” as described in Section 26.67 of Title 49 of the Code of Federal Regulations and by Section 8(a) of the Small Business Act of 1953.

SEC. 6.

 Section 14838 of the Government Code is amended to read:

14838.
 In order to facilitate the participation of small business, including microbusiness, in the provision of goods, information technology, and services to the state, and in the construction (including construction, including alteration, demolition, repair, or improvement) improvement, of state facilities, the directors of the department and other state agencies that enter those contracts, each within their respective areas of responsibility, shall do all of the following:
(a) (1) Establish goals, a minimum goal of 25 percent, as is reasonable per scope of procurement need relative to free market availability to deliver the product, good, or service by a small, disadvantaged, or disabled veteran business enterprise, consistent with those established by the Office of Small Business and Disabled Veteran Business Enterprise Services, for the extent of participation of small businesses, including microbusinesses, in the provision of goods, information technology, and services to the state, and in the construction of state facilities.
(2) By January 1, 2027, each state agency shall provide a compliance report, relative to the 25-percent small, disadvantaged, or disabled veteran business enterprise goal, to the Department of General Services. This report shall include the percentage of small, disadvantaged, or disabled veteran business enterprise state procurement participation per legislative district.
(3) By December 31, 2027, the Director of General Services shall testify to the Legislature on the effectiveness and outcomes of the statewide compliance of the minimum 25-percent goal of small, disadvantaged, or disabled veteran business enterprise procurement participation.
(4) Thereafter, the Director of General Services shall annually provide a written report to the Legislature on compliance with the 25-percent minimum goal of small, disadvantaged, or disabled veteran business enterprise procurement participation, and subject to a hearing on this matter, at the discretion of the Legislature.
(A) The requirement for submitting a report imposed under this paragraph is inoperative on January 1, 2032, pursuant to Section 10231.5.
(B) A report to be submitted pursuant to this paragraph shall be submitted in compliance with Section 9795.
(5) The failure of an agency to meet the minimum goal of 25 percent by January 1, 2027, shall result in the agency having an audit conducted by the Department of General Services with a subsequent report back to the Legislature as to reasons and justifications for not meeting the goal, by no later than January 1, 2028. The context of the reporting shall, at minimum, consist of a written report, complete with audit findings from the Department of General Services, and may include hearings by, and at the discretion of, the Legislature.
(b) Provide for small business preference, or nonsmall business preference for bidders that provide for small business and microbusiness subcontractor participation, in the award of contracts for goods, information technology, services, and construction, as follows:
(1) In solicitations where an award is to be made to the lowest responsible bidder meeting specifications, the preference to small business and microbusiness shall be 5 percent of the lowest responsible bidder meeting specifications. The preference to nonsmall business bidders that provide for small business or microbusiness subcontractor participation shall be, up to a maximum of 5 percent of the lowest responsible bidder meeting specifications, determined according to rules and regulations established by the Department of General Services.
(2) In solicitations where an award is to be made to the highest scored bidder based on evaluation factors in addition to price, the preference to small business or microbusiness shall be 5 percent of the highest responsible bidder’s total score. Additionally, the preference to disadvantaged business enterprises shall be a separate 5 percent of the highest responsible bidder’s total score. The preference to nonsmall business bidders that provide for small business or microbusiness subcontractor participation shall be up to a maximum 5 percent of the highest responsible bidder’s total score, determined according to rules and regulations established by the Department of General Services.
(3) The preferences under paragraphs (1) and (2) shall not be awarded to a noncompliant bidder and shall not be used to achieve any applicable minimum requirements.
(4) The preference under paragraph (1) shall not exceed fifty thousand dollars ($50,000) for any bid, and the combined cost of preferences granted pursuant to paragraph (1) and any other provision of law shall not exceed one hundred thousand dollars ($100,000). In bids in which the state has reserved the right to make multiple awards, this fifty thousand dollar ($50,000) maximum preference cost shall be applied, to the extent possible, so as to maximize the dollar participation of small businesses, including microbusinesses, microbusinesses and disadvantaged business enterprises, in the contract award.
(c) Give special consideration to small businesses and microbusinesses businesses, microbusinesses, and disadvantaged business enterprises by both:
(1) Reducing the experience required.
(2) Reducing the level of inventory normally required.
(d) Give special assistance to small businesses and microbusinesses in the preparation and submission of the information requested in Section 14310.
(e) Under the authorization granted in Section 10163 of the Public Contract Code, make awards, whenever feasible, to small business and microbusiness bidders for each project bid upon within their prequalification rating. This may be accomplished by dividing major projects into subprojects so as to allow a small business or microbusiness contractor to qualify to bid on these subprojects.
(f) Small business and microbusiness bidders qualified in accordance with this chapter shall have precedence over nonsmall business bidders in that the application of a bidder preference for which nonsmall business bidders may be eligible under this section or any other provision of law shall not result in the denial of the award to a small business or microbusiness bidder. In the event of a precise tie between the low responsible bid of a bidder meeting specifications of a small business or microbusiness, and the low responsible bid of a bidder meeting the specifications of a disabled veteran-owned small business or microbusiness, the contract shall be awarded to the disabled veteran-owned small business or microbusiness. This provision applies if the small business or microbusiness bidder is the lowest responsible bidder, as well as if the small business or microbusiness bidder is eligible for award as the result of application of the small business and microbusiness bidder preference granted by subdivision (b).
(g) If the directors of the department and other state agencies that enter into those contracts are unable to reach the goals established under subdivision (a) in the year in which the changes made by the act that added this subdivision become operative, the directors of the department and other state agencies may count towards that goal, contracts with firms that would be considered a small business or microbusiness under the amendments made to Section 14837 by the act adding this subdivision. This subdivision shall become operative on January 1, 2019.

SEC. 7.

 Section 14838.2 of the Government Code is amended to read:

14838.2.
 The Legislature finds and declares all of the following:
(a) Market demand is a driving factor in determining profitability of California companies and the ability of those companies to invest in business growth.

(b)Recent unemployment figures indicate that California’s employment has declined by more than 420,000 jobs since the middle of 1990, with up to 133,000 of those jobs in the manufacturing sector.

(b) The onset of COVID-19 and the subsequent economic downturn and recession has laid bare considerable social and economic inequities, and overall, nearly one-half of all small businesses face permanent closure, with disadvantaged business enterprises facing even higher foreclosure thresholds.
(c) The current economic recession, coupled with losses of federal contracts by our defense and aerospace industries, is causing an economic crisis in California. recession caused by COVID-19 is causing an economic crisis in California, hitting our minority and disadvantaged communities the hardest.
(d) California companies are often at a competitive disadvantage when responding to public contract proposals from government agencies because of factors associated with higher taxes, wages, rents, labor benefits, and insurance rates.
(e) The competitiveness of California companies is also impacted as a result of in-state business preference policies that exist in other states.

SEC. 8.

 Section 14838.5 of the Government Code is amended to read:

14838.5.
 (a) 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, disadvantaged business enterprise, 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, disadvantaged business enterprise, 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.

SEC. 9.

 Section 14839 of the Government Code is amended to read:

14839.
 (a) There is hereby established within the department the Office of Small Business and Disabled Veteran Business Enterprise Services. The duties of the office shall include:
(1) Compiling and maintaining a comprehensive bidders list of qualified small businesses and disabled veteran business enterprises, and noting which small businesses also qualify as microbusinesses.
(2) Coordinating with the Federal Small Business Administration, the Minority Business Development Agency, the California Disabled Veteran Business Enterprise Program Advocate, appointed by the Secretary of the Department of Veterans Affairs pursuant to Section 999.11 of the Military and Veterans Code, and the Small Business Advocate, appointed by the Governor pursuant to Section 12098.3.
(3) Providing technical and managerial aids to small businesses, microbusinesses, and disabled veteran business enterprises, by conducting workshops on matters in connection with government procurement and contracting.
(4) Assisting small businesses, microbusinesses, and disabled veteran business enterprises, in complying with the procedures for bidding on state contracts.
(5) Working with appropriate state, federal, local, and private organizations and business enterprises in disseminating information on bidding procedures and opportunities available to small businesses, microbusinesses, and disabled veteran business enterprises.
(6) Making recommendations to the department and other state agencies for simplification of specifications and terms in order to increase the opportunities for small business, microbusiness, disadvantaged business enterprise, and disabled veteran business enterprise participation.
(7) Developing, by regulation, other programs and practices that are reasonably necessary to aid and protect the interest of small businesses, microbusinesses, and disabled veteran business enterprises in contracting with the state, including, but not limited to, those specified in Article 6 (commencing with Section 999) of Chapter 6 of Division 4 of the Military and Veterans Code.
(8) Making efforts to develop, in cooperation with associations representing counties, cities, and special districts, a core statewide small business certification application that may be adopted by all participating entities, with any supplemental provisions to be added as necessary by the respective entities.
(b) The information furnished by each contractor requesting a small business or microbusiness preference shall be under penalty of perjury.

SEC. 10.

 Section 14840 of the Government Code is amended to read:

14840.
 (a) In the process of certifying and determining the eligibility of a disabled veteran business enterprise enterprise, disadvantaged business enterprise, or a small business enterprise, including a microbusiness, the department shall require the applicant or certified firm to submit a written declaration, under penalty of perjury, that the information submitted to the department pursuant to this chapter, and in the case of a disabled veteran enterprise all information submitted to the department pursuant to Section 999.2 of the Military and Veterans Code, is true and correct. The department, at its discretion, may apply relevant federal certifications for the business categories referenced above, including certifications from the federal Small Business Administration and federal Department of Transportation, and in the department’s delineated procurement authority to other state agencies.
(b) (1) If the department determines that just cause exists, it may require the owner of the disabled veteran business enterprise, disadvantaged business enterprise, microbusiness, or small business, the applicant, or the certified firm to complete and submit to the department a federal Form 4506-T from the Internal Revenue Service, United States Department of the Treasury, requesting a transcript of a tax return.
(2) For the purposes of this subdivision, “just cause” means either of the following circumstances exists:
(A) The department receives a complaint regarding the certified firm.
(B) The department determines, based on its findings during the course of any certification eligibility review of the applicant or certified firm, that the action described in paragraph (1) is necessary.

SEC. 11.

 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.