Code Section Group

Public Contract Code - PCC

DIVISION 2. GENERAL PROVISIONS [1100 - 22355]

  ( Division 2 enacted by Stats. 1981, Ch. 306. )

PART 1. ADMINISTRATIVE PROVISIONS [1100 - 9203]

  ( Heading of Part 1 added by Stats. 1982, Ch. 1120, Sec. 2. )

CHAPTER 2. Responsive Bidders [2000 - 2010]
  ( Chapter 2 added by Stats. 1986, Ch. 1060, Sec. 2. )

2000.
  

(a) Notwithstanding any other provision of law requiring a local agency to award contracts to the lowest responsible bidder, any local agency may require that a contract be awarded to the lowest responsible bidder who also does either of the following:

(1) Meets goals and requirements established by the local agency relating to participation in the contract by minority business enterprises and women business enterprises. If the bidder does not meet the goals and requirements established by the local agency for that participation, the local agency shall evaluate the good faith effort of the bidder to comply with those goals and requirements as provided in paragraph (2).

(2) Makes a good faith effort, in accordance with the criteria established pursuant to subdivision (b), prior to the time bids are opened, to comply with the goals and requirements established by the local agency relating to participation in the contract by minority or women business enterprises.

(b) (1) The bidder attended any presolicitation or prebid meetings that were scheduled by the local agency to inform all bidders of the minority and women business enterprise program requirements for the project for which the contract will be awarded. A local agency may waive this requirement if it determines that the bidder is informed as to those program requirements.

(2) The bidder identified and selected specific items of the project for which the contract will be awarded to be performed by minority or women business enterprises to provide an opportunity for participation by those enterprises.

(3) The bidder advertised, not less than 10 calendar days before the date the bids are opened, in one or more daily or weekly newspapers, trade association publications, minority or trade oriented publications, trade journals, or other media, specified by the local agency for minority or women business enterprises that are interested in participating in the project. This paragraph applies only if the local agency gave public notice of the project not less than 15 calendar days prior to the date the bids are opened.

(4) The bidder provided written notice of his or her interest in bidding on the contract to the number of minority or women business enterprises required to be notified by the project specifications not less than 10 calendar days prior to the opening of bids. To the extent possible, the local agency shall make available to the bidder not less than 15 calendar days prior to the date the bids are opened a list or a source of lists of enterprises which are certified by the local agency as minority or women business enterprises. If the local agency does not provide that list or source of lists to the bidder, the bidder may utilize the list of certified minority or women business enterprises prepared by the Department of Transportation pursuant to Section 14030.5 of the Government Code for this purpose.

(5) The bidder followed up initial solicitations of interest by contacting the enterprises to determine with certainty whether the enterprises were interested in performing specific items of the project.

(6) The bidder provided interested minority and women business enterprises with information about the plans, specifications, and requirements for the selected subcontracting or material supply work.

(7) The bidder requested assistance from minority and women community organizations; minority and women contractor groups; local, state, or federal minority and women business assistance offices; or other organizations that provide assistance in the recruitment and placement of minority or women business enterprises, if any are available.

(8) The bidder negotiated in good faith with the minority or women business enterprises, and did not unjustifiably reject as unsatisfactory bids prepared by any minority or women business enterprises, as determined by the local agency.

(9) Where applicable, the bidder advised and made efforts to assist interested minority and women business enterprises in obtaining bonds, lines of credit, or insurance required by the local agency or contractor.

(10) The bidder’s efforts to obtain minority and women business enterprise participation could reasonably be expected by the local agency to produce a level of participation sufficient to meet the goals and requirements of the local agency.

(c) The performance by a bidder of all of the criteria specified in subdivision (b) shall create a rebuttable presumption, affecting the burden of producing evidence, that a bidder has made a good faith effort to comply with the goals and requirements relating to participation by minority and women business enterprises established pursuant to subdivision (a).

(d) “Local agency,” as used in this section, means a county or city, whether general law or chartered, city and county, school district, or other district. “District,” as used in this section, means an agency of the state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.

(e) “Minority or women business enterprise,” as used in this section, means a business enterprise that meets both of the following criteria:

(1) A business that is at least 51 percent owned by one or more minority persons or women or, in the case of any business whose stock is publicly held, at least 51 percent of the stock is owned by one or more minority persons or women.

(2) A business whose management and daily business operations are controlled by one or more minority persons or women.

(f) “Minority person,” for purposes of this section, means Black Americans, Hispanic Americans, Native Americans (including American Indians, Eskimos, Aleuts, and Native Hawaiians), Asian-Pacific Americans (including persons whose origins are from Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, the United States Trust Territories of the Pacific, Northern Marianas, Laos, Cambodia, and Taiwan), or any other group of natural persons identified as minorities in the project specifications by the local agency.

(g) This section does not apply to any of the following:

(1) Any contract, funded in whole or in part by the federal government, to the extent of any conflict between the requirements imposed by this section and any requirements imposed by the federal government relating to participation in a contract by a minority or women business enterprise as a condition of receipt of the federal funds.

(2) The San Francisco Bay Area Rapid Transit District, the Los Angeles County Transportation Commission, or any other local agency that has authority to facilitate the participation of minority or women business enterprises substantially similar to the authority granted to the San Francisco Bay Area Rapid Transit District pursuant to Section 20229 of this code or the Los Angeles County Transportation Commission pursuant to Section 130239 of the Public Utilities Code.

(Amended by Stats. 1988, Ch. 538, Sec. 1.)

2001.
  

(a) Any local agency, as defined in subdivision (d) of Section 2000, that requires that contracts be awarded to the lowest responsible bidder meeting, or making a good faith effort to meet, participation goals for minority, women, or disabled veteran business enterprises shall provide in the general conditions under which bids will be received, that any person making a bid or offer to perform a contract shall, in his or her bid or offer, set forth the following information:

(1) The name and the location of the place of business of each subcontractor certified as a minority, women, or 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 minority, women, and disabled veteran business enterprise participation goals.

(2) The portion of work that will be done by each subcontractor under paragraph (1). The prime contractor shall list only one subcontractor for each portion of work as is defined by the prime contractor in his or her bid or offer.

(b) The Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) shall apply to the information required by subdivision (a) relating to subcontractors certified as minority, women, or 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.

(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.

(Added by Stats. 1993, Ch. 1032, Sec. 4. Effective January 1, 1994.)

2002.
  

(a) Notwithstanding any other provision of law requiring a local agency to award contracts to the lowest responsible bidder, any local agency may do any of the following in facilitating contract awards to small businesses:

(1) Provide for a small business preference in construction, the procurement of goods, or the delivery of services where responsibility and quality are equal.

The local agency shall set the percent and financial value of a preference. The maximum percentage of a preference shall be 7 percent of the lowest responsible bidder meeting specifications and the maximum financial value shall be one hundred fifty thousand dollars ($150,000) for any bid.

(2) Establish a subcontracting participation goal for small businesses on contracts and grant a preference, pursuant to paragraph (1), to those bidders who meet the goal.

(3) (A) Require bidders to make good faith efforts to meet a subcontracting participation goal for small business contracts. Bidders that fail to meet the goal established by the local agency, shall demonstrate that they made good faith efforts to meet the goal.

(B) A prime contractor may, subject to the approval of the local agency, substitute a subcontractor with another small business as applicable. A local agency shall approve the substitution of a subcontractor only in the instance where the substitution meets the requirements of paragraph (6) of subdivision (d) and the local agency’s adopted policy.

(4) Set additional guidelines for local preference purposes.

(b) (1) The local agency shall define the eligibility for a preference authorized pursuant to this section.

(2) In defining eligibility for a “small business,” a local agency shall, at a minimum, include businesses meeting the requirements of a small business enterprise certified pursuant to Article 1 (commencing with Section 14835) of Chapter 6.5 of Part 5.5 of Division 3 of Title 2 of the Government Code.

(c) Every local agency that offers a preference, pursuant to this section, shall, prior to offering a preference, adopt a procurement policy that includes, at a minimum, all of the following:

(1) A definition of an eligible entity for each preference category being utilized by the local agency.

(2) The percentage and maximum financial value of a single preference.

(3) A requirement that a preference only be awarded to a small business that performs a commercially useful function, as defined in subdivision (e).

(4) A policy regarding oversight and potential fraudulent behavior on the part of a contractor, subcontractor, or individual for the purpose of qualifying as a small business and being awarded a preference.

(5) A policy for determining whether a contractor has made a good faith effort, pursuant to paragraph (3) of subdivision (a).

(6) A policy on how a prime contractor may substitute a subcontractor, pursuant to subparagraph (B) of paragraph (3) of subdivision (a). This policy shall, at a minimum, include all of the following:

(A) The identification of the condition or conditions for which a substitution of subcontractors is authorized.

(B) A requirement that construction subcontractors awarded construction subcontracts under this section shall be afforded all the protections of the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100)).

(C) A requirement that a subcontractor that served to qualify the bid package for a preference shall be replaced only with a subcontractor meeting the eligibility requirements of subdivision (b).

(D) A requirement that the condition qualifying the substitution be verified with the subcontractor.

(d) Every entity used to qualify a bid for a preference pursuant to this section shall perform a commercially useful function. A “commercially useful function” means:

(1) A contractor is deemed to perform a commercially useful function if the contractor, including a subcontractor, does all of the following:

(A) Is responsible for the execution of a distinct element of the work of the contract.

(B) Carries out its obligation by actually performing, managing, or supervising the work involved.

(C) Performs work that is normal for its business services and functions.

(D) 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.

(E) Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices.

(2) A contractor or subcontractor shall not be considered to perform a commercially useful function if the contractor’s or subcontractor’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 a small business.

(Amended by Stats. 2018, Ch. 654, Sec. 1. (AB 2762) Effective January 1, 2019.)

2003.
  

(a) Notwithstanding Section 2002 or any other law requiring a local agency to award contracts to the lowest responsible bidder, any local agency located within the Counties of Alameda, Contra Costa, Lake, Los Angeles, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma may do any of the following in facilitating contract awards to small businesses, disabled veteran businesses, or social enterprises:

(1) Provide for a small business, disabled veteran business, or social enterprise preference in construction, the procurement of goods, or the delivery of services where responsibility and quality are equal.

(A) The local agency shall set the percent and financial value of a preference. The maximum percentage of a preference shall be 7 percent of the lowest responsible bidder meeting specifications and the maximum financial value shall be one hundred fifty thousand dollars ($150,000) for any bid.

(B) If the local agency authorizes the use of more than one preference in a single bid, the local agency shall set the percentage and maximum financial value of the combined preferences. The maximum percentage of combined preferences shall be 15 percent of the lowest responsible bidder and the maximum combined financial value of all preferences shall be two hundred thousand dollars ($200,000).

(2) Establish a subcontracting participation goal for small businesses, disabled veteran businesses, or social enterprises on contracts and grant a preference, pursuant to paragraph (1), to those bidders who meet the goal.

(3) (A) Require bidders to make good faith efforts to meet a subcontracting participation goal for small business, disabled veteran business, or social enterprise contracts. Bidders that fail to meet the goal established by the local agency shall demonstrate that they made good faith efforts to meet the goal.

(B) A prime contractor may, subject to the approval of the local agency, substitute a subcontractor with another small business, disabled veteran business, or social enterprise, as applicable. A local agency shall approve the substitution of the subcontractor only in the instance where the substitution meets the requirements of paragraph (8) of subdivision (d) and the local agency’s adopted policy.

(4) Set additional guidelines for local preference purposes.

(b) The local agency shall define the eligibility for a preference authorized pursuant to this section, which at a minimum, shall include businesses meeting the requirements of paragraph (1) of subdivision (c) as a small business, businesses meeting the requirements of paragraph (2) of subdivision (c) as a disabled veteran business, and an entity meeting the requirements of paragraph (3) of subdivision (c) as a social enterprise.

(c) For the purposes of this section:

(1) “Small business” includes, but is not limited to, a small business enterprise certified pursuant to Article 1 (commencing with Section 14835) of Chapter 6.5 of Part 5.5 of Division 3 of Title 2 of the Government Code.

(2) “Disabled veteran business” includes a disabled veteran business enterprise certified pursuant to Article 6 (commencing with Section 999) of Chapter 6 of Division 4 of the Military and Veterans Code.

(3) “Social enterprise” includes a nonprofit or for-profit business whose primary purpose is to benefit the economic, environmental, or social health of the community and which uses the methods and disciplines of business and the power of the marketplace to advance its social, environmental, and human justice agendas, wherein the organization applies commercial strategies to maximize improvements in human and environmental well-being that may include maximizing social impact rather than profits for external shareholders. A “social enterprise” shall be a business that has been in operation for at least one year providing transitional or permanent employment to a transitional workforce or providing social, environmental, or human justice services. A “social enterprise” shall only include a social enterprise certified by the administering local agency or by an entity the local agency identifies in the procurement policy adopted pursuant to subdivision (d).

(4) “Transitional employment” means short-term or long-term, wage-paying, subsidized, or nonsubsidized employment that combines real work, skill development, and supportive services to help a transitional workforce overcome barriers to employment and transition to unsubsidized competitive employment.

(5) “Transitional workforce” means underemployed or hard-to-employ persons who may be homeless, formerly incarcerated, or who either have not worked for an extended period of time or face significant barriers to employment, where applicable.

(d) Every local agency that offers a preference, pursuant to this section, shall, prior to offering a preference, adopt a procurement policy that includes, at a minimum, all of the following:

(1) A definition of an eligible entity for each preference category being utilized by the local agency.

(2) The percentage and maximum financial value of a single preference.

(3) If the local agency allows multiple preferences in a bid package, the percentage and maximum financial value of multiple preferences in a bid package, if authorized by a local agency.

(4) A requirement that a preference only be awarded to a small business, disabled veteran business, or social enterprise that performs a commercially useful function, as defined in subdivision (e).

(5) A policy regarding oversight and potential fraudulent behavior on the part of a contractor, subcontractor, or individual for the purpose of qualifying as a small business, disabled veteran business, or social enterprise and being awarded a preference.

(6) If the local agency offers a preference for social enterprise participation, a certification process for social enterprises, as defined in paragraph (3) of subdivision (c).

(7) A policy for determining whether a contractor has made a good faith effort, pursuant to paragraph (3) of subdivision (a).

(8) Policy on how a prime contractor may substitute a subcontractor, pursuant to subparagraph (B) of paragraph (3) of subdivision (a). This policy shall, at a minimum, include all of the following:

(A) The identification of the condition or conditions for which a substitution of subcontractors is authorized.

(B) A requirement that construction subcontractors awarded construction subcontracts under this section shall be afforded all the protections of the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100)), including a provision that in addition to substitution conditions identified in Section 4107, a prime contractor may request substitution of a social enterprise or microbusiness, certified pursuant to Section 14837 of the Government Code, due to the subcontractor’s inability to execute the contract due to staffing or scheduling conflicts that have arisen since the submittal of the bid.

(C) A requirement that a subcontractor that served to qualify the bid package for a preference shall be replaced only with a subcontractor meeting the eligibility requirements of subdivision (b).

(D) A requirement that the condition qualifying the substitution be verified with the subcontractor.

(e) Every entity used to qualify a bid for a preference pursuant to this section shall perform a commercially useful function. A “commercially useful function” means:

(1) A contractor is deemed to perform a commercially useful function if the contractor, including a subcontractor, does all of the following:

(A) Is responsible for the execution of a distinct element of the work of the contract.

(B) Carries out its obligation by actually performing, managing, or supervising the work involved.

(C) Performs work that is normal for its business services and functions.

(D) 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.

(E) Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices.

(2) A contractor or subcontractor shall not be considered to perform a commercially useful function if the contractor’s or subcontractor’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 a small business, a disabled veteran business, or a social enterprise.

(f) This section shall remain in effect only until January 1, 2024, and as of that date is repealed.

(Added by Stats. 2018, Ch. 654, Sec. 2. (AB 2762) Effective January 1, 2019. Repealed as of January 1, 2024, by its own provisions.)

2010.
  

A person that submits a bid or proposal to, or otherwise proposes to enter into or renew a contract with, a state agency with respect to any contract in the amount of one hundred thousand dollars ($100,000) or more shall certify, under penalty of perjury, at the time the bid or proposal is submitted or the contract is renewed, all of the following:

(a) That they are in compliance with the Unruh Civil Rights Act (Section 51 of the Civil Code).

(b) That they are in compliance with the California Fair Employment and Housing Act (Chapter 7 (commencing with Section 12960) of Part 2.8 of Division 3 of Title 2 of the Government Code).

(c) (1) That any policy that they have against any sovereign nation or peoples recognized by the government of the United States, including, but not limited to, the nation and people of Israel, is not used to discriminate in violation of the Unruh Civil Rights Act (Section 51 of the Civil Code) or the California Fair Employment and Housing Act (Chapter 7 (commencing with Section 12960) of Part 2.8 of Division 3 of Title 2 of the Government Code).

(2) Any policy adopted by a person or actions taken thereunder that are reasonably necessary to comply with federal or state sanctions or laws affecting sovereign nations or their nationals shall not be construed as unlawful discrimination in violation of the Unruh Civil Rights Act (Section 51 of the Civil Code) or the California Fair Employment and Housing Act (Chapter 7 (commencing with Section 12960) of Part 2.8 of Division 3 of Title 2 of the Government Code.

(Added by Stats. 2016, Ch. 581, Sec. 2. (AB 2844) Effective January 1, 2017.)

PCCPublic Contract Code - PCC