Bill Text: CA AB926 | 2009-2010 | Regular Session | Chaptered
Bill Title: State contracts: goods: loss leader.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2009-10-11 - Chaptered by Secretary of State - Chapter 490, Statutes of 2009. [AB926 Detail]
Download: California-2009-AB926-Chaptered.html
BILL NUMBER: AB 926 CHAPTERED
BILL TEXT
CHAPTER 490
FILED WITH SECRETARY OF STATE OCTOBER 11, 2009
APPROVED BY GOVERNOR OCTOBER 11, 2009
PASSED THE SENATE SEPTEMBER 10, 2009
PASSED THE ASSEMBLY SEPTEMBER 11, 2009
AMENDED IN SENATE SEPTEMBER 4, 2009
INTRODUCED BY Assembly Member Ruskin
(Principal coauthor: Assembly Member Hill)
(Coauthor: Assembly Member Price)
FEBRUARY 26, 2009
An act to amend Section 14837 of the Government Code, to amend
Section 999 of the Military and Veterans Code, and to amend Sections
10111, 10302, 10344, and 12104.5 of the Public Contract Code,
relating to public contracts.
LEGISLATIVE COUNSEL'S DIGEST
AB 926, Ruskin. State contracts: goods: loss leader.
(1) Existing law requires the Department of General Services to
make available a report on contracting activity containing specified
information, as provided.
This bill would expand the reporting requirements of the
Department of General Services in the years 2011 and 2012, to include
any errors reported to the Department of General Services, as
specified.
(2) Existing law governs contracting between state agencies and
private contractors, and sets forth requirements for the procurement
of materials, supplies, equipment, and services, and the acquisition
of information technology goods and services by state agencies. Under
existing law, it is unlawful for any person engaged in business with
this state to sell or use any article or product as a "loss leader,"
as defined.
This bill would require a statement of this latter provision to be
specified in a solicitation for a state contract for goods, a
request for proposal for a contract for services that involves the
furnishing of equipment, materials, or supplies and a request for
proposal for a state contract for the acquisition of information
technology goods and services. This bill would require an awarding
agency, on and after March 31, 2010, and until December 31, 2011, if
this statement is not contained in a solicitation or request for
proposal, to report this error to the Department of General Services.
This bill would require the Department of General Services to post
in the State Contracting Manual instructions for including this
statement in all affected contracts. This bill would provide that
this statement shall be deemed to part of a solicitation or request
for proposal even if the statement is inadvertently omitted from the
solicitation or request for proposal.
(3) Existing law encourages state agencies that enter into
contracts to establish goals to facilitate the participation of small
businesses and disabled veteran business enterprises.
This bill would make technical, nonsubstantive changes to those
provisions.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. 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) "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.
(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.
(3) 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. 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) (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.
(ii) 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
subdivision (g) of Section 999 of the Military and Veterans Code.
SEC. 2. Section 999 of the Military and Veterans Code is amended
to read:
999. (a) This article shall be known as, and may be cited as, the
California Disabled Veteran Business Enterprise Program. The
California Disabled Veteran Business Enterprise Program is
established to address the special needs of disabled veterans seeking
rehabilitation and training through entrepreneurship and to
recognize the sacrifices of Californians disabled during military
service. It is the intent of the Legislature that every state
procurement authority honor California's disabled veterans by taking
all practical actions necessary to meet or exceed the disabled
veteran business enterprise participation goal of a minimum of 3
percent of total contract value.
(b) As used in this article, the following definitions apply:
(1) "Administering agency" means the Treasurer in the case of
contracts for professional bond services, and the Department of
General Services' Office of Small Business and Disabled Veteran
Business Enterprise Services, in the case of contracts governed by
Section 999.2.
(2) "Awarding department" means a state agency, department,
governmental entity, or other officer or entity empowered by law to
issue bonds or enter into contracts on behalf of the state.
(3) "Bonds" means bonds, notes, warrants, certificates of
participation, and other evidences of indebtedness issued by, or on
behalf of, the state.
(4) "Contract" includes any agreement or joint agreement to
provide professional bond services to the State of California or an
awarding department. "Contract" also includes any agreement or joint
development agreement to provide labor, services, materials,
supplies, or equipment in the performance of a contract, franchise,
concession, or lease granted, let, or awarded for, and on behalf of,
the state.
(5) (A) "Contractor" means any person or persons, regardless of
race, color, creed, national origin, ancestry, sex, marital status,
disability, religious or political affiliation, age, or any sole
proprietorship, firm, partnership, joint venture, corporation, or
combination thereof that 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. "Contractor" includes any provider of
professional bond services who enters into a contract with an
awarding department.
(B) "Disabled veteran business enterprise contractor,
subcontractor, or supplier" means any person or entity that has been
certified by the administering agency pursuant to this article and
that performs a "commercially useful function," as defined below, in
providing services or goods that contribute to the fulfillment of the
contract requirements:
(i) A person or an entity is deemed to perform a "commercially
useful function" if a person or entity does all of the following:
(I) (aa) Is responsible for the execution of a distinct element of
the work of the contract.
(ab) Carries out the obligation by actually performing, managing,
or supervising the work involved.
(ac) Performs work that is normal for its business services and
functions.
(II) Is not further subcontracting a portion of the work that is
greater than that expected to be subcontracted by normal industry
practices.
(ii) 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 a
disabled veteran business enterprise participation.
(6) "Disabled veteran" means a veteran of the military, naval, or
air service of the United States, including, but not limited to, the
Philippine Commonwealth Army, the Regular Scouts, "Old Scouts," and
the Special Philippine Scouts, "New Scouts," who has at least a
10-percent service-connected disability and who is domiciled in the
state.
(7) (A) "Disabled veteran business enterprise" means a business
certified by the administering agency as meeting all of the following
requirements:
(i) It is a sole proprietorship at least 51 percent owned by one
or more disabled veterans or, in the case of a publicly owned
business, at least 51 percent of its stock is owned by one or more
disabled veterans; a subsidiary that is wholly owned by a parent
corporation, but only if at least 51 percent of the voting stock of
the parent corporation is owned by one or more disabled veterans; or
a joint venture in which at least 51 percent of the joint venture's
management, control, and earnings are held by one or more disabled
veterans.
(ii) The management and control of the daily business operations
are by one or more disabled veterans. The disabled veterans who
exercise management and control are not required to be the same
disabled veterans as the owners of the business.
(iii) It is a sole proprietorship, corporation, or partnership
with its home office located in the United States, which is not a
branch or subsidiary of a foreign corporation, foreign firm, or other
foreign-based business.
(B) Notwithstanding subparagraph (A), after the death or the
certification of a permanent medical disability of a disabled veteran
who is a majority owner of a business that qualified as a disabled
veteran business enterprise prior to that death or certification of a
permanent medical disability, and solely for purposes of any
contract entered into before that death or certification, that
business shall be deemed to be a disabled veteran business enterprise
for a period not to exceed three years after the date of that death
or certification of a permanent medical disability, if the business
is inherited or controlled by the spouse or child of that majority
owner, or by both of those persons.
(8) "Foreign corporation," "foreign firm," or "foreign-based
business" means a business entity that is incorporated or has its
principal headquarters located outside the United States of America.
(9) "Goal" means a numerically expressed objective that awarding
departments and contractors are required to make efforts to achieve.
(10) "Management and control" means effective and demonstrable
management of the business entity.
(11) "Professional bond services" include services as financial
advisers, bond counsel, underwriters in negotiated transactions,
underwriter's counsel, financial printers, feasibility consultants,
and other professional services related to the issuance and sale of
bonds.
SEC. 3. Section 10111 of the Public Contract Code is amended to
read:
10111. Commencing January 1, 2007, the department shall make
available a report on contracting activity containing the following
information:
(a) A listing of consulting services contracts that the state has
entered into during the previous fiscal year. The listing shall
include the following:
(1) The name and identification number of each contractor.
(2) The type of bidding entered into, the number of bidders,
whether the low bidder was accepted, and if the low bidder was not
accepted, an explanation of why another contractor was selected.
(3) The amount of the contract price.
(4) Whether the contract was a noncompetitive bid contract, and
why the contract was a noncompetitive bid contract.
(5) Justification for entering into each consulting services
contract.
(6) The purpose of the contract and the potential beneficiaries.
(7) The date when the initial contract was signed, and the date
when the work began and was completed.
(b) The report shall also include a separate listing of consultant
contracts completed during that fiscal year, with the same
information specified in subdivision (a).
(c) The information specified in subdivisions (a) and (b) shall
also include a list of any contracts underway during that fiscal year
on which any change was made regarding the following:
(1) The completion date of the contract.
(2) The amount of money to be received by the contractor, if it
exceeds 3 percent of the original contract price.
(3) The purpose of the contract or duties of the contractor. A
brief explanation shall be given if the change in purpose is
significant.
(d) The level of participation, by agency, of disabled veteran
business enterprises in statewide contracting and shall include
dollar values of contract award for the following categories:
(1) Construction.
(2) Architectural, engineering, and other professional services.
(3) Procurement of materials, supplies, and equipment.
(4) Information technology procurements.
Additionally, the report shall include a statistical summary
detailing each awarding department's goal achievement and a statewide
total of those goals.
(e) The level of participation by small business in state
contracting including:
(1) Upon request, an up-to-date list of eligible small business
bidders by general procurement and construction contract categories,
noting company names and addresses and also noting which small
businesses also qualify as microbusinesses.
(2) By general procurement and construction contract categories,
statistics comparing the small business and microbusiness contract
participation dollars to the total state contract participation
dollars.
(3) By awarding department and general procurement and
construction categories, statistics comparing the small business and
microbusiness contract participation dollars to the total state
contract participation dollars.
(4) Any recommendations for changes in statues or state policies
to improve opportunities for small businesses and microbusinesses.
(5) A statistical summary of small businesses and microbusinesses
certified for state contracting by the number of employees at the
business for each of the following categories: 0-5, 26-50, 51-75, and
76-100.
(6) To the extent feasible, beginning in the year 2008, the number
of contracts awarded by the department in the categories specified
in paragraph (5).
(7) The number of contracts and dollar amounts awarded annually
pursuant to Section 14838.5 of the Government Code to small
businesses, microbusinesses, and disabled veteran business
enterprises.
(f) The level of participation of business enterprises, by race,
ethnicity, and gender of owner, in contracts as identified in Section
2051 of the Government Code, to the extent that the information has
been voluntarily reported to the department. In addition, the report
shall contain the levels of participation of business enterprises, by
race, ethnicity, and gender of owner, for the following categories
of contracts, to the extent that the information has been voluntarily
reported to the department:
(1) Construction.
(2) Purchases of materials, supplies, or equipment.
(3) Professional services.
(g) In the years 2011 and 2012, any errors reported to the
department by an awarding agency as required by Sections 10302,
10344, and 12104.5, in the previous fiscal year.
SEC. 4. Section 10302 of the Public Contract Code is amended to
read:
10302. (a) Except in cases of emergency where immediate purchase
of goods without bid is necessary for the protection of the public
health, welfare, or safety, whenever the department contracts for
goods in excess of twenty-five thousand dollars ($25,000), or a
higher amount as established by the director, the department shall
advertise in the California State Contracts Register the availability
of its solicitation, and interested suppliers, upon request, shall
be furnished with copies of the solicitation. In addition to
advertising in the California State Contracts Register, the
department shall post in a public place a copy of the solicitation,
which shall remain posted until seven days after an award has been
made. Whenever a contract in excess of twenty-five thousand dollars
($25,000), or a higher amount as established by the director, is made
pursuant to this section or Section 10301 without the taking of
bids, the department shall prepare a written document stating the
fact of the contract together with the facts requiring the contract
of the goods without the taking of bids. This document shall be
maintained by the department and shall be available as a public
record.
(b) (1) Every solicitation shall contain the following statement:
"It is unlawful for any person engaged in business within this
state to sell or use any article or product as a "loss leader" as
defined in Section 17030 of the Business and Professions Code."
(2) On and after March 31, 2010, and until December 31, 2011, if a
solicitation does not contain the statement required by paragraph
(1), the awarding agency shall report this error to the department
within 30 days of the date the awarding agency discovers this error.
(3) The department shall post in the State Contracting Manual
instructions for including the statement required by paragraph (1) in
all affected contracts.
(4) The statement required by paragraph (1) shall be deemed to be
part of a solicitation even if the statement is inadvertently omitted
from the solicitation.
SEC. 5. Section 10344 of the Public Contract Code is amended to
read:
10344. (a) Contracts subject to the provisions of this article
may be awarded under a procedure that makes use of a request for
proposal. State agencies that use this procedure shall include in the
request for proposal a clear, precise description of the work to be
performed or services to be provided, a description of the format
that proposals shall follow and the elements they shall contain, the
standards the agency will use in evaluating proposals, the date on
which proposals are due and the timetable the agency will follow in
reviewing and evaluating them.
State agencies that use a procedure that makes use of a request
for proposal shall evaluate proposals and award contracts in
accordance with the provisions of subdivision (b) or (c). No
proposals shall be considered that have not been received at the
place, and prior to the closing time, stated in the request for
proposal.
(b) State agencies that use the evaluation and selection procedure
in this subdivision shall include in the request for proposal, in
addition to the information required by subdivision (a), a
requirement that bidders submit their proposals with the bid price
and all cost information in a separate, sealed envelope.
Proposals shall be evaluated and the contract awarded in the
following manner:
(1) All proposals received shall be reviewed to determine those
that meet the format requirements and the standards specified in the
request for proposal.
(2) The sealed envelopes containing the bid price and cost
information for those proposals that meet the format requirements and
standards shall then be publicly opened and read.
(3) The contract shall be awarded to the lowest responsible bidder
meeting the standards.
(c) State agencies that use the evaluation and selection procedure
in this subdivision shall include in the request for proposal, in
addition to the information required by subdivision (a), a
description of the methods that will be used in evaluating and
scoring the proposals. Any evaluation and scoring method shall ensure
that substantial weight in relationship to all other criteria
utilized shall be given to the contract price proposed by the bidder.
Proposals shall be evaluated and the contract awarded in the
following manner:
(1) All proposals shall be reviewed to determine which meet the
format requirements specified in the request for proposal.
(2) All proposals meeting the formal requirements shall then be
submitted to an agency evaluation committee which shall evaluate and
score the proposals using the methods specified in the request for
proposal. All proposals and all evaluation and scoring sheets shall
be available for public inspection at the conclusion of the committee
scoring process.
(3) The contract shall be awarded to the bidder whose proposal is
given the highest score by the evaluation committee.
(d) Nothing in this section shall require the awarding of the
contract if no proposals are received containing bids offering a
contract price that in the opinion of the state agency is a
reasonable price.
(e) (1) In addition to the information required by subdivision
(a), a request for proposal for a contract that involves the
furnishing of equipment, materials, or supplies shall contain the
following statement:
"It is unlawful for any person engaged in business within this
state to sell or use any article or product as a "loss leader" as
defined in Section 17030 of the Business and Professions Code."
(2) On and after March 31, 2010, and until December 31, 2011, if a
request for proposal does not contain the statement required by
paragraph (1), the awarding agency shall report this error to the
department within 30 days of the date the awarding agency discovers
this error.
(3) The department shall post in the State Contracting Manual
instructions for including the statement required by paragraph (1) in
all affected contracts.
(4) The statement required by paragraph (1) shall be deemed to be
part of a request for proposal even if the statement is inadvertently
omitted from the request for proposal.
SEC. 6. Section 12104.5 of the Public Contract Code is amended to
read:
12104.5. (a) All rules and requirements governing an information
technology acquisition, for which the department determines that a
request for proposal (RFP) is appropriate, shall be communicated in
writing to all vendors that have expressed an intent to bid and shall
be posted in a public location. Any changes to the rules and
requirements governing that RFP shall be communicated in writing to
all vendors that have expressed an intent to bid and shall be posted
in a public location. No requirements other than those provided by
law or outside of the published RFP and posted addendums shall be
used by the department to score bids.
(b) (1) All requests for proposals shall contain the following
statement:
"It is unlawful for any person engaged in business within this
state to sell or use any article or product as a "loss leader" as
defined in Section 17030 of the Business and Professions Code."
(2) On and after March 31, 2010, and until December 31, 2011, if a
request for proposal does not contain the statement required by
paragraph (1), the awarding agency shall report this error to the
department within 30 days of the date the awarding agency discovers
this error.
(3) The department shall post in the State Contracting Manual
instructions for including the statement required by paragraph (1) in
all affected contracts.
(4) The statement required by paragraph (1) shall be deemed to be
part of a request for proposal even if the statement is inadvertently
omitted from the request for proposal.
(c) The requirements of this section shall be in addition to any
other requirement provided by law.
