Bill Text: CA AB177 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Public contracts: small businesses and disabled veteran

Spectrum: Moderate Partisan Bill (Democrat 9-1)

Status: (Passed) 2010-09-27 - Chaptered by Secretary of State - Chapter 342, Statutes of 2010. [AB177 Detail]

Download: California-2009-AB177-Amended.html

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BILL NUMBER: AB 177	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 2, 2010
	AMENDED IN ASSEMBLY  JANUARY 4, 2010
	AMENDED IN ASSEMBLY  APRIL 23, 2009
	AMENDED IN ASSEMBLY  APRIL 13, 2009

INTRODUCED BY   Assembly Members Ruskin and V. Manuel Perez
   (Coauthors: Assembly Members  Price  
  and Salas   Beall,   Block,
  Logue,   and Salas  )
   (  Coauthor:  Senator  
NegreteB McLeod   Coauthors:   Senators 
 NegreteB McLeod   and Price  )

                        FEBRUARY 2, 2009

   An act to amend Sections 14842 and 14842.5 of the Government Code,
and to amend Section 999.9 of the Military and Veterans Code,
relating to public contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 177, as amended, Ruskin. Public contracts: small businesses and
disabled veteran business enterprises.
   (1) Existing law provides for various programs to encourage the
participation of small businesses and disabled veteran business
enterprises, as certified by the Department of General Services, in
state agency contracts. Existing law revokes, for a specified period,
the small business or microbusiness certification of a business that
obtained the classification as a small business or microbusiness by
reason of having furnished incorrect supporting information or
withholding relevant information, and suspends that business from
transacting with the state, as specified. Existing law extends the
period of revocation and suspension for additional or subsequent
violations.
   This bill would increase the period of certification revocation
and suspension for such violations, and additionally require the
revocation of the business' seller's permit for additional or
subsequent violations.
   (2) Existing law also revokes, for a specified period, the small
business or microbusiness or disabled veteran business enterprise
certification of a person who, among other activities, fraudulently
attempts to become certified as a disabled veteran business
enterprise or as a small business or microbusiness. Existing law
additionally suspends, for a specified period, that person from
bidding on or participating in any state contract or project.
Existing law extends the period of revocation and suspension for
additional and subsequent violations.
   This bill would increase the period of certification revocation
and suspension for such violations, and additionally require the
revocation of the business' seller's permit for additional or
subsequent violations.
   This bill would impose civil penalties against any person who
knowingly and fraudulently represents that a commercially useful
function is being performed by a disabled veteran business enterprise
in order to obtain or retain a bid preference or a state contract,
and would subject that person to revocation of the disabled veteran
business enterprise certification and suspension from bidding on or
participating in any state contract or project for a specified
period.
   This bill would additionally require that any existing contract
between any awarding department and contractor be terminated if the
contractor knowingly and fraudulently represents that a commercially
useful function is being performed by a disabled veteran business
enterprise or by a small business or microbusiness, and require the
Controller to withhold any payments to that contractor except for
outstanding invoices.
   This bill would require persons or businesses found to have
obtained small business or disabled veteran business enterprise
certification by fraudulent or improper means to pay costs incurred
by the awarding department or the Department of General Services, as
specified.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 14842 of the Government Code is amended to
read:
   14842.  (a) A business that has obtained classification as a small
business or microbusiness by reason of having furnished incorrect
supporting information or by reason of having withheld information,
and that knew, or should have known, the information furnished was
incorrect or the information withheld was relevant to its request for
classification, and that by reason of that classification has been
awarded a contract to which it would not otherwise have been
entitled, shall do all of the following:
   (1) Pay to the state any difference between the contract amount
and what the state's costs would have been if the contract had been
properly awarded.
   (2) Pay to the awarding department an amount  that is
equal to the costs incurred for investigating the small business or
microbusiness certification that led to the finding that the contract
had been improperly awarded.
   (3) In addition to the amount described in subdivision (a), be
assessed a penalty in an amount of not more than 10 percent of the
amount of the contract involved.
   (b) Suspend any person who violates subdivision (a) from
transacting any business with the state either directly as a prime
contractor or indirectly as a subcontractor, for a period of not less
than three years and not more than 10 years. State agencies may
reject the bid of a supplier offering goods, information technology,
or services manufactured or provided by a subcontractor if that
subcontractor has been declared ineligible to transact any business
with the state under this chapter, even though the bidder is a
business in good standing.
   (c) All payments to the state pursuant to paragraphs (1) and (2)
of subdivision (a) shall be deposited in the fund out of which the
contract involved was awarded.
   (d) All payments to the state pursuant to paragraph (3) of
subdivision (a) shall be deposited in the state General Fund.
   (e) The small business certification of a business found to have
violated subdivision (a) shall be revoked by the department for a
period of not less than five years. For an additional or subsequent
violation, the period of certification revocation or suspension shall
be extended for a period of up to 10 years and shall result in the
revocation of the business' seller's permit. The certification
revocation shall apply to the principals of the business and any
subsequent businesses formed by those principals.
   (f) Prior to the imposition of any sanctions under this article, a
business shall be entitled to a public hearing and to at least five
working days' notice of the time and place thereof. The notice shall
state the reasons for the hearing.
  SEC. 2.  Section 14842.5 of the Government Code is amended to read:

   14842.5.  (a) It shall be unlawful for a person to do any of the
following:
   (1) Knowingly and with intent to defraud, fraudulently obtain,
retain, attempt to obtain or retain, or aid another in fraudulently
obtaining or retaining or attempting to obtain or retain,
certification as a small business or microbusiness enterprise for the
purposes of this chapter.
   (2) Willfully and knowingly make a false statement with the intent
to defraud, whether by affidavit, report, or other representation,
to a state official or employee for the purpose of influencing the
certification or denial of certification of any entity as a small
business or microbusiness enterprise.
   (3) Willfully and knowingly obstruct, impede, or attempt to
obstruct or impede, any state official or employee who is
investigating the qualifications of a business entity that has
requested certification as a small business or microbusiness
enterprise.
   (4) Knowingly and with intent to defraud, fraudulently obtain,
attempt to obtain, or aid another person in fraudulently obtaining or
attempting to obtain, public moneys to which the person is not
entitled under this chapter.
   (5) Knowingly and with intent to defraud, fraudulently represent
certified small business or microbusiness participation in order to
obtain or retain a bid preference or a state contract.
   (6) Knowingly and with intent to defraud, fraudulently represent
that a commercially useful function is being performed by a certified
small business or microbusiness in order to obtain or retain a bid
preference or a state contract.
   (b) (1) Any person who is found by the department to have violated
any of the provisions of subdivision (a) is subject to a civil
penalty of not less than ten thousand dollars ($10,000) nor more than
thirty thousand dollars ($30,000) for the first violation, and a
civil penalty of not less than thirty thousand dollars ($30,000) nor
more than fifty thousand dollars ($50,000) for each additional or
subsequent violation.
   (2) A person who violates any of the provisions of subdivision (a)
shall pay all costs incurred by the awarding department and the
Department of General Services for any investigations that led to the
finding of the violation.
   (c) The department shall revoke the small business or
microbusiness certification of any person that violates subdivision
(a) for a period of not less than five years, and shall, in addition
to the penalties provided for in subdivision (b), be suspended from
bidding on, or participating as a contractor, a subcontractor, or a
supplier in, any state contract or project for a period of not less
than three years nor more than 10 years and shall result in the
revocation of the business' seller's permit. However, for an
additional or subsequent violation, the period of certification
revocation or suspension shall be extended for a period of up to
three years. The certification revocation shall apply to the
principals of the business and any subsequent businesses formed by
those principals. Any business or person who fails to satisfy the
penalties imposed pursuant to subdivisions (b) and (c) shall be
prohibited from further contracting with the state until the
penalties are satisfied.
   (d) If a contractor, subcontractor, supplier, subsidiary, or
affiliate thereof, has been found by the department to have violated
subdivision (a) and that violation occurred within three years of
another violation of subdivision (a) found by the department, the
department shall prohibit that contractor, subcontractor, supplier,
subsidiary, or affiliate thereof, from entering into a state project
or state contract and from further bidding to a state entity, and
from being a subcontractor to a contractor for a state entity and
from being a supplier to a state entity.
   (e) (1) In addition to the penalties imposed by this section, if a
contractor is found to be in violation of paragraph (6) of
subdivision (a) any existing contract between that contractor and any
awarding department shall be terminated, and the Controller shall
withhold any payments to that contractor except for outstanding
invoices.
   (2) For purposes of this subdivision:
   (A) "Awarding department" means any state agency, department,
governmental entity, or other officer or entity empowered by law to
enter into contracts on behalf of the State of California.
   (B) "Contractor" means any person or persons, firm, partnership,
corporation, or combination thereof who submits a bid and enters into
a contract with a representative of a state agency, department,
governmental entity, or other officer empowered by law to enter into
contracts on behalf of the State of California.
  SEC. 3.  Section 999.9 of the Military and Veterans Code is amended
to read:
   999.9.  (a) It shall be unlawful for a person to:
   (1) Knowingly and with intent to defraud, fraudulently obtain,
retain, attempt to obtain or retain, or aid another in fraudulently
obtaining or retaining or attempting to obtain or retain,
certification as a disabled veteran business enterprise for the
purpose of this article.
   (2) Willfully and knowingly make a false statement with the intent
to defraud, whether by affidavit, report, or other representation,
to a state official or employee for the purpose of influencing the
certification or denial of certification of any entity as a disabled
veteran business enterprise.
   (3) Willfully and knowingly obstruct, impede, or attempt to
obstruct or impede, any state official or employee who is
investigating the qualifications of a business entity that has
requested certification as a disabled veteran business enterprise.
   (4) Knowingly and with intent to defraud, fraudulently obtain,
attempt to obtain, or aid another person in fraudulently obtaining or
attempting to obtain, public moneys, contracts, or funds expended
under a contract, that are awarded by any state agency, department,
officer, or other state governmental agency, to which the person is
not entitled under this article.
   (5) Knowingly and with intent to defraud, fraudulently represent
participation of a disabled veteran business enterprise in order to
obtain or retain a bid preference or a state contract.
   (6) Knowingly and with intent to defraud, fraudulently represent
that a commercially useful function is being performed by a disabled
veteran business enterprise in order to obtain or retain a bid
preference or a state contract.
   (7) Willfully and knowingly make or subscribe to any statement,
declaration, or other document that is fraudulent or false as to any
material matter, whether or not that falsity or fraud is committed
with the knowledge or consent of the person authorized or required to
present the declaration, statement, or document.
   (8) Willfully and knowingly aid or assist in, or procure, counsel,
or advise, the preparation or presentation of a declaration,
statement, or other document that is fraudulent or false as to any
material matter, regardless of whether that falsity or fraud is
committed with the knowledge or consent of the person authorized or
required to present the declaration, statement, or document.
   (9) Willfully and knowingly fail to file any declaration or notice
with the awarding agency that is required by Section 999.2.
   (10) Establish, or knowingly aid in the establishment of, or
exercise control over, a firm found to have violated any of
paragraphs (1) to (9), inclusive.
   (b) Any person who violates any of the provisions of subdivision
(a) shall be guilty of a misdemeanor punishable by imprisonment in
the county jail not exceeding six months or by a fine not exceeding
one thousand dollars ($1,000), or by both. In addition, the person
shall be liable for a civil penalty of not less than ten thousand
dollars ($10,000) nor more than thirty thousand dollars ($30,000) for
the first violation, and a civil penalty of not less than thirty
thousand dollars ($30,000) nor more than fifty thousand dollars
($50,000) for each additional or subsequent violation. A defendant
who violates any of the provisions of subdivision (a) shall pay all
costs and attorney's fees incurred by the plaintiff in a civil action
brought pursuant to this section, including costs incurred by the
awarding department or the Department of General Services.
   (c) (1)  The Department of General Services shall suspend any
person who violates subdivision (a) from bidding on, or participating
as either a contractor, subcontractor, or supplier in, any state
contract or project for a period of not less than three years and not
more than 10 years, and if certified as a disabled veteran business
enterprise, the department shall revoke the business' certification
for a period of not less than five years. An additional or subsequent
violation shall extend the periods of suspension and revocation for
a period of not less than 10 years and shall result in the revocation
of the business' seller's permit. The suspension and revocation of
certification shall apply to the principals of the business and any
subsequent business formed or financed by, or affiliated with, those
principals.
   (2)  The Department of General Services shall prohibit any
business or person who fails to satisfy the penalties, costs, and
attorney's fees imposed pursuant to subdivision (b) from further
contracting with the state until the penalties are satisfied.
   (d) In addition to the penalties imposed by this section, if a
contractor is found to be in violation of paragraph (6) of
subdivision (a) any existing contract between that contractor and any
awarding department shall be terminated, and the Controller shall
withhold any payments to that contractor except for outstanding
invoices.
   (e) The awarding department shall report all alleged violations of
this section to the Department of General Services. The Department
of General Services shall subsequently report all alleged violations
to the Attorney General who shall determine whether to bring a civil
action against any person or firm for a violation of this section.
   (f) The Department of General Services shall monitor the status of
all reported violations and shall maintain and make available to all
state departments a central listing of all firms and persons who
have been determined to have committed violations resulting in
suspension.
   (g) No awarding department shall enter into any contract with any
person suspended for violating this section during the period of the
person's suspension. No awarding department shall award a contract to
any contractor utilizing the services of any person as a
subcontractor suspended for violating this section during the period
of the person's suspension.
   (h) The awarding department shall check the central listing
provided by the Department of General Services to verify that the
person or contractor to whom the contract is being awarded, or any
person being utilized as a subcontractor or supplier by that person
or contractor, is not under suspension for violating this section.