Governor Signs Senate Bill 588 - Disabled Veteran Business Enterprise Penalties

Governor Signs Senate Bill 588 – Disabled Veteran Business Enterprise Penalties

SACRAMENTO – California State Senate voted on SB 588 authored by Sen. Bob Archuleta (D-Pico Rivera).   The senate bill 588 would require an awarding department to give a prime contractor that fails to comply with certification requirements reasonable opportunity to cure the deficiency.  In addition the bill would require the department of general services, upon notification of the failure, to suspend a prime contractor from bidding on, or participating in the state contract for a period of no less than five years for the first violation, and a permanent suspension for a second violation.

The issues after reviewing a large sample of historic date, a state audit report 2013-115 indicated that many contract-awarding departments are doing a poor job obtaining and maintaining their data, to include records on certifications and payments. The audit included two of the state’s largest departments, the Department of Transportation (Caltrans) and the Department of Corrections and Rehabilitation (CDCR), both of which are among the highest volume contractors.

“While the state law provides for a penalty for a prime contractor who knowingly provides false information to an awarding department regarding its payments to a subcontractor, there is currently no penalty for simply failing to provide the information in the first place,” Archuleta said. This lack of enforcement tool contributes to the DVBE “data hole” common to many awarding departments.

This bill would establish an appropriate penalty framework for failing to provide the information already required under existing law in order to help facilitate accurate and transparent collection of date related to DVBE programs. This bill would also provide that prior to taking any penalty action, the awarding department would first be required to give the prime contractor a reasonable opportunity to cure the reporting deficiency, and if the prime contractor continues to fail to comply with the certification requirements, the awarding department must notify DGS.