Employee stock ownership plans: contractors: certification: bid preferences.

Plain English Breakdown

The exact percentage of employee participation and bid preferences are not detailed in the provided official summary text.

Employee Stock Ownership Plans: Contractor Certificates and Bid Preferences

This law requires the Director of General Services to issue certificates to contractors with employee stock ownership plans (ESOPs) that meet certain criteria, and it gives bid preferences to these certified contractors for state-funded construction projects starting in 2027.

What This Bill Does

• Requires the Director of General Services to give a certificate to contractors who have an ESOP meeting specific requirements.
• Specifies that at least an unspecified percentage of employees must participate in the ESOP, and the contractor needs a favorable letter from the IRS.
• Directs the Director of General Services to determine the ownership percentage for each applicant and include it on the certificate.
• Requires contractors with certificates to renew them every three years.
• Gives bid preferences to certified contractors based on their ESOP ownership percentage when the Department of Transportation prepares solicitations for state-funded construction contracts.

Who It Names or Affects

• Contractors who have employee stock ownership plans (ESOPs) and meet certain criteria.
• The Director of General Services, who issues certificates to qualified contractors.
• The Department of Transportation, which must provide bid preferences to certified contractors starting in 2027.

Terms To Know

Employee Stock Ownership Plan (ESOP)

A plan that allows employees to own shares of the company they work for.

Bid Preferences

Giving certain contractors an advantage in bidding on state contracts based on specific criteria.

Limits and Unknowns

• The exact percentage of employee participation required and the bid preferences given are not specified.
• It is unclear how many contractors will qualify for these certificates or what impact it will have on construction projects.

Official Summary Text

SB 713, as amended, Valladares.
Employee stock ownership plans: contractors:
certification.
certification: bid preferences.
Existing
(1)
Existing
law creates within the Governor’s Office of Business and Economic Development the Office of Small Business Advocate in order to advocate the causes of small business and to provide small businesses with the information they need to survive in the marketplace to be led by the Small Business Advocate. The California Employee Ownership Act requires, upon appropriation by the Legislature, the
Office of Small Business Advocate to establish the California Employee Ownership Hub (hub) and to appoint an Employee Ownership Hub Manager (manager) to administer the hub. The act authorizes the manager to be responsible for certain duties, including working with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.
This bill would require the Director of General Services
(director)
to issue an employee stock ownership plan (ESOP) contractor certificate to a qualified contractor, as defined,
with an ESOP that meets certain criteria, including that at least an unspecified percentage of the qualified contractor’s employees participate in the ESOP, as specified.
that presents a valid and favorable ESOP determination letter from the Internal Revenue Service. The bill would require the director to determine the percentage of ESOP ownership for an applicant and indicate the percentage on the certificate, as specified. The bill would require the director to require that the certificate be renewed every 3 years.
The bill would additionally authorize the manager to be responsible for compiling and maintaining a comprehensive bidders list of qualified contractors that have received
that
the
certificate from the Director of General Services.
The
(2) Existing law establishes within the Transportation Agency a Department of Transportation. Existing law requires the Department of Transportation to, among other things, plan, design, construct, operate, and maintain those transportation systems that the Legislature has made, or may make, the responsibility of the department, except as specified.
This
bill would
also
require, beginning January 1, 2027, the Department of Transportation to
ensure that an unspecified percentage of state funded construction contracts and construction-related procurements involve contractors who have received that certificate.
provide bid preferences to qualified contractors that have received the certificate based on the percentage of the qualified contractor owned by its ESOP, whenever the department prepares a solicitation for a state
-funded construction contract, as specified.

Current Bill Text

Download Bill PDF