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California State Assembly in Session. (Photo: Kevin Sanders for California Globe)

California Target Area Contract Preference Act

The Act is to encourage, facilitate job maintenance and development in distressed and declining cities and towns

By Chris Micheli, August 15, 2022 4:15 pm

California has numerous formal acts in statute. Government Code Title 1, Division 5, Chapter 10.5 provides the Target Area Contract Preference Act, which is contained in Section 4530 to 4535.3. Chapter 10.5 was added in 1983 by Chapter 323. Section 4530 names the act. 

Section 4531 provides a legislative declaration that it serves a public purpose, and is of benefit to the state, to encourage and facilitate job maintenance and job development in distressed and declining areas of cities and towns in the state.

It is the intent of the Legislature to further these goals by providing appropriate preferences to California based companies submitting bids or proposals for state contracts to be performed at worksites in distressed areas by persons with a high risk of unemployment when the contract is for goods or services in excess of $100,000.

Section 4532 defines the following terms: “California-based company”; “distressed area”; “person with a high risk of unemployment”; “poverty”; and, “worksite.” Section 4533 provides that, whenever the state prepares a solicitation for a contract for goods in excess of $100,000, except a contract in which the worksite is fixed by the provisions of the contract, the state is required to award preferences.

The first is a workplace preference of 5 percent to California-based companies who demonstrate and certify under penalty of perjury that of the total labor hours required to manufacture the goods and perform the contract, at least 50 percent of the hours shall be accomplished at an identified worksite or worksites located in a distressed area.

The second is a workforce preference of between 1 percent and 5 percent to California-based companies that demonstrate and certify, under penalty of perjury, that the workforce completing those labor hours are persons with a high risk of unemployment.

Section 4533.1 provides that, where a bidder complies with the provisions of law or the worksite or worksites where at least 50 percent of the labor required to perform the contract is within commuting distance of a distressed area, the state is required to award a specified preferences between 1% and 4% for bidders who certify under penalty of perjury to hire persons with high risk of unemployment equal to specified percentages of its workforce during the period of contract performance.

Section 4534 states that, in evaluating proposals for contracts for services in excess of $100,000, except a contract in which the worksite is fixed by the provisions of the contract, the state is required to award preferences.

The first is a workplace preference of 5 percent on the price submitted by California-based companies that demonstrate and certify under penalty of perjury that not less than 90 percent of the total labor hours required to perform the contract shall be accomplished at an identified worksite or worksites.

The second is a workforce preference of between 1 percent and 5 percent to California-based companies that demonstrate and certify, under penalty of perjury, that the workforce completing those labor hours are persons with a high risk of unemployment.

Section 4535 requires all state contracts issued to bidders who are awarded preferences under this chapter to contain conditions to ensure that the contractor performs the contract at the location specified and meets any commitment to employ persons with high risk of unemployment.

Section 4535.1 provides that a business that requests and is given the preference provided by reason of having furnished a false certification, and which by reason of that certification has been awarded a contract to which it would not otherwise have been entitled, is to be subject to all of the specified penalties.

Section 4535.2 specifies that the maximum preference and incentive a bidder may be awarded pursuant to this chapter and any other provision of law is 15 percent. However, in no case can the maximum preference and incentive cost for a single preference under this chapter exceed $50,000 for any bid, nor can the combined cost of preferences and incentives granted pursuant to this chapter and any other provision of law exceed $100,000.

Section 4535.3 provides that the Department of General Services, with the cooperation of the Employment Development Department, the Department of Industrial Relations and the Office of Planning and Research, and under the direction of the State and Consumer Services Agency, is required to adopt appropriate rules, regulations, and guidelines to implement this chapter.

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