SB 713: Employee stock ownership plans: contractors: certification: bid preferences.

(1)Existing law creates within the Governors 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 contractors 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

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.