SB1340 - Small business liaison: contract information: small business procurement participation.

Enrolled August 30, 2026 Passed IN Senate August 27, 2026 Passed IN Assembly August 26, 2026 Amended IN Assembly August 21, 2026 Amended IN Assembly June 18, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 1340 Introduced by Senator Richardson (Coauthor: Assembly Member Caloza) February 20, 2026 An act to amend Section 14841 of, and to add Section 11148.5.1 to, the Government Code, and to add Chapter 12 (commencing with Section 19200) to Part 2 of Division 2 of the Public Contract Code, relating to businesses. LEGISLATIVE COUNSEL'S DIGEST SB 1340, Richardson. Small business liaison: contract information: small business procurement participation. Existing law establishes the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development, led by the Small Business Advocate, and sets forth its powers and duties relating to advocacy on behalf of small businesses and providing small businesses with the information they need to survive in the marketplace. Existing law, the Small Business Procurement and Contract Act, which requires the directors of the Department of General Services and other state agencies that enter specified contracts to establish a minimum goal for procurement participation for small businesses, including microbusinesses, in the provision of goods, information technology, and services to the state, and in the construction of state facilities, also requires a contractor, upon completion of a contract for which a commitment to achieve a small business or disabled business enterprise participation goal was made, to report to the awarding department the actual percentage of small business and disabled business enterprise participation that was achieved. This bill would also require an awarding department, upon completion of a contract for which a commitment to achieve a small business or disabled business enterprise participation goal was made, to require a prime contractor that entered into a subcontract with a small business to certify specified information to the awarding department, including, among other things, the total amount that the prime contractor received under the contract, that all payments under the contract have been made to the small business, and the actual percentage of small business participation that was achieved. By requiring a prime contractor to certify this information, the bill would expand the crime of perjury and impose a state-mandated local program. The bill would require a prime contractor, after being awarded a contract pursuant to the act, to use the small businesses or microbusiness subcontractor proposed in its bid, proposal, or contract unless certain conditions are met. Existing law, the State Contract Act except as specified, makes all contracts entered into by any state agency for the acquisition of goods or services, the construction, alteration, improvement, repair, or maintenance of property, real or personal, or the performance of work or services by the state agency for or in cooperation with any person, or public body, void unless and until approved by the Department of General Services. This bill would require an awarding department, beginning on January 1, 2028, and annually thereafter, through its small business liaison, to make available a report on payment activity during the previous fiscal year related to all contracts awarded to a small business, as specified. Existing law requires a state agency that significantly regulates small business or that significantly impacts small business to designate at least one person to serve as a small business liaison for the agency. Existing law requires these state agencies to notify the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development and the Department of General Services of specified information, including the name and contact information of the agency’s small business liaison. This bill would require the small business liaison for each state agency to annually submit the above-described report on payment activity to the Office of Small Business Advocate. The bill would require the Office of Small Business Advocate to post that information on its internet website. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. Section 11148.5.1 is added to the Government Code, to read: 11148.5.1. (a) The small business liaison for each state agency shall annually submit the information required under subdivision (a) of Section 19200 of the Public Contract Code to the Office of Small Business Advocate. (b) The Office of Small Business Advocate shall post the information received pursuant to subdivision (a) on its internet website. SEC. 2. Section 14841 of the Government Code is amended to read: 14841. (a) Upon completion of an awarded contract for which a commitment to achieve small business or disabled veteran business enterprise participation goals was made, the contractor shall report to the awarding department the actual percentage of small business and disabled veteran business enterprise participation that was achieved. (b) A contract that includes disabled veteran business enterprise participation shall also meet the requirements of Article 6 (commencing with Section 999) of Chapter 6 of Division 4 of the Military and Veterans Code. (c) Upon completion of an awarded contract for which a commitment to achieve a small business goal was made, the awarding department shall require a prime contractor that entered into a subcontract with a small business to certify all of the following to the awarding department: (1) The total amount that the prime contractor received under the contract. (2) The contract number and description. (3) The name, address, and certification identification number of the small business that participated in the performance of the contract. (4) The amount and percentage of work the prime contractor committed to provide to one or more small businesses under the requirements of the contract and the total payment amount each small business received from the prime contractor. (5) That all payments under the contract have been made to the small business. Upon request by the awarding state department or agency, the prime contractor shall provide proof of payment for the work. (6) The actual percentage of small business participation that was achieved. (d) After being awarded a contract pursuant to this chapter, a prime contractor shall use the small business or microbusiness subcontractors proposed its bid, proposal, or contract with the state unless a substitution is requested in writing by the prime contractor and approved by the awarding department in writing before any work by the proposed subcontractor is started. A substitution pursuant to this subdivision shall additionally comply with regulations adopted by the Department of General Services. SEC. 3. Chapter 12 (commencing with Section 19200) is added to Part 2 of Division 2 of the Public Contract Code, immediately following Section 19150, to read: CHAPTER 12. Reporting Small Business Contracting 19200. (a) Commencing on January 1, 2028, and annually thereafter, each awarding department, through its small business liaison, shall make available a report on payment activity during the previous fiscal year related to all contracts awarded to a small business. (b) The report described in subdivision (a) shall be submitted to the Office of Small Business Advocate, as required under Section 11148.5.1 of the Government Code, and contain a list of contracts with the following information for each contract: (1) Contractor name. (2) Contract number and description. (3) Contract term, including amendments. (4) Total amount of the contract, including amendments. (5) Total amount paid during the previous fiscal year and the cumulative total amount paid during the contract term. (c) For purposes of this section, “small business” has the same meaning as defined in Section 14837 of the Government Code. SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.