HF 2596 (LSB 6256HV (1) 90)

HOUSE FILE 2596

BY  COMMITTEE ON PUBLIC SAFETY

(SUCCESSOR TO HSB 700)

A BILL FOR

An Act relating to qualifications to bid on or submit a proposal for certain public contracts, and providing penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  8A.311C  Qualifications to bid or submit proposals.
   1.  For purposes of this section:
   a.  “Company” means any sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, or other entity or business association, including all wholly owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such entities or business associations, that exists for profit-making purposes.
   b.  “Domicile” means any of the following:
   (1)  The country in which a company is registered.
   (2)  The country in which the company’s affairs are primarily completed.
   (3)  The country in which the majority of a company’s ownership shares are held.
   c.  “Federally banned company” means a company banned from doing business in the United States by the federal government. Such bans include but are not limited to those resulting from actions taken by any of the following federal agencies or pursuant to any of the following federal laws:
   (1)  The federal communications commission, including but not limited to the covered list developed pursuant to 47 C.F.R. §1.50002 and published by the public safety and homeland security bureau of the federal communications commission.
   (2)  The United States department of commerce.
   (3)  The United States cybersecurity and infrastructure security agency.
   (4)  The federal acquisition security council.
   (5)  Section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, Pub. L. No. 115-232.
   d.  “Foreign adversary” means the People’s Republic of China, the Russian Federation, the Islamic Republic of Iran, the Democratic People’s Republic of Korea, the Republic of Cuba, the Venezuelan regime of Nicolas Maduro, or the Syrian Arab Republic, including an agent of or an entity under significant control of such foreign country of concern, or an entity deemed a foreign adversary by the governor in consultation with the department.
   e.  “Foreign adversary company” means a company owned or controlled, in whole or in part, by the government of a foreign adversary, by individuals acting in official government capacities of a foreign adversary, by a company domiciled in a foreign adversary, or by a company otherwise under control of a foreign adversary.
   2.  Except as provided under subsection 5, all of the following are ineligible to bid on or submit a proposal for a contract with the state or a political subdivision of the state for goods or services, including but not limited to under this chapter, or chapter 8B, 26, 73, or 73A:
   a.  A foreign adversary company.
   b.  A federally banned company.
   c.  A company that offers to provide goods or services manufactured or produced by a foreign adversary company or federally banned company.
   3.  A company that submits a bid or proposal for a contract with the state or a political subdivision of the state for goods or services must certify that the company is not ineligible to bid on the contract under subsection 2.
   4.  If the department determines that a company has submitted a false certification under subsection 3, all of the following apply:
   a.  The department shall assess the company a civil penalty of not less than two hundred fifty thousand dollars, or twice the amount of the contract for which a bid or proposal was submitted, whichever is greater. Civil penalties collected under this paragraph shall be deposited in the general fund of the state.
   b.  The contract is void.
   c.  The company shall be ineligible to bid on a public contract for sixty months.
   5.  Notwithstanding subsection 2, the state or a political subdivision of the state may enter into a contract for goods manufactured by a foreign adversary company or federally banned company if all of the following criteria are met:
   a.  There is no other reasonable option for procuring the goods.
   b.  The contract is preapproved by the department.
   c.  Failure to procure the goods would pose a greater threat to this state than the threat associated with procuring the goods from a foreign adversary company or federally banned company.
   6.  Each bid or offer submitted for a public contract must include a disclosure of whether the bidder, offeror, or its corporate parents or subsidiaries, within the twenty-four-month period before submission of the bid or offer, had business operations that involved contracts with or the provision of supplies or services from or to a foreign adversary.
   7.  A bidder or offeror that does not include the disclosure required by subsection 6 may be given a reasonable period after the bid or offer is submitted to cure the nondisclosure. The state or political subdivision may consider the disclosure when evaluating the bid or offer or awarding the contract.
   8.  Each state entity or political subdivision that receives a disclosure under subsection 6 shall provide the disclosure to the department.
   9.  A company which wishes to submit a bid or offer for a public contract with the state or political subdivision of the state must certify that the bidder, offeror, or any of its corporate parents or subsidiaries, has not within the sixty months before submission of the bid or offer had business operations that involved contracts with or the provision of goods or services to a military entity of a foreign adversary, a foreign adversary company, a political party of a foreign adversary, or a federally banned company.
   10.  Each state entity or political subdivision shall provide the department with the name of each entity disclosed under subsection 9 as doing business or having done business with a military entity of a foreign adversary, a foreign adversary company, a political party of a foreign adversary, or a federally banned company.
   11.  If the department determines that a company has submitted a false certification under subsection 9, all of the following apply:
   a.  The department shall assess the company a civil penalty of not less than two hundred fifty thousand dollars, or twice the amount of the contract for which a bid or proposal was submitted, whichever is greater. Civil penalties collected under this paragraph shall be deposited in the general fund of the state.
   b.  The contract is void.
   c.  The company shall be ineligible to bid on a public contract for sixty months.
    Sec. 2.  Section 26.16, Code 2024, is amended to read as follows:
   26.16  Prequalification requirements prohibited.
   A Except to the extent provided in section 8A.311C, a governmental entity shall not by ordinance, rule, or any other action relating to contracts for public improvements for which competitive bids are required by this chapter impose any requirement that directly or indirectly restricts potential bidders to any predetermined class of bidders defined by experience on similar projects, size of company, union membership, or any other criteria. However, a governmental entity shall require nonresident bidders to comply with section 8A.311B, subsection 4.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill prohibits a foreign adversary company, a federally banned company, or a company that offers to provide goods or services manufactured or produced by such an entity from bidding on or submitting a proposal for a contract to supply goods or services to the state or a political subdivision of the state.
   The bill requires a company to certify that it is not ineligible for a public contract under the bill. If the certification is false, the department of administrative services (DAS) must assess the company a civil penalty of at least $250,000, the contract is void, and the company is ineligible to bid on a public contract for 60 months.
   The bill permits a contract with a foreign adversary company or federally banned company if there is no other reasonable way to obtain the goods, the contract is preapproved by DAS, and failure to obtain the goods poses a greater threat than obtaining the goods from the prohibited entity.
   When making a bid or offer on a public contract, a company must disclose whether the bidder, offeror, or its corporate parents or subsidiaries had contracts with, or provided or received supplies or services to or from, a foreign adversary. A company must also certify that the bidder, offeror, or its corporate parents or subsidiaries has not had contracts with or provided goods or services to a military entity or political party of a foreign adversary, a foreign adversary company, or a federally banned company 60 months before submission of the bid or offer. The public entity must submit this information to DAS. If the certification is false, the penalties previously set forth apply.