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House Engrossed
state contracts; foreign adversary; prohibition |
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State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024
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HOUSE BILL 2436 |
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An Act
amending title 41, chapter 23, article 3, Arizona Revised Statutes, by adding section 41-2559.01; relating to the procurement code.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 41, chapter 23, article 3, Arizona Revised Statutes, is amended by adding section 41-2559.01, to read:
41-2559.01. State contracts; covered company; certification letter; civil penalty; foreign adversary; disclosure penalties; definitions
A. A covered company may not bid on, submit a proposal for or enter into a contract with a state agency or political subdivision of this state for goods or services. All companies that submit a bid or proposal for a state contract for goods or services shall submit a certification letter to the department certifying that the company is not a covered company.
1. The company is liable for a civil penalty of $250,000 or twice the amount of the contract for which the bid or proposal was submitted, whichever is greater.
2. The state agency or the department shall terminate the contract with the company.
3. The company may not bid on any state contracts for at least sixty months.
C. Notwithstanding subsection a of this section, a state agency may enter into a contract for goods manufactured by a covered company if all of the following apply:
1. There are no other reasonable options for the procurement of the specific good.
2. The contract is preapproved by the department.
3. Not procuring the specific good would pose a greater threat to this state than the threat associated with the manufacture of the good by a covered company.
D. Each bid or offer submitted for a state contract shall include a disclosure stating whether, twenty-four months before submission of a bid or offer, the bidder or the offerer or any subsidiaries of the bidder or offerer had any business operations involving contracts with or services from any of the following:
1. A foreign adversary.
2. A state-owned enterprise of a foreign adversary.
3. A company domiciled within a foreign adversary.
E. If a bid or offer submitted for a state contract does not include a disclosure pursuant to subsection d of this section, the bidder or offerer may be given an opportunity after the bid or offer is submitted to submit the disclosure. A procurement officer may consider the disclosure when evaluating the bid or offer or when awarding the contract.
F. Each procurement officer shall provide the state agency with the name of each entity disclosed in the disclosure submitted pursuant to subsection D of this section.
G. A bid or offer may not be submitted for a state contract or for a contract with a political subdivision of this state if the bidder, the offerer or any subsidiaries of the bidder or offerer has, at least sixty months before submission of the bid or offer, had any business operations involving contracts with or services from any of the following:
1. A military entity of any foreign adversary.
2. A political party of a foreign adversary.
3. A federally banned corporation.
H. If the department determines that a company has violated subsection g of this section, all of the following shall occur:
1. The company is liable for a civil penalty of $250,000 or twice the amount of the contract for which the bid or proposal was submitted, whichever is greater.
2. The state agency or the department shall terminate the contract with the company.
3. The company may not bid on any state contracts for at least sixty months.
I. For the purposes of this section:
1. "Company":
(a) Means any of the following that exists for the purpose of making a profit:
(i) A sole proprietorship.
(ii) An organization.
(iii) A corporation.
(iv) An association.
(v) A partnership.
(vi) A joint venture.
(vii) A limited partnership.
(viii) A limited liability partnership.
(ix) A limited liability company.
(x) Any other entity or business association.
(b) Includes any of the following:
(i) A wholly owned subsidiary.
(ii) A majority owned subsidiary.
(iii) A parent company.
(iv) An affiliate of any entities or business associations.
2. "Covered company":
(a) Means any of the following:
(i) A state-owned enterprise of a foreign adversary.
(ii) A company domiciled within a foreign adversary.
(iii) A federally banned corporation.
(iv) A company of a foreign adversary.
(b) Includes a company owned or controlled, in whole or in part, by either of the following:
(i) The government of a foreign adversary.
(ii) Individuals acting in official government capacities of a foreign adversary.
(c) Includes any other company that sells the goods or services of a covered company to any state agency or political subdivision of this state as a third-party vendor.
3. "Domicile" means any of the following:
(a) The country where a company is registered.
(b) The country where the company's affairs are primarily completed.
(c) The country where the majority of ownership share is held.
4. "Federally banned corporation" includes companies banned by any of the following:
(a) The federal communications commission.
(b) The United States department of commerce.
(c) The federal acquisition security council.
5. "Foreign adversary":
(a) Means any of the following:
(i) China, including the Hong Kong special administration region.
(ii) Cuba.
(iii) Iran.
(iv) North Korea.
(v) Russia.
(vi) Saudi Arabia.
(vii) Syria.
(viii) Venezuela.
(b) Includes any agent or any other entity under significant control of such foreign adversary or any other entity deemed by the governor.
Sec. 2. Short title
This act shall be known as the "Protection Procurement Act".