SB 220 — Public contracts; prohibitions on public contracts with entities affiliated with the People's Republic of China, provided;

SB220 INTRODUCEDENGROSSED SB220 WD2J55E-1WIITEEE-2 By Senators Roberts, Orr, Jones, Shelnutt RFD:

19-Mar-24 Page 0 WD2J55E-1SB220 03/18/2024Engrossed CMH*2 (L)bm4 2024-3746 2A 4BILL SYNOPSIS:TO BE ENTITLED AN ACT Public contracts;

Underto existingprohibit law, all public contracts by certain localbusiness awardingentities authoritiesfrom forentering goods or services involving $30,000 or more must be entered into bypublic freecontracts andwith opena competitivepublic bidding,awarding onauthority; sealed bids, to the lowest responsible and responsive bidder.

Also under existing law, the method of awarding state contracts for goods and services is subject to the state procurement laws administered by the Division of Procurement within the Department of Finance.

This bill would prohibit any state or local awarding authority from awarding a contract to an entity organized under the laws of the People's Republic of China or that is owned or operated by the People's Republic of China.

This bill would also provide criminal and civil penalties for a violation.

Section 111.05 of the Constitution of Alabama of 2022, prohibits a general law whose purpose or effect would be to require a new or increased expenditure of local funds from becoming effective with regard to a local governmental entity without enactment by a 2/3 vote unless:

it comes within one of a number of specified exceptions;

it is approved by the affected entity;

or the Legislature appropriates funds, or Page 1 SB220 INTRODUCED provides a local source of revenue, to the entity for the purpose.

The purpose or effect of this bill would be to require a new or increased expenditure of local funds within the meaning of the section.

However, the bill does not require approval of a local governmental entity or enactment by a 2/3 vote to become effective because it comes within one of the specified exceptions contained in the section.

A BILL TO BE ENTITLED AN ACT Public contracts;

to prohibit certain companies affiliated with the People's Republic of China from entering into public contracts with a public awarding authority;

(1) The Chinese Communist Party's (CCP) authoritarian governance over the People's Republic of China (PRC) includes Page 2 SB220 INTRODUCED extensive efforts to destroy any meaningful distinction between the CCP, the PRC state, and commercial entities in the PRC.

(2) Dealings with PRC commercial entities tend to be less commercially sound because the entities are unusually likely to be acting on noncommercial motivations and carry increased political risk, including the risk of federal Page 1 SB220 Engrossed sanctions from the United States government.

(1) COMMUNICATIONSCOMPANY. TECHNOLOGIES.

IncludesAny communicationssole technologiesproprietorship, andorganization, theassociation, components,corporation, networks,partnership, systems,joint venture, limited partnership, limited liability partnership, limited liability company, or servicesother thereof.entity or business association, including all wholly owned subsidiaries, majority owned subsidiaries, parent companies, or affiliates of such entities or business associations, that exist for the purpose of making profit.

(2) COMPANY.INFORMATION OR COMMUNICATIONS TECHNOLOGIES.

AnyIncludes soleany proprietorship,equipment organization,used association,in corporation,fixed partnership,and jointmobile venture,networks limitedthat partnership,provides limitedhigh-speed, liabilityswitched, partnership,broadband limitedtelecommunications liabilitycapability, company,provided orthe otherequipment entityincludes or businessuses association,electronic includingcomponents. Page 3 SB220 INTRODUCED all wholly owned subsidiaries, majority owned subsidiaries, parent companies, or affiliates of such entities or business associations, that exist for the purpose of making profit.

For purposes of a publicly traded company, the term Page 2 SB220 Engrossed means any share of ownership that includes the ability to direct or influence the operations of the company, the ability to appoint or discharge any board member, officer, or director, or any other rights beyond those available to a retail investor holding an equivalent share of ownership.

95 (4) PUBLIC ENTITY.

A company to which anyeither of the following applies:

Is organizeda undercompany on the lawsFederal Communications Commission's Covered List, as provided in 47 C.F.R § 1.50002, or Section 1260H of the People'sNational RepublicDefense Authorization Act for Fiscal Year 2021, which provides communications equipment or services that are deemed to pose an unacceptable risk to the national security of Chinathe (PRC)United States or hasthe itssecurity principaland placesafety of businesspersons in the PRC.United States.

Is owned or operated, in whole or in part, by the government of the PRC or any entity controlled by the government of the PRC.

c.

(b) A scrutinized company shall be ineligible to, and Page 4 SB220 INTRODUCED shall not bid on, submit a proposal for, or enter into, directly or indirectly through a third party, any contract or contract renewal with any public awarding authority for any information or communications technologies.

Page 3 SB220 Engrossed (c) No public awarding authority shall enter into any contract or contract renewal that would result in any public funds being transferred under either of the following circumstances:

(d) A public awarding authority shall require a company 95 that submits a bid or proposal with respect to a contract for goods or services or that enters into any contract or contract renewal with any public awarding authority for any information or communications technologies to certify all of the following:

(3) That any productsinformation or servicescommunications technologies that are to be provided pursuant to the contract do not originate with a scrutinized company.

(e) Any contract determined by the Chief Procurement Officer to be in violation of this act shall be void ab Page 5 SB220 INTRODUCED initio.

(g) In addition to the penalties provided in subsection Page 4 SB220 Engrossed (f), the person who knowingly violates this act shall be subject to both of the following:

The rules shall not amend the definition of "scrutinized company" as defined under this section.

Although this bill would have as its purpose or effect the requirement of a new or increased expenditure of local funds, the bill is excluded from further requirements and application under Section 111.05 of the Constitution of Page 6 SB220 INTRODUCED Alabama of 2022, because the bill defines a new crime or amends the definition of an existing crime.

Page 5 SB220 Engrossed Section 4.

Page 6 SB220 Engrossed Senate Read for the first time and referred ................19-Mar-24 to the Senate committee on County and Municipal Government Read for the second time and placed ................21-Mar-24 on the calendar:

0 amendments Read for the third time and passed ................09-Apr-24 as amended Yeas 34 Nays 0 Abstains 0 Patrick Harris, Secretary.