SB 1174 California Senate · 2025-2026 Regular Session

Public contracts: Department of Transportation: bid preferences: employee stock ownership plans.

Summary

Existing law establishes the Department of Transportation and requires it to improve and maintain the state highways. Existing law authorizes the department to enter into any contracts required for the performance of its duties, as provided. Existing law establishes bid preferences in public contracting for certain types of bidders, including, but not limited to, small business and microbusiness bidders. This bill would, on and after January 1, 2028, require the department to provide certain bid preferences to a contractor or subcontractor with an employee stock ownership plan (ESOP) in which 30% or more is owned by the ESOP when the contractor or subcontractor bids or is part of a bid on a state-funded construction contract, as specified. The bill would make it unlawful for a person, contractor, or subcontractor to engage in specified behaviors related to the fraudulent obtaining or retaining of an ESOP bid preference and would subject a person, contractor, or subcontractor engaged in those behaviors to a suspension from bidding on or participating in any contract with the department for certain periods and specified civil penalties.

Bill status passed 3 of 5 stages cleared

Introduction

Feb 2026

Committee Review

Aug 2026

Senate Passage

May 2026

Assembly Passage

Governor

Introduced Feb 18, 2026 Last action Aug 13, 2026

Maddy AI version diff · 2 comparisons

What changed between versions

06/15/26 - Amended Assembly → SB1174 · 1 edit

MINOR

The changes between these two versions of SB 1174 are entirely formatting and presentation in nature. The 'from' version is a printed legislative document with line numbers, page headers/footers, and specific indentation, while the 'to' version is a clean web-published text with website navigation elements (skip to content, home, accessibility, FAQ, etc.). No substantive policy language was altered.

TECHNICAL

The bill text was reformatted from a printed legislative document layout (with line numbers, page breaks, and headers like 'SB 1174 -2-') into a clean web-published format with standard website navigation elements. The statutory language itself is unchanged.

02/18/26 - Introduced → 06/15/26 - Amended Assembly · 6 edits · Jun 15, 2026

MODERATE

The Assembly amendment significantly expands SB 1174 by extending ESOP bid preferences to subcontractors (not just prime contractors), changing how the preference is calculated so it applies to the specific work value performed by each ESOP contractor rather than the overall bid, and allowing cumulative preferences when multiple ESOP contractors appear in a single bid. The amendment also tightens documentation requirements by adding a CPA attestation of at least 30% ESOP ownership and narrows the collective bargaining bonus to require the contractor be a signatory to an agreement covering the specific contract.

SCOPE

Subcontractors are now explicitly eligible for ESOP bid preferences. A new definition of 'subcontractor' is added, and all references to 'person or contractor' in the enforcement and penalty sections are expanded to 'person, contractor, or subcontractor.'

ELIGIBILITY

The ESOP contractor definition now requires an attestation by an independent certified public accountant (as defined in Section 5033 of the Business and Professions Code) confirming that at least 30% of issued and outstanding shares are owned by the ESOP at the time of bid, in addition to the existing IRS determination letter, Form 5500, and independent review requirements.

The 1% bonus for collective bargaining changed from requiring the contractor to 'include employees covered by' a CBA or MLA to requiring the contractor to 'be a signatory to' a CBA or MLA 'that covers the contract to be awarded,' making the requirement more specific and tied to the particular project.

FISCAL

The bid preference is now calculated as a percentage of 'the bid value of the work to be performed by the ESOP contractor' rather than as a percentage of the overall lowest responsible bidder or highest scored bidder. This means the preference scales with the specific portion of work the ESOP entity performs.

REQUIREMENT

The bill now states that the bid preference shall be the cumulative total of bid preferences of all ESOP contractors listed in the bid, allowing multiple ESOP entities within a single bid to each receive their respective preference amounts.

DEFINITION

The definition of 'contractor' now incorporates a reference to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, tying the term to the state's existing contractor licensing framework.

Floor votes · Senate May 22, 2026

How they voted

33–0

Passed · 7 other

Total votes 40

May 22, 2026

D Democratic30

25 Yea 5

83% Yea

R Republican10

8 Yea 2

80% Yea

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Aug 13, 2026

Lower · Passed

August 13 hearing: Held in committee and under submission.

lower

Jul 1, 2026

Lower · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 10. Noes 0.) (June 30). Re-referred to Com. on APPR.

lower

Jun 23, 2026

Lower · Passed

From committee: Do pass and re-refer to Com. on JUD. (Ayes 15. Noes 0.) (June 22). Re-referred to Com. on JUD.

lower

Jun 15, 2026

Lower · Passed

From committee with author's amendments. Read second time and amended. Re-referred to Com. on TRANS.

lower

Jun 1, 2026

Committee

Referred to Coms. on TRANS. and JUD.

lower

May 22, 2026

Upper · Passed

Read third time. Passed. (Ayes 33. Noes 0. Page 4419.) Ordered to the Assembly.

upper

May 14, 2026

Upper · Passed

From committee: Do pass. (Ayes 7. Noes 0. Page 4267.) (May 14).

upper

Apr 22, 2026

Upper · Passed

From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 13. Noes 0. Page 3978.) (April 21). Re-referred to Com. on APPR.

upper

Apr 8, 2026

Upper · Passed

From committee: Do pass and re-refer to Com. on JUD. with recommendation: To consent calendar. (Ayes 12. Noes 0. Page 3760.) (April 7). Re-referred to Com. on JUD.

upper

Feb 26, 2026

Committee

Referred to Coms. on TRANS. and JUD.

upper

Feb 18, 2026

Introduced

Introduced. Read first time. To Com. on RLS. for assignment. To print.

upper

1 primary · 0 co-sponsors