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Senate Engrossed House Bill
state contracts; foreign adversary; prohibition |
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State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026
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HOUSE BILL 2170 |
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AN ACT
amending title 41, chapter 23, article 3, Arizona Revised Statutes, by adding section 41-2553; relating to the procurement code.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1.1. Title
41, chapter 23, article 3, Arizona Revised Statutes, is amended by adding
section 41-2553, to read:
41-2553. State contracts; electronic or information technology; certification letter; civil penalty; exceptions; definitions
A. A company that is domiciled in the people's republic of China and that is controlled by or is majority owned by the government, military or ruling political party OF THE PEOPLE'S REPUBLIC OF CHINA may not bid on, submit a proposal for or enter into a contract with a state agency for electronic or information technology. Each company that submits a bid or proposal for a state contract for ELECTRONIC OR INFORMATION TECHNOLOGY shall submit a certification letter to the department certifying that the company is not a company that is domiciled in the people's republic of China and that the company is not submitting the bid or proposal for a state contract for the express purpose of reselling to a state agency electronic or information technology from a company that is domiciled in the People's Republic of China.
B. If the department determines that a company has KNOWINGLY submitted a certification letter that is false, all of the following must occur:
1. The company is liable for a civil penalty of $100,000.
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 ELECTRONIC OR INFORMATION TECHNOLOGY manufactured by a company that is domiciled in the people's republic of China if both of the following apply:
1. There are no other reasonable options for the procurement of the specific ELECTRONIC OR INFORMATION TECHNOLOGY.
2. Not procuring the specific ELECTRONIC OR INFORMATION TECHNOLOGY would pose a greater threat to this state than the threat associated with the manufacture of the ELECTRONIC OR INFORMATION TECHNOLOGY by a company domiciled in the people's republic of China.
D. 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 either of the following:
(i) A wholly owned subsidiary.
(ii) A majority owned subsidiary.
2. "Controlled":
(a) has the same meaning prescribed in the investment company act of 1940 (15 United States code section 80a-2).
(b) In the case of a company that is domiciled in the people's republic of china, means involvement in an entity's governance structure, monitoring or internal human resources decisions consistent with the objectives prescribed in the "opinion on strengthening the united front work of the private economy in the new era" issued by the general office of the Chinese communist party central committee or a successor or similar document.
3. "Domicile" means any of the following:
(a) The country where a company is registered, incorporated, headquartered, issued or listed.
(b) The country where the company's affairs are primarily completed.
(c) The country where the majority of ownership share is held.
4. "electronic or information technology" has the same meaning prescribed in section 18-131.
Sec. 2.2. Short title
This act may be cited as the "Protection Procurement Act".