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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
state contracts; foreign adversary; prohibition
Purpose
Establishes the Protection Procurement Act, which prohibits a company domiciled in and controlled or majority owned by the government, military or ruling party of the People's Republic of China from contracting with a state agency for electronic or information technology, requires a prospective company to certify that the company is not domiciled in China or reselling electronic or information technology from a Chinese company to a state agency and outlines penalties for a company that submits a false certification.
Background
Contracts by state government units must be awarded by competitive sealed bidding. Invitations for bids must be issued and include a purchase description and all contractual terms and conditions applicable to the procurement. Adequate notice of the invitation for bids must be given a reasonable amount of time before the opening date of the bids and may be published in a newspaper of general circulation or electronically on a designated website. The state maintains an official electronic procurement system authorized by the State Procurement Officer (eProcurement System). Procurement files for state contracts may be located in the eProcurement System, the Office of the Director of the Arizona Department of Administration (ADOA) or at a public procurement unit (A.A.C. R2-7-101; A.R.S. § 41-2533).
A public entity may not enter into or renew a contract with a company to acquire or dispose of services, supplies, information technology, goods or construction unless the contract includes a written certification that the company does not currently, and agrees for the duration of the contract that it will not, use: 1) the forced labor of ethnic Uyghurs in the People's Republic of China; 2) any goods or services produced by the forced labor of ethnic Uyghurs in the People's Republic of China; or 3) any contractors, subcontractors or suppliers that use the forced labor or any goods or services produced by the forced labor of ethnic Uyghurs in the People's Republic of China (A.R.S. § 35-394).
Electronic or information technology is all electronic information processing hardware and software, including telecommunications and any electronic information equipment or interconnected system that is used in acquiring, storing, manipulating, managing, moving, controlling, displaying, switching, interchanging, transmitting and receiving data or information, including audio, graphics and text (A.R.S. § 18-131).
If the prohibition on contracting with a company domiciled in the People's Republic of China decreases the number of companies who are eligible to compete for state contracts in the procurement process, the potentially increased costs of state contracts may impact the state General Fund.
Provisions
1. Prohibits a company from bidding on, submitting a proposal for or entering into a contract with a state agency for electronic or information technology if the company is:
a) domiciled in the People's Republic of China; and
b) controlled or majority owned by the government, military or ruling political party of the People's Republic of China.
2. Requires each company that submits a bid or proposal for a state contract for electronic or information technology to submit a certification letter to ADOA certifying that the company is not:
a) a company that is domiciled in the People's Republic of China; or
b) submitting the bid or proposal for the express purpose of reselling to a state agency electronic or information technology from a company that is domiciled in China.
3. Stipulates that, if ADOA determines that a company has knowingly submitted a false certification letter:
a) the company is liable for a civil penalty of $100,000;
b) the state agency or ADOA must terminate the contract with the company; and
c) the company is barred from bidding on any state contracts for at least 60 months.
4. Specifies that a state agency may enter into a contract for electronic or information technology manufactured by a company domiciled in the People's Republic of China if:
a) there are no other reasonable options for the procurement of the specific technology; and
b) not procuring the specific technology would pose a greater threat to Arizona than the threat associated with the manufacture of the electronic or information technology by a company domiciled in the People's Republic of China.
5. Defines controlled as:
a) in reference to investment companies, the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company; and
b) in the case of a company that is domiciled in the People's Republic of China, 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.
6. Defines company, domicile and electronic or information technology.
7. Designates this legislation as the Protection Procurement Act.
8. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
· Specifies that the certification letter must certify 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, rather than for reselling products, from a company domiciled in the People's Republic of China.
House Action Senate Action
GOV 1/28/26 DP 4-3-0-0 PS 3/25/26 DP 4-3-0
3rd Read 3/11/26 36-16-7-0-1
Prepared by Senate Research
April 20, 2026
KJA/SDR/hk