The proposed bill, known as the "local government contracting act," aims to restrict units of local government from entering into procurement contracts with entities that are classified as "controlled entities," particularly those linked to foreign countries of concern such as China, Russia, and Iran. The bill defines a "controlled entity" as one that is owned or significantly influenced by a foreign government or operates under its laws. It mandates that any applicant for a procurement contract that grants access to personal identifying information must provide an affidavit confirming they are not a controlled entity. Furthermore, starting July 1, 2026, local governments are prohibited from extending or renewing contracts with controlled entities under similar conditions.

Additionally, the bill outlines civil penalties for violations, including fines equal to twice the contract amount and potential ineligibility for future contracts for up to five years. It also requires that procurement contracts include clauses preventing the use of technology or services that are flagged for national security concerns or are associated with controlled entities. Local governments must establish security procedures to protect their information and property from exploitation by foreign entities. The act will only take effect if House Bill No. 4236 is also enacted into law.