In a large dutch oven or pot, warm 2 T of the olive oil over medium heat. When shimmering, add onion, garlic, peppers, and jalapeno. Season with salt and pepper. Saute, stirring frequently, until onions begin to turn translucent, about 5-7 minutes. Add chili powder and bay leaf and cook for 1-2 minutes more to wake up the flavors. Add canned tomatoes, black beans, and 1-2 cans of water depending on how thick you like your chili. Season with salt and pepper. Bring the mixture to a boil, scraping any browned bits off the bottom of the pot. After it boils, reduce the mixture to a simmer and cook until flavors have melded, about 45 minutes.
Meanwhile, in a small saute pan, warm remaining 1 T olive oil over medium heat. Cook the chorizo in the pan, stirring as infrequently as possible until the crumbles become deeply browned and crunchy, about 10-15 minutes. The chorizo acts as a crispy topping so don't be afraid to let it get really dark - it will soften slightly when served in the chili.
After 45 minutes, taste the chili for salt and pepper and adjust accordingly. Stir in cooked squash.
Serve the chili in large bowls topped with crisped chorizo, cilantro, and a squeeze of fresh lime juice.