HB0102ham001 98TH GENERAL ASSEMBLY

Rep. William Davis

Filed: 3/5/2013

09800HB0102ham001 LRB098 03906 CEL 42228 a

AMENDMENT TO HOUSE BILL 102

AMENDMENT NO. ______. Amend House Bill 102 by replacing everything after the enacting clause with the following:

"Section 5. The Public Utilities Act is amended by adding Section 4-503 as follows:

(220 ILCS 5/4-503 new)

Sec. 4-503. Procurement from female owned, minority owned, and qualified service-disabled veteran-owned small businesses; goals; reports.

(a) Definitions. For the purpose of this Section:

"Certification" means a determination made under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, Section 45-57 of the Illinois Procurement Code, or the Clearinghouse that a business entity is a female owned, minority owned, or qualified service-disabled veteran-owned small business for whatever purpose. A business owned and controlled by females shall select and designate whether such business is to be certified as (i) a female owned business or minority owned business if the females are also minorities or (ii) a female owned business or qualified service-disabled veteran-owned small business if the females are qualified service-disabled veterans.

"Clearinghouse" means the Commission-supervised entity authorized under subsection (d) of this Section whose primary purpose is to audit and verify the status of female and minority owned businesses, and to establish and maintain a database of female, minority, and service-disabled veteran-owned businesses that is accessible to the Commission and participating entities.

"Commission" means the Illinois Commerce Commission.

"Control" has the meaning given to that term in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.

"Executive Director" means the Executive Director of the Illinois Commerce Commission.

"Female owned business" has the meaning given to that term in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.

"Goal" means a target that, when achieved, indicates progress in a preferred direction. A goal is neither a requirement nor a quota.

"Long-term goal" means a goal applicable to a period of 5 years.

"Mid-term goal" means a goal applicable to a period of 3 years.

"Minority owned business" has the meaning given to that term in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.

"Participating entity" means a public utility, as defined in this Section, that is required to participate in this procurement program as well as any other entity, including cable and wireless operators, that may voluntarily participate in this procurement program.

"Product and service categories" means product and service categories as defined by the Standard Industrial Classification (SIC) system maintained by the United States Department of Labor, Occupational Safety and Health Administration.

"Public utility" means all regulated gas, electric, water companies and incumbent local exchange telecommunications carriers with at least 100,000 customers.

"Qualified service-disabled veteran-owned small business" has the meaning given to that term in Section 45-57 of the Illinois Procurement Code.

"Qualifying business" means a female owned business, minority owned business, or qualified service-disabled veteran-owned small business.

"Short-term goal" means a goal applicable to a period of one year.

"Subcontract" means an agreement or arrangement between a contractor and any party or person in which the parties do not stand in the relationship of an employer and an employee (i) for the furnishing of supplies or services for the use of real or personal property, including lease arrangements, which, in whole or in part, is necessary to the performance of any one or more contracts or (ii) under which any portion of the contractor's obligation under any one or more contracts is performed, undertaken, or assumed.

(b) Annual reporting requirement. Within 90 days after the effective date of this amendatory Act of the 98th General Assembly, the Commission shall enter an order to establish a format for participating entities' annual reports required by subsection (h) and annual plans required by subsection (k).

(c) Verification rules and guidelines regarding eligibility of business enterprises.

(1) The Clearinghouse, as described in subsection (d), shall supply a verification form to applicants. An applicant may complete the verification forms and return them to the Clearinghouse for processing and inclusion in the database. In addition to verification by the Clearinghouse, a participating entity may accept verification of a qualifying female or minority owned business's status made under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act or Section 45-57 of the Illinois Procurement Code or, for verification of a qualifying service-disabled veteran-owned business, under Section 45-57 of the Illinois Procurement Code.

(2) In assessing the suitability of a qualifying business to bid for procurement contracts, a participating entity may require additional information or the completion of additional forms to comply with specific requirements created by the unique character of its business, including, but not limited to, insurance requirements, product and service codes, and bonding limits. A participating entity may not, however, require such additional information in order to verify that a business is in fact a qualifying business.

(3) Female owned businesses and minority owned businesses shall be required to submit verification forms at least once every 3 years.

(4) Service-disabled veteran-owned businesses must present proof of certification as determined by the Illinois Department of Veterans' Affairs.

(5) Completion of the verification application only initiates a verification of the business's status as a female owned business or minority owned business. Filing of an application does not guarantee verification.

(6) The fact that a verified qualifying business is included in the Clearinghouse database shall not be construed as an endorsement of its ability to perform, nor shall such inclusion guarantee it business with the participating entities.

(7) Verification forms for female owned businesses or minority owned businesses shall be available for inspection by the Commission.

(8) Falsification of information on the verification form shall disqualify owners from reapplying for verification for 5 years after the date the falsification is discovered.

(d) Clearinghouse for the sharing of identification and verification information of qualifying businesses. The Commission shall within 90 days after the effective date of this amendatory Act of the 98th General Assembly, after hearing and by order, authorize a participating entity-formed entity or arrangement whereby participating entities shall operate and fund the operation of a Commission-supervised Clearinghouse. In authorizing a participating entity-formed entity or arrangement, the Commission must identify sufficient terms and conditions to specify how verifications and audits shall be performed, to develop a Request for Proposals to solicit bids from vendors who will design and maintain the Clearinghouse website, and to ascertain and ensure that the Clearinghouse is operated in accordance with this Section and other applicable legal requirements.

The primary purpose of the Clearinghouse shall be to audit and verify the status of qualifying businesses and to establish and maintain a database of qualifying businesses that is accessible to the Commission and to participating entities.

The Clearinghouse auditing and verification program shall preclude the need for an individual participating entity to audit and verify the status of the qualifying businesses it does business with.

The Clearinghouse shall distribute renewal verification forms to female owned businesses or minority owned businesses at least once every 3 years. If the renewal is not completed and returned within a reasonable time, the Clearinghouse shall notify the female owned business or minority owned business and participating entities that the female owned business or minority owned business will not be listed as a verified female owned business or minority owned business in the shared database until the renewal is completed.

(e) Participating entity implementation.

(1) Each participating entity's program shall be designed to ensure that qualifying businesses are encouraged to become potential suppliers of products and services to the participating entities subject to this Section. Nothing in this Section authorizes or permits a participating entity to utilize set asides, preferences, or quotas in administration of its program. The participating entity retains its authority to use its legitimate business judgment to select the supplier for a particular contract.

(2) Each participating entity shall maintain an appropriately sized staff to provide overall program direction and guidance and to implement program requirements. Each participating entity shall ensure that its employees with procurement responsibilities receive training in the implementation of its program.

(3) Each participating entity shall implement an outreach program to inform and recruit qualifying businesses to apply for procurement contracts. Outreach activities may vary for each participating entity depending on its size, service territory, and specific lines of business. However, each participating entity shall, at a minimum:

(A) actively seek out opportunities to identify qualifying businesses and to expand qualifying business source pools;

(B) actively support the efforts of organizations experienced in the field who promote the interests of qualifying businesses;

(C) work with qualifying businesses to facilitate contracting relationships by explaining participating entity qualification requirements, bid and contracting procedures, materials requirements, invoicing and payment schedules, and other procurement practices and procedures;

(D) at the request of any unsuccessful qualifying business bidder, provide information concerning the relative range or ranking of the qualifying business's bid as contrasted with the successful bid; information on additional selection criteria, such as warranty periods, maintenance costs, and delivery capability, shall be provided when requested if disclosure would not violate the proprietary nature of the specific contract element;

(E) to the extent possible, make available to qualifying businesses lists of participating entity purchase and contract categories that offer them the best opportunity for success;

(F) encourage employees involved in procurement activities to break apart purchases and contracts as appropriate to accommodate the capabilities of qualifying businesses; and

(G) summarize this Section in its outreach program handouts.

Each participating entity is directed to offer the same assistance set forth in this subsection (e) to entities that are not qualifying businesses, upon request.

(f) Subcontracting. Each participating entity shall establish and maintain a subcontracting program for the purpose of encouraging its prime contractors to utilize qualifying businesses. The subcontracting program shall serve as an enhancement to, and not as a replacement for, the participating entity's prime contractor outreach program. The subcontracting program shall apply to:

(A) purchases or contracts exceeding $500,000 for products and services;

(B) construction contracts exceeding $1,000,000; and

(C) purchases or contracts that offer subcontracting opportunities to qualifying businesses, regardless of value, where appropriate.

The subcontracting program need not be applied to the procurement of products manufactured for general consumption, such as paper, pens, and the like.

Each participating entity shall encourage and assist its prime contractors to develop plans to increase the utilization of qualifying businesses as subcontractors. Prime contractors shall be encouraged to submit to the participating entity plans that include goals for the utilization of qualifying businesses as subcontractors. These plans may be incorporated into the contract between the participating entity and the prime contractor. The prime contractor may submit periodic reports on its compliance with the plan to the participating entity.

Each participating entity is encouraged to incorporate in all purchase orders, requests for bid proposals, and other appropriate procurement documents related to procurement efforts subject to the subcontracting program, a statement in substantially the following form:

"UTILIZATION OF FEMALE OWNED BUSINESSES, MINORITY OWNED BUSINESSES, AND QUALIFIED SERVICE-DISABLED VETERAN-OWNED SMALL BUSINESSES

(1) It is the policy of (insert the name of the participating entity) that female owned businesses, minority owned businesses, or qualified service-disabled veteran-owned small businesses shall have the maximum practicable opportunity to participate in the performance of contracts. However, this policy shall not be used to exclude other qualified businesses from participating in participating entity contracting.

(2) The contractor agrees to use his or her best efforts to carry out this policy in the award of subcontracts to the fullest extent consistent with the efficient performance of this contract.

(3) The contractor agrees to inform prospective female owned businesses, minority owned businesses, or qualified service-disabled veteran-owned small businesses of their opportunity to request from the Clearinghouse a verification application form and to return the completed form to the Clearinghouse for processing and inclusion in the database.".

Each participating entity is encouraged to inform suppliers of products and services that suppliers' good faith efforts to subcontract with qualifying businesses is a factor that will be considered in the bid evaluation process. A statement to that effect could be included in all appropriate procurement documents.

Each participating entity shall monitor and include in its annual report to the Commission a summary of prime contractor progress in increasing the participation of qualifying businesses. Each participating entity shall include in its annual plan a description of future plans for encouraging prime contractors to engage qualifying businesses in all procurement categories that provide subcontracting opportunities. Each participating entity may include awards to verified qualifying businesses in its results.

(g) Goals. Each participating entity shall set substantial and verifiable short-term, mid-term, and long-term goals for the utilization of qualifying businesses. Goals shall be set annually for each major product and service category that provides opportunities for procurement. A goal shall be considered substantial if it is realistic and clearly demonstrates a participating entity's commitment to encourage the participation of qualifying businesses in participating entity purchases and contracts. The participating entities shall consider the following factors in setting their goals:

(A) total participating entity purchasing and contracting projections;

(B) availability of qualifying businesses and competitiveness in the geographical area served by the participating entity;

(C) market dynamics based on historical data and trends; and

(D) other appropriate factors that would increase the qualifying businesses' share of participating entity business.

Each participating entity shall establish initial minimum long-term goals for each major category of products and services the participating entity purchases from outside vendors of not less than 11% for minority owned businesses and not less than 7% for female owned businesses. For the purposes of this Section, contracts with minority female owned businesses can be counted toward either the minority owned business goal or the female owned business goal, but not toward both. Similarly, contracts with qualified service-disabled veteran-owned small businesses can be counted either as service-disabled veteran-owned small business procurement or the appropriate female or minority business goal, but not toward both. The goal for qualified service-disabled veteran-owned small business participation in procurement programs of the participating entities is set at 3%.

The specification of initial long-term goals in this subsection shall not prevent the participating entities from seeking to reach a goal of awarding 20% or more of their contracts to female owned, minority owned, and service-disabled veteran-owned businesses.

Goals shall also be established for both minority female owned businesses and non-minority female owned businesses. These goals are to be a subset of the overall goal for female owned businesses and minority owned businesses established by this subsection (g). These goals are intended to ensure that participating entities do not direct their female owned business and minority owned business procurement programs toward non-minority female owned businesses and minority male owned businesses to the detriment or exclusion of minority female owned businesses.

Goals shall be set for each major category of products or services. For each major category of products and services where the minimum long-term goals required by this subsection (g) are not met, the participating entity shall include a comprehensive discussion and detailed description of any efforts made to find or recruit qualifying businesses' suppliers of products or services in areas where qualifying businesses' suppliers are currently the only available procurement method. The participating entity may also explain in detail in its annual report how its ability to meet its qualifying business's goals are affected because the qualifying businesses capable of supplying certain products and services are unavailable, or because sole source procurement is the only available procurement method.

A participating entity that, on the effective date of this Section, is purchasing products or services from affiliates may subtract the dollars paid to affiliates for these products or services from the total dollars used as the basis for establishing goals for purchases from qualifying businesses of these categories of products or services, provided that the participating entity encourages the affiliate to establish an appropriate subcontracting program where such affiliate employs subcontractors. Any participating entity that subtracts these dollars must, in its annual report to the Commission, state whether the affiliates have established a subcontracting program and describe the results of any such program. The participating entity's annual plan must describe any future plans to encourage such a subcontracting program.

Goals for each specific product or service category shall be expressed as a percentage of total dollars awarded by a participating entity to outside vendors in that category; however, where appropriate, non-numeric goals may also be included.

Overall program goals shall be expressed as a percentage of total dollars awarded to outside vendors in all categories of products and services purchased by a participating entity other than products and services related to fuel procurement.

Payments to other public utilities, franchise tax fees, other taxes, and postage need not be included in the standard procurement base used to establish goals.

Each participating entity shall make special efforts to increase utilization and encourage entry into the marketplace of qualifying businesses in product or service categories where there has been low utilization of qualifying businesses, such as legal and financial services and areas that are considered technical in nature.

No penalty shall be imposed for failure of any participating entity to meet or exceed goals.

Participating entities shall report their goals in an annual report.

(h) Annual report. Each participating entity shall submit its annual report on its qualifying business program to the Executive Director by February 1 of each year beginning in 2015. The annual report shall contain at least:

(1) a description of the activities of its qualifying business program engaged in during the previous calendar year, including both internal and external activities;

(2) a summary of purchases and contracts with qualifying businesses, with breakdowns by qualifying business (female, minority, service-disabled veteran), product, and service categories compared with total contract dollars awarded to outside vendors in those categories;

(3) an itemization of its qualifying business program expenses, provided in the format required by the Commission;

(4) a description of its progress in meeting or exceeding set goals and an explanation of any circumstances that may have caused the participating entity to fall short of its goals;

(5) a summary of prime contractor utilization of qualifying business subcontractors; and

(6) a description of any efforts made to recruit qualifying business suppliers of products or services in procurement categories where qualifying business utilization has been low, such as legal and financial services and areas that are considered highly technical in nature.

Participating entities shall retain all documents and data they rely on in preparing their annual report for the longer of either 3 years or in conformance with the a participating entity's individual document retention policies, and shall provide these documents and data to the Commission upon request.

(i) Complaint process. The Commission shall within 90 days after the effective date of this amendatory Act of the 98th General Assembly establish, after hearing and by order, a complaint process that addresses:

(A) complaints by business enterprises whose status has been denied by the Clearinghouse, or who have been deverified by the Clearinghouse;

(B) third-party complaints challenging the status of a business whose verification is pending or who has already been verified by the Clearinghouse; and

(C) the complaint and appeal process.

(j) Limitation. Nothing in this Section shall prohibit any participating entity from breaking down specific categories further than specifically required under this Section.

(k) Annual plan. Participating entities shall also submit a detailed and verifiable plan for encouraging qualifying business procurement in all categories to the Executive Director by February 1 of each year, beginning in 2015. The annual plan shall contain at least:

(A) the short-term, mid-term, and long-term goals set as required by this Section;

(B) a description of qualifying business program activities planned for the next calendar year, which shall include both internal and external activities;

(C) plans for recruiting qualifying business suppliers of products or services where utilization of qualifying businesses has been low, such as legal and financial services and areas that are considered highly technical in nature;

(D) plans for seeking and recruiting qualifying business suppliers of products or services where qualifying business suppliers are currently unavailable;

(E) plans for encouraging prime contractors to engage qualifying businesses in subcontracts in all categories that provide subcontracting opportunities; and

(F) plans for complying with the qualifying business program guidelines established by the Commission.

(l) Commission report. The Commission shall provide a report to the General Assembly on or before January 31, 2014, describing the Commission's and participating entities' progress toward implementing this Section. Thereafter, the Commission shall provide an annual report to the General Assembly, beginning with the first such report on or before May 1, 2015, on the progress of activities undertaken by each participating entity to implement this Section. In this report, the Commission shall recommend a program to enhance implementation of the policy declared in this Section, together with recommendations for legislation it deems necessary or desirable to further that policy. This report shall include recommendations to the participating entities for the achievement of maximum results in implementing this Section.

Section 99. Effective date. This Act takes effect upon becoming law.".