GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

H	1 

HOUSE BILL 476

Short Title:  Minority/Small Business Contracts.	(Public)
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Sponsors: Representatives Hardaway; Barnhill, Barnes, Bowman, Burke, Cunningham, Easterling, Fitch, Gist, Holt, H. Hunter, Jeralds, Michaux, and S. Thompson.
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Referred to:  Government.
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March 7, 1989

A BILL TO BE ENTITLED
AN ACT TO FURTHER THE DEVELOPMENT OF MINORITY-OWNED BUSINESSES AND SMALL BUSINESSES BY CREATING THE MINORITY AND SMALL BUSINESS DEVELOPMENT COUNCIL AND BY ESTABLISHING GOALS FOR STATE CONTRACTS.
The General Assembly of North Carolina enacts:
Section 1.  Article 9 of Chapter 143B is amended by adding a Part to read:
“Part 29.
"Minority and Small Business
Development Act.
"§ 143B-426.45.  Policy; purpose.
(a)	The State of North Carolina declares that it is the public policy of the State to promote and encourage the economic development of minority-owned businesses and small businesses and that minority-owned businesses and small businesses participate in the State's procurement process as both prime contractors and subcontractors.
(b)	The purposes of this Part are:
(1)	To increase the State's knowledge of minority-owned businesses and small businesses and to become familiar with their products and services.
(2)	To stimulate those businesses whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities.
(3)	To provide documentation of the number of minority-owned businesses and small businesses that are qualified to undertake State prime contracts and subcontracts and the level of participation in State contracts by minority-owned businesses and small businesses.
(4)	To serve the public interest in the efficient performance of its public contracts by making information regarding minority-owned businesses and small businesses readily available.
(5)	To encourage minority-owned businesses and small businesses by establishing flexible goals for these businesses regarding State contracts.
"§ 143B-426.46.  Definitions.
As used in this Part, unless the context requires otherwise:
(1)	‘Certification' means a determination made by a State agency or the Minority and Small Business Development Council that a business entity is a minority-owned business or a small business.
(2)	‘Contract package' means related contracts that are bid or awarded simultaneously for the same project.
(3)	‘Control' means the exclusive or ultimate and sole control of the business, including capital investment and all other financial matters, property, acquisitions, contract negotiations, legal matters, officer-director-employee selection and comprehensive hiring, operating responsibilities, cost-control matters, income and dividend matters, financial transactions and rights of other shareholders or joint partners.  Control shall be real, substantial, and continuing, not pro forma.  Control shall include the power to direct or cause the direction of the management and policies of the business and to make the day-to-day as well as major decisions in matters of policy, management, and operations.  Control shall be exemplified by possessing the requisite knowledge and expertise to run the particular business.  Control does not mean simple majority or absentee ownership.
(4)	‘Female' shall mean a person who is a citizen or lawful permanent resident of the United States and who is of the female gender.
(5)	‘Female-owned business' means a business concern:
a.	In which at least fifty-one percent (51%) is owned by one or more females, or, in the case of a corporation, in which at least fifty-one percent (51%) of the stock is owned by one or more females; and
b.	Of which the management and daily business operations are controlled by one or more of the females who own it.
(6)	‘Goal' means a voluntary percentage or quantitative objective.
(7)	‘Minority person' means a person who is a citizen or lawful permanent resident of the United States and who is:
a.	Black, that is, a person having origins in any of the black racial groups in Africa;
b.	Hispanic, that is, a person of Spanish or Portugese culture with origins in Mexico, South or Central America, or the Caribbean Islands, regardless of race;
c.	Asian American, that is, a person having origins in any of the original peoples of the Far East, South and Asia, the Indian  subcontinent, or the Pacific Islands; or
d.	American Indian or Alaskan Native, that is, a person having origins in any of the original peoples of North America.
(8)	‘Minority-owned business' means a business concern:
a.	In which at least fifty-one percent (51%) is owned by one or more minority persons, or in the case of a corporation, in which at least fifty-one percent (51%) of the stock is owned by one or more minority persons; and
b.	Of which the management and daily business operations are controlled by one or more of the minority individuals who own it.
(9)	‘Physically handicapped-owned business' means a business concern:
a.	In which at least fifty-one percent (51%) is owned by one or more physically handicapped persons, or in the case of a corporation, in which at least fifty-one percent (51%) of the stock is owned by one or more physically handicapped persons; and
b.	Of which the management and daily business operations are controlled by one or more of the physically handicapped persons who own it.
(10)	‘Small business' means a business concern:
a.	Which is a female-owned business, a physically handicapped-owned business, or a minority-owned business;
b.	In which gross annual sales total less than one million dollars ($1,000,000); and
c.	Which employs less than 20 full-time employees.
(11)	‘State contracts' means all State contracts, funded exclusively with State funds which are not subject to federal reimbursement, whether competitively bid or negotiated.
(12)	‘State agencies' means all departments, officers, boards, commissions, institutions and bodies politic and corporate of the State.
"§ 143B-426.47.  Minority and Small Business Development Council; membership.
(a)	To help implement, monitor, and enforce the goals of this Part, the Minority and Small Business Development Council of the Department of Administration is created.
The Council shall be comprised of 14 members.  The members shall include:  the chief executive officer of the Rural Economic Development Center, Inc., or his designee; the Chief of the Minority Business Section, the Small Business Development Division, Department of Commerce, or his designee; the Director of the Small Business Development Division, Department of Commerce, or his designee; the chief executive officer of the North Carolina Biotechnology Center, or his designee; the chief executive officer of the North Carolina Science and Technology Research Center established in Part 6 of Chapter 143B of the General Statutes, or his designee; the Director of the North Carolina Technological Development Authority established in Part 12 of Chapter 143B of the General Statutes, or his designee; the Secretary of State, or his designee; the Chairman of the Council on the Status of Women, or his designee; the Chairman of the Governor's Advocacy Council for Persons with Disabilities, or his designee; three members appointed by the Speaker of the House, two of whom shall:
(1)	Be members of a minority as defined in G.S. 143B-426.46;
(2)	Have an interest and knowledge of the problems confronting minorities who seek to be in business; and
(3)	Represent the interests of minorities seeking to establish businesses,
and one of whom shall:
(1)	Be a female;
(2)	Have an interest and knowledge of the problems confronting females who seek to be in business; and
(3)	Represent the interests of females seeking to establish businesses,
and three members appointed by the President Pro Tempore of the Senate, who satisfy the same criteria as the Speaker's three appointments.
(b)	Members serving by virtue of their office shall serve so long as they hold that office, except that the members appointed by the Speaker of the House and the President Pro Tempore of the Senate shall serve two-year terms and shall be eligible for reappointment.  Any member who is appointed by the Speaker of the House or the President Pro Tempore of the Senate to fill a vacancy occurring prior to the expiration of a term shall be appointed for the remainder of the term.
(c)	The Council shall appoint one member to serve as chairman and one member to serve as vice-chairman at the pleasure of the Council.  The Director of each State agency shall appoint a liaison to the Council.  The liaison shall be responsible for submitting to the Council any reports and documents necessary under this Part.
(d)	Members of the Council shall serve without compensation, but shall be reimbursed for any expenses pursuant to the provisions of G.S. 138-5 or G.S. 138-6.  Any Council member who has direct financial or personal interest in any measure pending before the Council shall disclose this fact to the Council and refrain from participating in the determination of the measure.
"§ 143-426.48.  Powers and duties of the Council.
The Minority and Small Business Development Council shall:
(1)	Devise a certification procedure to assure that businesses seeking a preference pursuant to this Part are legitimate minority-owned businesses or small businesses.
(2)	Maintain a list of all certified minority-owned businesses and small businesses to provide to all State agencies.
(3)	Review rules and regulations for the implementation of the provisions of this Part.
(4)	Review compliance plans submitted by each agency pursuant to this Part.
(5)	Make annual reports to the Governor and the General Assembly on the status of the program implemented pursuant to this Part.
(6)	Serve as a central clearinghouse for information on State contracts, including the maintenance of a list of all pending State contracts upon which minority-owned businesses and small businesses may bid.
(7)	Serve as a coordinator for the State's minority and small business programs and as the information and referral center for all State minority-owned business and small business initiatives.
(8)	Devise appropriate policies, regulations, and procedures for including minority-owned business and small business participation as prime contractors, to include:
a.	Encouraging the inclusion of qualified minority-owned businesses and small businesses on solicitation lists; and     
b.	Investigating the potential of blanket bonding programs for small construction jobs.
(9)	Establish an enforcement procedure whereby the Council may recommend to the appropriate State agency or law enforcement officer that the State exercise its legal remedies to include:
a.	Termination of the contract involved;
b.	Prohibition of participation in public contracts by the business that violated this Part for a period not to exceed one year; or
c.	Imposition of a penalty not to exceed any profit acquired as a result of the violation.
(10)	Make findings, recommendations, and proposals to the Governor and the General Assembly as are necessary and appropriate to implement the provisions of this Part; and
(11)	Devise procedures for the waiver of the participation goals in appropriate circumstances.
"§ 143B-426.49.  Adoption of rules.
The Department of Administration shall submit for review by the Administrative Rules Review Commission and for subsequent adoption any rules recommended by the Council.
"§ 143B-426-50.  State contracts.
(a)	It is a goal to award not less than twenty-five percent (25%) of the total dollar amount of State contracts to minority-owned businesses and small businesses; provided, however:
(1)	At least ten percent (10%) of the total dollar amount of all State contracts shall be awarded to minority-owned businesses;
(2)	At least ten percent (10%) of the total dollar amount of all State procurement contracts shall be awarded to female-owned businesses; and
(3)	At least two percent (2%) of the total dollar amount of all State construction contracts and State consulting contracts shall be awarded to female-owned businesses.
(b)	The percentage of the total dollar amount of State contracts is calculated for one fiscal year and is calculated by examining independently each type of contract for each agency which enters into contracts pursuant to Article 3 and Article 8 of Chapter 143 of the General Statutes and Article 2 of Chapter 136 of the General Statutes.
"§ 143B-426.51.  Annual compliance plans.
(a)	Each State agency shall file with the Council an annual compliance plan which outlines the agency's minority-owned business and small business contracting goals for the fiscal year, the manner in which the agency intends to reach these goals, and a timetable for reaching these goals.  The Council shall review and approve the plan of each agency or reject any plan that does not comply with the provisions of this Part or any rules adopted pursuant to this Part.
(b)	The compliance plan shall include:
(1)	A policy statement signed by the agency head, expressing a commitment to use minority-owned businesses and small businesses in all aspects of contracting to the maximum extent feasible;
(2)	A designation of the liaison officer as required by G.S. 143B-426.47(c);
(3)	Procedures to distribute to potential contractors and vendors the list of all the certified minority-owned businesses and small businesses;
(4)	Procedures to set separate contract goals on specific prime contracts and purchase orders with subcontracting possibilities based upon the type of work or services and subcontractor availability;
(5)	Procedures to assure that contractors and vendors made a good faith effort to meet contract goals;
(6)	Procedures for contract goal exemption, modification, and waiver; and
(7)	The delineation of separate contract goals for minority-owned businesses and small businesses.  
(b)	If the Council concludes that a compliance plan submitted pursuant to subsection (a) of this section is unlikely to produce the minority-owned business or small business participation goals within the current fiscal year, the Council may recommend that the State agency revise its plan to provide additional opportunities for minority-owned business and small business participation.  Such recommended revisions may include:
(1)	Assurances of stronger and better focused solicitation efforts to obtain more minority-owned businesses and small businesses as potential sources of supply;
(2)	Division of job or project requirements, when economically feasible, into tasks or quantities to permit participation of minority-owned businesses and small businesses;
(3)	Elimination of extended experience or capitalization requirements, when programmatically feasible, to permit participation of minority-owned businesses and small businesses; or
(4)	Identification of specific proposed contracts as particularly attractive or appropriate for participation by minority-owned businesses or small businesses.
"§ 143B-426.52.  Individual contract exemptions, class exemptions; waivers.
(a)	The Council, on its own initiative or at the request of an affected State agency, may permit an individual contract or contract package to be wholly or partially exempt from minority-owned business and small business State contracting goals prior to the advertisement for bids or solicitation of proposals whenever there has been a written determination based on the best information available at the time of the determination, that there is an insufficient number of minority-owned businesses or small businesses to ensure adequate competition and an expectation of reasonable prices on bids or proposals solicited for the individual contract or contract package in question.
(b)	The Council, on its own initiative or at the request of an affected State agency, may permit an entire class of contracts to be exempt from minority-owned business and small business State contracting goals whenever there has been a written determination based on the best information available at the time of the determination, that there is an insufficient number of qualified minority-owned businesses or small businesses to ensure adequate competition and an expectation of reasonable prices on bids or proposals within that class.
(c)	Any such class exemption shall not be permitted for a period of more than one year at a time.
(d)	Where a particular contract requires a contractor to meet a goal established pursuant to this Part, the contractor shall have the right to request a waiver from this requirement.  The Council shall grant the waiver where the contractor demonstrates that there has been a good faith effort to comply with the goals for minority-owned business or small business participation.
"§ 143B-426.53.  False information supplied by business.
(a)	When a State agency determines that a business has knowingly supplied false information in order to be classified as a minority-owned business or a small business and the business has been awarded a State contract to which it would otherwise not be entitled under this Part, the State agency shall exercise any legal remedy available to the agency as set forth in G.S. 143B-426.48(9).
(b)	Prior to any final determination under subsection (a) of this section, the business charged with supplying false information may commence an action under Chapter 150B of the General Statutes.
(c)	Any person who, with intent to defraud another, represents himself as a minority-owned business or a small business without having been certified as such pursuant to the procedures established by the Minority and Small Business Development Council, for the purpose of obtaining money, goods, property, services, choses in action, or any item of value from a person within this State is guilty of a Class J felony.
"§ 143B-426.54.  Conflict of laws or rules.
(a)	To the extent of any conflict with this Part, federal law or rules or regulations shall  prevail over this Part, and the contract will be interpreted and enforced accordingly.
(b)	To the extent of any conflict with this Part, this Part will prevail over all State or local laws which do not meet or exceed the goals set forth in this Part.
(c)	Any State agency which administers a construction project for which federal law or regulations establish standards and procedures for the utilization of minority-owned businesses or small businesses may use the federal standards and procedures for the establishment of goals and utilization procedures for the State-funded, as well as the federally assisted, portions of the project.  In these cases, these goals shall not exceed those established pursuant to the relevant federal statutes or regulations.  A compliance plan which is filed by such State agency pursuant to this Part, which incorporates equivalent terms and conditions of its federally-approved compliance plan, shall be deemed approved under this Part."
Sec. 2.  This act shall become effective January 1, 1990, and applies to all contracts entered into pursuant to Article 3 or Article 8 of Chapter 143 of the General Statutes or Article 2 of Chapter 136 of the General Statutes.