GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	1 

SENATE BILL 176

Short Title:  Comprehensive Goals.	(Public)
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Sponsors: Senator Hunt.
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Referred to:  State Personnel and State Government.
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February 21, 1991

A BILL TO BE ENTITLED
AN ACT TO ESTABLISH A COMPREHENSIVE GOALS PROGRAM FOR INCLUSION OF BUSINESSES OWNED BY MINORITIES, WOMEN, AND THE DISABLED IN PUBLIC CONTRACTS. 
The General Assembly of North Carolina enacts:
Section 1.  Chapter 143 of the General Statutes is amended by adding a new Article to read:
“ARTICLE 3E.
"Full Inclusion in Public Contracts.
"§ 143-64.40.  Purpose.
The purpose of this Article is to provide maximum contracting opportunities to minority business enterprises (MBEs), womens business enterprises (WBEs), and disabled business enterprises (DBEs).  To further this purpose:
(1)	Each procurement agency in State government, other than the Department of Transportation with regard to highway construction, shall structure its procedures for procuring supplies, services, maintenance, and construction to attempt to achieve the following minimum verifiable percentage goals:
a.	Ten percent (10%) of the total dollar value of these procurements that are made directly or indirectly from certified MBEs;
b.	Five percent (5%) of the total dollar value of these procurements that are made directly or indirectly from certified WBEs;
c.	Two percent (2%) of the total dollar value of these procurements that are made directly or indirectly from certified DBEs;
	For purposes of these goals, a contract shall be counted as being with an MBE without regard to the gender of the owner, but only if the business does not qualify as a DBE; shall be counted as being with a WBE only if the business does not also qualify as a DBE or MBE; and shall be counted as a DBE without regard to the race or gender of the owner.
(2)	Each procurement agency of local government shall adopt, after notice and public hearing, a minimum appropriate verifiable percentage goal for inclusion of certified MBEs, WBEs, and DBEs in contracts for supplies, services, maintenance, or construction, unless those contracts fall below the dollar thresholds set by G.S. 143-129 for the competitive bidding requirement;
(3)	Nothing in this Article shall be construed to require procurement agencies or contractors to award contracts or subcontracts to or to make purchases of materials or equipment from an MBE, WBE, or DBE who does not submit the lowest responsible bid, taking into consideration quality, performance, and the time specified in the proposals for the performance of the contract.
"§ 143-64.41.  Definitions.
As used in this Article, unless the context indicates otherwise:
(1)	‘Appropriate verifiable percentage goal' means a verifiable percentage goal that the governing body of the procurement agency determines, after a public hearing, will foster maximum contracting opportunities for certified MBEs, WBEs, and DBEs, in light of local circumstances; provided that no goals are appropriate that are lower than the following percentages of the total value of the procurements:
a.	Five percent (5%) from certified MBEs,
b.	Two and one half percent (2.5%) from certified WBEs,
c.	One percent (1%) from certified DBEs.
	For purposes of these goals, a contract shall be counted as being with an MBE without regard to the gender of the owner, but only if the business does not qualify as a DBE; shall be counted as being with a WBE only if the business does not also qualify as a DBE or MBE; and shall be counted as a DBE without regard to the race or gender of the owner.
(2)	‘Certification' means a determination made in accordance with the provisions of G.S. 143-64.47 that a legal entity is an MBE, a WBE, or a DBE, for purposes of this Article.
(3)	‘Control' means the exercise of the power to manage and operate a business enterprise.
(4)	‘Disabled person' means a handicapped person as defined in G.S. 168A-3.
(5)	‘Disabled Business Enterprise' (DBE), means any legal entity, other than a joint venture, organized to engage in commercial transactions, that is at least fifty-one percent (51%) owned and controlled by one or more disabled persons, or a nonprofit entity organized to promote the interests of disabled persons, or a sheltered workshop whose main function is to provide services to disabled persons.
(6)	‘Goal' means a voluntary percentage or quantitative objective.
(7)	‘Minority Business Enterprise' (MBE), means any legal entity, other than a joint venture, organized to engage in commercial transactions, that is at least fifty-one percent (51%) owned and controlled by one or more minority persons.
(8)	‘Minority person' means a member of one of the following groups: African-Americans, Hispanics, American Indians, Asians.
(9)	‘Ownership' means:
a.	For a sole proprietorship, that the sole proprietor is a disabled person, a minority person, or a woman.  If the ownership interest held by a disabled person, a minority person, or a woman is subject to formal or informal restrictions such as options, security interests, or agreements held by a nonminority person or business entity, the options, security interests, or agreements held by the nonminority person or business entity may not significantly impair the minority person's ownership interest.
b.	For a partnership, that at least fifty-one percent (51%) of the partnership's assets or interests are owned by a minority person or minority persons.  If the ownership interest held by a minority person is subject to formal or informal restrictions such as options, security interests, or agreements, held by a nonminority person or business entity, the options, security interests, or agreements held by the nonminority person or business entity may not significantly impair the minority person's ownership interest.
c.	For a corporation, that legal and equitable ownership of at least fifty-one percent (51%) of all classes of stock, bonds, or other securities issued by the corporation is owned by a minority person or minority persons.  If an ownership interest held by a minority person is subject to formal or informal restrictions such as options, security interests, or agreements held by a nonminority person or business entity, the options, security interests, or agreements held by the nonminority person or business entity may not significantly impair the minority person's ownership interest.
(10)	‘Procurement agency' means any State agency or local government that is authorized by law or regulations to procure or contract. The term includes, but is not limited to, cities, counties, and boards of education.
(11)	‘Verifiable percentage goal' means that the procurement agency has adopted written guidelines specifying the actions that will be taken;
a.	By the procurement agency itself in the case of the separate prime contract system; and
b.	By the prime contractor in the case of the single-prime contract system
	to ensure a good faith effort in the recruitment and selection of certified MBEs, WBEs, and DBEs for inclusion in contracts awarded for procurement of supplies, services, maintenance, and construction. Guidelines adopted shall conform to rules issued by the Department of Administration under G.S. 143-64.46.
(12)	‘Womens Business Enterprise' (WBE), means any legal entity, other than a joint venture, organized to engage in commercial transactions, that is at least fifty-one percent (51%) owned and controlled by one or more women.
"§ 143-64.42.  Scope of Article.
This Article applies to every procurement of supplies, services, maintenance, and construction by a procurement agency.
"§ 143-64.43.  Procurement agency responsibility.
(a)	Each procurement agency shall make its procurements in accordance with this Article.  Each local board of education shall adopt procedures consistent with this Article before obtaining State funds for public school construction projects.  When delegating procurement authority to procurement agencies and other departments, the Department of Administration shall condition the delegation on compliance with this Article.
(b)	Procurement agencies shall, to the extent practicable, develop uniform affidavits and reporting forms required by this Article.
"§ 143-64.44.  MBE-WBE-DBE Liaison Officer.
The head of each procurement agency shall designate an employee to be an MBE-WBE-DBE Liaison Officer in the administration of that agency's minority business enterprise program.  The MBE-WBE-DBE Liaison Officer shall be a high-level employee reporting directly to a Secretary, Deputy Secretary, or head of a department or procurement agency.  The MBE-WBE-DBE Liaison Officer shall be responsible for coordinating agency outreach efforts to the minority business community, reviewing agency contracting procedures to assure compliance with this Article, assisting in the resolution of contracting issues, and for the submission of all required MBE-WBE-DBE program reports or information.
"§ 143-64.45.  Central directory.
The Department of Administration shall publish a central directory of MBEs, WBEs, and DBEs certified in accordance with G.S. 143-64.47.  The central directory shall specify the type of supplies, services, maintenance, or construction  primarily provided by the MBE, WBE, or DBE, and the date of certification.  The central directory shall include:
(1)	The address;
(2)	Phone number; and
(3)	Contact person
of all certified MBEs, WBEs, and DBEs; and the name of every business entity that has been denied certification or decertified within the last two years.  The directory shall be updated at least quarterly, and if feasible, monthly.
"§ 143-64.46.  Outreach and notification.
The Department of Administration shall establish procedures for outreach, notification, and solicitation of MBEs, WBEs, and DBEs.
"§ 143-64.47.  Certification.
(a)	The Department of Administration shall develop a procedure for the certification, recertification, and decertification of businesses as MBEs, WBEs, or DBEs. Any procurement agency may certify, decertify, or recertify a business as MBE, WBE, DBE, or more than one of the three, if the procurement agency follows the procedures established by the Department of Administration.
(b)	If a business petitions the Department of Administration for action under the certification process developed under subsection (a), the Department of Administration shall take the appropriate action according to the certification process not more than 60 days after the receipt of the application.  If a business petitions a procurement agency other than the Department of Administration for action under the certification process, that procurement agency may take the appropriate action itself, or it may forward the petition to the Department of Administration for action. If the procurement agency elects to take the appropriate action itself, it shall do so not more than 60 days after receipt of the application; if the procurement agency elects to forward the application to the Department of Administration, it shall do so not more than 30 days after receipt of the application. If the Department of Administration receives a petition forwarded from a procurement agency, the Department shall take the appropriate action according to the certification process not more than 60 days after the Department's receipt of the application.
(c)	A business certified as an MBE, a WBE, or a DBE in accordance with this section shall be recognized as such by all other procurement agencies for the purposes of this Article.
(d)	The Department of Administration or another procurement agency may request the following information to assist in any certification, recertification, and decertification determination:
(1)	Copies of articles of incorporation, bylaws, minutes, shareholder agreements, stock certificates, stock transfer ledgers, any additional profit-sharing agreements or buy out rights, or in the case of a partnership, the partnership agreement;
(2)	Current financial statements, business licenses, the prior two years' federal tax returns, cancelled checks, resumes of principal parties, and any relevant personal and third-party agreements, such as rental and management agreements;
(3)	Any other information that the certifying entity determines is necessary.
Failure to furnish the requested information within 30 days may result in a denial of certification or recertification, or a determination to decertify.
"§ 143-426.48.  Adoption of rules.
The Department of Administration shall submit for review by the Administrative Rules Review Commission any rules deemed appropriate for the enforcement of this Article.
"§ 143-426.49.  False information supplied by business.
(a)	When a procurement agency determines that a business has knowingly supplied false information in order to be classified as an MBE, WBE, or DBE, the procurement agency shall contact the Department of Administration to determine, after consultation with legal counsel, the appropriate action to be taken.
(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 an MBE, WBE, or DBE 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 H felony.
"§ 143-64.50.  Reporting requirements.
(a)	Each procurement agency, other than the Department of Transportation with regard to highway construction, and each private nonprofit corporation, other than an institution of higher education or a hospital, that receives an appropriation of five hundred thousand dollars ($500,000) or more during a fiscal year from the General Assembly, shall make a report annually within 90 days following the close of the fiscal year to the Department of Administration:
(1)	The total number and value of its procurements from certified MBEs, WBEs, and DBEs as prime contractors, and separately as subcontractors.
(2)	The percentage which purchases and contracts from MBEs, WBEs, and DBEs represent of its total number and value of its procurements from business enterprises for the fiscal year just ended. The procurement agency or corporation shall report percentages for each of the following groups:
a.	Nondisabled MBEs, regardless of the gender of the owner,
b.	Nonminority, nondisabled WBEs,
c.	All DBEs, regardless of the minority status or gender,
d.	Male disabled MBEs,
e.	Female disabled MBEs,
f.	Male nondisabled MBEs,
g.	Female nondisabled MBEs,
h.	Minority disabled WBEs,
i.	Nonminority disabled WBEs,
j.	Minority nondisabled WBEs,
k.	Male minority DBEs,
l.	Female minority DBEs,
m.	Female nonminority DBEs;
(3)	An evaluation by the procurement agency or corporation of the success of its MBE-WBE-DBE program;
provided that procurement agencies of local government shall not be required to report on contracts that fall below the dollar thresholds set by G.S. 143-129 for the competitive bidding requirement;
The Department of Administration shall prepare an annual report summarizing MBE, WBE, and DBE participation throughout the State for submission by the end of each calendar year to the General Assembly and to each department and procurement agency.
(b)	The Department of Transportation shall prepare an annual report for submission to the General Assembly by the end of each calendar year. The report shall contain the information on highway construction contracts that is equivalent to the information outlined in subsection (a) of this section."
Sec. 2.  G.S. 143-48 reads as rewritten:
"§ 143-48. State policy; cooperation in promoting the use of small, minority, physically handicapped and women contractors; purpose.
	It is the policy of this State to encourage and promote the use of small, minority, physically handicapped and women contractors in State purchasing of goods and services. All State agencies, institutions and political subdivisions shall cooperate with the Department of Administration and all other State agencies, institutions and political subdivisions in efforts to encourage the use of small, minority, physically handicapped and women contractors in achieving the purpose of this Article, which is to provide for the effective and economical acquisition, management and disposition of goods and services by and through the Department of Administration.  Accordingly, all contracts entered into for the purchase of goods and services pursuant to this Article shall be subject to the provision of Article 3E of this Chapter.
						Sec. 3.  G.S. 143-135.5 reads as rewritten:
"§ 143-135.5. State policy; cooperation in promoting the use of small, minority, physically handicapped and women contractors; purpose.
It is the policy of this State to encourage and promote the use of small, minority, physically handicapped and women contractors in State construction projects. All State agencies, institutions and political subdivisions shall cooperate with the Department of Administration and all other State agencies, institutions and political subdivisions in efforts to encourage and promote the use of  small, minority, physically handicapped and women contractors in achieving the purpose of this Article, which is the effective and economical construction of public buildings. Accordingly, all construction contracts entered into pursuant to this Article shall be subject to the provisions of Article 3E of this Chapter."
Sec. 4.  G.S. 143-128(c) and (d) are repealed.
Sec. 5.  G.S. 143-128 is amended by adding a new subsection to read:
"( e)	Any State agency or institution or city, county or other public body shall be governed by the goals and procedures of Article 3E of this Chapter for all contracts awarded pursuant to this section."
Sec. 6.  This act becomes effective January 1, 1992.