GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2011

H                                                                                                                                                    1

HOUSE BILL 172

Short Title:        Encourage Military Veteran Contractor Use.		(Public)
Sponsors:	Representatives Killian, McElraft, and Horn (Primary Sponsors). For a complete list of Sponsors, see Bill Information on the NCGA Web Site.
Referred to:	Homeland Security, Military, and Veterans Affairs, if favorable, Government.

February 24, 2011

A BILL TO BE ENTITLED

AN ACT to encourage State and local government to use military veteran contractors.

The General Assembly of North Carolina enacts:

PART I. CREATE MILITARY VETERAN BUSINESS PARTICIPATION GOALS FOR PUBLIC CONTRACTS

SECTION 1.(a)  G.S. 143-48 reads as rewritten:

"§ 143-48.  State policy; cooperation in promoting the use of small contractors, minority contractors, physically handicapped contractors, and women contractors; contractors, women contractors, and military veteran contractors; purpose; required annual reports.

(a)        Policy. - It is the policy of this State to encourage and promote the use of small contractors, minority contractors, physically handicapped contractors, and women contractors contractors, women contractors, and military veteran 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 contractors, minority contractors, physically handicapped contractors, and women contractors contractors, women contractors, and military veteran 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.

(b)        Reporting. - Every governmental entity required by statute to use the services of the Department of Administration in the purchase of goods and services, every local school administrative unit, and every 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 report to the department Department of Administration annually on what percentage of its contract purchases of goods and services, through term contracts and open-market contracts, were from minority-owned businesses, what percentage from female-owned businesses, what percentage from disabled-owned businesses, what percentage from disabled business enterprises and enterprises, what percentage from nonprofit work centers for the blind and the severely disabled. disabled, and what percentage from military veteran contractors. The same governmental entities shall include in their reports what percentages of the contract bids for such purchases were from such businesses. The Department of Administration shall provide instructions to the reporting entities concerning the manner of reporting and the definitions of the businesses referred to in this act, provided that, for the purposes of this act:

(1)        Except as provided in subdivision (1a) subdivisions (1a) through (4) of this subsection, a business in one of the categories above means one:

a.         In which at least fifty-one percent (51%) of the business, or of the stock in the case of a corporation, is owned by one or more persons in the category; and

b.         Of which the management and daily business operations are controlled by one or more persons in the category who own it.

(1a)      A "disabled business enterprise" means a nonprofit entity whose main purpose is to provide ongoing habilitation, rehabilitation, independent living, and competitive employment for persons who are handicapped through supported employment sites or business operated to provide training and employment and competitive wages.

(1b)      A "nonprofit work center for the blind and the severely disabled" means an agency:

a.         Organized under the laws of the United States or this State, operated in the interest of the blind and the severely disabled, the net income of which agency does not inure in whole or in part to the benefit of any shareholder or other individual;

b.         In compliance with any applicable health and safety standard prescribed by the United States Secretary of Labor; and

c.         In the production of all commodities or provision of services, employs during the current fiscal year severely handicapped individuals for (i) a minimum of seventy-five percent (75%) of the hours of direct labor required for the production of commodities or provision of services, or (ii) in accordance with the percentage of direct labor required under the terms and conditions of Public Law 92-28 (41 U.S.C. § 46, et seq.) for the production of commodities or provision of services, whichever is less.

(2)        A female or a disabled person is not a minority, unless the female or disabled person is also a member of one of the minority groups described in G.S. 143-128(2)a. through d.

(3)        A disabled person means a person with a handicapping condition as defined in G.S. 168-1 or G.S. 168A-3.

(4) A veteran contractor is a contractor that is a military veteran or a veteran business, as those terms are defined in G.S. 143-128.5(f).

(c)        The Department of Administration shall compile information on small and medium-sized business participation in State contracts subject to this Article and report the information as provided in subsection (d) of this section. The report shall analyze (i) contract awards by business size category, (ii) historical trends in small and medium-sized business participation in these contracts, and (iii) to the extent feasible, participation by small and medium-sized businesses in the State procurement process as dealers, service companies, and other indirect forms of participation. The Department may require reports on contracting by business size in the same manner as reports are required under subsection (b) of this section.

(d)        The Department of Administration shall collect and compile the data described in this section and report it annually to the General Assembly.

(d1)      Repealed by Session Laws 2007-392, s. 1, effective October 1, 2007.

(e)        In seeking contracts with the State, a disabled business enterprise must provide assurances to the Secretary of Administration that the payments that would be received from the State under these contracts are directed to the training and employment of and payment of competitive wages to handicapped employees."

SECTION 1.(b)  Article 8 of Chapter 143 of the General Statutes is amended by adding a new section to read:

"§ 143-128.5.  Military veteran business participation goals.

(a) The State shall have a verifiable ten percent (10%) goal for participation by military veteran businesses in the total value of work for each State building project, including building projects done by a private entity on a facility to be leased or purchased by the State. A local government unit or other public or private entity that receives State appropriations for a building project or other State grant funds for a building project, including a building project done by a private entity on a facility to be leased or purchased by the local government unit, where the project cost is one hundred thousand dollars ($100,000) or more, shall have a verifiable ten percent (10%) goal for participation by veteran businesses in the total value of the work.

Each city, county, or other local public entity shall adopt, after a notice and public hearing, an appropriate verifiable percentage goal for participation by veteran businesses in the total value of work for building projects.

Each entity required to have verifiable percentage goals under this subsection shall make a good faith effort to recruit veteran participation in accordance with this section or G.S. 143-131(c), as applicable.

(b) A public entity shall establish prior to solicitation of bids the good faith efforts that it will take to make it feasible for veteran businesses to submit successful bids or proposals for the contracts for building projects. Public entities shall make good faith efforts as set forth in subsection (e) of this section. Public entities shall require contractors to make good faith efforts to meet the veteran business participation goal established in subsection (a) of this section. Each first-tier subcontractor on a construction management at-risk project shall comply with the requirements applicable to contractors under this subsection.

(c) Each bidder, which shall mean first-tier subcontractor for construction manager at-risk projects for purposes of this subsection, on a project bid under any of the methods authorized under G.S. 143-128(a1) shall identify on its bid the veteran businesses that it will use on the project and an affidavit listing the good faith efforts it has made pursuant to subsection (b) of this section and the total dollar value of the bid that will be performed by the veteran businesses. A contractor, including a first-tier subcontractor on a construction manager at-risk project, that performs all of the work under a contract with its own workforce may submit an affidavit to that effect in lieu of the affidavit otherwise required under this subsection. The apparent lowest responsible, responsive bidder shall also file the following:

(1) Within the time specified in the bid documents, either:

a. An affidavit that includes a description of the portion of work to be executed by veteran businesses, expressed as a percentage of the total contract price, which is equal to or more than the applicable goal. An affidavit under this sub-subdivision shall give rise to a presumption that the bidder has made the required good faith effort; or

b. Documentation of its good faith effort to meet the goal. The documentation must include evidence of all good faith efforts that were implemented, including any advertisements, solicitations, and evidence of other specific actions demonstrating recruitment and selection of veteran businesses for participation in the contract.

(2) Within 30 days after award of the contract, a list of all identified subcontractors that the contractor will use on the project.

Failure to file a required affidavit or documentation that demonstrates that the contractor made the required good faith effort is grounds for rejection of the bid.

(d) No subcontractor who is identified and listed pursuant to subsection (c) of this section may be replaced with a different subcontractor except:

(1) If the subcontractor's bid is later determined by the contractor or construction manager at risk to be nonresponsible or nonresponsive, or the listed subcontractor refuses to enter into a contract for the complete performance of the bid work, or

(2) With the approval of the public entity for good cause.

Good faith efforts as set forth in G.S. 143-131(c) shall apply to the selection of a substitute subcontractor. Prior to substituting a subcontractor, the contractor shall identify the substitute subcontractor and inform the public entity of its good faith efforts pursuant to G.S. 143-131(c).

(e) Before awarding a contract, a public entity shall do the following:

(1) Develop and implement a veteran business participation outreach plan to identify veteran businesses that can perform public building projects and implement outreach efforts to encourage veteran business participation in these projects to include education, recruitment, and interaction between veteran businesses and nonveteran businesses.

(2) Attend the scheduled prebid conference.

(3) Utilize other media, as appropriate, likely to inform potential veteran businesses of the bid being sought.

(f) As used in this section:

(1) The term 'veteran business' means a business:

a. In which at least fifty-one percent (51%) is owned by one or more military veterans, or in the case of a corporation, in which at least fifty-one percent (51%) of the stock is owned by one or more military veterans; and

b. Of which the management and daily business operations are controlled by one or more of the military veterans who own it.

(2) The term 'military veteran' means a person who is a citizen or lawful permanent resident of the United States and who either:

a. Served in the Armed Forces of the United States or the North Carolina National Guard for a minimum of 180 days but has since been discharged or released.

b. Is or was a member of the reserve components of the Armed Forces, as that term is defined in 10 U.S.C. § 10101, who was placed on active federal service status for 180 days or more.

However, this term includes only persons described in subdivisions (1) and (2) of this section who, if discharged or released from service, were discharged or released with an honorable discharge or a general discharge under honorable conditions.

(g) Nothing in this section shall be construed to require contractors or awarding authorities to award contracts or subcontracts to or to make purchases of materials or equipment from veteran business contractors or veteran business subcontractors who do not submit the lowest responsible, responsive bid or bids.

(h) Notwithstanding G.S. 132-3 and G.S. 121-5, all public records created pursuant to this section shall be maintained by the public entity for a period of not less than three years from the date of the completion of the building project.

(i) Except as provided in subsections (a), (f), (g), and (h) of this section, this section shall only apply to building projects costing three hundred thousand dollars ($300,000) or more. This section shall not apply to the purchase and erection of prefabricated or relocatable buildings or portions thereof, except that portion of the work that must be performed at the construction site.

(j) Each public or private entity that is subject to this section shall report annually to the Department of Administration on its compliance with the requirements of this section. The Department of Administration shall provide instructions to the reporting entities concerning the manner and date of reporting. The Secretary of the Department of Administration shall make reports annually to the Joint Legislative Commission on Governmental Operations on information reported pursuant to this subsection.

(k) If the death of a military veteran causes a business to be less than fifty-one percent (51%) owned by one or more military veterans, the surviving spouse of the military veteran who acquires ownership rights in the business shall, for the period set forth in this subsection, be treated as if the surviving spouse were the veteran for the purpose of maintaining the status of the business as a veteran business. This period shall begin on the date the veteran dies and end on the earliest of the following:

(1) The date on which the surviving spouse remarries.

(2) The date on which the surviving spouse relinquishes an ownership interest in the business.

(3) The date that is 10 years after the veteran's death."

SECTION 1.(c)  G.S. 143-131 is amended by adding a new subsection to read:

"(c) All public entities shall solicit military veteran participation in contracts for the erection, construction, alteration, or repair of any building awarded pursuant to this section. The public entity shall maintain a record of contractors solicited and shall document efforts to recruit military veteran business participation in those contracts. Nothing in this section shall be construed to require formal advertisement of bids. All data, including the type of project, total dollar value of the project, dollar value of military veteran business participation on each project, and documentation of efforts to recruit military veteran participation shall be reported to the Department of Administration, Division of Veterans Affairs, upon the completion of the project."

PART II. CONFORMING CHANGES

SECTION 2.(a)  G.S. 18C-151(a)(4) reads as rewritten:

"(4)      The Commission has complied with the minority participation goals of G.S. 143-128.2 and G.S. 143-128.3.G.S. 143-128.3, and with the veteran participation goals of G.S. 143-128.5."

SECTION 2.(b)  G.S. 113-315.36 reads as rewritten:

"§ 113-315.36.  Building contracts.

(a)        The following general laws, to the extent provided below, do not apply to the North Carolina Seafood Industrial Park Authority:

(1)        Repealed by Session Laws 1999-368, s. 1.

(2)        Except for G.S. 143-128.2, G.S. 143-128.2 and G.S. 143-128.5, Article 8 of Chapter 143 of the General Statutes does not apply to public building contracts of the Authority that require the estimated expenditure of public money in an amount less than two hundred fifty thousand dollars ($250,000). With respect to a contract that is exempted from certain provisions of Article 8 under this subdivision, the powers and duties set out in Article 8 shall be exercised by the Authority, and the Secretary of Administration and other State officers, employees, or agencies shall have no duties or responsibilities concerning the contract.

(3)        G.S. 143-341(3) does not apply to plans and specifications for construction or renovation authorized by the Authority that require the estimated expenditure of public money in an amount less than two hundred fifty thousand dollars ($250,000).

(b)        Notwithstanding the other provisions of this section, the services of the Department of Administration may be made available to the Authority, when requested by the Authority, with regard to matters governed by Article 8 of Chapter 143 of the General Statutes and G.S. 143-341(3). The Authority shall report quarterly to the Joint Legislative Commission on Governmental Operations on any building contract to which this exemption is applied. The quarterly report required by this subsection shall specifically include information regarding the Authority's compliance with the provisions of G.S. 143-128.2. G.S. 143-128.2 and G.S. 143-128.5."

SECTION 2.(c)  G.S. 116-31.11(f) is amended by adding a new subdivision to read:

"(5) Whether the person or business awarded a contract under this section meets the definition of 'veteran business' or 'military veteran' as defined in G.S. 143-128.5(f)."

SECTION 2.(d)  G.S. 116D-4 reads as rewritten:

"§ 116D-4.  Minority and Minority, veteran, and historically underutilized business participation.

(a)        Minority Business and Veteran Business Participation. - The goals set by G.S. 143-128 and G.S. 143-128.5 for participation in projects by minority and veteran businesses apply to projects funded by the proceeds of bonds or notes issued under this section. The following State agencies shall monitor compliance with this requirement and shall report to the General Assembly by January 1 of each year on the participation by minority and veteran businesses in these projects. The State Construction Office, Department of Administration, shall monitor compliance with regard to projects funded by the proceeds of university improvement general obligation bonds and notes and special obligation bonds and notes; the Board of Governors of The University of North Carolina shall provide the State Construction Office any information required by the State Construction Office to monitor compliance. The Community Colleges System Office shall monitor compliance with regard to projects funded by the proceeds of community college general obligation bonds and notes.

(b)        Participation in Providing Professional Services. - The Department of State Treasurer shall provide contracting opportunities for historically underutilized businesses in providing professional services in connection with the issuance of bonds and notes authorized by this section. As used in this subsection, the term "historically underutilized business" means a business described in G.S. 143-48. The Department of State Treasurer shall strive to increase the amount of legal, financial, and other professional services acquired by it from historically underutilized businesses. With the assistance of the Office for Historically Underutilized Businesses in the Department of Administration, the Department of State Treasurer shall set objectives for contracting with these businesses, identify and eliminate barriers or constraints that may restrict these businesses from contracting with the Department, and develop a plan for meeting its objectives. The Department of State Treasurer shall report quarterly to the Office for Historically Underutilized Businesses on its progress in carrying out the requirements of this subsection."

SECTION 2.(e)  G.S. 143-128.1 reads as rewritten:

"§ 143-128.1.  Construction management at risk contracts.

(a)        For purposes of this section and G.S. 143-64.31:

(1)        "Construction management services" means services provided by a construction manager, which may include preparation and coordination of bid packages, scheduling, cost control, value engineering, evaluation, preconstruction services, and construction administration.

(2)        "Construction management at risk services" means services provided by a person, corporation, or entity that (i) provides construction management services for a project throughout the preconstruction and construction phases, (ii) who is licensed as a general contractor, and (iii) who guarantees the cost of the project.

(3)        "Construction manager at risk" means a person, corporation, or entity that provides construction management at risk services.

(4)        "First-tier subcontractor" means a subcontractor who contracts directly with the construction manager at risk.

(b)        The construction manager at risk shall be selected in accordance with Article 3D of this Chapter. Design services for a project shall be performed by a licensed architect or engineer. The public owner shall contract directly with the architect or engineer.

(c)        The construction manager at risk shall contract directly with the public entity for all construction; shall publicly advertise as prescribed in G.S. 143-129; and shall prequalify and accept bids from first-tier subcontractors for all construction work under this section. The prequalification criteria shall be determined by the public entity and the construction manager at risk to address quality, performance, the time specified in the bids for performance of the contract, the cost of construction oversight, time for completion, capacity to perform, and other factors deemed appropriate by the public entity. The public entity shall require the construction manager at risk to submit its plan for compliance with G.S. 143-128.2 and G.S. 143-128.5 for approval by the public entity prior to soliciting bids for the project's first-tier subcontractors. A construction manager at risk and first-tier subcontractors shall make a good faith effort to recruit and select minority businesses for participation in contracts pursuant to G.S. 143-128.2. G.S. 143-128.2 and military veteran businesses for participation in contracts pursuant to G.S. 143-128.5. A construction manager at risk may perform a portion of the work only if (i) bidding produces no responsible, responsive bidder for that portion of the work, the lowest responsible, responsive bidder will not execute a contract for the bid portion of the work, or the subcontractor defaults and a prequalified replacement cannot be obtained in a timely manner, and (ii) the public entity approves of the construction manager at risk's performance of the work. All bids shall be opened publicly, and once they are opened, shall be public records under Chapter 132 of the General Statutes. The construction manager at risk shall act as the fiduciary of the public entity in handling and opening bids. The construction manager at risk shall award the contract to the lowest responsible, responsive bidder, taking into consideration quality, performance, the time specified in the bids for performance of the contract, the cost of construction oversight, time for completion, compliance with G.S. 143-128.2, G.S. 143-128.2 and G.S. 143-128.5, and other factors deemed appropriate by the public entity and advertised as part of the bid solicitation. The public entity may require the selection of a different first-tier subcontractor for any portion of the work, consistent with this section, provided that the construction manager at risk is compensated for any additional cost incurred.

When contracts are awarded pursuant to this section, the public entity shall provide for a dispute resolution procedure as provided in G.S. 143-128(f1).

(d)        The construction manager at risk shall provide a performance and payment bond to the public entity in accordance with the provisions of Article 3 of Chapter 44A of the General Statutes."

SECTION 2.(f)  G.S. 143-129.4 reads as rewritten:

"§ 143-129.4.  Guaranteed energy savings contracts.

The solicitation and evaluation of proposals for guaranteed energy savings contracts, as defined in Part 2 of Article 3B of this Chapter, and the letting of contracts for these proposals are not governed by this Article but instead are governed by the provisions of that Part; except that guaranteed energy savings contracts are subject to the requirements of G.S. 143-128.2 and G.S. 143-135.3."G.S. 143-128.2, 143-128.5, and 143-135.3."

SECTION 2.(g)  G.S. 143-135.5(a) reads as rewritten:

"§ 143-135.5.  State policy; cooperation in promoting the use of small, minority, physically handicapped and women handicapped, women, and military veteran contractors; purpose.

(a)        It is the policy of this State to encourage and promote the use of small, minority, physically handicapped and women handicapped, women, and military veteran 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 handicapped, women, and military veteran contractors in achieving the purpose of this Article, which is the effective and economical construction of public buildings."

SECTION 2.(h)  G.S. 143-135.26(9)b1 reads as rewritten:

"b1.      The entity includes in its bid or proposal requirements that the contractor will file a plan for making a good faith effort to reach the minority participation goal set out in G.S. 143-128.2. G.S. 143-128.2 and the veteran business participation goal set out in G.S. 143-128.5."

SECTION 2.(i)  G.S. 147-33.97 reads as rewritten:

"§ 147-33.97.  Information technology procurement policy; reporting requirements.

(a)        Policy. - In order to further the policy of the State to encourage and promote the use of small, minority, physically handicapped, and women handicapped, women, and veteran contractors in State purchasing of goods and services, all State agencies covered by this Part shall cooperate with the Office in efforts to encourage the use of small, minority, physically handicapped, and women handicapped, women, and veteran contractors in achieving the purpose of this Part, which is to provide for the effective and economical acquisition, management, and disposition of information technology.

(a1)      A vendor submitting a bid shall disclose in a statement, provided contemporaneously with the bid, where services will be performed under the contract sought, including any subcontracts and whether any services under that contract, including any subcontracts, are anticipated to be performed outside the United States. Nothing in this section is intended to contravene any existing treaty, law, agreement, or regulation of the United States.

(a2)      The State Chief Information Officer shall retain the statements required by subsection (a1) of this section regardless of the State entity that awards the contract and shall report annually to the Secretary of Administration on the number of contracts which are anticipated to be performed outside the United States.

(b)        Reporting. - Every State agency that makes a direct purchase of information technology using the services of the Office shall report directly to the Department of Administration all information required by G.S. 143-48(b).

(c)        The Department of Administration shall collect and compile the data described in this section and report it annually to the Office."

SECTION 2.(j)  G.S. 148-37.2(j) reads as rewritten:

"(j)       Minority Business Participation. - G.S. 143-128.2 applies and G.S. 143-128.5 apply to the Projects authorized in this section."

PART III. EFFECTIVE DATE

SECTION 3.  This act is effective when it becomes law and applies to bids solicited on or after that date.