W/MBE Programs and Caselaw Summary: 50-State Survey

Transcription

1 American Bar Association Forum on the Construction Industry W/MBE Programs and Caselaw Summary: 50-State Survey Andrea L. Murdock, Esq. Halloin & Murdock, S.C. Milwaukee, Wisconsin David Valdini & V. Julia Luyster, Esq. Valdini & Palmer, P.A. Ft. Lauderdale, Florida Jennifer Evans Morris Carrington, Coleman, Sloman & Blumenthal, L.L.P. Dallas, Texas September 11 & 12, 2008 The Fairmont Chicago- Chicago, IL 2008 American Bar Association MBE - 1

2 Public and private owners are engaging in a variety of measures to increase participation of women and minority owned businesses in construction projects. Throughout the following chart, such entities will be referred to as women business enterprises (WBEs) and minority business enterprises (MBEs). This chart provides a 50-State Survey of M/WBE programs, voluntary and mandatory, as well as a discussion of various state agency actions in each state. As illustrated below, most state programs do not involve contracting set asides from the regular contracting process or a bid percentage discount. Rather, as illustrated below, state affirmative procurement programs are tending toward either (1) requirements that prime contractors use a certain percentage of M/WBE programs or (2) targeting procurement agents to outreach to potential M/WBE bidders. Many states programs have evolved from mandatory to voluntary during the last decade as a result of affirmative-action related legal challenges. Goal-based programs involve a goal or good faith requirement that prime contractors or suppliers strive to involve a target percentage of M/WBEs. Voluntary, targeted outreach programs differ from goals-based programs in that they do not require M/WBEs as subcontractors or suppliers. Rather, in voluntary programs, procurement agents are (1) encouraged to use M/WBEs and (2) encouraged to target outreach to M/WBEs. The chart below illustrates the divergent ways states address M/WBE involvement in the procurement process. MBE - 2

3 Alabama None None M/WBE organization: Alabama Department of Economic and Community Affairs, Office of Minority Business Enterprise. Certification available through the OMBE Alaska Alaska Stat C.F.R (2008) No M/WBE goals A federal statute provides a program related to contracts under natural gas transport system Opinions of Attorney General Primes to make good faith effort in awarding Ks to MBE Subs. Arizona Ariz. Admin. Code R2-7- D303 Ariz. Admin. Code R Voluntary Program: Governor s Equity in State Contracting Initiative: (1) Contracts under $50K must have at least one M/WBE bidder. (2) an implementation, tracking, and compliance system. (3) Online business directory with self-reported M/WBE status. (4) Executive Oversight committee to track participation. Arkansas Ark. Code Ann Ark. Code Ann Ark. Code Ann Ark. Code Ann Ark. Code R Ark. Reg. 50 (Sept. 2007) 88 Ark. Reg. 52 (Sept. 2007) 88 Ark. Reg. 67 (Sept. 2007) MBE The state agency is required to verify minority business ownership and control. MBE - 3

4 California Cal. Pub. Util. Code 8281 Cal. Pub. Util. Code 8283 Cal. Pub. Util. Code 8285 Cal. Code. Regs. Tit. 14, 4730 Cal. Pub. Cont. Code Cal. Sys. & Hwy Code 94.4 Moore v. Navarro, No. C , 2004 WL (N. D. Cal. March 31, 2004). Allied Temporaries, Inc. v. AT&T Comm. Of Cal., Inc., 42 Cal. Pub. Util. Comm. 2d 403 (Dec. 18, 1991). Ballot initiative eliminated M/WBE goal. Women and Minority Business Enterprises False representation penalty falls under the public utility code. M/WBE violations are reviewed by the Public Utilities Commission. Colorado Co. St Co.St Co. St Co. St Co. St CCR (procurement rules) R b-04 R Mandatory M/WBE goal in city/county of Denver Colorado Minority Business Office. There is no single all encompassing certification program for women and minority owned business. Connecticut Conn. Gen. Stat. 46a-56 Conn. Gen. Stat. Ann. 4a-60g Conn. Agencies Regs a Electrical Contractors, Inc. v. Connecticut Dept. of Transp., 139 F. Supp. 2d 265 (D. Conn. 2001). Governor Roy Romer issued Executive Order D entitled Concerning Minority Business Opportunities, and Executive Order D00594 entitled Establishing Women s Business Office, both which establish procedures and goals for the participation of minorities and women in state procurement. Goal-Based Program Set aside of 25 percent of contract dollars for instate small businesses and a goal of 6.25 percent for M/WBEs Fraud addressed in state statute 6 Op. Att y Gen. 008 (2008) addresses program MBE - 4

5 Delaware 49 C.F.R Del. Code Regs Del. Gov t Reg. 63 (Weil Apr. 2004). Voluntary Program: Supplier diversity program to increase participation of M/WBEs Any RFP over $10K must be transmitted to M/WBE development associations. Office of Minority and Women Business Florida (1), Fla. Stat (2), Fla. Stat (3), Fla. Stat , Fla. State. Fla. Admin. Code R. 6C Fla. Admin. Code R. 6C Fla. Admin. Code R. 6C Fla. Admin. Code R. 6C U.S. v. Blankenship, 382 F.3d 1110 (11th Cir. 2004). Barton Protective Serv., LLC, v. Dept. of Transp., 6 F.A.L.R (Div. Admin. Hearings 2006). Personal Enrichment Through Mental Health Serv., Inc. v. Dept. of Juvenile Justice, 1 F.A.L.R (Div. Admin. Hearings 2001). Enterprise Voluntary Program: Prime contractors are graded by use of M/WBEs. Outreach programs include workshops, trade shows, conferences, and match-maker events. Local govts are still allowed affirmative action in public contracting. Fed. case addressed issue of MBE program fraud violations of state statute and secondary federal violations. Georgia Ga. Code Ann Ga. Code Ann Ga. Code Ann Ga. Code Ann Ga. Code Ann Ga. Comp. R. & Regs Minority Business Enterprise Ga. Code Ann deals with fraud in certification process; penalty; effect of multiple violations. MBE - 5

6 Hawaii None None No statewide M/WBE organization. Hawaii does have the Hawaii Strategic Development Corporation, established by statute (Haw. St. 211F-1, et. seq.) The HSDC s purpose is to encourage economic development and diversification in Hawaii through innovative actions in cooperation with private enterprises. The HSDC is required to establish rules to assure equal opportunity to minority-owned businesses, and shall encourage the development of minority-owned businesses. Idaho 49 C.F.R. 26 Illinois 30 ILCS 575/1, et seq. 30 ILCS 575/4 goals 30 ILCS 575/8 enforcement See also 50 ILCS 20/ ILCS 65/27 70 ILCS 210/ ILCS 3205/9 18 U.S.C.A Ill. Admin. Code 10.05, et seq. Goals Certification Phillips v. Consol. Supply Co., 895 P.2d 574 (Idaho 1995): Deals with verification of DME status. Keefe-Shea Joint Venture v. City of Evanston, 332 Ill. App. 3d 163, 773 N.E.2d 1155 (Ill. Ct. App. 2002): Losing bidder entitled to injunction where winning bidder did not meet MBE requirements. People ex rel. Hartigan v. E&E Hauling, 153 Ill. 2d 473, 607 N.E.2d 165 (1992): Attorney General has standing to bring common law tort claim and claim under Consumer Fraud Act for State follows the federal rules. If a contractor violates program rules, the state uses the Fraud and Civil Remedies rules and criminal prosecution permitted under 18 U.S.C.A Contractors are made aware of the penalties on the face of the application. IDOT created 22.8% DBE goal in projects that receive federal highway funding. M/WBE organization: Business Enterprise Program. Certification is available through the Business Enterprise Program. Percentage goals contained in statutes. MBE - 6

7 Illinois (cont d) Violations See also 35 Ill. Admin. Code contractor s fraudulent representations regarding use of M/WBE subcontractors. Albin Carlson & Co. v. State, 48 Ill. Ct. Cl. 245 (Ct. Cl. Ill. 1996): State s failure to deny contractor s request for waiver of M/WBE requirements after some of the work contractor had subcontracted out to M/WBE entities was eliminated within 20 day limitation entitled contractor to damages. Am. Health Care Providers, Inc. v. County of Cook, 265 Ill. App. 3d 919, 638 N.E.2d 772 (Ill. Ct. App. 1994): M/WBE ordinances do not confer substantive rights on M/WBE entities, as percentage goals are only goals, not requirements. Indiana Ind. Code Ann Ind. Admin. Code Goals range between 5-8 percent for MBEs and 3-11 percent for WBEs Each state agency required to have a supplier diversity plan and coordinator. Disadvantaged, Minority, and Women-Owned Business Enterprise Ind. Code Ann deals with false representation penalties; Class D Felony. MBE - 7

8 Iowa Ia. St Ia. St (goals) Ia. St (goals) Certification Ia. Admin. Code (73), et seq. Ia. St (definition of TSB) Ia. St. 10A.104 (Dept. of Insp. & App.) See also Ia. St Ia. St. 19B.7 Violations (714) See also , et seq. (TSB procurement program) , et seq. (TSB financial assistance) , et seq. (Bd. of Regents) , et seq. (contract compliance, incl. sanctions) (TSB interim guidelines) 10 percent goal for targeted small businesses. M/WBE organization: Iowa Department of Administrative Services, Targeted Small Business Program. Certification available through Iowa Department of Inspections and Appeals. Kansas K.S.A a K.S.A a K.S.A a K.S.A K.S.A See also K.S.A K.S.A K.S.A See also Kan. Admin. Reg M/WBE organization: Kansas Office of Minority and Women Business Development Certification available through Kansas Office of Minority and Women Business Development. State inclusive business program takes role in coordinating with local govts MBE - 8

9 Kentucky Ky Pub. Util. Code 8285 Public Law : Small Business Act penalties for misrepresentations. 10 percent M/WBE goal. Louisiana La. Rev. Stat. 38: Maine Me. Rev. Stat. tit. 5, 791 Maryland Md. Code Ann. State Fin. & Proc (West 2008). 40 CFR C.F.R (a) 49 C.F.R Me. Code R. 1 (Weil 2008) Me. Code R. 1 (Weil 2008). Md. Code Regs Md. Code Regs Public Utility Code includes the penalties for false representation of business Now called the Small Business Procurement Act; former M/WBE program was repealed in MBE/WBE a/k/a DBE Fraud, misrepresentation, or false statement are prosecuted under the federal statute. Executive Order 11625, as amended by Executive Order (Minority Business Enterprises) 25 percent M/WBE goal, including subset requirement of 7 percent for African-American businesses and 10 percent for WBEs. Massachusetts Mass. Gen. Laws Ann. ch. 23A, 40 (West 2008). Mass. Gen. Laws Ann. ch. 23A, 44 (West 2008). Mass. Gen. Laws Ann. ch. 149A, 8 (West 2008). 810 Mass. Code Regs Mass. Code Regs Minority Business Enterprise Fraud and misrepresentation addressed under all 3 state codes. Improves monitoring of M/WBE participation and requires local governments that receive state funds to have M/WBE goals. State inclusive business program takes role in coordinating with local govts Sec. 44; fraud MBE - 9

10 Michigan Mich. Comp. Laws Ann (c) (West 2008). Mich. Comp. Laws Ann (West 2008). Mich. Comp. Laws Ann b (West 2008). Mich. Comp. Laws Ann (4)(f)(i)-(ii) (West 2008). U.S. v. Hunter, 843 F. Supp. 235 (E. D. Mich. 1994). RLVIC, Inc. v. DAWDA, No , 2006 Lexis 605 (Mich. App. March 7, 2006). State has an anti-affirmative action rule. State uses electronic means to conduct vendor outreach and has procurement agents participate in events held by M/WBEs. Minnesota Minn. Stat. Ann. 116M.14, through 116M.18 (2008) Minn. R (2007). Hybrid-Program: Targeted-group (TG) and economically disadvantaged (ED) goals-based program. TGs receive a 6 percent price-preference on construction bids. EDs receive 4 percent on constructions bids and 6 percent on other goods and services. Mississippi Miss. Code Ann (West 2008) Miss. Code R. I through IV (Weil 2008). 79 Miss. Gov t Reg. 83 (Weil February 2004). 102 Miss. Gov t Reg. 53 (Weil January 2006). 103 Miss. Gov t Reg. 72 (Weil February 2006). 114 Miss. Gov t Reg. 83 (Weil January 2007). Minority Business Enterprise False statements, fraud, and misrepresentations are prosecuted under the False Claims Act. The False Claims Acts is referred in the Miss. Gov t Reg. MBE - 10

11 Missouri Mo. St Mo. St Mo. St Mo. St Mo. St Mo. St Mo. ADC Mo. ADC Mo. ADC Voluntary Program: Proactive vendor outreach program with supplier diversity program M/WBE organization: State Office of Administration, Office of Supplier and Workforce Diversity. See also Mo. St Certification available through OSWD. Montana None None In the planning stages of developing program to provide low interest rate loans to M/WBEs. Offers general business development services to M/WBEs, including Native-American owned businesses. Nebraska None None Offers general business development services for M/WBEs Nevada None None Suspended DBE program goal after legal challenge. New Hampshire None None Ended race-gender conscious programs for its DOT DBE programs. New Jersey N.J. Stat. Ann. 34:1B- 24 Division of Minority and Women s Business Development State agencies shall expend from total annual contract amounts not less than 10% with MBEs and not less than 4% with WBEs. 25 percent small business procurement goal. New Mexico None None N/A MBE - 11

12 New York N.Y. Exec. Law (Article 15-A of the Executive Law) Division of Minority and Women s Business Development N.Y. Comp. Codes R. & Regs. tit. 5, to North Carolina N.C. Gen. Stat , , N.C. Admin. Code 30I.0301 The Office for Historically Underutilized Businesses New York v. Mikuscewski, 538 N.E.2d 1107 (N.Y. 1989): Criminal charges brought against contracting company and its Vice-President for allegedly fraudulent efforts to feign compliance with minority business participation requirements, including providing false statements and filings. U.S. v. Villazan, No. 05 CR 792-1, 2008 US. Dist. LEXIS (N.D. Ill. 2008) U.S. Palumbro Bros., 797 F. Supp. 624 (N.D. Ill. 1992: 28 construction company and individual defendants sued under the False Claims Act for alleged false statements and claims made by minority and women business enterprises. State agencies shall establish employment and business participation goals for minorities and women. The director to promulgate rules and regulations to ensure that minority and women-owned firms are rewarded a fair share of state contracts. State agencies shall establish separate M/WBE goals on all state contracts. Contractors must submit utilization plans for achieving these goals and compliance reports at intervals established in the contract. Good faith efforts required toward compliance. Contractors whose bids have been disqualified for failure to submit a utilization plan and contractors failing to document good faith efforts in meeting goal requirements shall be entitled to an administrative hearing. The Agency or the contractor may file a complaint with the director regarding disputes over goals. If the director is unable to resolve the complaint, it shall be referred to State construction projects of $500k+ have a 10% MBE goal. Local government entities that receive state funds for building projects of $100k+ have a 10% goal. The Secretary shall annually review the preceding year s minority business participation and adjust percentage goals as appropriate. MBE - 12

13 North Carolina (cont d) Bidders must either comply with the requirements or undertake good faith efforts under a point value system in recruiting minority business participation. The contractor is required to make good faith efforts to comply with the requirements. State inclusive business program takes role in coordinating with local govts Failure to comply with the minority business guidelines shall constitute a breach of the contract, which may result in termination of the contract at the option of the state North Dakota None None Offers general business development services to M/WBEs, including Native-American owned businesses. Ohio Ohio Rev. Code Ann Ohio Admin. Code 123:2-3 The Minority Business Enterprise Division: EDGE Program (Encouraging Diversity, Growth, and Equity) Goals shall be based on a percentage level of participation and a percentage of contractor availability and applied at the contract level relative to overall dollar goal for each state agency. Contractors to public works contracts with 50 or more employees and a contract of $50k or more are required to exert every good faith effort to accomplish the goals of the affirmative action program. Contractors may obtain an acceptable affirmative action program by either of the following methods: MBE - 13

14 Ohio (cont d) 1) Adopt state percentage goals for minority utilization work hours. Goals are listed as the proportion of the minority work hours to the contractor s total workforce hours during the performance of the state contract. The minority work hours are provided by trade and designated geographic area, ranging from 8% to 20% minority participation; or Oklahoma Okla. Stat. tit [ repealed in 2003] Okla. Admin. Code 580:15-4-3, 580: : [all revoked in 2001] The Office for Minority and Disadvantaged Business Enterprises 2) Submit their own affirmative action program consisting of utilization work hour goals developed from an analysis of all trades employed by the contractor within the last year, an explanation of problem areas inherent in minority employment, and an evaluation of minority underutilization in all trades. Contractors must provide monthly utilization work hour reports for their total Ohio workforce. Failure to submit a report may result in sanctions. Adjudication hearings may be used to determine sanctions, which could include a recommendation that civil or criminal proceedings be initiated; cancellation, suspension, or termination of the contract; or a determination that the contractor is ineligible for future contracts until an affirmative action program is implemented. Regulations have been revoked after legal challenge. Statutes still in effect concern legislative purpose, definitions, creation of the OMDBE, and certification programs. However, no contracting requirements exist. MBE - 14

15 Oregon Or. Rev. Stat The Office of Minority and Regulations are for certification procedures only; to Emerging Small Businesses no percentage goals exist. Or. Admin. R to Pennsylvania 4 Pa. Code 1.511, Pennsylvania Procurement Handbook Part I, Ch. 3 Rhode Island R.I. Gen. Laws to ERLID No. 716 Regulations Governing Participation by Minority Business Enterprises and State Funded and Directed Public Construction Projects, Construction Contracts and Procurement Department of General Services; Bureau of Minority and Women Business Opportunities Minority Business Enterprises Compliance Office U.S. v. Tulio, No , 2008 U.S. App. LEXIS 2741 (3rd Cir. 2008): Construction Contractor convicted of mail fraud after falsely representing that contractor satisfied Disadvantaged Business Enterprise requirements. U.S. v. Blankenship, 382 F.3d 1110 (11th Cir. 2004): Individuals and trucking company convicted of a variety of federal offenses in connection with an affirmative action fraud scheme involving false statements regarding DBE status. Goal-Based Programs: For contracts over $50k, BMWBO will provide to the agency minimum participation levels for MBEs and WBEs, and will determine the contractor s responsibility in regard to nondiscrimination. The DGS s current anticipated participation level for all Public Works projects is 25% MBE/WBE. Sanctions may be imposed for non-compliance, including publication of contractor s name, recommendation for enforcement by injunction or criminal proceedings, suspension or termination of the contract, and refraining from entering into further state contracts. 10% of the total dollar value of procurements to be made directly or indirectly from MBEs. This can be achieved through one of two methods: 1) Prime Contractor Method: each prime contractor shall ensure that a minimum of 10% of the dollar value of a construction project is performed by MBEs; or 2) Construction Contracts with No Prime Contractor: a department may meet the 10% MBE - 15

16 Rhode Island (cont d) Contracts for Goods and Services requirement by ensuring that 10% of the dollar value of construction contracts in the aggregate for each fiscal year is awarded to MBEs. South Carolina S.C. Code Ann to The Office of Small and Minority Business Assistance In the event of non-compliance, the director may take appropriate enforcement action including suspension of payments, termination of a contract, recovery by the state of 10% of the contract price as liquidated damages and/or denial of the right to participate in future projects for up to three years. Each agency director shall develop a minority business enterprise utilization plan. The plan must include goals that include expending with certified minority business enterprises 10% of each governmental body s total dollar amount expended. Upon petition by the governmental body, SMBAO may authorize an MBE utilization plan establishing a goal of less than 10% of the total dollar amount expended. Firms with state contracts that subcontract with minority firms are eligible for an income tax credit of 4% of the payments to minority subcontractors for work on a state contract, limited to a maximum of $50k annually. A firm is eligible to claim the credit for a period of 10 years. South Dakota None None Provides services primarily in individualize settings. DOT provides financial assistance with loans and bonds. Electronic vendor outreach programs. MBE - 16

17 Tennessee Tenn. Code Voluntary Program: All State agencies required to actively solicit bids and proposals from M/WBEs Texas Tex. Gov t Code Ann Tex. Admin. Code to Historically Underutilized Businesses Program Each state agency shall make a good faith effort to utilize HUBs in accordance with the following percentages: 1) 11.9% for heavy construction other than building contracts; 2) 26.1% for all building construction contracts; 3) 57.2% for all special trade construction contracts. These are overall annual procurement goals for each state agency applicable to the total annual dollar amount of an agency s contracts for each of the specific types of contracts. State contracts over $100k must include an HUB subcontracting plan. The contractor must make good faith efforts in implementing the plan and file a monthly report of progress payments made to HUBs. Any deficiencies in the contractor s performance under the plan will be identified by the agency and must be rectified prior to the next reporting period. If a contractor fails to execute the HUB plan in good faith, the agency may bar the contractor from further contracts with the agency or implement other remedies MBE - 17

18 Utah None None DOT partners with nonprofit economic development organizations. Vermont None None Active partnering activities and vendor outreach. Virginia W/MBE program/ certification Va. St Va. St Va. St Va. St Va. St Va. St Va. St Requires participation of W/MBE businesses Va. St Exemptions Va. St Penalties Va. St Va. St Va. St Va. St Va. St Virginia Admin. Code Title 7, Agency 10, Chapter 20 Certification 7 VAC VAC VAC VAC VAC VAC VAC VAC VAC VAC Penalties 7 VAC None Offers general business development services for M/WBEs. W/MBE organization: Department of Minority Business Enterprise. State certification available through the DMBE. Governor is authorized and encouraged to require state agencies to implement appropriate enhancement or remedial measures consistent with prevailing law. See Va. St Each agency has to submit its own plan. Local Government Va. Code Ann MBE - 18

19 Washington Wa. St , et seq. Wash. Admin. Code, Title 326 Gary Merlino Const. Co. v. City of Seattle, 108 Wash. 2d Compliance Prohibited Activities , 741 P.2d 34 (1987): Public contractor disbarred for one year for underutilizing minority contractors on a city project in violation of WMBE ordinances. Prohibited Activities/ Penalties Certification See also 28B A Penalties Certification Chapter Goals Chapter Voluntary Program: Voters passed Initiative 200 in 1998, prohibiting any local mandatory goals. M/WBE organization: Washington State Office of Minority and Women s Business Enterprises. State certification is available through the Washington State Office of Minority and Women s Business Enterprises. State has overall annual goals for M/WBE participation (adopted each year by June 15). State also requires each agency and educational institution to establish goals for M/WBE participation on individual purchases and contracts. West Virginia None None West Virginia Small Business Development Center maintains a database of minority and women-owned small businesses. To be included in the database, must merely complete one-page form. West Virginia does have a business procurement goal. See W. Va. St MBE - 19

20 Wisconsin Certification/Definition Wis. Stat Wis. Stat Wis. Admin. Code Comm , et seq. (WBE) Public works projects (incl. state fair park) Wis. Stat Wis. Stat Exposition center districts, baseball parks, football stadiums, local cultural arts districts Wis. Stat Wis. Stat Wis. Stat Wis. Stat Wis. Stat Wis. Stat See also Wis. Stat (Wisconsin Housing and Economic Development Authority preference to M/WBE in granting loans) Wis. Admin. Code Comm , et seq. (MBE) Penalties (decertification) Rucker v. Spindler, 169 Wis. 2d 746, 488 N.W. 2d 928 (Wis. Ct. App. 1992): Government official entitled to official immunity, thereby requiring dismissal of owner s claim for improper grant of minority business preference. Five-percent participation and five-percent preference M/WBE organization: Wisconsin Department of Commerce, Bureau of Minority Business Development. M/WBE certification available through Wisconsin Department of Commerce, Bureau of Minority Business Development. WBE certification began in Some mandatory percentages, some goal percentages. Wyoming None None Wyoming Community Development Block Grant Program requires subgrantees to keep a file on its minority business efforts, both in trying to attract minority businesses as bidders and the number of minorities hired on the project. This is an effort to see they have the opportunity to participate. MBE - 20

21 D.C. St Code of D.C. Municipal Regs. M.B.E. Inc. v. Minority D.C. St Business Opportunity Comm. D.C. St of D.C., 485 A. 2d 152 (D.C. D.C. St Ct. App. 1984): Commission D.C. St had authority to retroactively D.C. St revoke MBE status. D.C. St D.C. St District of Columbia Key federal statutes and cases 18 U.S.C.A. 371 (West 2008). 31 U.S.C.A (West 2008) C.F.R AB-Tech Constr, Inc. v. United States, 31 Fed. Cl. 429 (1994). United States v. Carter, 526 F.2d 1276 (5th Cir. 1976). United States v. Shasta Serv. Inc., 440 F. Supp. 2d (E.D. Cal. 2006). Electrical Contractors, Inc. v. Connecticut, Dept. of Transp., No. 3:00CV2422, 2001 WL (D. Conn. Nov. 7, 2001). United States v. Blankenship, 382 F.3d 1110 (11th Cir. 2004). M/WBE organization: D.C. Local Business Opportunity Commission (LBOC). Certification available through the D.C. Local Business Opportunity Commission (LBOC). MBEs receive a 2 percent cost-reduction on bids. Corporation counsel may bring a civil action in the Superior Court of the District of Columbia against a business enterprise and the directors, officers, or principals that is reasonably believed to have obtained certification by fraud or deceit or to have furnished substantially inaccurate or incomplete ownership information to the Commission. If found guilty under this subsection, a civil penalty of up to $100,000 can be imposed in accordance with D.C. Law MBE - 21

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23 Alabama None None M/WBE organization: Alabama Department of Economic and Community Affairs, Office of Minority Business Enterprise. Certification available through the OMBE Alaska Alaska Stat C.F.R (2008) No M/WBE goals A federal statute provides a program related to contracts under natural gas transport system Opinions of Attorney General Primes to make good faith effort in awarding Ks to MBE Subs. Arizona Ariz. Admin. Code R2-7- D303 Ariz. Admin. Code R Voluntary Program: Governor s Equity in State Contracting Initiative: (1) Contracts under $50K must have at least one M/WBE bidder. (2) an implementation, tracking, and compliance system. (3) Online business directory with self-reported M/WBE status. (4) Executive Oversight committee to track participation. Arkansas Ark. Code Ann Ark. Code Ann Ark. Code Ann Ark. Code Ann Ark. Code R Ark. Reg. 50 (Sept. 2007) 88 Ark. Reg. 52 (Sept. 2007) 88 Ark. Reg. 67 (Sept. 2007) MBE The state agency is required to verify minority business ownership and control. MBE - 3

24 California Cal. Pub. Util. Code 8281 Cal. Pub. Util. Code 8283 Cal. Pub. Util. Code 8285 Cal. Code. Regs. Tit. 14, 4730 Cal. Pub. Cont. Code Cal. Sys. & Hwy Code 94.4 Moore v. Navarro, No. C , 2004 WL (N. D. Cal. March 31, 2004). Allied Temporaries, Inc. v. AT&T Comm. Of Cal., Inc., 42 Cal. Pub. Util. Comm. 2d 403 (Dec. 18, 1991). Ballot initiative eliminated M/WBE goal. Women and Minority Business Enterprises False representation penalty falls under the public utility code. M/WBE violations are reviewed by the Public Utilities Commission. Colorado Co. St Co.St Co. St Co. St Co. St CCR (procurement rules) R b-04 R Mandatory M/WBE goal in city/county of Denver Colorado Minority Business Office. There is no single all encompassing certification program for women and minority owned business. Connecticut Conn. Gen. Stat. 46a-56 Conn. Gen. Stat. Ann. 4a-60g Conn. Agencies Regs a Electrical Contractors, Inc. v. Connecticut Dept. of Transp., 139 F. Supp. 2d 265 (D. Conn. 2001). Governor Roy Romer issued Executive Order D entitled Concerning Minority Business Opportunities, and Executive Order D00594 entitled Establishing Women s Business Office, both which establish procedures and goals for the participation of minorities and women in state procurement. Goal-Based Program Set aside of 25 percent of contract dollars for instate small businesses and a goal of 6.25 percent for M/WBEs Fraud addressed in state statute 6 Op. Att y Gen. 008 (2008) addresses program MBE - 4

25 Delaware 49 C.F.R Del. Code Regs Del. Gov t Reg. 63 (Weil Apr. 2004). Voluntary Program: Supplier diversity program to increase participation of M/WBEs Any RFP over $10K must be transmitted to M/WBE development associations. Office of Minority and Women Business Florida (1), Fla. Stat (2), Fla. Stat (3), Fla. Stat , Fla. State. Fla. Admin. Code R. 6C Fla. Admin. Code R. 6C Fla. Admin. Code R. 6C Fla. Admin. Code R. 6C U.S. v. Blankenship, 382 F.3d 1110 (11th Cir. 2004). Barton Protective Serv., LLC, v. Dept. of Transp., 6 F.A.L.R (Div. Admin. Hearings 2006). Personal Enrichment Through Mental Health Serv., Inc. v. Dept. of Juvenile Justice, 1 F.A.L.R (Div. Admin. Hearings 2001). Enterprise Voluntary Program: Prime contractors are graded by use of M/WBEs. Outreach programs include workshops, trade shows, conferences, and match-maker events. Local govts are still allowed affirmative action in public contracting. Fed. case addressed issue of MBE program fraud violations of state statute and secondary federal violations. Georgia Ga. Code Ann Ga. Code Ann Ga. Code Ann Ga. Code Ann Ga. Code Ann Ga. Comp. R. & Regs Minority Business Enterprise Ga. Code Ann deals with fraud in certification process; penalty; effect of multiple violations. MBE - 5

26 Hawaii None None No statewide M/WBE organization. Hawaii does have the Hawaii Strategic Development Corporation, established by statute (Haw. St. 211F-1, et. seq.) The HSDC s purpose is to encourage economic development and diversification in Hawaii through innovative actions in cooperation with private enterprises. The HSDC is required to establish rules to assure equal opportunity to minority-owned businesses, and shall encourage the development of minority-owned businesses. Idaho 49 C.F.R. 26 Illinois 30 ILCS 575/1, et seq. 30 ILCS 575/4 goals 30 ILCS 575/8 enforcement See also 50 ILCS 20/ ILCS 65/27 70 ILCS 210/ ILCS 3205/9 18 U.S.C.A Ill. Admin. Code 10.05, et seq. Goals Certification Phillips v. Consol. Supply Co., 895 P.2d 574 (Idaho 1995): Deals with verification of DME status. Keefe-Shea Joint Venture v. City of Evanston, 332 Ill. App. 3d 163, 773 N.E.2d 1155 (Ill. Ct. App. 2002): Losing bidder entitled to injunction where winning bidder did not meet MBE requirements. People ex rel. Hartigan v. E&E Hauling, 153 Ill. 2d 473, 607 N.E.2d 165 (1992): Attorney General has standing to bring common law tort claim and claim under Consumer Fraud Act for State follows the federal rules. If a contractor violates program rules, the state uses the Fraud and Civil Remedies rules and criminal prosecution permitted under 18 U.S.C.A Contractors are made aware of the penalties on the face of the application. IDOT created 22.8% DBE goal in projects that receive federal highway funding. M/WBE organization: Business Enterprise Program. Certification is available through the Business Enterprise Program. Percentage goals contained in statutes. MBE - 6

27 Illinois (cont d) Violations See also 35 Ill. Admin. Code contractor s fraudulent representations regarding use of M/WBE subcontractors. Albin Carlson & Co. v. State, 48 Ill. Ct. Cl. 245 (Ct. Cl. Ill. 1996): State s failure to deny contractor s request for waiver of M/WBE requirements after some of the work contractor had subcontracted out to M/WBE entities was eliminated within 20 day limitation entitled contractor to damages. Am. Health Care Providers, Inc. v. County of Cook, 265 Ill. App. 3d 919, 638 N.E.2d 772 (Ill. Ct. App. 1994): M/WBE ordinances do not confer substantive rights on M/WBE entities, as percentage goals are only goals, not requirements. Indiana Ind. Code Ann Ind. Admin. Code Goals range between 5-8 percent for MBEs and 3-11 percent for WBEs Each state agency required to have a supplier diversity plan and coordinator. Disadvantaged, Minority, and Women-Owned Business Enterprise Ind. Code Ann deals with false representation penalties; Class D Felony. MBE - 7

28 Iowa Ia. St Ia. St (goals) Ia. St (goals) Certification Ia. Admin. Code (73), et seq. Ia. St (definition of TSB) Ia. St. 10A.104 (Dept. of Insp. & App.) See also Ia. St Ia. St. 19B.7 Violations (714) See also , et seq. (TSB procurement program) , et seq. (TSB financial assistance) , et seq. (Bd. of Regents) , et seq. (contract compliance, incl. sanctions) (TSB interim guidelines) 10 percent goal for targeted small businesses. M/WBE organization: Iowa Department of Administrative Services, Targeted Small Business Program. Certification available through Iowa Department of Inspections and Appeals. Kansas K.S.A a K.S.A a K.S.A a K.S.A K.S.A See also K.S.A K.S.A K.S.A See also Kan. Admin. Reg M/WBE organization: Kansas Office of Minority and Women Business Development Certification available through Kansas Office of Minority and Women Business Development. State inclusive business program takes role in coordinating with local govts MBE - 8

29 Kentucky Ky Pub. Util. Code 8285 Public Law : Small Business Act penalties for misrepresentations. 10 percent M/WBE goal. Louisiana La. Rev. Stat. 38: Maine Me. Rev. Stat. tit. 5, 791 Maryland Md. Code Ann. State Fin. & Proc (West 2008). 40 CFR C.F.R (a) 49 C.F.R Me. Code R. 1 (Weil 2008) Me. Code R. 1 (Weil 2008). Md. Code Regs Md. Code Regs Public Utility Code includes the penalties for false representation of business Now called the Small Business Procurement Act; former M/WBE program was repealed in MBE/WBE a/k/a DBE Fraud, misrepresentation, or false statement are prosecuted under the federal statute. Executive Order 11625, as amended by Executive Order (Minority Business Enterprises) 25 percent M/WBE goal, including subset requirement of 7 percent for African-American businesses and 10 percent for WBEs. Massachusetts Mass. Gen. Laws Ann. ch. 23A, 40 (West 2008). Mass. Gen. Laws Ann. ch. 23A, 44 (West 2008). Mass. Gen. Laws Ann. ch. 149A, 8 (West 2008). 810 Mass. Code Regs Mass. Code Regs Minority Business Enterprise Fraud and misrepresentation addressed under all 3 state codes. Improves monitoring of M/WBE participation and requires local governments that receive state funds to have M/WBE goals. State inclusive business program takes role in coordinating with local govts Sec. 44; fraud MBE - 9

30 Michigan Mich. Comp. Laws Ann (c) (West 2008). Mich. Comp. Laws Ann (West 2008). Mich. Comp. Laws Ann b (West 2008). Mich. Comp. Laws Ann (4)(f)(i)-(ii) (West 2008). U.S. v. Hunter, 843 F. Supp. 235 (E. D. Mich. 1994). RLVIC, Inc. v. DAWDA, No , 2006 Lexis 605 (Mich. App. March 7, 2006). State has an anti-affirmative action rule. State uses electronic means to conduct vendor outreach and has procurement agents participate in events held by M/WBEs. Minnesota Minn. Stat. Ann. 116M.14, through 116M.18 (2008) Minn. R (2007). Hybrid-Program: Targeted-group (TG) and economically disadvantaged (ED) goals-based program. TGs receive a 6 percent price-preference on construction bids. EDs receive 4 percent on constructions bids and 6 percent on other goods and services. Mississippi Miss. Code Ann (West 2008) Miss. Code R. I through IV (Weil 2008). 79 Miss. Gov t Reg. 83 (Weil February 2004). 102 Miss. Gov t Reg. 53 (Weil January 2006). 103 Miss. Gov t Reg. 72 (Weil February 2006). 114 Miss. Gov t Reg. 83 (Weil January 2007). Minority Business Enterprise False statements, fraud, and misrepresentations are prosecuted under the False Claims Act. The False Claims Acts is referred in the Miss. Gov t Reg. MBE - 10

31 Missouri Mo. St Mo. St Mo. St Mo. St Mo. St Mo. St Mo. ADC Mo. ADC Mo. ADC Voluntary Program: Proactive vendor outreach program with supplier diversity program M/WBE organization: State Office of Administration, Office of Supplier and Workforce Diversity. See also Mo. St Certification available through OSWD. Montana None None In the planning stages of developing program to provide low interest rate loans to M/WBEs. Offers general business development services to M/WBEs, including Native-American owned businesses. Nebraska None None Offers general business development services for M/WBEs Nevada None None Suspended DBE program goal after legal challenge. New Hampshire None None Ended race-gender conscious programs for its DOT DBE programs. New Jersey N.J. Stat. Ann. 34:1B- 24 Division of Minority and Women s Business Development State agencies shall expend from total annual contract amounts not less than 10% with MBEs and not less than 4% with WBEs. 25 percent small business procurement goal. New Mexico None None N/A MBE - 11

32 New York N.Y. Exec. Law (Article 15-A of the Executive Law) Division of Minority and Women s Business Development N.Y. Comp. Codes R. & Regs. tit. 5, to North Carolina N.C. Gen. Stat , , N.C. Admin. Code 30I.0301 The Office for Historically Underutilized Businesses New York v. Mikuscewski, 538 N.E.2d 1107 (N.Y. 1989): Criminal charges brought against contracting company and its Vice-President for allegedly fraudulent efforts to feign compliance with minority business participation requirements, including providing false statements and filings. U.S. v. Villazan, No. 05 CR 792-1, 2008 US. Dist. LEXIS (N.D. Ill. 2008) U.S. Palumbro Bros., 797 F. Supp. 624 (N.D. Ill. 1992: 28 construction company and individual defendants sued under the False Claims Act for alleged false statements and claims made by minority and women business enterprises. State agencies shall establish employment and business participation goals for minorities and women. The director to promulgate rules and regulations to ensure that minority and women-owned firms are rewarded a fair share of state contracts. State agencies shall establish separate M/WBE goals on all state contracts. Contractors must submit utilization plans for achieving these goals and compliance reports at intervals established in the contract. Good faith efforts required toward compliance. Contractors whose bids have been disqualified for failure to submit a utilization plan and contractors failing to document good faith efforts in meeting goal requirements shall be entitled to an administrative hearing. The Agency or the contractor may file a complaint with the director regarding disputes over goals. If the director is unable to resolve the complaint, it shall be referred to State construction projects of $500k+ have a 10% MBE goal. Local government entities that receive state funds for building projects of $100k+ have a 10% goal. The Secretary shall annually review the preceding year s minority business participation and adjust percentage goals as appropriate. MBE - 12

33 North Carolina (cont d) Bidders must either comply with the requirements or undertake good faith efforts under a point value system in recruiting minority business participation. The contractor is required to make good faith efforts to comply with the requirements. State inclusive business program takes role in coordinating with local govts Failure to comply with the minority business guidelines shall constitute a breach of the contract, which may result in termination of the contract at the option of the state North Dakota None None Offers general business development services to M/WBEs, including Native-American owned businesses. Ohio Ohio Rev. Code Ann Ohio Admin. Code 123:2-3 The Minority Business Enterprise Division: EDGE Program (Encouraging Diversity, Growth, and Equity) Goals shall be based on a percentage level of participation and a percentage of contractor availability and applied at the contract level relative to overall dollar goal for each state agency. Contractors to public works contracts with 50 or more employees and a contract of $50k or more are required to exert every good faith effort to accomplish the goals of the affirmative action program. Contractors may obtain an acceptable affirmative action program by either of the following methods: MBE - 13

34 Ohio (cont d) 1) Adopt state percentage goals for minority utilization work hours. Goals are listed as the proportion of the minority work hours to the contractor s total workforce hours during the performance of the state contract. The minority work hours are provided by trade and designated geographic area, ranging from 8% to 20% minority participation; or Oklahoma Okla. Stat. tit [ repealed in 2003] Okla. Admin. Code 580:15-4-3, 580: : [all revoked in 2001] The Office for Minority and Disadvantaged Business Enterprises 2) Submit their own affirmative action program consisting of utilization work hour goals developed from an analysis of all trades employed by the contractor within the last year, an explanation of problem areas inherent in minority employment, and an evaluation of minority underutilization in all trades. Contractors must provide monthly utilization work hour reports for their total Ohio workforce. Failure to submit a report may result in sanctions. Adjudication hearings may be used to determine sanctions, which could include a recommendation that civil or criminal proceedings be initiated; cancellation, suspension, or termination of the contract; or a determination that the contractor is ineligible for future contracts until an affirmative action program is implemented. Regulations have been revoked after legal challenge. Statutes still in effect concern legislative purpose, definitions, creation of the OMDBE, and certification programs. However, no contracting requirements exist. MBE - 14

35 Oregon Or. Rev. Stat The Office of Minority and Regulations are for certification procedures only; to Emerging Small Businesses no percentage goals exist. Or. Admin. R to Pennsylvania 4 Pa. Code 1.511, Pennsylvania Procurement Handbook Part I, Ch. 3 Rhode Island R.I. Gen. Laws to ERLID No. 716 Regulations Governing Participation by Minority Business Enterprises and State Funded and Directed Public Construction Projects, Construction Contracts and Procurement Department of General Services; Bureau of Minority and Women Business Opportunities Minority Business Enterprises Compliance Office U.S. v. Tulio, No , 2008 U.S. App. LEXIS 2741 (3rd Cir. 2008): Construction Contractor convicted of mail fraud after falsely representing that contractor satisfied Disadvantaged Business Enterprise requirements. U.S. v. Blankenship, 382 F.3d 1110 (11th Cir. 2004): Individuals and trucking company convicted of a variety of federal offenses in connection with an affirmative action fraud scheme involving false statements regarding DBE status. Goal-Based Programs: For contracts over $50k, BMWBO will provide to the agency minimum participation levels for MBEs and WBEs, and will determine the contractor s responsibility in regard to nondiscrimination. The DGS s current anticipated participation level for all Public Works projects is 25% MBE/WBE. Sanctions may be imposed for non-compliance, including publication of contractor s name, recommendation for enforcement by injunction or criminal proceedings, suspension or termination of the contract, and refraining from entering into further state contracts. 10% of the total dollar value of procurements to be made directly or indirectly from MBEs. This can be achieved through one of two methods: 1) Prime Contractor Method: each prime contractor shall ensure that a minimum of 10% of the dollar value of a construction project is performed by MBEs; or 2) Construction Contracts with No Prime Contractor: a department may meet the 10% MBE - 15

36 Rhode Island (cont d) Contracts for Goods and Services requirement by ensuring that 10% of the dollar value of construction contracts in the aggregate for each fiscal year is awarded to MBEs. South Carolina S.C. Code Ann to The Office of Small and Minority Business Assistance In the event of non-compliance, the director may take appropriate enforcement action including suspension of payments, termination of a contract, recovery by the state of 10% of the contract price as liquidated damages and/or denial of the right to participate in future projects for up to three years. Each agency director shall develop a minority business enterprise utilization plan. The plan must include goals that include expending with certified minority business enterprises 10% of each governmental body s total dollar amount expended. Upon petition by the governmental body, SMBAO may authorize an MBE utilization plan establishing a goal of less than 10% of the total dollar amount expended. Firms with state contracts that subcontract with minority firms are eligible for an income tax credit of 4% of the payments to minority subcontractors for work on a state contract, limited to a maximum of $50k annually. A firm is eligible to claim the credit for a period of 10 years. South Dakota None None Provides services primarily in individualize settings. DOT provides financial assistance with loans and bonds. Electronic vendor outreach programs. MBE - 16