Equal Opportunity for Local, Small, and Disadvantaged Business Enterprises Amendment Act of 1998
Bill 12-616

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Chairman Linda W. Cropp, at the request of the Mayor

A BILL IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

Chairman Linda W. Cropp, at the request of the Mayor, introduced the following bill, which was referred to the Committee on _____.

To amend the Equal Opportunity for Local, Small, and Disadvantaged Business Enterprise Act of 1992 to establish new size standards for small business enterprise categories, require an assessment every three years of the continued need for the local, small, and disadvantaged programs, establish a two-tier set-aside program for small business enterprises, establish affiliated interest standards for small and disadvantaged business enterprises, and to amend the Minority Contracting Act of 1976 to authorize board members participation at Local Business Opportunity Commission meetings by conference telephone solely for the certification of joint ventures.

BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA,

That this act may be cited as the "Equal Opportunity for Local, Small, and Disadvantaged Business Enterprises Amendment Act of 1998".

Sec. 2. Section 5 of the Minority Contracting Act of 1976, effective March 29, 1977 (D.C. Law 1-95; D.C. Code sec. 1-1144), is amended as follows:

(a) The last sentence in subsection (c) is amended by striking the phrase "those present" and inserting the phrase "the members participating at the meeting" in its place.

(b) Add a new subsection (c-l) to read as follows:

"(c-l) The Commission may permit members to participate in meetings for the certification of joint ventures by means of a conference telephone or other similar communications equipment when it is otherwise difficult or impossible for the members to attend the meeting in person, provided that each member participating by conference telephone can be identified when speaking, all participants are able to hear each other at the same time, and members of the public attending the meeting are able to hear any member of the Commission who speaks during the meeting.".

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Sec. 3. The Equal Opportunity for Local, Small, and Disadvantaged Business Enterprises Act of 1992, effective March 17, 1993 (D.C. Law 9-217; D.C. Code §1-1152 et seq.) is amended as follows:

(a) Section 3 (D.C. Code §1-1152.1) is amended as follows:

(1) Paragraph (2) is amended to read as follows:

"(2) "Small business enterprise" means a local business enterprise, or a business enterprise that has satisfied the requirement, established in subsection 7(13), which is independently owned, operated, and controlled and which has had average annualized gross receipt, or average numbers of employees (for 3 years preceding certification) not exceeding the following limits:

Construction:
	Heavy (Street and Highways, Bridges, etc.)	$23 million
	Building (General Construction, etc.)	$21 million
	Specialty Trades	$13 million
Goods and Equipment		$8 million
General Services		$19 million
Professional Services:
	Personal (Hotels, Beauty, Laundry, etc.)	$5 million
	Business Services	$10 million
	Health and Legal Services	$10 million
	Health Facilities Management	$19 million
Manufacturing Services		$10 million
Transportation and Hauling Services		$13 million
Financial Institutions		$300 million in assets".

(2) Paragraph (3) is amended to insert after the phrase "local business enterprise" the phrase ", or a business enterprise that has satisfied the requirements established in subsection 7(13),".

(b) Subsection 4(b) (D.C. Code §1-1152.2(b)) is amended by adding a new sentence to the end to read as follows: "Every 3 years following the effective date of the Equal Opportunity for Local, Small, and Disadvantaged Business Enterprises Amendment Act of 1996, the Council shall also review the goals, intent, and purpose of this act to assess the continued need for the local, small, and disadvantaged business enterprise programs.".

(c) Subsection 5(b) (D.C. Code §1-1152.3(b)) is amended by deleting the phrase "a set-aside program for small business enterprises at the contract level" and inserting in its place the phrase "a two tier small business set-aside program at the contract level, which shall include a separate set-aside program for small business enterprises with gross revenues of $1,000,000 or less, which shall provide that a business becomes ineligible for participation in this set-aside program when the business has gross revenue in excess of $1,000,000 for 2 consecutive years, and a separate set-aside program for all small business enterprises," .

(d) Section 7 (D.C. Code §1-1152.5) is amended by adding new paragraphs "(14)", "(15)", and "(16)" to read as follows:

"(14) Determine according to rule" adopted by the Mayor that a small business enterprise affiliated with other business enterprises through common ownership, management, or control is a small enterprise if:

"(A) The consolidated financial statements of the affiliated companies do not exceed the limits established in subsection 3(2); and

"(B) In the event of a parent/subsidiary affiliation, the parent company qualifier for certification as a small business.

"(15) Determine according to rule" adopted by the Mayor that a disadvantaged business enterprise affiliated with other companies through common ownership, management, or control is a disadvantaged business enterprise provided that, in the event of a parent/subsidiary affiliation, both companies meet the requirements of subsection 3(3).

"(16) Whenever a small business enterprise is affiliated with a business that is in a different line of business, paragraph (14) of this subsection shall not be applicable, and such affiliate shall be eligible for certification as a small business enterprise if it meets the requirements of subsection 3(2).".

Sec. 4. Subsection 9(b) (D.C. Code §1-1152 note) is repealed.

Sec. 5. This act shall take effect following approval by the Mayor (or in the event of veto by the Mayor, action by the Council of the District of Columbia to override the veto), approval by the Financial Responsibility and Management Assistance Authority as provided in section 203(a) of the District of Columbia Financial Responsibility and Management Assistance Authority Act of 1995, approved April 17, 1995 (109 Stat. 116; D.C. Code S 47-392.3(c)), and a 30-day period of Congressional review as provided in section 602(c)(1) of the District of Columbia Self-Government and Government Reorganization Act, approved December 24, 1973 (87 Stat. 813; D.C. Code §233(c)(1), and publication in either the District of Columbia Register, the District of Columbia Statutes-at-Large, or the District of Columbia Municipal Regulations.

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Section by Section Analysis

Section 2 of the Bill would amend section 5 of the Minority Contracting Act to allow the members of the Minority Business Opportunity Commission to vote by telephone conference call on joint venture certifications. This amendment is necessary because joint ventures are contract specific and must be acted upon within a short period of time. If the Commission is unable to consider an application in a timely manner, the applicant is unable to participate in the bidding.

Subsection 3(a) of the Bill would amend the definitions of "small business enterprise. and disadvantaged business enterprise" to be consistent with section 7(13) of the LSDBE Act which authorize. the Commission to determine that a business enterprise is small or disadvantaged if it can demonstrate a significant presence or close economic ties to the District. Additionally, subsection 3(a) would increase the size standards for certification of a small business enterprise in the various procurement categories. The new size standards in the Bill are based on a derivation of the Small Business Administration size standards.

Subsection 3(b) of the Bill would require the Council to review the LSDBE programs every 3 years to asses. whether there is still a need for the programs.

Subsection 3(c) of the Bill would require the establishment of a two-tier small business enterprise set-aside program. One set-aide program would apply to businesses with gross revenues of $1,000,000 or less. Any business that has gross revenues exceeding $1,000,000 for two consecutive years would be ineligible to continue participating in this tier of the set-aside program, but may participate in the larger small business set-aside program as long a. the business meets the size standard for the procurement categories established in the Bill. As has been mentioned during a previous public hearing before the Council, the two tier set-aside program is intended to assure that sufficient contracting opportunities are available to smaller businesses that are sometimes unable to successfully compete against larger small businesses.

Subsection 3(d) of the Bill would establish guidelines for determining when affiliated companies qualify for certification as a small or disadvantaged business enterprise. The Bill generally would require the aggregation of the revenues of affiliated companies for the purpose of determining eligibility for certification as a small business enterprise. However, the Bill would allow affiliates in unrelated lines of business, though under common ownership, management, and control to be certified as small business enterprises without aggregating the assets of the affiliates.

Section 4 of the Bill would repeal the sunset provision of the LSDBE Act.

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OFFICE OF THE CHIEF FINANCIAL OFFICER
OFFICE OF BUDGET AND PLANNING

1. SPONSOR: Transmitted by Chairman Linda W. Cropp at the request of the Mayor

2. PROPOSED BILL NO.

3. TITLE: Equal Opportunity for Local, Small, and Disadvantaged Business Enterprises Amendment Act of 1998

4. OVERVIEW:

This legislation provides guideline for District Government agencies in awarding or doing business with small business enterprises, local or disadvantaged business enterprises. It establishes a three year assessment by the Council, based on information received from the District of Columbia Local Business Opportunity Commission (the "Commission), on the need for local, small and disadvantaged business enterprise programs. It establishes regulations, bid preference mechanisms, set aside programs and contract participation guideline for local disadvantaged and small business contractors. It establishes criteria for certification of a business. Finally, it establishes procedures and guidelines for actions of the Commission and allows telephone participation in meetings by members of the Commission.

5. FISCAL IMPACT:

Implementation of this legislation is not expected to have an impact on the Financial Plan and Budget. There is, however, the potential for an upward movement of costs because of a possible increase in the number of expenditures awarded to disadvantaged businesses. This may come about because the legislation provides an increase in the average annualized gross receipts a business can have and still meet the threshold to become certified. This will result in more businesses becoming certified, and therefore, becoming eligible for "sheltered market" bid awards.