Relates to the state procurement council and special provisions regarding joint ventures

Summary of provisions

Section 1. Amends State Finance Law, paragraph n of subdivision 2 of section 161, to add making recommendations for teaming and joint ventures to the responsibilities of the state procurement council.

Section 2. Amends section 165 of the State Finance Law by adding a new subdivision 9:

A. Definitions:

o Disabled Veteran Business Enterprise is a business enterprise in which a disabled veteran has a 51% or greater ownership with independent control, which has been certified as a disadvantaged business enterprise (DBE) by the federal DOT or other federal agency, or by a national certification organization satisfactory to the commissioner. "Disabled Veteran" has the same meaning as in civil service law.

* New York Business Enterprise is a business formed and located in New York, which has more than 50% of its employees in this state and realizes more than 50% of its gross revenues from this state.

* Diversity Business Enterprise means an MWBE or Disabled Veteran Business Enterprise.

* Joint venture is a business entity that includes one or more Diversity Business Enterprises and one or more New York Business Enterprises for a specific project in which the parties contribute equity, assets, and expertise.

* Teaming is a cooperative written agreement between one or more Diversity Business Enterprises and one or more New York Business Enterprises that defines the common purpose, performance goals, approach, financing, liability, and accountability for a project, satisfactory to the commissioner.

B. Requires the OGS commissioner to establish a pilot program, subject to the following:

* Work and Ownership: The Diversity Business Enterprise shall perform a share of the work equal to its ownership or potential profit from the venture. The agreement brings resources, financing, and expertise that would not otherwise be available to the Diversity Business Enterprise, and

* Price: The contract price equals or is less than would otherwise be charged by an entity which is not a JV or which is not involved in such teaming agreement, and

* Engagement: The JV or teaming arrangement demonstrates significant engagement by the Diversity Business Enterprise.

C. in addition

* Article 15-A contracts: If an MWBE has an ownership of 50% or greater, then the JV is eligible for opportunities for participation on contracts for minority and women owned business enterprises pursuant to Article 15-A of the Executive Law.

* Localizing Factors: OGS may additionally set other factors in contracts under the pilot, such as distance from the job or project, green technology, financial or expert resources of the contractor or joint venture or teaming arrangement, the freshness or newness of the product, the impact of extended transportation, etc.

* Weighting: OGS must weight any consideration in awarding a contract by the percentage of the JV or teaming arrangement allocated to the Diversity Business Enterprise.

D. Report: The commissioner shall report annually on January 1 of each year, beginning in the second calendar year after enactment of this program, on contracts let to joint ventures, and the development of Diversity Business Enterprises as a result of such joint ventures.

Existing law

New bill.

Justification

The major barrier in development of new Minority or Women Business Enterprises, and businesses of disabled veterans, is access to capital, expertise, and resources. Absent these, the business entities cannot obtain larger contracts. The problem is classic: the MWBE or disabled veteran enterprise cannot grow because it is too small to get access to the capital and resources it needs to meet performance bonds, cash flow and other requirements; but it cannot grow without access to these things.

Teaming and joint ventures provide a way for these business entities to gain access to the cash, resources, expertise and other attributes needed for growth by providing mutually beneficial access to the expertise and resources or a larger company. Procurement makes up as much as a quarter or a third of New York's annual budget - tens of billions of dollars each year for everything from construction to food to toilet paper to everything else. These contracts and purchases could be used to spur rapid growth for these entities. The state does not now provide opportunities for JVs or teaming. This measure opens the door to opportunity by allowing for teaming and JVs in a controlled pilot program. Inherent in the program are means to assure that the MWBEs and the disabled veteran enterprises are full partners in any business venture.

Fiscal implications

None to the state.

Effective date

immediately, with a sunset at midnight on December 31 of the fifth full year following enactment.