What's happening
This bill reauthorizes and expands New York’s Minority and Women-Owned Business Enterprise (MWBE) program, raising personal net worth limits, updating participation goals, and creating a new workforce diversity program for state contracts.
Why it matters
Dramatically raising the personal net worth cap for MWBE certification. (from $3.5 million to $15 million, with potential for higher industry-specific thresholds) allows larger and more financially established minority- and women-owned businesses to participate in the program, potentially expanding the pool of eligible firms and increasing competition for state contracts.
Mandating more rigorous and transparent agency accountability. including annual disparity studies, public reporting of waiver decisions and participation rates, and remedial action plans for agencies failing to meet goals—will likely make it easier for the public and policymakers to scrutinize how well state entities are promoting MWBE participation and may make it harder for agencies to evade compliance.
Introducing a new workforce diversity program for state contracts. creates not just supplier diversity but also requirements and aspirational goals for the inclusion of minority group members and women in the actual workforce on state construction projects (across specific trades and occupations), potentially increasing access to good jobs for underrepresented populations, not just access to contracts for business owners.
Simplifying and streamlining certification and procurement processes. (e.g., allowing acceptance of federal/municipal certifications, waiving plan fees for MWBEs, raising discretionary spending thresholds for MWBE contracting, and expanding reporting access to tax/labor data for verification) could lower barriers to entry and speed up the process for businesses seeking MWBE status, while also aiming to reduce fraud and misrepresentation through enhanced verification and enforcement mechanisms.
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Who cares
Headline styles
Expand MWBE Protections, Punish Fraud
Plain English, a few words. Used as the page title.
Sponsors
History
- Substituted by A8414
- Ordered to third reading cal.1661
- Referred to rules
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Expand MWBE Rules and Penalties
Signed by Governor · Sponsor Rodneyse Bichotte Hermelyn
Full text
25 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6575
2019-2020 Regular Sessions
IN SENATE
June 16, 2019
Introduced by Sen. SANDERS -- (at request of the Governor) -- read twice and ordered printed, and when printed to be committed to the Committee on Rules
AN ACT to amend the executive law, the public buildings law, the state finance law and the public authorities law in relation to the reauthorization of the minority and women-owned business enterprise program and to amend chapter 261 of the laws of 1988, amending the state finance law and other laws relating to the New York state infrastructure trust fund, in relation to the effectiveness thereof; and providing for the repeal of certain provisions upon expiration thereof (Part __);
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
PART __
Section 1. Paragraph (e) of subdivision 7, paragraph (b) of subdivision 8, subdivision 13, paragraph (e) of subdivision 15, subdivisions 16, 19, 21 and 22 of section 310 of the executive law, paragraph (b) of subdivision 8 as added by chapter 261 of the laws of 1988, paragraph (e) of subdivision 7 and paragraph (e) of subdivision 15 as amended by chapter 22 of the laws of 2014, subdivision 13 as amended by chapter 506 of the laws of 2009, subdivision 16 as added by section 3 of part BB of chapter 59 of the laws of 2006, and subdivisions 19, 21 and 22 as added by chapter 175 of the laws of 2010, are amended to read as follows:
(e) an enterprise owned by an individual or individuals, whose ownership, control and operation are relied upon for certification, with a personal net worth that does not exceed [three] fifteen million [five hundred thousand] dollars, and such other amount as the director shall set forth in regulations, as adjusted annually on the first of January
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD12034-01-9
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for inflation according to the consumer price index of the previous year; and
(b) [Hispanic] Hispanic/Latino persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American of either Indian or Hispanic origin, regardless of race;
13. "State contract" shall mean: (a) a written agreement or purchase order instrument, providing for a total expenditure in excess of twenty-five thousand dollars, whereby a contracting agency is committed to expend or does expend funds in return for labor, services including but not limited to legal, financial and other professional services, supplies, equipment, materials or any combination of the foregoing, to be performed for, on behalf of, or rendered or furnished to the contracting agency; (b) a written agreement in excess of one hundred thousand dollars whereby a contracting agency is committed to expend or does expend funds for the acquisition, construction, demolition, replacement, major repair or renovation of real property and improvements thereon; and (c) a written agreement in excess of one hundred thousand dollars whereby the owner of a state assisted housing project is committed to expend or does expend funds for the acquisition, construction, demolition, replacement, major repair or renovation of real property and improvements thereon for such project.
(e) an enterprise owned by an individual or individuals, whose ownership, control and operation are relied upon for certification, with a personal net worth that does not exceed [three] fifteen million [five hundred thousand] dollars, and such other amount as the director shall set forth in regulations, as adjusted annually on the first of January for inflation according to the consumer price index of the previous year; and
16. "Statewide advocate" shall mean the person appointed by the [commissioner] director to serve in the capacity of the minority and women-owned business enterprise statewide advocate and procurement ombudsman.
19. "Personal net worth" shall mean the aggregate adjusted net value of the assets of an individual remaining after total liabilities are deducted. Personal net worth includes the individual's share of assets held jointly with said individual's spouse and does not include the individual's ownership interest in the certified minority and womenowned business enterprise, the individual's equity in his or her primary residence, ownership interest in a holding company established for the exclusive and sole purpose of leasing machinery, equipment, or vehicles exclusively to the certified minority or women-owned business enterprise that is majority owned by the minority group member or woman relied upon for certification, and the holding company does not own any other assets of any kind, or up to [five] seven hundred fifty thousand dollars of the present cash value of any qualified retirement savings plan or individual retirement account held by the individual less any penalties for early withdrawal.
21. "The [2010] disparity study" shall refer to the disparity study commissioned by the [empire state development corporation] department of economic development, pursuant to section three hundred twelve-a of this article, and published on [April twenty-nine] June thirtieth, two thousand [ten] seventeen.
22. "Diversity practices" shall mean the contractor's practices and policies with respect to:
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(a) utilizing or mentoring certified minority and women-owned business enterprises in contracts awarded by a state agency or other public corporation, as subcontractors and suppliers; and
(b) entering into partnerships, joint ventures or other similar arrangements with certified minority and women-owned business enterprises as defined in this article or other applicable statute or regulation governing an entity's utilization of minority or women-owned business enterprises.
§ 2. Paragraphs (f) and (i) of subdivision 3 and the opening paragraph of subdivision 4 of section 311 of the executive law, paragraph (f) of subdivision 3 as added by chapter 261 of the laws of 1988, paragraph (i) of subdivision 3 as added by section 1 of part BB of chapter 59 of the laws of 2006 and the opening paragraph of subdivision 4 as amended by chapter 361 of the laws of 2009, are amended and a new paragraph (d-1) is added to subdivision 3 and two new paragraphs (d) and (e) are added to subdivision 4 to read as follows:
(d-1) to require all contracting state agencies to develop a four-year growth plan to determine a means of promoting and increasing participation by minority-owned and women-owned business enterprises with respect to state contracts and subcontracts. Every four years, beginning September fifteenth, two thousand twenty, each contracting state agency shall submit a four-year growth plan as part of its annual report to the governor and legislature pursuant to section one hundred sixty-four of this chapter.
(f) to prepare and update [periodically], no less than annually, a directory of certified minority and women-owned business enterprises which shall, wherever practicable, be divided into categories of labor, services, supplies, equipment, materials and recognized construction trades and which shall indicate areas or locations of the state where such enterprises are available to perform services;
(i) to streamline the state certification process to accept federal and municipal corporation certifications;
(j) to make publicly available records of all waivers of compliance reported pursuant to paragraph (b) of subdivision six of section three hundred thirteen of this article on the division's website.
The director [may] shall provide assistance to, and facilitate access to programs serving certified businesses as well as applicants to ensure that such businesses benefit, as needed, from technical, managerial and financial, and general business assistance; training; marketing; organization and personnel skill development; project management assistance; technology assistance; bond and insurance education assistance; and other business development assistance. The director shall maintain a toll-free number at the department of economic development to be used to answer questions concerning the MWBE certification process. In addition, the director may, either independently or in conjunction with other state agencies:
(d) conduct outreach events, training workshops, seminars, and other such educational programs throughout the state, including all regional offices, to state agencies, external stakeholders, and the public, to promote awareness and utilization of minority and women-owned business enterprises; and
(e) identify and establish mentorship opportunities and other business development programs to increase capacity and better prepare MWBEs for bidding on contracts with state agencies upon successful completion of the mentorship opportunity. Such mentorship opportunities shall be
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intended to ensure that mentor and mentee are connected based on a commercially useful function.
§ 3. Section 311-a of the executive law, as added by section 4 of part BB of chapter 59 of the laws of 2006, is amended to read as follows:
§ 311-a. Minority and women-owned business enterprise statewide advocate. 1. There is hereby established within the [department of economic development] division of minority and women's business an office of the minority and women-owned business enterprise statewide advocate. The statewide advocate shall be appointed by the commissioner with the advice of the small business advisory board as established in section one hundred thirty-three of the economic development law and shall serve in the unclassified service of the director. [The statewide advocate shall be located in the Albany empire state development office].
2. The advocate shall act as a liaison for minority and women-owned business enterprises (MWBEs) to assist them in obtaining technical, managerial, financial and other business assistance for certified businesses and applicants. The advocate shall receive and investigate complaints brought by or on behalf of MWBEs concerning certification delays and instances of violations of [law] the requirements of this article by contractors and by state agencies. The statewide advocate [shall] may assist certified businesses and applicants in the certification process. Other functions of the statewide advocate shall be directed by the commissioner. The advocate may request and the director may appoint staff and employees of the division of minority and women business development to support the administration of the office of the statewide advocate.
3. The statewide advocate [shall establish a toll-free number at the department of economic development to be used to answer questions concerning the MWBE certification process] shall conduct periodic audits of state contracting agencies' compliance with the requirements of section three hundred fifteen of this article, such audits shall include a review of the books and records of state contracting agencies concerning, among other things, annual agency expenditures, annual participation of minority and women-owned business enterprises as prime contractors and subcontractors in state contracting agencies' state contracts, and documentation of state contracting agencies' good faith efforts to maximize minority and women-owned business enterprise participation in such agencies' contracting.
4. The statewide advocate shall investigate complaints by certified minority-owned business enterprises or women-owned business enterprises concerning a procuring governmental entity's failure to comply with the requirements of section three hundred fifteen of this article.
5. The statewide advocate shall report to the director and commissioner by November fifteenth on an annual basis on all activities related to fulfilling the obligations of the office of the statewide advocate including, but not limited to: (a) the number of complaints investigated; (b) the resolution of complaints, as applicable; and (c) information regarding audits conducted pursuant to this subdivision. The [commissioner] director shall include the unedited text of the statewide advocate's report within the reports submitted by the department of economic development to the governor and the legislature.
§ 4. Section 312-a of the executive law, as amended by section 1 of part Q of chapter 58 of the laws of 2015, is amended to read as follows:
§ 312-a. Study of minority and women-owned business [enterprise programs] enterprises. 1. The director of the division of minority and women-owned business development [in the department of economic develop-
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ment] is authorized and directed to recommission a statewide disparity study regarding the participation of minority and women-owned business enterprises in state contracts since the amendment of this article to be delivered to the governor and legislature no later than August fifteenth, two thousand [sixteen] twenty-three. The study shall be prepared by an entity independent of the department and selected through a request for proposal process. The purpose of such study is:
(a) to determine whether there is a disparity between the number of qualified minority and women-owned businesses ready, willing and able to perform state contracts for commodities, services and construction, and the number of such contractors actually engaged to perform such contracts, and to determine what changes, if any, should be made to state policies affecting minority and women-owned business enterprises; [and]
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the executive law, the public build- ings law, the state finance law and the public authorities law in relation to the reauthorization of the minority and women-owned business enterprise program and to amend chapter 261 of the laws of 1988, amend- ing the state finance law and other laws relating to the New York state infrastructure trust fund, in relation to the effectiveness thereof; and providing for the repeal of certain provisions upon expiration thereof (Part __);
Purpose
This bill would extend the effectiveness of provisions of law relating to participation by minority and women-owned business enterprises (MWBE) in state contracts and would expand upon those provisions based upon the findings of the 2016 Disparity Study.
Summary of provisions and statement in support
Article 15-A of the Executive Law authorizes the Department of Economic Development's Division of Minority and Women-owned Business Enterprises ("MWBE") to promote employment and business opportunities on state contracts for minorities and women owned businesses. Under this statute, state agencies and authorities are charged with establishing business participation goals for minorities and women. This authorization and the requirements of the program will expire on December 31, 2019. This bill would extend the sunset provision to December 31, 2024.
Read the full memo (776 words)
In addition, this bill would expand upon the requirements of the MWBE program based upon the findings of the 2016 Disparity Study (the "Study"). As required by statute, the Study was conducted to ensure that the MWBE program continues to meet the constitutional requirements established by the United States Supreme Court, and its progeny, in City of Richmond v. J.A. Croson, Co., 488 U.S. 469 (1989). Under Croson, the Supreme Court held that diversity program must be narrowly tailored to achieve a compelling governmental interest. Id. At 493. The Study provides the strong factual predicated needed to support program. Id. at 510. In keeping with the requirements set forth in Croson, the Study found continued evidence of statistically significant underutilization of available MWBEs and provides support for the continuation of the MWBE program. The Study also provided several recommendations to enhance and improve upon the program. Based upon those recommendations and to address other more technical issues, the bill seeks to make several amendments, which include, but are not limited to, the following:
- Increases agency and authority discretionary purchasing threshold to $500,000;
- Increases the personal net worth to $15 million and provides the Director the authority to set the personal net worth ("PNW") requirement for MWBE certification via regulation, excludes holding companies from PNW;
- Creates a workforce program with goals for minority group members and women;
- Enhances opportunities for MWBE prime contractors by establishing bidding credits for low-bid construction projects of up to $1.4 million and increases the size of procurements that can include bidding credits each year with inflation;
- Expands the authority of the Statewide Advocate to audit agencies and investigate complaints from MWBEs of violations of Article 15
- A by agencies and contractors;
- Requires agencies to take into account findings of most recent Study in setting goals and removes references to the 2010 Study;
- Provides Director with enhanced authority to define commercially useful function;
- Requires Tax & Finance and DOL to share records with the Division; and
- Makes other additional technical changes
Effective date
This act shall take effect on the one hundred eightieth day after it shall have become a law, provided, however, that the provisions of section twelve of this act shall apply to any state contracts executed and entered into on or after January 1, 2020 and shall exclude such contracts that have been previously awarded or have pending bids or pending requests for proposals issued prior to such date, and shall not apply to projects that have commenced project design prior to such date; provided, further, that: (a) the amendments to article 15-A of the exec- utive law, made by sections one, two, three, four, five, six, seven and eight of this act, shall not affect the expiration of such article and shall expire and be deemed expired therewith; (b) the amendments to section 163 of the state finance law, made by section nine of this act, shall not affect the expiration and repeal of such section, and shall expire and be deemed repealed therewith; (c) the amendments to section 139-j of the state finance law, made by section eleven of this act, shall not affect the expiration and repeal of such section, and shall expire and be deemed repealed herewith; and (d) section fourteen of this act shall expire and be deemed repealed December 31, 2024.
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