By: WBG, LLP Published: January 2013

Amendments to the NYC Charter and the Administrative Code in Relation to Opportunities for Minority and Women Owned Business Enterprises and Emerging Business Enterprises in City Procurement.

On January 7, 2013, the Mayor signed Introductory No. 911-A into law (Law No. 2013/001). This Local Law amends the New York City charter and the administrative code of the City of New York, in relation to opportunities for minority and women owned business enterprises and emerging business enterprises in City procurement. The laws that are amended are: New York City Charter § 1304 and New York City Administrative Code § 6-129.

Summary of Amendments to New York City Charter § 1304

The 2013 amendments grant the commissioner of the division of economic and financial opportunity within the Department of Small Business Services a number of additional powers and duties in the implementation of the purpose of the division, including the power to:

(i) recognize firms, that are certified as minority owned and women owned businesses by other governmental entities, to be recognized as certified business enterprises by the City of New York;

(ii) perform site visits at businesses seeking certification; and

(iii) post on the division's website, a directory of City certified business enterprises which must include information such as the business enterprise's market sector, bonding capacity, contract price and tasks for its last 3 contracts, union affiliation, and the renewal date for its certification.

Summary of Amendments to New York City Administrative Code § 6-129

The definition of graduate MBE, WBE, and EBEs is no longer limited to entities that were previously awarded prime contracts. However, the qualifying contract size for these entities increased from fifteen to fifty million dollars and, to qualify, the size of the entities must exceed the size standards established by the US small business administration for three years. The amendments also add a definition for "human services" and state that participation requirements are not applicable for those services.

The participation goals for construction contracts are now applicable to all construction contracts irrespective of the amount of the contract, rather than being limited to contracts under one million dollars. The percentages per category of participant were redistributed and were increased to 44% from 27.69%. The categories of Asian Americans and Women were added to the citywide contracting participation goals for MBEs, WBEs and EBEs. The participation goals for construction subcontracts did not change.

The participation goals for professional services contracts, including architectural, engineering, and construction management services, are also now applicable to all construction contracts irrespective of the amount of the contract, rather than being limited to contracts under one million dollars. The percentages per category of participant were redistributed and were increased to 63% from 36.5%. Women were added as a category to the citywide contracting participation goals for MBEs, WBEs and EBEs. The participation goals for professional services subcontracts did not change.

The participation goals for goods contracts are now applicable to all goods contracts under one hundred thousand dollars, rather than one million dollars. The percentages per category of participant were redistributed and were increased to 51% from 41.52%. Women were added as a category to the citywide contracting participation goals for MBEs, WBEs and EBEs.

Going forward, and no later than 2015, the commissioner must review and adjust the City's participation goals, as necessary, on a bi-yearly basis.

The division has also taken on additional tasks to offer assistance to MBEs, WBEs, and EBEs such as conducting meetings with MBEs, WBEs and EBEs to discuss what agencies look for in evaluating bids and proposals, and educating prime contractors on opportunities to partner or subcontract with certified MBEs, WBEs and EBEs.

Agencies are able to set differing participation goals for their annual agency utilization plans with higher, lower, or the same levels as citywide goals, subject to the approval of the commissioner. The agency's plan and schedule must be published on the division's website no later than July 31 of each year. Pursuant to the amendment, an "agency may establish a goal for a procurement that may be achieved by a combination of prime contract and subcontract dollars, a combination of construction and services performed pursuant to the contract, and/or a combination of MBEs, WBEs and/or EBEs. Alternatively, an agency may establish specific goals for particular types of services, and/or goals for particular types of certified firms."

"A contractor that is an MBE, WBE or EBE shall be permitted to count its own participation toward fulfillment of the relevant participation goal, provided that the value of such a contractor's participation shall be determined by subtracting from the total value of the contract any amounts that the contractor pays to direct subcontractors. A contractor that is a qualified joint venture shall be permitted to count a percentage of its own participation toward fulfillment of the relevant participation goal. The value of such a contractor's participation shall be determined by subtracting from the total value of the contract any amounts that the contractor pays to direct subcontractors, and then multiplying the remainder by the percentage to be applied to total profit to determine the amount to which an MBE, WBE or EBE is entitled pursuant to the joint venture agreement."

The contracting agency must require that the qualifying contractor submit a list of its intended subcontractors at least once per year. The contracting agency may also require the contractor to report periodically about the contracts awarded by its direct subcontractors to indirect subcontractors.

A bidder has the option of requesting that the contracting agency change the participation goals in light of the availability of firms to perform the services required, or by demonstrating that it has legitimate business reasons for proposing a lower level of subcontracting in its utilization plan. If the contracting agency agrees, it shall revise the solicitation and extend the deadline for bids and proposals. Furthermore, an agency may modify the participation goals when there are changes to the scope of work that affect the scale and types of work. The City chief procurement officer may also identify types of contract where payments to indirect subcontractors can be credited toward the participation goals. Contractors or subcontractors that are both MBEs and WBEs are only credited toward the goal for one of those categories.

There are also amendments that enhance the reporting and oversight requirements.

Impact

The most significant amendment to the law is the elimination of the $1 million cap on contracts that are covered by participation goals. This change will ensure that MWBEs are targeted bidders for larger contracts.

If you have any questions about the information set forth in this Legal Alert, call us at 914-428-2100.

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