Substitute Senate Bill No. 1232

Public Act No. 99-233

An Act Transferring the Set-Aside Program from the Department of Economic and Community Development to the Department of Administrative Services and Concerning Conditional Approval of Affirmative Action Plans by the Commission on Human Rights and Opportunities.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 32-9e of the general statutes is repealed and the following is substituted in lieu thereof:

(a) As used in this section and sections 32-9f to 32-9h, inclusive, as amended by this act, the following terms have the following meanings:

(1) "Small contractor" means any contractor, subcontractor, manufacturer or service company (A) which has been doing business under the same ownership and management and has maintained its principal place of business in the state, for a period of at least one year immediately prior to the date of application for certification under this section, (B) which had gross revenues not exceeding ten million dollars in the most recently completed fiscal year prior to such application and (C) at least fifty-one per cent of the ownership of which is held by a person or persons who [are active in] exercise operational authority over the daily affairs of the business and have the power to direct the management and policies and receive the beneficial interests of the business, except that a nonprofit corporation shall be construed to be a small contractor if such nonprofit corporation meets the requirements of subparagraphs (A) and (B) of this subdivision.

(2) "State agency" means each state board, commission, department, office, institution, council or other agency with the power to contract for goods or services itself or through its head.

(3) "Minority business enterprise" means any small contractor (A) fifty-one per cent or more of the capital stock, if any, or assets of which are owned by a person or persons (i) who [are active in] exercise operational authority over the daily affairs of the enterprise, (ii) who have the power to direct the management and policies and receive the beneficial interest of the enterprise, and (iii) who are members of a minority, as such term is defined in subsection (a) of section 32-9n, as amended by this act, (B) who is an individual with a disability or (C) which is a nonprofit corporation in which fifty-one per cent or more of the persons who [are (i) active in the daily affairs of] (i) exercise operational authority over the enterprise and (ii) have the power to direct the management and policies of the enterprise are members of a minority, as defined in this subsection or are individuals with a disability.

(4) "Affiliated" means the relationship in which a person directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with another person.

(5) "Control" means the power to direct or cause the direction of the management and policies of any person, whether through the ownership of voting securities, by contract or through any other direct or indirect means. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing twenty per cent or more of any voting securities of another person.

(6) "Person" means any individual, corporation, limited liability company, partnership, association, joint stock company, business trust, unincorporated organization or other entity.

(7) "Individual with a disability" means an individual (A) having a physical impairment that substantially limits one or more of the major life activities of the individual or (B) having a record of such an impairment.

(8) "Nonprofit corporation" means a nonprofit corporation incorporated pursuant to chapter 602 or any predecessor statutes thereto.

(b) It is found and determined that there is a serious need to help small contractors, minority business enterprises, nonprofit organizations and individuals with disabilities to be considered for and awarded state contracts for the construction, reconstruction or rehabilitation of public buildings, the construction and maintenance of highways and the purchase of goods and services. Accordingly, the necessity, in the public interest and for the public benefit and good, of the provisions of this section and sections 32-9f to 32-9p, inclusive, as amended by this act, is declared as a matter of legislative determination. Notwithstanding any provisions of the general statutes to the contrary, and except as set forth herein, the head of each state agency and each political subdivision of the state other than a municipality shall set aside in each fiscal year, for award to small contractors, on the basis of [a] competitive bidding [procedure established by the head of each state agency or political subdivision of the state other than a municipality and approved by the Commissioner of Economic and Community Development] procedures, contracts or portions of contracts for the construction, reconstruction or rehabilitation of public buildings, the construction and maintenance of highways and the purchase of goods and services. Eligibility of nonprofit corporations under the provisions of this section shall be limited to predevelopment contracts awarded by the Commissioner of Economic and Community Development for housing projects. The total value of such contracts or portions thereof to be set aside by each such agency shall be at least twenty-five per cent [of the average] of the total value of all contracts let by the head of such [state] agency [for each of the previous three fiscal years] in each fiscal year, provided that neither: (1) A contract that may not be set aside due to a conflict with a federal law or regulation; or (2) a contract for any goods or services which, [pursuant to regulations adopted pursuant to section 32-9f,] have been determined by the Commissioner of Economic and Community Development to be not customarily available from or supplied by small contractors shall be included, [in the calculation of such average, and] except that the head of any such agency may set aside an amount based on the amount of all contracts not excluded from the calculation [of such average] which are anticipated to be let in any fiscal year if the method of calculation [of such average] for such year would result in a maximum value of contracts to be set aside of less than twenty-five per cent of the contracts anticipated to be let in such year or in a minimum value of contracts to be set aside of greater than twenty-five per cent of the contracts anticipated to be let in such year. Contracts or portions thereof having a value of not less than twenty-five per cent of the total value of all contracts or portions thereof to be set aside shall be reserved for awards to minority business enterprises.

(c) The head of any state agency or political subdivision of the state other than a municipality may, in lieu of setting aside any contract or portions thereof, require any general or trade contractor or any other entity authorized by such agency to award contracts, to set aside a portion of any contract for subcontractors who are eligible for set-aside contracts under this section. Nothing in this subsection shall be construed to diminish the total value of contracts which are required to be set aside by any state agency or political subdivision of the state other than a municipality pursuant to this section.

(d) The heads of all state agencies and of each political subdivision of the state other than a municipality shall notify the Commissioner of [Economic and Community Development] Administrative Services of all contracts to be set aside pursuant to subsection (b) or (c) of this section at the time that bid documents for such contracts are made available to potential contractors.

(e) In no case shall the Commissioner of [Economic and Community Development] Administrative Services recommend, nor shall any small contractor be awarded, any such contract or contracts, the total amount of which exceeds ten million dollars in any one fiscal year.

(f) The awarding authority shall require that a contractor or subcontractor awarded a contract or a portion of a contract under this section perform not less than fifteen per cent of the work with [his own forces] the workforces of such contractor or subcontractor and shall require that not less than twenty-five per cent of the work be performed by contractors or subcontractors eligible for awards under this section. A contractor awarded a contract or a portion of a contract under this section shall not subcontract with any person with whom the contractor is affiliated. No person who is affiliated with another person shall be eligible for awards under this section if both affiliated persons considered together would not qualify as a small contractor or a minority business enterprise under subsection (a).

(g) The awarding authority may require that a contractor or subcontractor awarded a contract or a portion of a contract under this section furnish the following documentation: (1) A copy of the certificate of incorporation, certificate of limited partnership, partnership agreement or other organizational documents of the contractor or subcontractor; (2) a copy of federal income tax returns filed by the contractor or subcontractor for the previous year; and (3) evidence of payment of fair market value for the purchase or lease by the contractor or subcontractor of property or equipment from another contractor who is not eligible for set-aside contracts under this section.

(h) The awarding authority or the Commissioner of [Economic and Community Development] Administrative Services or the Commission on Human Rights and Opportunities may conduct an audit of the financial, corporate and business records and conduct an investigation of any small contractor or minority business enterprise which applies for or is awarded a set-aside contract for the purpose of determining eligibility for awards or compliance with the requirements established under this section.

(i) The provisions of this section shall not apply to any state agency or political subdivision of the state other than a municipality for which [the average of] the total value of all contracts or portions of contracts of the types enumerated in subsection (b) of this section [for each of the previous three years equals] is anticipated to be equal to ten thousand dollars or less.

(j) In lieu of a performance, bid, labor and materials or other required bond, a contractor or subcontractor awarded a contract under this section may provide to the awarding authority and the awarding authority shall accept a letter of credit. Any such letter of credit shall be in an amount equal to ten per cent of the contract for any contract that is less than one hundred thousand dollars and in an amount equal to twenty-five per cent of the contract for any contract that exceeds one hundred thousand dollars.

(k) (1) Whenever the awarding agency has reason to believe that any contractor or subcontractor awarded a set-aside contract has wilfully violated any provision of this section, the awarding agency may send a notice to such contractor or subcontractor by certified mail, return receipt requested. Such notice shall include: (A) A reference to the provision alleged to be violated; (B) a short and plain statement of the matter asserted; (C) the maximum civil penalty that may be imposed for such violation; and (D) the time and place for the hearing. Such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed.

(2) The awarding agency shall hold a hearing on the violation asserted unless such contractor or subcontractor fails to appear. The hearing shall be held in accordance with the provisions of chapter 54. If, after the hearing, the awarding agency finds that the contractor or subcontractor has wilfully violated any provision of this section, the awarding agency shall suspend all set-aside contract payments to the contractor or subcontractor and may, in its discretion, order that a civil penalty not exceeding ten thousand dollars per violation be imposed on the contractor or subcontractor. If such contractor or subcontractor fails to appear for the hearing, the awarding agency may, as the facts require, order that a civil penalty not exceeding ten thousand dollars per violation be imposed on the contractor or subcontractor. The awarding agency shall send a copy of any order issued pursuant to this subsection by certified mail, return receipt requested, to the contractor or subcontractor named in such order. The awarding agency may cause proceedings to be instituted by the Attorney General for the enforcement of any order imposing a civil penalty issued under this subsection.

(l) On or before January 1, [1994] 2000, the Commissioner of [Economic and Community Development] Administrative Services shall establish a process for certification of small contractors and minority business enterprises as eligible for set-aside contracts. Each certification shall be valid for a period not to exceed two years. [and the form for certification shall be less than six pages.] The application for certification shall be no longer than six pages. Annually, the commissioner shall print a directory of small contractors and minority business enterprises certified under this section. State agencies shall be provided with updated directory information quarterly.

(m) On or before September 30, 1995, and annually thereafter, each state agency and each political subdivision of the state other than a municipality setting aside contracts or portions of contracts shall prepare a report establishing small and minority business set-aside program goals for the twelve-month period beginning July first in the same year. Each such report shall be submitted to the Commissioner of Economic and Community Development, the Commission on Human Rights and Opportunities and the [cochairmen] cochairpersons and ranking members of the joint standing committee of the General Assembly having cognizance of matters relating to planning and development.

(n) On or before November 1, 1995, and quarterly thereafter, each state agency and each political subdivision of the state other than a municipality setting aside contracts or portions of contracts shall prepare a status report on the implementation and results of its small business and minority business enterprise set-aside program goals during the three-month period ending one month before the due date for the report. Each report shall be submitted to the Commissioner of Economic and Community Development, the Commission on Human Rights and Opportunities and the [cochairmen] cochairpersons and ranking members of the joint standing committee of the General Assembly having cognizance of matters relating to planning and development.

(o) On or before January 1, 2000, and annually thereafter, the Department of Administrative Services shall establish a precertification list of small contractors and minority business enterprises who have established a principal place of business in the state but have not maintained such place of business for one year and are not in the directory prepared pursuant to subsection (l) of this section. An awarding agency may select a small contractor or minority business enterprise from such precertification list only after such awarding agency makes a good faith effort to find an eligible small contractor or minority business enterprise in the directory and determines that no small contractor or minority business enterprise is qualified to perform the work required under the contract.

Sec. 2. Section 32-9f of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The Commissioner of [Economic and Community Development] Administrative Services shall be responsible for the administration of the set-aside program. [and shall promulgate such regulations as are necessary to carry out the purposes of sections 32-9e to 32-9g, inclusive.] The commissioner shall conduct regular training sessions, as the commissioner deems necessary, for state agencies to explain the set-aside program and to specify the factors that must be addressed in calculating agency goals under the program. The commissioner shall conduct informational workshops to inform businesses of set-aside opportunities and responsibilities.

(b) The commissioner shall adopt regulations in accordance with the provisions of chapter 54 to carry out the purposes of sections 32-9e to 32-9g, inclusive, as amended by this act. Such regulations shall include (1) provisions concerning the application of the program to individuals with a disability; [and] (2) guidelines for a legally acceptable format for, and content of, letters of credit authorized under subsection (j) of section 32-9e, as amended by this act; (3) procedures for random site visits to the place of business of an applicant for certification at the time of application and at subsequent times, as necessary, to ensure the integrity of the application process; and (4) time limits for approval or disapproval of applications.

[(b)] (c) On or before January 1, 1994, the Commissioner of [Economic and Community Development] Administrative Services shall, by regulations adopted in accordance with chapter 54, establish a process to ensure that small contractors, small businesses and minority business enterprises have fair access to all competitive contracts outside of the set-aside program.

Sec. 3. Section 32-9n of the general statutes is repealed and the following is substituted in lieu thereof:

(a) There is established within the Department of Economic and Community Development an Office of Small Business Affairs. Such office shall aid and encourage small business enterprises, particularly those owned and operated by minorities and other socially or economically disadvantaged individuals in Connecticut. As used in this section, minority means: (1) Black Americans, including all persons having origins in any of the Black African racial groups not of Hispanic origin; (2) Hispanic Americans, including all persons of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race; (3) all persons having origins in the Iberian Peninsula, including Portugal, regardless of race; (4) women; (5) Asian Pacific Americans and Pacific islanders; or (6) American Indians and persons having origins in any of the original peoples of North America and maintaining identifiable tribal affiliations through membership and participation or community identification.

(b) Said Office of Small Business Affairs shall: (1) Administer [the set-aside program for small contractors and minority business enterprises that is provided for in sections 32-9e through 32-9g, inclusive; (2) administer] the small business development center program run by the Department of Economic and Community Development; [(3)] (2) coordinate the flow of information within the technical and management assistance program run by the Department of Economic and Community Development; [(4)] (3) encourage the Connecticut Development Authority to grant loans to small businesses, particularly those owned and operated by minorities and other socially or economically disadvantaged individuals, and [(5)] (4) coordinate and serve as a liaison between all federal, state, regional and municipal agencies and programs affecting small business affairs.

Sec. 4. On or before January 1, 2000, the Commissioner of Administrative Services shall submit a progress report to the joint standing committee of the General Assembly having cognizance of matters relating to planning and development on the implementation of a system to make set-aside program application forms and the set-aside directory available on the Internet.

Sec. 5. The Commissioner of Administrative Services, the Commissioner of Economic and Community Development and the Commission on Human Rights and Opportunities shall, in consultation with the Office of Policy and Management, develop a plan to implement the transfer of enforcement responsibilities of the set-aside program, provided for in sections 32-9e to 32-9g, inclusive, of the general statutes, as amended by this act, from the Department of Economic and Community Development to the Department of Administrative Services and the Commission on Human Rights and Opportunities. Such plan shall: (1) Provide for a division of responsibilities between the Department of Administrative Services and Commission on Human Rights and Opportunities in a manner which is consistent with the existing responsibilities of each agency; (2) outline the resources necessary to automate agency goal reports and enforcement information; (3) specify the staffing needs of each agency for the program; (4) provide a summary of the statutory changes necessary to implement the transition; and (5) provide a plan for coordinating enforcement policies between the agencies. The plan shall be submitted to the Office of Policy and Management and the joint standing committee of the General Assembly having cognizance of matters relating to planning and development on or before September 1, 1999.

Sec. 6. Subsection (d) of section 46a-68 of the general statutes is repealed and the following is substituted in lieu thereof:

(d) The Commission on Human Rights and Opportunities shall review and formally approve, conditionally approve or disapprove the content of such affirmative action plans within ninety days of the submission of each plan to the commission. If the commissioners, by a majority vote of those present and voting, fail to approve, conditionally approve or disapprove a plan within that period, the plan shall be deemed to be approved.

Sec. 7. This act shall take effect from its passage.

Approved June 29, 1999

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