Bill Text: NJ S3691 | 2024-2025 | Regular Session | Introduced
Bill Title: Requires State agencies to make good faith effort towards certain goals to use certified minority and women-owned businesses as prime contractors and subcontractors.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced) 2024-09-30 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S3691 Detail]
Download: New_Jersey-2024-S3691-Introduced.html
Sponsored by:
Senator RAJ MUKHERJI
District 32 (Hudson)
SYNOPSIS
Requires State agencies to make good faith effort towards certain goals to use certified minority and women-owned businesses as prime contractors and subcontractors.
CURRENT VERSION OF TEXT
As introduced.
An Act requiring State agencies to make a good faith effort towards certain goals to use certified minority and women-owned businesses as prime contractors and subcontractors and supplementing Title 52 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature finds and declares that it is the public policy of the State to promote and encourage the continuing economic development of minority and women-owned businesses, that minority and women-owned businesses participate in the State procurement process, and that the State procurement process operate and award contracts in a manner that is free from bias against minority and women-owned businesses that are ready, willing, and able to engage in business with the State.
a. In January 2024, a New Jersey Disparity Study was conducted on the availability and utilization of small, minority, women, and service-disabled veteran-owned businesses and their experience in the State procurement process.
The disparity study found the following:
(1) For formal construction prime contracts, minority and women-owned businesses received 4 percent of prime contract dollars.
(2) For formal professional services prime contracts, minority and women-owned businesses received 15 percent of prime contract dollars.
(3) For formal goods and services prime contracts, minority and women-owned businesses received 10 percent of prime contract dollars.
(4) Across all types of informal prime contracts, meaning a contract where the value fell below the dollar threshold where a public bid is required, minority and women-owned businesses received 10 percent of prime contract dollars.
(5) For construction subcontracts, minority and women-owned businesses received 31 percent of subcontract dollars.
(6) For professional services subcontracts, minority and women-owned businesses received 41 percent of subcontract dollars.
b. The disparity study determined that minority and women-owned businesses are capable of fulfilling large State contracts if and when they are awarded the contracts and there are measurable differences for minority and women-owned businesses across all types of contracts.
c. The Legislature further finds that, in order to redress the disparities found by the New Jersey Disparity Study, it is necessary for the State to implement a program that requires a good faith effort towards goals to use certified minority and women-owned businesses as prime contractors and subcontractors. The Legislature further finds that it is in the best interest of the economic development of the State to promote and encourage the continuing economic development of minority and women-owned businesses.
2. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Certified" means a minority business or a women's business as certified by the Division of Revenue Business Certification Program in the Department of the Treasury.
"Chief Diversity Officer" means the individual holding the position established in the Division of Purchase and Property in the Department of the Treasury pursuant to section 1 of P.L.2017, c.95 (C.52:32-18.1), or its successor.
"Minority-owned business" shall mean a business that has a valid certification as a "minority business" pursuant to P.L.1986, c.195 (C.52:27H-21.17 et seq.).
"Prime contractor" means any person who has a construction, goods and services, or professional services contract with a State agency and who may subcontract all or a part of that contract.
"State agency" means any of the principal departments in the Executive Branch of the State Government, and any agency, authority, division, board, bureau, office, commission or other instrumentality within or created by such department, the Legislature of the State and any agency, authority, office, board, bureau or commission within or created by the Legislative Branch, and any independent State authority, commission, instrumentality or agency which is authorized by law to award State contracts. A county or municipality shall not be deemed an agency or instrumentality of the State.
"Subcontractor" means any person who enters into a contract with a prime contractor to perform a specific part of the work for which the prime contractor is responsible under a construction, goods and services, or professional services contract with a State agency.
"Women-owned business" shall mean a business that has a valid certification as a "women's business" pursuant to P.L.1986, c.195 (C.52:27H-21.17 et seq.).
3. a. The Chief Diversity Officer shall recommission a statewide disparity study regarding the participation of minority and women-owned businesses in State contracts that shall be delivered to the Governor and to the Legislature no later than August 15, 2029. The study shall be prepared by an entity independent of the department and selected through a request for proposal process.
b. The purpose of such study shall be:
(1) to determine whether there is a disparity between the number of certified minority and women-owned businesses ready, willing, and able to perform State contracts for construction, goods and services, and professional services, 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 businesses; and
(2) to determine whether there is a disparity between the number of certified minority and women's businesses ready, willing, and able, with respect to labor markets, qualifications, and other relevant factors, to participate in the contractor process. Such study shall include, but not be limited to, an analysis of the history of minority and women-owned business programs and their effectiveness as a means of securing and ensuring participation by minorities and women, and a disparity analysis by market area and region of the State. Such study shall distinguish between minority males, minority females, and non-minority females in the statistical analysis.
c. The Chief Diversity Officer shall report the findings and conclusions of the disparity study to the Governor, and to the Legislature, pursuant to section 2 of P.L.1991, c.164 (52:14-19.1), by August 15, 2029, and post the study on the website of the Department of the Treasury.
4. a. Notwithstanding any other provision of law to the contrary, each State agency shall structure procurement procedures for contracts made directly or indirectly to minority and women-owned businesses in accordance with the findings of the disparity study and make a good faith effort towards increased utilization of minority and women-owned businesses with regard to total annual Statewide procurement in the following industries:
(1) construction industry;
(2) professional services industry;
(3) goods and services industry; and
(4) overall agency total dollar value of procurement.
b. The Chief Diversity Officer shall ensure that each State agency has been provided an electronic copy of the most recent disparity study.
c. Each agency shall develop and adopt agency-specific goals based upon, and consistent with, the findings of the most recent disparity study required by section 3 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill).
d. The Chief Diversity Officer, through the Department of the Treasury, shall promulgate, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations based on subsection a. of this section to provide measures and procedures to ensure that certified minority and women's businesses shall be given the opportunity for maximum feasible participation in the performance of State contracts and to assist in the agency's identification of those State contracts for which minority and women certified businesses may be best positioned to bid, and to actively and affirmatively promote and assist their participation in the performance of State contracts.
The officer shall promulgate rules and regulations that to accomplish the following:
(1) require that each contract solicitation document accompanying each solicitation set forth the expected degree of minority and women-owned businesses participation based, in part, on:
(a) the availability, as contained within the study, of certified minority and women businesses positioned to respond competitively to the potential prime contract or subcontract opportunities, as also reflected in the State's directory of minority and women businesses certified by the Division of Revenue and Enterprise Services; and
(b) the findings of the disparity study;
(2) establish criteria for agencies to credit the participation of minority and women businesses towards the achievement of the minority and women business participation goals on a State contract based on the commercially useful function provided by each minority and women business on the contract;
(3) provide for joint ventures, which a bidder may count toward meeting its minority and women business participation;
(4) provide for the collection of statistical data by each agency concerning actual minority and women business participation; and
(5) require each agency to consult the most current disparity study when calculating agency-wide and contract specific participation goals pursuant to this act.
e. In the implementation of this section, the contracting agency shall:
(1) consult the findings contained within the disparity study evidencing relevant industry specific disparities in the utilization of minority and women businesses relative to their availability;
(2) implement a program that will enable the agency to evaluate each contract to determine the appropriate goal for participation by minority businesses and women businesses;
(3) consider where practicable, the severability of construction projects and other bundled contracts; and
(4) consider compliance with the requirements of any federal law concerning opportunities for minority and women businesses which effectuates the purpose of this section. The contracting agency shall determine whether the imposition of the requirements of any such law duplicate or conflict with the provisions hereof and, if such duplication or conflict exists, the contracting agency shall waive the applicability of this section to the extent of such duplication or conflict.
f. The Chief Diversity Officer shall promulgate, and the contracting agencies shall adhere to, rules and regulations that ensure a good faith effort is made to achieve the maximum feasible participation by minority and women businesses adopted pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
Such rules and regulations shall:
(1) require a contractor to submit a utilization plan for the use of certified minority and women-owned businesses as subcontractors after bids are opened, or when bids are required, but prior to the award of a State contract;
(2) require the contracting agency to review the utilization plan submitted by the contractor and to post the utilization plan and any waivers of compliance issued pursuant to subsection g. of this section on the website of the contracting agency;
(3) require the contracting agency to notify the contractor in writing within a period of time specified by the director of the State agency as to any deficiencies contained in the contractor's utilization plan;
(4) require remedy thereof within a period of time specified by the director;
(5) require the contractor to submit compliance reports relating to the operation and implementation of any utilization plan;
(6) prohibit any automatic waivers but allow a contractor to apply for a partial or total waiver of the minority and women-owned businesses participation requirements pursuant to subsection h. and i. of this section;
(7) allow a contractor to file a complaint with the Chief Diversity Officer pursuant to subsection j. of this section in the event a contracting agency has failed or refused to issue a waiver of the minority and women-owned business participation requirements or has denied such request for a waiver; and
(8) allow a contracting agency to file a complaint with the Chief Diversity Officer pursuant to subsection k. of this section in the event a contractor is failing or has failed to comply with the minority and women-owned business participation requirements set forth in the State contract where no waiver has been granted.
g. The rules and regulations promulgated pursuant to this section regarding a utilization plan shall provide that where businesses have been identified within a utilization plan, a contractor shall attempt, in good faith, to utilize such business at least to the extent indicated. A contracting agency may require a contractor to indicate, within a utilization plan, what measures and procedures they intend to take to comply with the provisions of this act, but may not require, as a condition of award of, or compliance with, a contract that a contractor utilize a particular business in performance of the contract.
Without limiting other grounds for the disqualification of bids or proposals on the basis of nonresponsibility, a contracting agency may disqualify the bid or proposal of a contractor as being nonresponsible for failure to remedy notified deficiencies contained in the contractor's utilization plan within a period of time specified in regulations promulgated by the Chief Diversity Officer after receiving notification of such deficiencies from the contracting agency. When failure to remedy any notified deficiency in the utilization plan is a ground for disqualification, that issue and all other grounds for disqualification shall be stated in writing by the contracting agency. When the contracting agency states that a failure to remedy any notified deficiency in the utilization plan is a ground for disqualification the contractor shall be entitled to an administrative hearing, on a record, involving all grounds stated by the contracting agency. Such hearing shall be conducted by the appropriate authority of the contracting agency to review the determination of disqualification. A final administrative determination made following such hearing shall be reviewable by a court of competent jurisdiction in this State, provided that such proceeding is commenced within thirty days of the notice given by certified mail return receipt requested rendering such final administrative determination. Such proceeding shall be commenced in the Superior Court.
h. (1) When it appears that a contractor cannot, after a good faith effort, comply with the minority and women-owned business participation requirements set forth in a particular State contract, a contractor may file a written application with the contracting agency requesting a partial or total waiver of such requirements setting forth the reasons for such contractor's inability to meet any or all of the participation requirements together with an explanation of the efforts undertaken by the contractor to obtain the required minority and women-owned business participation. In implementing the provisions of this section, the contracting agency shall consider the number and types of minority and women-owned businesses available to provide goods or services required under the contract in the region in which the State contract is to be performed, the total dollar value of the State contract, the scope of work to be performed and the project size and term. If, based on such considerations, the contracting agency determines there is not a reasonable availability of contractors on the list of certified business to furnish services for the project, it shall issue a waiver of compliance to the contractor. In making such determination, the contracting agency shall first consider the availability of other businesses located in the region and shall thereafter consider the financial ability of minority and women-owned businesses located outside the region in which the contract is to be performed to perform the State contract.
(2) Upon the issuance of all waivers of compliance as provided in subsection a. of this section, the contracting agency shall:
(a) report the issuance of the waiver to the Chief Diversity Officer; and
(b) publish on the contracting agency's website on a monthly basis, if practicable, but no less than on a quarterly basis, in a location easily accessible to the general public:
(i) information identifying the contract, including the value of the contract;
(ii) the name of the contractor receiving the waiver;
(iii) the date of the waiver;
(iv) whether the waiver was a partial or total waiver; and
(v) the specific contract provisions to which the waiver applies.
i. For purposes of determining a contractor's good faith effort to comply with the requirements of this section or to be entitled to a waiver therefrom the contracting agency shall consider:
(1) whether the contractor has advertised in general circulation media, trade association publications, and minority-focus and women-focus media and, in such event;
(2) whether or not certified minority or women-owned businesses which have been solicited by the contractor exhibited interest in submitting proposals for a particular project by attending, or having attended, a pre-bid conference, if any, scheduled by the State agency awarding the State contract with certified minority and women-owned businesses; and
(3) whether certified businesses which have been solicited by the contractor have responded in a timely fashion to the contractor's solicitations for timely competitive bid quotations prior to the contracting agency's bid date; and
(4) whether the contractor can reasonably structure the amount of work to be performed under subcontracts in order to increase the likelihood of participation by certified businesses.
j. In the event that a contracting agency fails or refuses to issue a waiver to a contractor as requested within 20 days after having made application therefor pursuant to subsection h. of this section or if the contracting agency denies such application, in whole or in part, the contractor may file a complaint with the Chief Diversity Officer pursuant to section 6 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill) of this act setting forth the facts and circumstances giving rise to the contractor's complaint together with a demand for relief. The contractor shall serve a copy of such complaint upon the contracting agency by personal service or by certified mail, return receipt requested. The contracting agency shall be afforded an opportunity to respond to such complaint in writing.
k. If, after the review of a contractor's minority and women-owned business utilization plan or review of a periodic compliance report and after such contractor has been afforded an opportunity to respond to a notice of deficiency issued by the contracting agency in connection therewith, it appears that a contractor is failing or refusing to comply with the minority and women-owned business participation requirements as set forth in the State contract and where no waiver from such requirements has been granted, the contracting agency may file a written complaint with the Chief Diversity Officer pursuant to section 6 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill), setting forth the facts and circumstances giving rise to the contracting agency's complaint together with a demand for relief. The contracting agency shall serve a copy of such complaint upon the contractor by personal service or by certified mail, return receipt requested. The contractor shall be afforded an opportunity to respond to such complaint in writing.
5. a. Each contracting agency shall be responsible for monitoring State contracts under its jurisdiction, and recommending matters to the office respecting non-compliance with the provisions of this act, P.L. c. (C. ) (pending before the Legislature as this bill), so that the office may take such action as is appropriate to ensure compliance with the provisions of this act, the rules and regulations of the Chief Diversity Officer issued pursuant to this act, and the contractual provisions herein required. All contracting agencies shall comply with the rules and regulations of the officer, shall cooperate with the officer, and shall furnish to the officer such information and assistance as may be required in the performance of their functions under this act.
b. Each contracting agency shall provide to prospective bidders a current copy of the directory of certified businesses, and a copy of the regulations required at the time bids or proposals are solicited.
To the extent practicable, upon completion of the restrictive period of a procurement, each contracting agency when notifying a contractor of a winning bid award shall also notify any minority or women-owned business identified in the contractor's submitted utilization plan of such contractor's receipt of the winning bid award.
c. Each contracting agency shall report to the Chief Diversity Officer with respect to activities undertaken to promote employment of minority group members and women and promote and increase participation by certified businesses with respect to State contracts and subcontracts. Such reports shall be submitted no later than May 15 of every year and shall include such information as is necessary for the Chief Diversity Officer to determine whether the contracting agency and any contractor to the contracting agency have complied with the purposes of this act, including, without limitation, a summary of all waivers of the requirements of subsection h. and subsection i. of section 4 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill), allowed by the contracting agency during the period covered by the report, including a description of the basis of the waiver request and the rationale for granting any such waiver and any instances in which the contract agency has deemed a contractor to have committed a violation pursuant to section 6 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill) and such other information as the Chief Diversity Officer shall require. Each agency shall also include in such annual report whether or not it has been required to prepare a remedial plan, and, if so, the plan and the extent to which the agency has complied with each element of the plan.
d. Each agency shall provide a copy of its annual report required pursuant to subsection c. of this section to the Governor and Legislature pursuant to section 2 of P.L.1991, c.164 (52:14-19.1) not later than May 15 of each year. Such report shall also include:
(1) the agency's annual goals for contracts with minority-owned and women-owned business;
(2) the number of actual contracts issued to minority-owned and women-owned businesses;
(3) a summary of all waivers of the requirements of subsection h. and subsection i. of section 4 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill) allowed by the reporting agency during the preceding year, including a description of the basis of the waiver request and the rationale for granting such waiver;
(4) whether or not it has been required to prepare a remedial plan, and, if so, the plan and the extent to which the agency has complied with each element of the plan; and
(5) which expenditures are exempt from participation goals and the rationale for such exemption.
e. Each contracting agency that substantially fails to make a good faith effort as defined by regulation of the Chief Diversity Officer, to achieve the maximum feasible participation of minority and women-owned businesses in such agency's contracting shall be required to submit to the Chief Diversity Officer a remedial action plan to remedy such failure.
f. If it is determined by the Chief Diversity Officer that any agency has failed to act in good faith to implement the remedial action plan, pursuant to subsection e. of this section within one year, the Chief Diversity Officer shall provide written notice of such a finding, which shall be publicly available, and direct implementation of remedial actions to:
(1) ensure that sufficient and effective solicitation efforts to women and minority-owned businesses are being made by said agency;
(2) divide contract requirements, when economically feasible, into quantities that will expand the participation of women and minority-owned businesses;
(3) eliminate extended experience or capitalization requirements, when programmatically and economically feasible, that will expand participation by women and minority-owned businesses;
(4) identify specific proposed contracts as particularly attractive or appropriate for participation by women and minority-owned businesses with such identification to result from and be coupled with the efforts of paragraphs (1), (2), and (3) of this subsection; and
(5) upon a finding by the Chief Diversity Officer that an agency has failed to take affirmative measures to implement the remedial plan and to follow any of the remedial actions set forth by the Chief Diversity Officer, and in the absence of any objective progress towards the agency's goals, require some or all of the agency's procurement, for a specified period of time, be placed under the direction and control of another agency or agencies.
6. a. Upon receipt by the Chief Diversity Officer of a complaint by a contracting agency that a contractor has violated the provisions of a State contract which have been included to comply with the provisions of this act or of a contractor that a contracting agency has violated such provisions or has failed or refused to issue a waiver where one has been applied for pursuant to subdivision h. of section 4 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill), or has denied such application, the Chief Diversity Officer shall attempt to resolve the matter giving rise to such complaint. If efforts to resolve such matter to the satisfaction of all parties are unsuccessful, the Chief Diversity Officer shall refer the matter, within 30 days of the receipt of the complaint, to the Department of the Treasury's hearing officers. Upon conclusion of the administrative hearing, the hearing officer shall submit to the Chief Diversity Officer their decision regarding the alleged violation of the contract and recommendations regarding the imposition of sanctions, fines or penalties. The Chief Diversity Officer, within 10 days of receipt of the decision, shall file a determination of such matter and shall cause a copy of such determination along with a copy of this act to be served upon the contractor by personal service or by certified mail return receipt requested. The decision of the hearing officer shall be reviewable by a court of competent jurisdiction in this State. The penalties imposed for any violation which is premised upon either a fraudulent or intentional misrepresentation by the contractor or the contractor's willful and intentional disregard of the minority and women-owned participation requirement included in the contract may include a determination that the contractor shall be ineligible to submit a bid to any contracting agency or be awarded any such contract for a period not to exceed one year following the final determination; provided however, if a contractor has previously been determined to be ineligible to submit a bid pursuant to this section, the penalties imposed for any subsequent violation, if such violation occurs within five years of the first violation, may include a determination that the contractor shall be ineligible to submit a bid to any contracting agency or be awarded any such contract for a period not to exceed five years following the final determination. The Chief Diversity Officer shall maintain a website listing all contractors that have been deemed ineligible to submit a bid pursuant to this section and the date after which each contractor shall once again become eligible to submit bids.
7. This act shall take effect on the 120th day following the date of enactment, except that the Department of the Treasury may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act. This act shall expire on December 31, 2029, unless extended by the Legislature upon sufficient findings of cause in the report completed pursuant to section 3 of this act.
STATEMENT
This bill requires State agencies to make a good faith effort towards goals to use certified minority and women-owned businesses as prime contractors and subcontractors in the State procurement process.
In January 2024, a New Jersey Disparity Study was conducted on the availability and utilization of small, minority, women, and service-disabled veteran-owned businesses and their experience in the State procurement process. Across all types of contracts, minority and women-owned businesses received about 10 percent of prime contract dollars and about 36 percent of subcontract dollars. The study determined that minority and women-owned businesses are capable of fulfilling large State contracts if they were to be awarded the contracts and there are measurable differences for minority and women-owned businesses across all types of contracts.
Under this bill, the Chief Diversity Officer is required to recommission the statewide disparity study regarding the participation of minority and women-owned businesses in State contracts. The study and its findings must be completed by August 15, 2029.
Each State agency is required to structure procurement procedures for contracts made directly or indirectly to minority and women-owned businesses to attempt good faith effort towards increased utilization of minority and women-owned businesses with regard to total annual statewide procurement across all types of contracts. Each agency is also required to develop and adopt agency specific goals based on the findings of the most recent disparity study and must be consistent with the findings of the disparity study.
The bill requires each contractor to develop a utilization plan on the use of minority and women-owned businesses as subcontractors during the bidding process. The bill also establishes a waiver procedure for contractors who have made a good faith effort to comply with the minority and women-owned business participation requirements. The bill establishes a complaint procedure for State agencies who have reason to believe that a good faith effort was not made by the contractor.
The bill contains a sunset provision and will expire on December 31, 2029 if the required recommissioned disparity study does not indicate a measurable disparity for minority and women-owned businesses in the State contract procurement process.
