Bill Text: PA HB2149 | 2009-2010 | Regular Session | Amended

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Bill Title: In general provisions, providing for public access to procurement information; in source selection and contract information, further providing for competitive sealed proposals; in small and disadvantaged businesses, further providing for definitions and providing for authority to waive employee limit, for mentor-protege program, for small business reserve program, for alternative certification, for oversight and responsibility and for contractor performance and general conditions; in small and disadvantaged businesses, establishing a surety bond guarantee program; and, in contracts for public works, further providing for contractors' and subcontractors' payment obligations.

Spectrum: Bipartisan Bill

Status: (Engrossed - Dead) 2010-10-12 - Referred to STATE GOVERNMENT [HB2149 Detail]

Download: Pennsylvania-2009-HB2149-Amended.html

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PRIOR PRINTER'S NOS. 3091, 4029 PRINTER'S NO. 4287
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2149 Session of2010
INTRODUCED BY MUSTIO, WHEATLEY, BUXTON, JOSEPHS, THOMAS, SONNEY, BEYER, WATERS, D. COSTA, FRANKEL, GEORGE, GINGRICH, GROVE, HENNESSEY, HORNAMAN, KNOWLES, KOTIK, LONGIETTI, MARSICO, McCALL, MOUL, MURT, O'NEILL, PAYTON, SOLOBAY, STURLA, J. TAYLOR, VULAKOVICH AND YOUNGBLOOD, JANUARY 19, 2010
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, SEPTEMBER 21, 2010
AN ACT
Amending Title 62 (Procurement) of the Pennsylvania Consolidated
Statutes, further providing for contractors' and <--
subcontractors' payment obligations. in general provisions, <--
providing for public access to procurement information; in
source selection and contract information, further providing
for competitive sealed proposals; in small and disadvantaged
businesses, further providing for definitions and providing
for authority to waive employee limit, for mentor-protégé
program, for small business reserve program, for alternative
certification, for oversight and responsibility and for
contractor performance and general conditions; in small and
disadvantaged businesses, establishing a surety bond
guarantee program; and, in contracts for public works,
further providing for contractors' and subcontractors'
payment obligations.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 3933(c) of Title 62 of the Pennsylvania <--
Consolidated Statutes is amended to read:
Section 1. Title 62 of the Pennsylvania Consolidated <--
Statutes is amended by adding a section to read:
§ 106.1. Public access to procurement information.
(a) Access.--Information concerning a procurement shall be
made public, consistent with the act of February 14, 2008
(P.L.6, No.3), known as the Right-to-Know Law.
(b) Access for noncompetitive contracts.--Except as provided
under subsection (c), if a procurement is to be made under
section 513 (relating to competitive sealed proposals), 515
(relating to sole source procurement), 517 (relating to multiple
awards), 518 (relating to competitive selection procedures for
certain services), 519 (relating to selection procedure for
insurance and notary bonds) or 905 (relating to procurement of
design professional services), five business days prior to
execution by the contracting official the purchasing agency
shall post the proposed contract on its Internet website.
(c) Exception.--The provisions of subsection (b) shall not
apply to a procurement under section 516 (relating to emergency
procurement).
Section 2. Section 513(e) of Title 62 is amended to read:
§ 513. Competitive sealed proposals.
* * *
(e) Evaluation.--The relative importance of the evaluation
factors shall be fixed prior to opening the proposals. A
Commonwealth agency is required to invite its comptroller to
participate in the evaluation as a nonvoting member of any
evaluation committee. No individual who has been employed by an
offeror within the last two years may participate in the
evaluation of proposals.
* * *
Section 3. Section 2102 of Title 62 is amended to read:
§ 2102. Definitions.
[Subject] Notwithstanding section 103 (relating to
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definitions) and subject to section 2103 (relating to
regulations), the following words and phrases when used in this
chapter shall have the meanings given to them in this section
unless the context clearly indicates otherwise:
"Commonwealth agency." The term shall include the following:
(1) Any office, department, authority, board, multistate
agency or commission of the executive branch, including:
(i) The Office of the Governor.
(ii) The Office of Attorney General, the Department
of the Auditor General and the Treasury Department.
(iii) An organization established by the
Constitution of Pennsylvania or a statute or executive
order that performs or is intended to perform an
essential governmental function.
(2) The term shall not include a judicial or legislative
agency.
"Disadvantaged business." A small business which is owned or
controlled by a majority of persons, not limited to members of
minority groups, who:
(1) have been deprived of the opportunity to develop and
maintain a competitive position in the economy because of
social disadvantages[.]; or
(2) are service-disabled veterans.
The term shall include a small business which is owned or
controlled by a majority of persons who are service-disabled
veterans.
"Governmental agency." A Commonwealth agency, local agency,
independent agency, State-affiliated entity or State-related
institution. The term shall not include any local library,
county library, library system, district library center or
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Statewide library resource center as those terms are defined in
the act of June 14, 1961 (P.L.324, No.188), known as The Library
Code, or to any nonprofit organization that performs or is
intended to perform an essential governmental function.
"Independent agency." Any board, commission or other agency
or officer of the Commonwealth that is not subject to the policy
supervision and control of the Governor. The term shall not
include a legislative agency or a judicial agency.
"Judicial agency." A court of the Commonwealth or any other
entity or office of the unified judicial system.
"Legislative agency." Any of the following:
(1) The Senate.
(2) The House of Representatives.
(3) The Capitol Preservation Committee.
(4) The Center for Rural Pennsylvania.
(5) The Joint Legislative Air and Water Pollution
Control and Conservation Committee.
(6) The Joint State Government Commission.
(7) The Legislative Budget and Finance Committee.
(8) The Legislative Data Processing Committee.
(9) The Independent Regulatory Review Commission.
(10) The Legislative Reference Bureau.
(11) The Local Government Commission.
(12) The Pennsylvania Commission on Sentencing.
(13) The Legislative Reapportionment Commission.
(14) The Legislative Office for Research Liaison.
(15) The Legislative Audit Advisory Commission.
"Local agency." Any of the following:
(1) Any political subdivision, intermediate unit,
charter school, cyber charter school or public trade or
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vocational school.
(2) Any local, intergovernmental, regional or municipal
agency, authority, council, board, commission or similar
governmental entity.
"Service-disabled veteran." An individual who:
(1) Served in the active United States military in any
of the four current branches and all previous branches,
including a reserve component or the National Guard.
(2) Was released or discharged from active military
service under conditions other than dishonorable.
(3) Possesses a certificate of release or discharge from
active duty.
(4) Possesses either an adjudication letter from the
United States Veterans Administration establishing a service-
connected disability rating or a disability determination
from the United States Department of Defense.
"Small business." A business in the United States which is
independently owned, is not dominant in its field of operation
and employs 100 or fewer employees.
"State-affiliated entity." A Commonwealth authority or
Commonwealth entity. The term includes the Pennsylvania Higher
Education Assistance Agency and any entity established thereby,
the Pennsylvania Gaming Control Board, the Pennsylvania Game
Commission, the Pennsylvania Fish and Boat Commission, the
Pennsylvania Housing Finance Agency, the Pennsylvania Municipal
Retirement Board, the State System of Higher Education, a
community college, the Pennsylvania Turnpike Commission, the
Pennsylvania Public Utility Commission, the Pennsylvania
Infrastructure Investment Authority, the State Public School
Building Authority, the Pennsylvania Interscholastic Athletic
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Association and the Pennsylvania Higher Educational Facilities
Authority. The term shall include a State-related institution.
"State-related institution." Includes:
(1) Temple University.
(2) University of Pittsburgh.
(3) The Pennsylvania State University.
(4) Lincoln University.
Section 4. Title 62 is amended by adding sections to read:
§ 2104.1. Authority to waive employee limit.
(a) Authority to waive.--The department or a Commonwealth
agency may, at its discretion and where it is determined to be
in the best interest of this Commonwealth, waive the small
business employee limit requirement as established in the
definition of "small business" in section 2102 (relating to
definitions) in order to promote and create economic
opportunities for disadvantaged businesses.
(b) Inclusion of employee limit in bid document.--The
department or a Commonwealth agency shall inform prospective
bidders of the decision to waive the small business employee
limit for disadvantaged businesses by including notice of the
waiver in the invitation for bid, request for proposal or any
other bid document that is subject to an employee limit waiver,
prior to its release for bidding purposes by the department or a
Commonwealth agency.
(c) Subsequent determination to waive notice.--If the
department or a Commonwealth agency determines that the small
business employee limit should be waived subsequent to the
release of an invitation for bid, request for proposal or any
other bid document, the department or Commonwealth agency shall
take appropriate action to ensure the inclusion of disadvantaged
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businesses in bidding requirements and provide prompt notice to
all prospective bidders of the determination to waive the small
business employee limit.
(d) Report.--The department shall include in its annual
report to the General Assembly information on its use of the
small business employee limit waiver authorized under this
section. The report shall include, but may not be limited to,
the following information for the preceding calendar year:
(1) The number of times the employee limit was waived
prior to the release of an invitation for bid, request for
proposal or other bid document and the reason for imposing
the waiver.
(2) The number of times the employee limit was waived
following the release of an invitation for bid, request for
proposal or other bid document and the reason for the
subsequent determination to waive the small business employee
limit requirement.
(3) The identity and geographic location of the
disadvantaged businesses subject to an employee limit waiver.
(4) The number of employees of each disadvantaged
business subject to an employee limit waiver.
(5) The dollar amount of each contract awarded which
included a small business employee limit waiver.
(e) Applicability.--The provisions of this section shall
apply to any eligible "disadvantaged business" as defined under
section 2102 (relating to definitions).
§ 2109. Mentor-protégé program.
(a) Establishment and purpose of program.--
(1) The department shall establish a mentor-protégé
program to assist disadvantaged businesses in enhancing their
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capabilities to compete for and perform prime contracts and
subcontracts awarded by a Commonwealth agency.
(2) The purpose of the mentor-protégé program is to
foster long-term business relationships between disadvantaged
businesses and prime contractors in order to facilitate their
growth and development and increase their prime contracting
and subcontracting opportunities with Commonwealth agencies.
(b) General rule.--A prime contractor that is approved as a
mentor by the department may enter into a written agreement with
a disadvantaged business to provide developmental assistance to
enhance the disadvantaged business contracting and
subcontracting capabilities. Developmental assistance provided
by a mentor prime contractor to its protégé disadvantaged
business may include, but not be limited to, the following:
(1) Management assistance, including financial
management, organizational management, business management
and planning and business development.
(2) Technical assistance.
(3) Financial assistance.
(4) Temporary employee assistance.
(5) Use of facilities, equipment or property without
charge.
(6) Any other type of developmental assistance as
approved by the department.
(c) Factor to be considered.--Notwithstanding any other
provision of this title to the contrary, the mentor-protégé
arrangement between a prime contractor and a disadvantaged
business whereby the disadvantaged business serves as a joint
venture partner or subcontractor to the prime contractor shall
be an important factor to be considered or weighed by a
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Commonwealth agency in awarding a contract under sections 513
(relating to competitive sealed proposals), 517 (relating to
multiple awards), 518 (relating to competitive selection
procedures for certain services) and 519 (relating to selection
procedure for insurance and notary bonds).
(d) Guidelines.--The department shall adopt and publish
guidelines to enforce and carry out the requirements of this
section. The guidelines shall be published in the Pennsylvania
Bulletin and shall include, but may not be limited to, the
following:
(1) Selection criteria for mentor and protégé
businesses.
(2) An application process, including an application
form to be used by prime contractors seeking to participate
in the mentor-protégé program and a time frame for review.
(3) Criteria for measuring program impact and success.
(4) The required contents of a mentor-protégé written
agreement. Each such written agreement shall specify the type
of developmental assistance that will be provided by the
mentor to the protégé disadvantaged business.
§ 2110. Small business reserve program.
(a) Small business reserve.--The department shall establish
a small business reserve program for the purpose of increasing
economic opportunities for small and disadvantaged businesses
and affording small and disadvantaged businesses the opportunity
to bid on State government contracts without competing with
larger businesses. All procurement by the department shall be
eligible for designation for the small business reserve program
and shall be published in the same manner as required for a
request for proposal or an invitation for bid.
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(b) Reserve account.--Notwithstanding any other provision of
this title to the contrary, the department shall structure its
procurement procedures to reserve up to 10% of the total dollar
value of its procurement contracts, including public works,
construction and professional services and designed professional
services contracts, to be made directly to qualified small and
disadvantaged businesses. However, the total dollar value of
procurements by the department shall not include the value of
any contract to which this subsection would not apply because of
a conflict with Federal law.
(c) Awards.--The department shall award a procurement
contract designated for a small business reserve to the small
and disadvantaged business that submits a bid or proposal that:
(1) is the lowest bid price;
(2) is the lowest evaluated bid price, if the invitation
for bid or request for proposal so provides; or
(3) is in the best interest of the Commonwealth.
(d) Other Commonwealth agencies.--
(1) A Commonwealth agency may collaborate with the
department to structure its procurement procedures to provide
for a small business reserve program which shall be subject
to the requirements of this act.
(2) Upon request, the department shall assist the
procurement unit of a Commonwealth agency with the
development and implementation of a small business reserve.
(e) Construction and application.--
(1) The provisions of this section shall not be
construed to preclude any small and disadvantaged business
from competing for any other contract that is not
specifically designated for the small business reserve
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program.
(2) The provisions of this section shall apply to any
eligible "small business" as defined under section 2102
(relating to definitions).
(f) Regulations.--The department shall adopt and promulgate
regulations to govern the provisions of this section. The
regulations shall:
(1) Establish a comprehensive bidder's list of eligible
small and disadvantaged businesses.
(2) Provide procedures for maintaining the list in
paragraph (1).
(3) Include any other information the department
determines necessary and appropriate to carry out the
provisions of this act.
(g) Reports.--On or before December 31, 2012, and on or
before each December 31 thereafter, the department shall submit
a report to the Chief Clerk of the Senate and the Chief Clerk of
the House of Representatives on the operation and effectiveness
of the Small Business Reserve Program. The report shall include
the following:
(1) The total number and dollar value of payments the
department made to small and disadvantaged businesses
pursuant to designated small business reserve contracts.
(2) The total number and dollar value of payments the
department made to small and disadvantaged businesses that
were not designated as small business reserve contracts.
(3) The total dollar value of payments made by the
department under procurement contracts.
(4) Information on any Commonwealth agency that has
implemented a small business reserve program, including
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information required under paragraphs (1), (2) and (3).
(5) Any other information or recommendation the
department determines necessary.
§ 2111. Alternative certification.
(a) Acceptance of alternative certification authorized.--To
establish greater uniformity in the Commonwealth's disadvantaged
business certification process, the department may accept the
certification of any eligible disadvantaged business certified
under the Pennsylvania Unified Certification Program as
established by the department in accordance with the
requirements of 49 CFR Ch. 1 Pts. 23 (relating to participation
of disadvantaged business enterprise in airport concessions) and
26 (relating to participation by disadvantaged business
enterprises in Department of Transportation financial assistance
programs). However, the department shall not certify or accept
any certification from an owner of a disadvantaged business who
is not a citizen or lawful permanent resident of the United
States.
(b) Reciprocity.--Notwithstanding any provision of law,
regulation, guideline or policy statement to the contrary, the
certification of any disadvantaged business enterprise by the
department in accordance with subsection (a) shall be accepted
and used by a governmental agency as adequate certification for
the purpose of bidding on or participating in any public bid,
contract or award, the execution of which involves the use of
Commonwealth funds.
(c) Disadvantaged business utilization program.--
(1) Each governmental agency receiving public funds may
establish a disadvantaged business utilization program which
encourages the participation and use of disadvantaged
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businesses in the performance of Commonwealth-funded
contracts.
(2) A governmental agency that fails to establish a
disadvantaged business utilization program in accordance with
paragraph (1) shall adopt and implement the program
established by the department.
(d) Adoption of procurement practices.--The department shall
provide assistance to the Auditor General, the State Treasurer,
the Attorney General and appropriate officers in the legislative
and judicial agencies to develop best procurement practices
specific to the constitutional and statutory functions of each
office and agency and consistent with the provisions of this
title and regulations related to procurement by disadvantaged
businesses. To facilitate participation by disadvantaged
businesses in procurement by constitutional offices and the
judicial and legislative agencies, such constitutional officers
and purchasing agents of any judicial agency or legislative
agency may adopt the procurement practices and utilization
program used by the department to promote participation by
disadvantaged businesses in contracting, subcontracting and
purchasing.
§ 2112. Oversight and responsibility.
(a) Identification of best practices.--
(1) The department shall identify and adopt best
practices for use by Commonwealth agencies to determine the
most effective means for promoting, increasing and sustaining
procurement opportunities for disadvantaged businesses.
(2) The department and each Commonwealth agency awarding
contracts in accordance with the applicable provisions of
this title, including construction, public works, designed
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professional services and professional services contracts,
shall adopt the best practices identified by the department
in accordance with paragraph (1) in order to increase
oversight, transparency and accountability in contracting and
subcontracting and promote, increase and sustain procurement
opportunities for disadvantaged businesses. The best
practices shall include, but not be limited to, the
following:
(i) Uniform templates, including templates for
procurement planning, submitting proposals and bids,
contracting and contract management, including standard
forms, reports and other knowledge-based tools.
(ii) (A) Verifiable goals for participation by
disadvantaged businesses of not less than 25% of the
total dollar value of State contracts entered into by
each Commonwealth agency during the calendar year,
including construction, public works, designed
professional services, professional services
contracts and sole source contracts. In the case of
construction contracts, the participation goal shall
apply to a local agency or other public or private
entity that receives a Commonwealth appropriation or
grant funds for the performance of a construction or
reconstruction project, including a construction or
reconstruction project performed by a private entity
on a facility to be leased or purchased by the
Commonwealth. Existing contracts with an optional
renewal clause that did not include the disadvantaged
business participation goal established under this
subparagraph shall be subject to the participation
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goal and other disadvantaged business review and
inclusion requirements prior to renewal of the
contract by the department or a Commonwealth agency.
(B) The department or a Commonwealth agency may
attain participation goals by, where appropriate,
directly designating prime contracts for
disadvantaged businesses or by requiring that a
portion of a prime contract, which is not directly
designated for disadvantaged businesses, be
subcontracted to disadvantaged businesses.
(C) The department and each Commonwealth agency
shall make a good faith effort to attain the goals
established in this paragraph.
(b) Duties of department.--The department shall:
(1) Ensure that disadvantaged business participation is
a component of its and each Commonwealth agency's strategic
procurement priorities through the identification of
measurable goals and objectives.
(2) Develop a best practices manual for use by
Commonwealth agencies. The manual shall provide procedures
for the uniform implementation of procurement policies, best
practices and participation goals for disadvantaged
businesses.
(3) Establish and require a comprehensive quarterly and
annual reporting process for Commonwealth agencies. Such
reports shall include data on contract award amounts and
actual spending for contractors, subcontractors, vendors,
suppliers and professional services contractors, including
consultant services.
(4) Designate a single point of contact to implement,
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monitor and report work force utilization and contractor
participation in disadvantaged business programs.
(5) Create a coordinated cross-agency, integrated
disadvantaged business support system. The support system
shall be designed to provide training in the areas of
information management, business management, technical
assistance and other such developmental assistance to
disadvantaged businesses.
(6) Identify and adopt uniform monitoring, enforcement,
tracking and reporting procedures, guidelines or policy
statements.
(7) Expand its ability to quantify and measure the
effectiveness of Commonwealth procurement programs.
(8) Use the department's e-marketplace system to provide
public notice of contracting, subcontracting and grant
opportunities.
(9) Continue to connect disadvantaged businesses to
other entities, such as the Small Business Development
Centers, Minority Business Enterprise Centers and
Professional Technical Assistance Centers for developmental
assistance.
(10) Identify and adopt guidelines that will ensure
accountability and transparency in the procurement process.
The guidelines shall include, but not limited to,
documentation requirements to be used throughout the
procurement process, reporting and disclosure requirements,
treatment of confidential information and procedures for
reporting and resolving complaints.
(11) Identify and adopt best practices to ensure that
the procurement process is properly structured and managed to
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ensure probity and provide fairness and equal treatment for
all contractors, including disadvantaged businesses.
(12) Adopt, implement and adhere to all contract
compliance requirements, policy statements, guidelines,
regulations and applicable laws pertaining to procurement by
disadvantaged businesses.
(c) Monitoring, enforcement and sanctions.--The following
shall apply:
(1) The department shall administer this section and
shall adopt and implement best practice guidelines to monitor
and enforce the provisions of this section as they relate to
the Commonwealth's disadvantaged business program.
(2) Each Commonwealth agency shall provide mandatory
quarterly and annual reports on the utilization of
disadvantaged businesses on procurement contracts and
subcontracts. An evaluation of a prime contractor's
performance on contracts shall include a review of good faith
efforts in the oversight of disadvantaged business
procurement, timely payment, as provided under Subchapter D
of Chapter 39 (relating to prompt payment schedules), and
continued commitment to the utilization of disadvantaged
subcontractors.
(3) Sanctions for failure to demonstrate good faith
efforts in the oversight, timely payment and commitment to
disadvantaged businesses and subcontractors shall include
withholding of payments to the prime contractor and
suspension or debarment from participation in Commonwealth
procurement for no less than 12 months or more than 36
months. The department and any other Commonwealth agency may
also institute any appropriate and necessary administrative,
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legal, judicial or other proceedings after inquiry, review or
investigation if it finds that any person, contractor or
grantee has failed to comply with or has violated any
requirement or action set forth in this title or regulations
promulgated under this title.
(d) Construction.--Nothing in this section shall be
construed to authorize the department or a Commonwealth agency
to discriminate in the awarding of any contract or subcontract
or to authorize a contractor or any other person or entity to
discriminate in the solicitation or acceptance of bids or offers
for contracting or subcontracting in any procurement authorized
under this title.
§ 2113. Contractor performance; general conditions.
Each Commonwealth agency taking bids in connection with the
award of any contract shall provide in the general conditions,
under which a bid will be received, that any person making a bid
as a prime contractor shall, in his bid or offer, set forth the
following information:
(1) The name and address of the place of business of
each subcontractor certified as a disadvantaged business that
will perform work or labor or render service to the prime
contractor in connection with the performance of the contract
and that will be used by the prime contractor to fulfill
disadvantaged business participation goals.
(2) The portion of the contract that will be performed
by each subcontractor under paragraph (1). Except that, in
the case of an emergency where a contract is necessary and
essential for the immediate preservation of the public
health, welfare or safety or the protection of State
property, the prime contractor shall list only one
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subcontractor for each portion of the contract as is defined
by the prime contractor in his bid or offer.
(3) A statement of the efforts made to negotiate with
disadvantaged businesses, including the name, address and
telephone number of any disadvantaged business contacted by
the prime contractor; the date the negotiations took place,
if any; and a description of the information provided to the
disadvantaged businesses regarding the plans, specifications
and requirements for the portion of the contract proposed to
be performed by the disadvantaged business.
(4) The bid or offer may also set forth any of the
following information:
(i) Whether the person or a representative of the
person attended any prebid or preproposal conferences.
(ii) A copy of any written notification of the bid
or offer to perform a contract sent by certified mail,
return receipt requested, or electronic mail, read
receipt, to disadvantaged businesses that perform the
type of work to be subcontracted in sufficient time to
allow the disadvantaged businesses to participate
effectively.
(iii) The specific work the person intends to
subcontract, that interest in the project is being
solicited and how to obtain information for the review
and inspection of the plans, specifications and
requirements of the invitation for bids or requests for
proposals.
(iv) A statement of whether economically feasible
portions of the contract will be performed by
disadvantaged businesses, including, where appropriate,
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segmenting or combining elements of a contract into
economically feasible units.
(v) Information on whether the person or a
representative of the person consulted with the Bureau of
Minority and Women Business Opportunities to ensure
significant contracting, subcontracting and purchasing
opportunities for disadvantaged businesses.
(vi) Information on whether the person or a
representative of the person participated in any outreach
activities or events to increase disadvantaged business
interest and participation in contracting, subcontracting
and purchasing opportunities.
(vii) Information on use of the department's
Internet website to identify certified disadvantaged
businesses as prospects for contracting, subcontracting
and purchasing opportunities in connection with a bid or
offer.
(viii) Any solicitation of certified disadvantaged
businesses for contracting, subcontracting or purchasing
opportunities and inclusion of certified disadvantaged
businesses on solicitation lists.
(ix) Records of solicitations, including a bid
tabulation, showing the names of all disadvantaged
businesses solicited and the dollar amount of the bid,
quote or proposal, as well as copies of all bids, quotes
and proposals received.
(x) Any quarterly reports or other report provided
to the Bureau of Minority and Women Business
Opportunities depicting disadvantaged business
utilization.
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(xi) Evidence demonstrating any good faith effort in
the oversight of and timely payment, as provided under
Subchapter D of Chapter 39 (relating to prompt payment
schedules), to disadvantaged businesses and to maintain
the commitment made to disadvantaged businesses that
serve as subcontractor at the time the subcontract was
awarded, and thereafter.
Section 5. Title 62 is amended by adding a chapter to read:
CHAPTER 21-A
SURETY BOND GUARANTEE PROGRAM
Sec.
2101-A. Definitions.
2102-A. Establishment of program.
2103-A. Surety Bond Guarantee Fund.
2104-A. Contract eligible for guarantee.
2105-A. Disadvantaged business participation.
2106-A. Criteria for denying program participation.
2107-A. Duties of department.
2108-A. Regulations.
§ 2101-A. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicant." A disadvantaged business as defined in this
chapter.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Disadvantaged business." A small business which is owned or
controlled by a majority of persons, not limited to members of
minority groups, who have been deprived of the opportunity to
20100HB2149PN4287 - 21 -
develop and maintain a competitive position in the economy
because of social disadvantages. The term shall include a small
business which is owned or controlled by a majority of persons
who are service-disabled veterans.
"Fund." The Surety Bond Guarantee Fund established in
section 2103-A (relating to Surety Bond Guarantee Fund).
"Program." The Surety Bond Guarantee Fund Program
established in this chapter.
"Secretary." The Secretary of Community and Economic
Development of the Commonwealth.
"Service-disabled veteran." A person who:
(1) Served in the active United States military in any
of the four current branches and all previous branches,
including a reserve component or the National Guard.
(2) Was released or discharged from active military
service under conditions other than dishonorable.
(3) Possesses a certificate of release or discharge from
active duty.
(4) Possesses either an adjudication letter from the
United States Department of Veterans Affairs establishing a
service-connected disability rating or a disability
determination from the United States Department of Defense.
"Small business." A business in the United States which is
independently owned, is not dominant in its field of operation
and employs 100 or fewer employees.
"Surety bond." A guarantee in which the surety guarantees
that the contractor or principal in the bond will perform the
obligation stated in the bond. The term shall include the
following types of bonds:
(1) Bid bonds that guarantee the bidder will enter into
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a contract and furnish the required payment and performance
bonds.
(2) Payment bonds that guarantee payment from the
contractor to parties who furnish labor, materials, equipment
and supplies.
(3) Performance bonds that guarantee the contractor will
fulfill the contract in accordance with terms and conditions.
(4) Ancillary bonds which may be incidental and
essential to the performance of the contract.
§ 2102-A. Establishment of program.
The Surety Bond Guarantee Fund Program is established in the
department. The purpose of the program is to assist
disadvantaged businesses to competitively bid for governmental
contracts.
§ 2103-A. Surety Bond Guarantee Fund.
(a) Fund established.--There is established the Surety Bond
Guarantee Fund within the State Treasury for the purpose of
assisting disadvantaged businesses to competitively bid for
certain Commonwealth contracts.
(b) Fund administration.--The fund shall be administered by
the department. All moneys in the fund shall be used to finance
guarantees to bonding companies against percentages of losses
sustained as a result of defaults by qualified disadvantaged
businesses on a contract or project.
(c) Payments from fund.--Surety bond guarantees made with
payments from the fund under the program shall not exceed the
sum of $1,000,000 for any one disadvantaged business.
§ 2104-A. Contract eligible for guarantee.
(a) Eligibility.--A bond guaranteeing the performance of a
contract or project shall be qualified and eligible for a surety
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bond guarantee under the program if:
(1) The bond is listed in the contract bonds section of
the Surety Association of America's "Manual of Rules,
Procedures and Classifications."
(2) The bond is required by the contract, invitation for
bid or request for proposal.
(3) The bond is executed by a surety company that is
acceptable to the Treasury Department and qualified by the
department.
(4) The bond meets any other requirements established by
the department.
(b) Required provision; notice of cancellation.--No bond
shall qualify or be eligible for a guarantee under the program
unless it contains a provision affirming that the bond shall not
be canceled for any cause unless notice of intention to cancel
is given to the department at least 30 days before the day upon
which cancellation shall take effect. Cancellation of the bond
shall not invalidate the bond regarding the period of time it
was in effect.
§ 2105-A. Disadvantaged business participation.
(a) Application process.--A disadvantaged business may apply
to participate in the program by filing an application with the
department. The department shall review the application to
determine if the applicant is eligible to participate in the
program within 30 days of receipt of the completed application.
The department may extend the review period for an additional 30
days if it determines that additional time is needed to complete
the review process. The department shall notify the applicant in
writing of the extended period, including the date it will reach
its final decision.
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(b) Investigation.--Upon receipt of a completed application,
the department may conduct an investigation of the applicant,
including an investigation of its owners, officers, directors,
principals or agents, in order to determine whether the
applicant is eligible to participate in the program. If the
investigation finds and the department determines that an
applicant is not eligible to participate in the program, it
shall notify the applicant in writing that the applicant will
not be approved for program participation. The notification of
ineligibility shall include the reason the application was not
approved and that the applicant has the right to appeal the
department's determination to the secretary within 30 days of
the date of the notice.
(c) Criteria for determining eligibility.--An applicant
shall be deemed eligible to participate in the program if the
department determines that an applicant meets all of the
following qualifications:
(1) The applicant is a disadvantaged business certified
by the department.
(2) The applicant is in the construction or building
trade industry.
(3) The applicant has been actively operating its
business for at least one year prior to the application date.
(4) The applicant has the experience and financial
fitness appropriate to a qualified contract.
(5) The applicant has agreed to subcontract no more than
75% of the work to be performed under a qualified contract or
project.
(6) The applicant has demonstrated an inability to
secure bonding under normal market conditions.
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(7) The applicant or one of its owners, officers,
directors, principals or agents has not committed or been
convicted of any of the activities set forth in section 2106-
A (relating to criteria for denying program participation).
(8) The applicant meets any other program requirements
that establish criteria for eligibility that the department
shall adopt by regulation within 180 days of the effective
date of this chapter.
§ 2106-A. Criteria for denying program participation.
The department may not approve an application for program
participation if it determines that the applicant or one of its
owners, officers, directors, principals or agents committed or
has been convicted of the following:
(1) Made a material misstatement in the application or
any other document required to be submitted by the department
or under a provision of this chapter.
(2) Failed to comply with or violated any provision of
this chapter or any regulation, order or statement of policy
issued by the department under this chapter.
(3) Engaged in unfair or unethical conduct in connection
with the construction or building trade industry or in
violation of Chapter 23 (relating to ethics in public
contracting).
(4) Does not possess the financial fitness, character,
reputation, integrity and general fitness sufficient to
warrant reasonable belief that the applicant's business will
be conducted lawfully, honestly and in the public interest.
(5) Notwithstanding any other provision of law to the
contrary, been convicted of or pleaded guilty or nolo
contendere to a crime of moral turpitude or to an offense
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graded as a felony.
(6) Been enjoined by a court of competent jurisdiction
from engaging in the construction or building trade industry.
(7) Has had a license issued by the department or any
other Federal, state or local agency denied, not renewed,
suspended or revoked.
(8) Became the subject of a United States Postal Service
fraud order.
(9) Demonstrated negligence or incompetence in
performing an act for which the applicant is required to hold
a license under an act enacted by this Commonwealth.
(10) Has an outstanding debt to the Federal Government,
the Commonwealth or any Federal or Commonwealth agency or a
political subdivision of the Commonwealth or agency of a
political subdivision.
(11) Became insolvent at any time prior to the
application date, meaning that the liabilities of the
applicant exceeded the assets of the applicant or that the
applicant could not meet the obligations of the applicant as
they matured or was in such financial condition that the
applicant could not continue in business without jeopardizing
the health, safety and welfare of its customers and
employees.
(12) At any time prior to application, has failed to
disburse payments to subcontractors in a timely manner as
agreed to under a contract for any reason other than the
owner's failure to make the agreed-to payments to the
applicant or because such disbursement would constitute a
violation of applicable law or an order issued by a court or
administrative body of competent jurisdiction.
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§ 2107-A. Duties of department.
(a) Technical assistance.--The department shall provide
technical assistance to enable disadvantaged businesses to
competitively bid on State and other governmental contracts.
Technical assistance shall include, but not be limited to,
assisting disadvantaged businesses in responding to bid
requests, strengthening financial condition and addressing other
concerns raised or likely to be raised by a bonding company.
(b) Monitoring program.--The department shall establish a
monitoring program to monitor the activities of disadvantaged
businesses participating in the program. The monitoring program
shall include inspections of projects approved for bond
guarantees to minimize the risk of calls on the fund. The
department shall promptly advise the disadvantaged business of
any deficiencies identified during an inspection. In the event
the deficiencies noted in the report are not promptly addressed
by the disadvantaged business to the satisfaction of the
department, the department may give the disadvantaged business a
reasonable period to correct the deficiencies or may report such
deficiencies to the issuing bond company.
§ 2108-A. Regulations.
The department shall administer and enforce the provisions of
this chapter and shall adopt and promulgate regulations,
guidelines or policy statements necessary to carry out the
provisions of this chapter.
Section 6. Section 3933(c) of Title 62 is amended to read:
§ 3933. Contractors' and subcontractors' payment obligations.
* * *
(c) Payment.--When a subcontractor has performed in
accordance with the provisions of the contract, a contractor
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shall pay to the subcontractor, and each subcontractor shall in
turn pay to its subcontractors, the full or proportional amount
received for each such subcontractor's work and material, based
on work completed or services provided under the subcontract,
[14] seven days after receipt of a progress payment. Payment
shall be made under this section unless it is being withheld
under section 3934 (relating to withholding of payment for good
faith claims).
* * *
Section 2. This act shall take effect immediately. <--
Section 7. It is the intent of the General Assembly that the <--
additions and amendments to 62 Pa.C.S. Ch. 21 shall be enacted
and enforced in their entirety. Should any portion or provision
of the additions or amendments to 62 Pa.C.S. Ch. 21 be declared
unconstitutional, the remaining additions or amendments to 62
Pa.C.S. Ch. 21 shall remain in effect and be enforceable.
Section 8. The provisions of this act are severable. If any
provision of this act or its application to any person or
circumstance is held invalid, the invalidity shall not affect
other provisions or applications of this act which can be given
effect without the invalid provision or application.
Section 9. This act shall take effect as follows:
(1) The following provisions shall take effect
immediately:
(i) The amendment of 62 Pa.C.S. § 3933(c).
(ii) This section.
(2) The remainder of this act shall take effect in 60
days.
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