Section 4.4545  Small Businesses

a)         Authority to Establish Small Business Set-Aside

The CPO-HE, in consultation with the universities, may determine categories of construction, supplies or service procurements that will be set aside for small businesses in Illinois.  A set-aside designation shall be for a stated period of time.  An SPO, in consultation with a university, may determine to set aside for small business individual contracts not in a set-aside category.  A set-aside may be established for competitive solicitations or for small purchases.

b)         Certified Small Business List

The CPO-HE, in consultation with the universities, may develop its own list, or may use a list maintained by another CPO, of vendors that meet the criteria of small business.

c)         Contract Set-Aside

1)         Any procurement proposed for set-aside to small businesses shall be so identified in the Bulletin notice and the solicitation documents.  Bids or proposals received from large businesses will be rejected as nonresponsive.  Vendors desiring to submit bids or proposals or to otherwise contract for items set aside for small businesses must be certified as a small business by one or more CPOs or shall submit information as specified verifying that the vendor qualifies as a small business under this Part.  A business that fits the definition of small on the day of award or proposal opening will be considered small for the duration of the contract.

2)         When conducting a small purchase in a set-aside category, the university shall consult the list of certified small businesses and shall solicit at least three vendors under the commodity codes or classifications representing the supplies or services being solicited.  Vendors outside a reasonable geographic area need not be contacted.

3)         The SPO may waive the requirement for set-aside on individual transactions based upon a request from the university that a set-aside is not conducive to meeting its need.

4)         Withdrawal of Set-Aside

If the SPO determines that acceptance of the best bid or proposal will result in the payment of an unreasonable price, the SPO may reject all bids or proposals and withdraw the designation of small business set-aside for the procurement in question.  When a small business set-aside is withdrawn, notification shall be published in the Bulletin with an explanation.  After withdrawal of the small business set-aside, the procurement shall be conducted in accordance with this Part but without the small business designation.

d)         Criteria for Small Business

1)         Unless the CPO-HE provides a definition for a particular procurement that reflects industrial characteristics, a small business is a business that is independently owned and operated and is not dominant in its field of operation.

A)        A wholesale business is a small business if its annual sales for its most recently completed fiscal year do not exceed $13,000,000.

B)        A retail business or business selling services is a small business if its annual sales and receipts for its most recently completed fiscal year do not exceed $8,000,000.

C)        A manufacturing business is a small business if it employs no more than 250 persons.  A manufacturing business shall calculate how many people it employs by determining its average full-time equivalent employment, based on the number of persons employed on a full-time, part-time, temporary or other basis, for its most recently ended fiscal year.  If a manufacturing business has been in existence for less than a full fiscal year, its average employment shall be calculated for the period through one month prior to the bid or proposal due date.

D)        A construction business is a small business if its annual sales and receipts for its most recently completed fiscal year do not exceed $14,000,000.

E)        If a business is any combination of retailer, wholesaler or construction business, then the annual sales for each component may not exceed the higher of $13,000,000 for a wholesaler, $8,000,000 for a retailer, $14,000,000 for a construction business or the amounts shown in Section 45-45 of the Code.  For example, a business that is both a retailer and a wholesaler may not have total sales exceeding $21,000,000 and the retail component may not exceed $8,000,000 and the wholesale component may not exceed $13,000,000.  If the business is also a manufacturer, in addition to meeting the annual sales requirement, the number of manufacturing employees may not exceed 250.

2)         A small business in Illinois is defined as a company that meets the criteria in subsection (e)(1) and is a sole proprietor whose primary residence is in Illinois or is a business incorporated or organized as a domestic corporation under the Business Corporation Act of 1983 [805 ILCS 5/1.80], is a business organized as a domestic limited liability company under the Limited Liability Company Act [805 ILCS 180], is a business organized as a domestic partnership under the Uniform Partnership Act of 1997 [805 ILCS 206], or a business organized as a domestic limited partnership under the Uniform Limited Partnership Act of 2001 [805 ILCS 215].

3)         A small business that is not dominant in its field of operations means the business does not exercise a controlling or major influence in the kind of business activity in which it is engaged.  In determining dominance, consideration shall be given to all appropriate factors, including volume of business, number of employees, financial resources, competitive status or position, ownership or control of materials, processes, patents, license agreements, facilities, sales territory, and nature of business activity.

4)         Businesses artificially divided to qualify as small business will be disallowed.  When computing the size status of a vendor and whether the vendor qualifies as a small business, the number of employees and annual sales and receipts, as applicable, of the vendor and all affiliates, concerns and related entities shall be included.  Concerns and related entities are affiliates of each other when one directly or indirectly controls or has the power to control the other, or when a third party or parties controls or has the power to control both.  It does not matter whether control is exercised, so long as the power to control exists.  In determining whether concerns and related entities are independently owned and operated and whether affiliation exists, consideration shall be given to all appropriate factors, including use of common facilities, common ownership and management, identity of interest (substantially identical business or economic interests such as family members, individuals or firms with common investments, or firms that are economically dependent through contractual or other relationships) and contractual arrangements.  In determining whether affiliation exists, the CPO-HE will consider the totality of the circumstances, and may find affiliation even though no single factor is sufficient to constitute affiliation.  A franchise relationship shall not affect small business status if the franchise has the right to profit commensurate with ownership and bears the risk of loss or failure.

e)         Small Business Specialist

1)         The CPO-HE shall designate a small business specialist, who shall have the duties set forth in Section 45-45(e) and (f) of the Code, and who shall also act as coordinator of small business.  The designated small business specialist shall compile statistics provided by the university needed to make the small business annual report to the General Assembly required under Section 45-45(f) of the Code.

2)         The small business specialist shall provide written instruction to any business registered as a small business in accordance with Section 45-45 of the Code on how to register for the Public Higher Education Bulletin.  Notice shall be provided within 30 days after the small business certification.

f)         Small Business Contracts

1)         Goal

A)        It is the goal of the State of Illinois to award not less than 10% of the total dollar amount of State contracts to small businesses. 

B)        Small businesses are defined as those businesses meeting the criteria established in Section 45-45 of the Code and subsection (d) of this Section.  

2)         Goal Measurement

A)        The goal shall be measured on a full fiscal year basis. 

B)        Each university's expenditures, whether against contracts established by the university or against contracts established on behalf of a university, shall be included in the university's goal attainment statistics.

C)        A university may satisfy its goal, in whole or in part, by counting expenditures made by State vendors to subcontractors that are small businesses.

3)         University Compliance Plans

A)        Each university shall submit an annual compliance plan of how it intends to reach its goal and a timetable for reaching its goal.  The CPO-HE shall establish the format and timetable for submission of the compliance plan.  The CPO-HE shall approve the plan if it meets the requirements of the Code and this Part.

B)        Each university shall submit an annual utilization report of small business contracts during the preceding fiscal year, including lapse period spending and a mid-fiscal year utilization report.  The CPO-HE shall establish the format and timetable for submission of the utilization report.

C)        The CPO-HE or small business specialist appointed under Section 45-45 of the Code may recommend ways in which a university may reach its goal. Upon a finding by the CPO-HE that a university's compliance plan is insufficient to reach the university's goal, the CPO-HE shall recommend ways in which a university can reach its goal.  Those recommendations may include, but are not be limited to:

i)          using stronger and better focused solicitation efforts to obtain more small businesses as potential sources of supply;

ii)         division of job or project requirements, when economically feasible, into smaller, more manageable, tasks or quantities;

iii)        elimination of extended experience or capitalization requirements when programmatically feasible; and

iv)        identification of specific proposed contracts as particularly attractive or appropriate for participation by small businesses.

D)        If the compliance plans or utilization reports indicate a university's goal will not be reached, the CPO-HE may request that the university explain the university's noncompliance.  If the CPO-HE determines a university is not making a serious effort to reach the goal, the CPO-HE will prepare a report for submission to the Governor and General Assembly with recommendations for remedial action.

(Source:  Amended at 43 Ill. Reg. 1781, effective February 15, 2019)