HB0102 98TH GENERAL ASSEMBLY

LRB098 03906 AMC 33924 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB0102

Introduced 1/10/2013, by Rep. William Davis

SYNOPSIS AS INTRODUCED:

220 ILCS 5/4-503 new

Amends the Public Utilities Act. Requires the Illinois Commerce Commission to establish a procedure for entities regulated by it and their Commission-regulated subsidiaries and affiliates to submit annual detailed and verifiable plans for increasing female, minority, and disabled veteran business's procurement in all categories. Provides that the Commission shall provide a clearinghouse for the sharing of identification and verification information of qualifying businesses. Sets forth guidelines and goals for each regulated entity's program to ensure that qualifying businesses are encouraged to become potential suppliers of products and services to the regulated entity, including provisions regarding outreach programs and subcontracting programs. Requires each regulated entity to set substantial and verifiable short-term, mid-term, and long-term goals for the utilization of qualifying businesses. Requires each regulated entity to submit an annual report and an annual plan with respect to these goals. Requires the Commission to provide an annual report to the General Assembly on the progress of activities undertaken by each regulated entity. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Public Utilities Act is amended by adding Section 4-503 as follows:

(220 ILCS 5/4-503 new)

Sec. 4-503. Procurement from female owned, minority owned, and qualified service-disabled veteran-owned small businesses; goals; reports.

(a) For the purpose of this Section:

"Certification" means a determination made under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, Section 45-57 of the Illinois Procurement Code, or the clearinghouse that a business entity is a female owned business, minority owned business, or qualified service-disabled veteran-owned small business for whatever purpose. A business owned and controlled by females shall select and designate whether such business is to be certified as (i) a female owned business or minority owned business if the females are also minorities or (i) a female owned business or qualified service-disabled veteran-owned small business if the females are qualified service-disabled veterans.

"Clearinghouse" means the clearinghouse authorized under subsection (d) of this Section.

"Control" has the meaning given to that term in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.

"Female owned business" has the meaning given to that term in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.

"Goal" means a target that, when achieved, indicates progress in a preferred direction. A goal is neither a requirement nor a quota.

"Long-term goal" means a goal applicable to a period of 5 years.

"Mid-term goal" means a goal applicable to a period of 3 years.

"Minority owned business" has the meaning given to that term in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.

"Product and service categories" means product and service categories as defined by the Standard Industrial Classification (SIC) system maintained by the United States Department of Labor, Occupational Safety and Health Administration.

"Qualified service-disabled veteran-owned small business" has the meaning given to that term in Section 45-57 of the Illinois Procurement Code.

"Qualifying business" means a female owned business, minority owned business, or qualified service-disabled veteran-owned small business.

"Regulated entity" means any entity that is regulated by the Commission and their Commission-regulated subsidiaries and affiliates.

"Short-term goal" means a goal applicable to a period of one year.

"Subcontract" means an agreement or arrangement between a contractor and any party or person in which the parties do not stand in the relationship of an employer and an employee (i) for the furnishing of supplies or services for the use of real or personal property, including lease arrangements, which, in whole or in part, is necessary to the performance of any one or more contracts or (ii) under which any portion of the contractor's obligation under any one or more contracts is performed, undertaken, or assumed.

(b) The Commission shall establish a procedure for regulated entities to submit annual detailed and verifiable plans for increasing female, minority, and disabled veteran business's procurement in all categories. In addition, the Commission may accept such plans from cable operators.

In cases where the application of this Section results in undue hardship or unreasonable expense to a regulated entity, the regulated entity may request relief by filing an application with the Commission. Where the relief requested is of minor importance or temporary in nature, the regulated entity may apply for such relief through an advice letter filing. Any advice letter filing must, at a minimum, be served on all parties on the service list of this proceeding.

(c) The clearinghouse shall supply a verification form to applicants. An applicant may complete the verification forms and return them to the clearinghouse for processing and inclusion in the database. In addition to verification by the clearinghouse, a regulated entity may accept verification of a qualifying business's status made under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act or Section 45-57 of the Illinois Procurement Code or made by the Supplier Clearinghouse used by the California Public Utilities Commission.

In assessing the suitability of a qualifying business to bid for procurement contracts, a regulated entity may require additional information or the completion of additional forms to comply with specific requirements created by the unique character of its business, including, but not limited to, insurance requirements, product and service codes, and bonding limits. A regulated entity may not, however, require such additional information in order to verify that a business is in fact a qualifying business.

Female owned businesses and minority owned businesses shall be required to submit verification forms at least once every 3 years.

Completion of the verification application only initiates a verification of the business's status as a female owned business or minority owned business. Filing of an application does not guarantee verification.

The fact that a verified qualifying business is included in the clearinghouse database shall not be construed as an endorsement of its ability to perform, nor shall such inclusion guarantee it business with the utilities.

Verification forms for female owned businesses or minority owned businesses shall be available for inspection by the Commission.

Falsification of information on the verification form is subject to penalties as set by the Commission by administrative rule.

(d) The Commission shall provide a clearinghouse for the sharing of identification and verification information of qualifying businesses. The Commission may establish and operate such a clearinghouse internally or authorize, by decision or resolution, a regulated entity-formed entity or arrangement to fund the operation of such a clearinghouse. In authorizing a regulated entity-formed entity or arrangement, the Commission must specify sufficient terms and conditions to specify how verifications and audits shall be performed and to ascertain and ensure that the clearinghouse is operated in accordance with this Section and other applicable legal requirements.

The primary purpose of the clearinghouse shall be to audit and verify the status of qualifying businesses and to establish and maintain a database of qualifying businesses that is accessible to the Commission and to participating utilities. The clearinghouse auditing and verification program shall preclude the need for an individual regulated entity to audit and verify the status of the qualifying businesses it does business with.

The clearinghouse shall distribute renewal verification forms to female owned businesses or minority owned businesses at least once every 3 years. If the renewal is not completed and returned within a reasonable time, the clearinghouse shall notify the female owned business or minority owned business and utilities that the female owned business or minority owned business will not be listed as a verified female owned business or minority owned business in the shared database until the renewal is completed.

(d) Each regulated entity's program shall be designed to ensure that qualifying businesses are encouraged to become potential suppliers of products and services to the utilities subject to this Section. Nothing in this Section authorizes or permits a regulated entity to utilize setasides, preferences, or quotas in administration of its program. The regulated entity retains its authority to use its legitimate business judgment to select the supplier for a particular contract.

Each regulated entity shall maintain an appropriately sized staff to provide overall program direction and guidance and to implement program requirements. Each regulated entity shall ensure that its employees with procurement responsibilities receive training in the implementation of its program.

Each regulated entity shall implement an outreach program to inform and recruit qualifying businesses to apply for procurement contracts. Outreach activities may vary for each regulated entity depending on its size, service territory, and specific lines of business. However, each regulated entity shall, at a minimum:

(1) actively seek out opportunities to identify qualifying businesses and to expand qualifying business source pools;

(2) actively support the efforts of organizations experienced in the field who promote the interests of qualifying businesses;

(3) work with qualifying businesses to facilitate contracting relationships by explaining regulated entity qualification requirements, bid and contracting procedures, materials requirements, invoicing and payment schedules, and other procurement practices and procedures;

(4) at the request of any unsuccessful qualifying business bidder, provide information concerning the relative range or ranking of the qualifying business's bid as contrasted with the successful bid; information on additional selection criteria, such as warranty periods, maintenance costs, and delivery capability, shall be provided when requested if disclosure would not violate the proprietary nature of the specific contract element;

(5) to the extent possible, make available to qualifying businesses lists of regulated entity purchase and contract categories that offer them the best opportunity for success;

(6) encourage employees involved in procurement activities to break apart purchases and contracts as appropriate to accommodate the capabilities of qualifying businesses; and

(7) summarize this Section in its outreach program handouts.

Each regulated entity is directed to offer the same assistance set forth in this subsection (d) to entities that are not qualifying businesses, upon request.

(e) Each regulated entity shall establish and maintain a subcontracting program for the purpose of encouraging its prime contractors to utilize qualifying businesses. The subcontracting program shall serve as an enhancement to, and not as a replacement for, the regulated entity's prime contractor outreach program. The subcontracting program shall apply to:

(1) purchases or contracts exceeding $500,000 for products and services;

(2) construction contracts exceeding $1,000,000; and

(3) purchases or contracts that offer subcontracting opportunities to qualifying businesses, regardless of value, where appropriate.

The subcontracting program need not be applied to the procurement of products manufactured for general consumption, such as paper, pens, and the like.

Each regulated entity shall encourage and assist its prime contractors to develop plans to increase the utilization of qualifying businesses as subcontractors. Prime contractors shall be encouraged to submit to the regulated entity plans that include goals for the utilization of qualifying businesses as subcontractors. These plans may be incorporated into the contract between the regulated entity and the prime contractor. The prime contractor may submit periodic reports on its compliance with the plan to the regulated entity.

Each regulated entity is encouraged to incorporate in all purchase orders, requests for bid proposals, and other appropriate procurement documents related to procurement efforts subject to the subcontracting program, a statement in substantially the following form:

"UTILIZATION OF FEMALE OWNED BUSINESSES, MINORITY OWNED BUSINESSES, AND QUALIFIED SERVICE-DISABLED VETERAN-OWNED SMALL BUSINESSES

(1) It is the policy of (insert the name of the regulated entity) that female owned businesses, minority owned businesses, or qualified service-disabled veteran-owned small businesses shall have the maximum practicable opportunity to participate in the performance of contracts. However, this policy shall not be used to exclude other qualified businesses from participating in regulated entity contracting.

(2) The contractor agrees to use his or her best efforts to carry out this policy in the award of subcontracts to the fullest extent consistent with the efficient performance of this contract.

(3) The contractor agrees to inform prospective female owned businesses, minority owned businesses, or qualified service-disabled veteran-owned small businesses of their opportunity to request from the clearinghouse a verification application form and to return the completed form to the clearinghouse for processing and inclusion in the database.".

Each regulated entity is encouraged to inform suppliers of products and services that suppliers' good faith efforts to subcontract with qualifying businesses is a factor that will be considered in the bid evaluation process. A statement to that effect could be included in all appropriate procurement documents.

Each regulated entity shall monitor and include in its annual report to the Commission a summary of prime contractor progress in increasing the participation of qualifying businesses. Each regulated entity shall include in its annual plan a description of future plans for encouraging both prime contractors and grantees to engage qualifying businesses in all procurement categories that provide subcontracting opportunities. Each regulated entity may include awards to verified qualifying businesses in its results.

(f) Each regulated entity shall set substantial and verifiable short-term, mid-term, and long-term goals for the utilization of qualifying businesses. Goals shall be set annually for each major product and service category that provides opportunities for procurement. A goal shall be considered substantial if it is realistic and clearly demonstrates a regulated entity's commitment to encourage the participation of qualifying businesses in regulated entity purchases and contracts. The utilities shall consider the following factors in setting their goals:

(1) total regulated entity purchasing and contracting projections;

(2) availability of qualifying businesses and competitiveness in the geographical area served by the regulated entity;

(3) market dynamics based on historical data and trends; and

(4) other appropriate factors that would increase the qualifying businesses' share of regulated entity business.

Each regulated entity shall establish initial minimum long-term goals for each major category of products and services the regulated entity purchases from outside vendors of not less than 11% for minority owned businesses and not less than 7% for female owned businesses. For the purposes of this Section, contracts with minority female owned businesses can be counted toward either the minority owned business goal or the female owned business goal, but not toward both. Similarly, contracts with qualified service-disabled veteran-owned small businesses can be counted either as service-disabled veteran-owned small business procurement or the appropriate female or minority business goal, but not toward both. The goal for qualified service-disabled veteran-owned small business participation in procurement programs of the participating utilities is set at 3%. The specification of initial long-term goals in this subsection shall not prevent the utilities from seeking to reach a goal of awarding 30% or more of their contracts to female owned businesses and minority owned businesses.

Goals shall also be established for both minority female owned businesses and non-minority female owned businesses. These goals are to be a subset of the overall goal for female owned businesses and minority owned businesses established by this subsection (f). These goals are intended to ensure that utilities do not direct their female owned business and minority owned business procurement programs toward non-minority female owned businesses and minority male owned businesses to the detriment or exclusion of minority female owned businesses.

Goals shall be set for each major category of products or services. For each major category of products and services where the minimum long-term goals required by this subsection (f) are not met, the regulated entity shall include a comprehensive discussion and detailed description of any efforts made to find or recruit qualifying businesses' suppliers of products or services in areas where qualifying businesses' suppliers are currently the only available procurement method. The regulated entity may also explain in detail in its annual report how its ability to meet its qualifying business's goals are affected because the qualifying businesses capable of supplying certain products and services are unavailable, or because sole source procurement is the only available procurement method.

A regulated entity that, on the effective date of this Section, is purchasing products or services from affiliates may subtract the dollars paid to affiliates for these products or services from the total dollars used as the basis for establishing goals for purchases from qualifying businesses of these categories of products or services, provided that the regulated entity encourages the affiliate to establish an appropriate subcontracting program where such affiliate employs subcontractors. Any regulated entity that subtracts these dollars must, in its annual report to the Commission, state whether the affiliates have established a subcontracting program and describe the results of any such program. The regulated entity's annual plan must describe any future plans to encourage such a subcontracting program.

Goals for each specific product or service category shall be expressed as a percentage of total dollars awarded by a regulated entity to outside vendors in that category; however, where appropriate, non-numeric goals may also be included. Overall program goals shall be expressed as a percentage of total dollars awarded to outside vendors in all categories of products and services purchased by a regulated entity other than products and services which are included in a fuel procurement base established pursuant to this subsection (f). Payments to other utilities, franchise tax fees, other taxes, and postage need not be included in the standard procurement base used to establish goals.

Each regulated entity may establish a separate fuel procurement base for reporting progress and establishing goals for procurement of fuels from qualifying businesses. Utilities choosing to report fuel purchases separately from the purchase of other products and services must follow the following guidelines:

(i) Fuel used to power vehicles, heat facilities, and supply emergency generators may not be included in the fuel procurement base. Such fuel must be included in the standard procurement base used to establish goals.

(ii) The fuel procurement base must, at a minimum, include all purchases of natural gas from domestic on-shore natural gas markets.

(iii) Utilities that purchase fuels other than domestic on-shore natural gas from qualifying businesses must include such purchases in the fuel procurement base.

Each regulated entity shall make special efforts to increase utilization and encourage entry into the marketplace of qualifying businesses in product or service categories where there has been low utilization of qualifying businesses, such as legal and financial services, fuel procurement, and areas that are considered technical in nature.

No penalty shall be imposed for failure of any regulated entity to meet or exceed goals.

(g) Utilities shall report their goals in an annual report. Each regulated entity shall serve 12 copies of its annual report on its qualifying business program on the Executive Director by March 1 of each year beginning in 2014. The annual report shall contain at least:

(1) a description of the activities of its qualifying business program engaged in during the previous calendar year, including both internal and external activities;

(2) a summary of purchases and contracts with qualifying businesses, with breakdowns by ethnicity, product, and service categories compared with total contract dollars awarded to outside vendors in those categories;

(3) an itemization of its qualifying business program expenses, provided in the format required by the Commission;

(4) a description of its progress in meeting or exceeding set goals and an explanation of any circumstances that may have caused the regulated entity to fall short of its goals;

(5) a summary of prime contractor utilization of qualifying business subcontractors; and

(6) a description of any efforts made to recruit qualifying business suppliers of products or services in procurement categories where qualifying business utilization has been low, such as legal and financial services, fuel procurement, and areas that are considered highly technical in nature.

Utilities shall retain all documents and data they rely on in preparing their annual report for the longer of either 3 years or in conformance with the utilities' individual document retention policies, and shall provide these documents and data to the Commission upon request.

(h) Each regulated entity that elects to report fuel procurement separately must file with the Executive Director by March 1 of each year, beginning in 2014, a separate detailed and verifiable report on qualifying business participation in fuel markets. These reports must include, at a minimum, the results of purchases in each fuel category. Each regulated entity shall report purchases by:

(1) market origin and fuel type;

(2) volume and dollar magnitude;

(3) the term of sale, such as spot, intermediate, or long-term; and

(4) the ethnicity and gender of the supplier.

Each regulated entity shall provide (i) an explanation of how existing and changing market conditions are affecting the regulated entity's ability to meet or exceed its qualifying business goals for fuel; (ii) a comprehensive description of the specific out-reach programs used to seek qualifying business fuel suppliers in each market in which fuel is purchased; and (iii) a justification for any exclusion of a specific fuel category from the regulated entity's fuel procurement base.

(i) Nothing in this Section shall prohibit any regulated entity from breaking down specific categories further than specifically required under this Section.

(j) Utilities shall serve 12 copies of a detailed and verifiable plan for encouraging qualifying business procurement in all categories on the Executive Director by March 1 of each year, beginning in 2014. The annual plan shall contain at least:

(1) the short-term, mid-term, and long-term goals set as required by this Section;

(2) a description of qualifying business program activities planned for the next calendar year, which shall include both internal and external activities;

(3) plans for recruiting qualifying business suppliers of products or services where utilization of qualifying businesses has been low, such as legal and financial services, fuel procurement, and areas that are considered highly technical in nature;

(4) plans for seeking and recruiting qualifying business suppliers of products or services where qualifying business suppliers are currently unavailable;

(5) plans for encouraging both prime contractors and grantees to engage qualifying businesses in subcontracts in all categories that provide subcontracting opportunities; and

(6) plans for complying with the qualifying business program guidelines established by the Commission by rule.

(k) The Commission shall provide an annual report to the General Assembly, beginning in January of 2015, on the progress of activities undertaken by each regulated entity to implement this Section. In this report, the Commission shall recommend a program for carrying out the policy declared in this Section, together with recommendations for legislation it deems necessary or desirable to further that policy. This report shall include recommendations to the utilities for the achievement of maximum results in implementing this Section.

Section 99. Effective date. This Act takes effect upon becoming law.