Relates to the state procurement council and special provisions regarding joint ventures.
Ayes (26): DeFrancisco, Farley, Flanagan, Fuschillo, Golden, Griffo, Grisanti, Hannon, Lanza, Larkin, LaValle, Little, Marcellino, Nozzolio, O'Mara, Ranzenhofer, Robach, Savino, Seward, Young, Dilan, Gianaris, Breslin, Parker, Stavisky, Kennedy
Ayes W/R (5): Bonacic, Montgomery, Peralta, Squadron, Espaillat
Nays (4): Krueger, Rivera, Perkins, Hassell-Thompson
Excused (1): Diaz
Ayes (44): Addabbo, Avella, Ball, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Farley, Felder, Flanagan, Fuschillo, Gallivan, Gipson, Golden, Griffo, Grisanti, Hannon, Kennedy, Klein, Lanza, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Ranzenhofer, Ritchie, Robach, Savino, Seward, Skelos, Smith, Tkaczyk, Valesky, Young, Zeldin
Nays (14): Dilan, Espaillat, Gianaris, Hassell-Thomps, Hoylman, Krueger, Parker, Peralta, Perkins, Rivera, Sanders, Serrano, Stavisky, Stewart-Cousin
Absent (5): Adams, Bonacic, Larkin, Sampson, Squadron
TITLE OF BILL: An act to amend the state finance law, in relation to the state procurement council and special provisions regarding joint ventures; and providing for the expiration and repeal of such provisions upon expiration thereof
PURPOSE: To give MWBEs and service-disabled veteran owned companies opportunities for joint ventures and teaming in a pilot project under the state procurement law.
SUMMARY OF PROVISIONS:
Section 1. Amends State Finance Law, paragraph n of subdivision 2 of section 161, to add making recommendations for teaming and joint ventures to the responsibilities of the state procurement council.
Section 2. Amends section 165 of the State Finance Law by adding a new subdivision 9:
o Disabled Veteran Business Enterprise is a business enterprise in which a disabled veteran has a 51% or greater ownership with independent control, which has been certified as a disadvantaged business enterprise (DBE) by the federal DOT or other federal agency, or by a national certification organization satisfactory to the commissioner. "Disabled Veteran" has the same meaning as in civil service law.
* New York Business Enterprise is a business formed and located in New York, which has more than 50% of its employees in this state and realizes more than 50% of its gross revenues from this state.
* Diversity Business Enterprise means an MWBE or Disabled Veteran Business Enterprise.
* Joint venture is a business entity that includes one or more Diversity Business Enterprises and one or more New York Business Enterprises for a specific project in which the parties contribute equity, assets, and expertise.
* Teaming is a cooperative written agreement between one or more Diversity Business Enterprises and one or more New York Business Enterprises that defines the common purpose, performance goals, approach, financing, liability, and accountability for a project, satisfactory to the commissioner.
B. Requires the OGS commissioner to establish a pilot program, subject to the following:
* Work and Ownership: The Diversity Business Enterprise shall perform a share of the work equal to its ownership or potential profit from the venture. The agreement brings resources, financing, and expertise that would not otherwise be available to the Diversity Business Enterprise, and
* Price: The contract price equals or is less than would otherwise be charged by an entity which is not a JV or which is not involved in such teaming agreement, and
* Engagement: The JV or teaming arrangement demonstrates significant engagement by the Diversity Business Enterprise.
C. in addition
* Article 15-A contracts: If an MWBE has an ownership of 50% or greater, then the JV is eligible for opportunities for participation on contracts for minority and women owned business enterprises pursuant to Article 15-A of the Executive Law.
* Localizing Factors: OGS may additionally set other factors in contracts under the pilot, such as distance from the job or project, green technology, financial or expert resources of the contractor or joint venture or teaming arrangement, the freshness or newness of the product, the impact of extended transportation, etc.
* Weighting: OGS must weight any consideration in awarding a contract by the percentage of the JV or teaming arrangement allocated to the Diversity Business Enterprise.
D. Report: The commissioner shall report annually on January 1 of each year, beginning in the second calendar year after enactment of this program, on contracts let to joint ventures, and the development of Diversity Business Enterprises as a result of such joint ventures.
EXISTING LAW: New bill.
JUSTIFICATION: The major barrier in development of new Minority or Women Business Enterprises, and businesses of disabled veterans, is access to capital, expertise, and resources. Absent these, the business entities cannot obtain larger contracts. The problem is classic: the MWBE or disabled veteran enterprise cannot grow because it is too small to get access to the capital and resources it needs to meet performance bonds, cash flow and other requirements; but it cannot grow without access to these things.
Teaming and joint ventures provide a way for these business entities to gain access to the cash, resources, expertise and other attributes needed for growth by providing mutually beneficial access to the expertise and resources or a larger company. Procurement makes up as much as a quarter or a third of New York's annual budget - tens of billions of dollars each year for everything from construction to food to toilet paper to everything else. These contracts and purchases could be used to spur rapid growth for these entities. The state does not now provide opportunities for JVs or teaming. This measure opens the door to opportunity by allowing for teaming and JVs in a controlled pilot program. Inherent in the program are means to assure that the MWBEs and the disabled veteran enterprises are full partners in any business venture.
FISCAL IMPLICATIONS: None to the state.
EFFECTIVE DATE: immediately, with a sunset at midnight on December 31 of the fifth full year following enactment.
STATE OF NEW YORK ________________________________________________________________________ 4916 2013-2014 Regular Sessions IN SENATE May 1, 2013 ___________Introduced by Sens. GOLDEN, GRISANTI, LANZA, LARKIN, MAZIARZ, VALESKY -- read twice and ordered printed, and when printed to be committed to the Committee on Finance AN ACT to amend the state finance law, in relation to the state procure- ment council and special provisions regarding joint ventures; and providing for the expiration and repeal of such provisions upon expi- ration thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph n of subdivision 2 of section 161 of the state finance law, as added by chapter 173 of the laws of 2010, is amended to read as follows: n. Recommend to the commissioner necessary legislative changes or modifications to existing or proposed rules, regulations and procedures that would increase access to the state's procurement process by minori- ty-owned business enterprises and women-owned business enterprises and create model language to be used by agencies when issuing requests for bids or proposals to other solicitations or offers that would increase the ability of small businesses to participate in state procurements, INCLUDING THROUGH TEAMING AND JOINT VENTURES AS DEFINED IN SUBDIVISION NINE OF SECTION ONE HUNDRED SIXTY-FIVE OF THIS ARTICLE. S 2. Section 165 of the state finance law is amended by adding a new subdivision 9 to read as follows: 9. SPECIAL PROVISIONS REGARDING JOINT VENTURES. A. DEFINITIONS. AS USED IN THIS SUBDIVISION: (I) "DISABLED VETERAN BUSINESS ENTERPRISE" IS AN INDEPENDENTLY OWNED AND OPERATED BUSINESS ENTERPRISE IN WHICH A DISABLED VETERAN HAS A REAL, SUBSTANTIAL, AND CONTINUING OWNERSHIP OF FIFTY-ONE PER CENT OR GREATER AND HAS AND EXERCISES INDEPENDENT CONTROL OF THE DAY TO DAY DECISIONS OF THE ENTERPRISE, AND WHICH HAS BEEN CERTIFIED AS A DISADVANTAGED BUSINESS ENTERPRISE PURSUANT TO THE FEDERAL DEPARTMENT OF TRANSPORTATION OR OTHEREXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09996-03-3 S. 4916 2
FEDERAL AGENCY PROCEDURES, OR CERTIFIED AS A DISABILITY-OWNED BUSINESS ENTERPRISE BY A NATIONAL CERTIFICATION ORGANIZATION SATISFACTORY TO THE COMMISSIONER. THE TERM "DISABLED VETERAN" HAS THE SAME MEANING AS IN PARAGRAPH (B) OF SUBDIVISION ONE OF SECTION EIGHTY-FIVE OF THE CIVIL SERVICE LAW AND ADDITIONALLY MEANS A MEMBER OF THE ARMED FORCES OF THE UNITED STATES WHO SERVED IN TIME OF WAR OR WHO SERVED IN AN AREA DESIG- NATED BY THE PRESIDENT OF THE UNITED STATES BY EXECUTIVE ORDER AS A "COMBAT ZONE" AT ANY TIME DURING THE PERIOD DESIGNATED BY THE PRESIDENT BY EXECUTIVE ORDER AS THE PERIOD OF COMBATANT ACTIVITIES IN SUCH ZONE, AND WHO WAS HONORABLY DISCHARGED OR RELEASED UNDER HONORABLE CIRCUM- STANCES FROM SUCH SERVICE, AND WHO IS A CITIZEN OF THE UNITED STATES AND A RESIDENT OF THE STATE OF NEW YORK. (II) "DIVERSITY BUSINESS ENTERPRISE" OR "DIVERSITY BUSINESS ENTER- PRISES" REFERS INDIVIDUALLY OR COLLECTIVELY, ACCORDING TO CONTEXT, TO A MINORITY BUSINESS ENTERPRISE, A WOMEN'S BUSINESS ENTERPRISE, AND/OR A DISABLED VETERAN BUSINESS ENTERPRISE. (III) "JOINT VENTURE" MEANS A BUSINESS, A PARTNERSHIP, SOLE PROPRIE- TORSHIP, OR A CORPORATION FORMED UNDER THE LIMITED LIABILITY CORPORATION LAW OR THE BUSINESS CORPORATION LAW BY A DIVERSITY BUSINESS ENTERPRISE AND ONE OR MORE NEW YORK BUSINESS ENTERPRISES FOR A SPECIFIC PROJECT IN WHICH THE PARTIES CONTRIBUTE EQUITY, ASSETS, AND EXPERTISE. (IV) "NEW YORK BUSINESS ENTERPRISE" MEANS A BUSINESS ENTITY FORMED IN THIS STATE, WHOSE PRIMARY RESIDENCE IS LOCATED IN THIS STATE, WHICH REALIZES MORE THAN HALF ITS GROSS REVENUES FROM ACTIVITIES CONDUCTED IN THIS STATE AND WHICH HAS MORE THAN HALF ITS FULL TIME EMPLOYEES LOCATED IN THIS STATE. A NEW YORK BUSINESS ENTERPRISE MAY BE A PARTNERSHIP, SOLE PROPRIETORSHIP, OR A CORPORATION FORMED UNDER THE LIMITED LIABILITY CORPORATION LAW, OR A CORPORATION FOR PROFIT FORMED UNDER THE BUSINESS CORPORATION LAW, OR EXISTING ON ITS EFFECTIVE DATE AND THERETOFORE FORMED UNDER ANY OTHER GENERAL STATUTE OR BY ANY SPECIAL ACT OF THIS STATE FOR A PURPOSE OR PURPOSES FOR WHICH A CORPORATION MAY BE FORMED UNDER SUCH BUSINESS CORPORATION LAW, OTHER THAN A CORPORATION WHICH MAY BE FORMED UNDER THE COOPERATIVE CORPORATIONS LAW. (V) "TEAMING" MEANS A COOPERATIVE AGREEMENT BETWEEN ONE OR MORE DIVER- SITY BUSINESS ENTERPRISES AND ONE OR MORE NEW YORK BUSINESS ENTERPRISES EXECUTED BY A WRITTEN INSTRUMENT THAT DEFINES THE COMMON PURPOSE, PERFORMANCE GOALS, APPROACH, FINANCING, LIABILITY, AND ACCOUNTABILITY FOR A PROJECT, THAT IS SATISFACTORY TO THE COMMISSIONER FOR THE PURPOSES OF CONTRACTING PURSUANT TO THIS SUBDIVISION. B. THE COMMISSIONER SHALL TAKE SUCH STEPS AS MAY BE NECESSARY TO DEVELOP AND IMPLEMENT A PILOT PROGRAM TO INSURE THAT CENTRALIZED CONTRACTS PROVIDED PURSUANT TO THIS ARTICLE ALSO INCLUDE PROVISION FOR JOINT VENTURES AND TEAMING ARRANGEMENTS AS DEFINED HEREIN, PROVIDED THAT IN ANY SUCH JOINT VENTURE OR TEAMING ARRANGEMENT: (I) THE DIVERSITY BUSINESS ENTERPRISE SHALL PERFORM A SHARE OF THE WORK NECESSARY TO SUCH CONTRACT EQUAL TO ITS OWNERSHIP OF STOCK, DIVI- DENDS, PROFIT, OR CONTROL OF A JOINT VENTURE, WHICHEVER IS GREATER, OR TO ITS POTENTIAL PROFITABILITY RETURN IN THE CASE OF TEAMING, AND (II) THE AGREEMENT IS DEMONSTRATED TO THE SATISFACTION OF THE COMMIS- SIONER TO BRING RESOURCES AND EXPERTISE TO THE PROJECT THAT WOULD NOT OTHERWISE BE AVAILABLE WITHIN THE SCOPE OF EXPERTISE, ABILITIES, ACTIV- ITIES OF THE DIVERSITY BUSINESS ENTERPRISE, OR WHICH WOULD BE OTHERWISE LIMITED BY RESOURCES AVAILABLE TO THE DIVERSITY BUSINESS ENTERPRISE IF SUCH ENTERPRISE SOUGHT TO PERFORM THE WORK ITSELF, AND (III) THE PROPOSAL OFFERS, IN THE JUDGEMENT OF THE COMMISSIONER, THE SERVICES OR COMMODITIES AT A PRICE EQUAL TO OR LESS THAN WOULD OTHERWISES. 4916 3
BE CHARGED BY AN ENTITY WHICH IS NOT A JOINT VENTURE OR WHICH IS NOT INVOLVED IN SUCH TEAMING AGREEMENT, AND (IV) THE JOINT VENTURE OR TEAMING ENTITY MEETS REQUIREMENTS AND CRITE- RIA OF THE COMMISSIONER IN SUCH AREAS AS FINANCING, LIABILITY, ACCOUNT- ABILITY, USE OF RESOURCES AND OTHER CRITERIA AND REQUIREMENTS THAT DEMONSTRATE SIGNIFICANT ENGAGEMENT BY THE DIVERSITY BUSINESS ENTERPRISE, PROVIDED THAT AN ENTITY WHICH QUALIFIES AS A NEW YORK BUSINESS ENTER- PRISE AT THE TIME OF THE EXECUTION OF A CONTRACT SHALL NOT BE DISQUALI- FIED FOR FAILING TO MEET EMPLOYMENT AND GROSS REVENUE CRITERIA DURING THE COURSE OF THE CONTRACT IF THE VARIATION IN REVENUES AND/OR EMPLOY- MENT IS NO MORE THAN TWENTY PER CENT MORE THAN SUCH CRITERIA WOULD OTHERWISE ALLOW. C. A JOINT VENTURE IN WHICH A MINORITY BUSINESS ENTERPRISE OR A WOMEN-OWNED BUSINESS ENTERPRISE HAS AN OWNERSHIP OF GREATER THAN FIFTY PERCENT SHALL BE ELIGIBLE FOR OPPORTUNITIES FOR PARTICIPATION ON CONTRACTS FOR MINORITY AND WOMEN OWNED BUSINESS ENTERPRISES PURSUANT TO ARTICLE FIFTEEN-A OF THE EXECUTIVE LAW. D. IN IMPLEMENTING THE PILOT PROGRAM THE COMMISSIONER MAY, IN ADDITION TO OTHER CONTRACT REQUIREMENTS IMPOSED ON CONTRACTS AND CONTRACTORS OR VENDORS PURSUANT TO SECTION ONE HUNDRED SIXTY-THREE OF THIS ARTICLE, REQUIRE CONSIDERATION OF ADDITIONAL FACTORS INCLUDING DISTANCE FROM THE JOB OR PROJECT, THE AMOUNT OR LEVEL OF GREEN TECHNOLOGY, FINANCIAL OR EXPERT RESOURCES OF THE CONTRACTOR OR JOINT VENTURE OR TEAMING ARRANGE- MENTS, ANCILLARY COSTS SUCH AS REQUIREMENTS TO BRING OR HIRE ON A CONSULTANT BASIS EXPERTISE FROM OTHER AREAS OR STATES, THE FRESHNESS OR NEWNESS OF THE PRODUCT BEING PURCHASED AND THE IMPACT OF EXTENDED TRANS- PORTATION ON IT, AND OTHER SIMILAR FACTORS. THE COMMISSIONER SHALL ADDITIONALLY WEIGH ANY CONSIDERATION IN THE AWARDING OF A CONTRACT BY THE PERCENTAGE OF THE JOINT VENTURE OR TEAMING ARRANGEMENT ALLOCATED OF THE DIVERSITY BUSINESS ENTERPRISE. E. THE COMMISSIONER SHALL REPORT ANNUALLY ON THE FIRST OF JANUARY OF EACH YEAR, BEGINNING IN THE SECOND YEAR AFTER ENACTMENT OF THIS PROGRAM, CONCERNING THE PILOT PROGRAM AUTHORIZED BY THIS SECTION. THE REPORT SHALL NOTE CONTRACTS LET TO JOINT VENTURES, AND THE DEVELOPMENT OF DIVERSITY BUSINESS ENTERPRISES AS A RESULT OF SUCH JOINT VENTURES. THE COMMISSIONER SHALL USE METRICS WHICH SHOW THE EFFECT OF THE PROGRAM ON THE DEVELOPMENT AND STRENGTHENING OF DIVERSITY BUSINESS ENTERPRISES, AND SHALL INCLUDE RECOMMENDATIONS FOR THE EXPANSION, ALTERATION, AND PERMAN- ENTIZATION OF THE PROGRAM. S 3. This act shall take effect immediately and shall expire and be deemed repealed on the thirty-first of December of the fifth full year following the effective date of this act.