HOUSE BILL REPORT
ESB 5529
BYSenator Fleming
Providing for certification of minority and women-owned and controlled business enterprises.
House Committe on State Government
Majority Report: Do pass with amendments. (8)
Signed by Representatives H. Sommers, Chair; Peery, Vice Chair; Baugher, Chandler, Hankins, O'Brien, Sayan and Taylor.
House Staff:Pam Madson (786-7135)
Rereferred House Committee on Ways & Means/Appropriations
Majority Report: Do pass with amendments by Committee on State Government. (22)
Signed by Representatives Locke, Chair; Belcher, Braddock, Brekke, Bristow, Ebersole, Fuhrman, Grant, Grimm, Hine, Holland, McLean, McMullen, Nealey, Niemi, Peery, Sayan, Silver, L. Smith, H. Sommers, Sprenkle and B. Williams.
House Staff: Randy Acker (786-7153)
AS PASSED HOUSE APRIL 13, 1987
BACKGROUND:
In 1983 the legislature created the Office of Minority and Women's Business Enterprises (OMWBE) to increase opportunities for participation of minority and women's businesses in state contracting and purchasing.
The office is mandated to develop and maintain a central minority and women's business enterprise certification list for all state agencies and educational institutions. Businesses seeking certification must file an application with OMWBE to demonstrate that they meet the criteria by the office. The criteria includes the element of ownership and excludes any consideration of size.
Certification programs are also administered by the cities of Seattle and Spokane, King County, and METRO. Currently, all jurisdictions are using the same application form. Each minority and woman-owned business must file a separate application for certification with each jurisdiction.
Current law allows imposition of a civil penalty of up to $1,000 if a person, firm, or union provides false information about compliance; interferes or prevents another's compliance; or commits other statutory violations. Additionally, the state is provided remedies against a person, firm, corporation, or business that does not comply with the provisions of a contract. The state may withhold payment; debar the contractor; suspend or terminate the contract; or subject the contractor to civil penalties of 10 percent of the amount of the contract or $5,000, whichever is less. Repeated violations by a contractor may disqualify the contractor from further participation in state contracting for a period of one year.
The Legislative Budget Committee (LBC) conducted a program and fiscal review of the Office and recommended that OMWBE no longer be required to report economic impact information; that OMWBE establish standards governing size of businesses eligible for participation; and that the schedule for terminating the agency under the Sunset Act be changed to 1995.
SUMMARY:
Control and size of a business are added as criteria for certification of a minority or woman owned business. In determining what constitutes a "small business concern", the Office of Minority and Women's Business Enterprises (OMWBE) shall use the same criteria as the Federal Small Business Act and its implementing regulations.
The office may impose sanctions and fines for misrepresentation and fraudulent conduct after holding an administrative proceeding. Fines may be imposed in an amount up to 10 percent of the contract amount or up to $5,000 for each violation. A contractor who willfully and repeatedly violates a contract or any provision of this chapter risks debarment for a period of up to three years. Agencies or institutions of higher education may pursue other statutory or contractual remedies in addition to those provided in this chapter.
The attorney general may assist in the enforcement of this chapter through use of civil actions and civil investigative procedures.
The OMWBE is the sole certifier of minority, disadvantaged, and women-owned businesses for all MWBE programs for state and local jurisdictions. Certification may be questioned through petition initiated by local governmental entities. Statewide certification is effective January 1, 1988. Any business certified by a specified jurisdiction prior to January 1, 1988 shall be deemed certified by OMWBE on January 1.
The Council of Minority and Women's Business Enterprises is created to assist and advise the OMWBE on certification. Membership includes those jurisdictions currently involved in certification programs in local jurisdictions. The council will terminate on June 30, 1991.
The office is no longer required to report to the legislature on the economic impact on the public and private sector of implementing this program.
The office is scheduled for sunset review in 1995.
Fiscal Note: Attached.
Effective Date:The bill contains an emergency clause and takes effect immediately.
House Committee ‑ Testified For: (State Government) Senator George Fleming, prime sponsor of original bill; Millie LaPalm, Office of Minority and Women's Business Enterprises; Pat Thibaudeau, Washington Women United; Clif Finch, Association of Washington Business; and Doug Peterson, Association of General Contractors of Washington (partly for).
(Ways & Means/Appropriations) None Presented.
House Committee - Testified Against: (State Government) Doug Peterson, Association of General Contractors of Washington (partly against).
(Ways & Means/Appropriations) None Presented.
House Committee - Testimony For: (State Government) One-stop certification reduces duplication for the certifying agency and the applicant contractor. It eliminates the need for MWBE contractors to apply with each individual jurisdiction for certification. It will help eliminate confusion over who is properly certified for participation in a specific project. With the state office as the sole certifier, local jurisdictions will have more time and resources to devote to monitoring efforts.
(Ways & Means/Appropriations) None Presented.
House Committee - Testimony Against: (State Government) The monetary penalties are too severe for some violations. The more effective remedy for sham or front companies is to decertify them.
(Ways & Means/Appropriations) None Presented.