SENATE BILL REPORT

ESB 5529

BYSenator Fleming

Providing for certification of minority and women-owned and controlled business enterprises.

Senate Committee on Governmental Operations

Senate Hearing Date(s):March 2, 1987

Majority Report:  Do pass as amended.

      Signed by Senators Halsan, Chairman; Garrett, Vice Chairman; DeJarnatt, McCaslin, Talmadge, Zimmerman.

Senate Staff:Walt Corneille (786-7452); Barbara Howard (786-7410) April 14, 1987

AS PASSED SENATE, MARCH 19, 1987

BACKGROUND:

The Office of Minority and Women's Business Enterprises (OMWBE) was created in 1983 to increase opportunities for participation of minority and women's business enterprises in state contracting and purchasing.  In September 1986, the required initial program and fiscal review and report was completed by the Legislative Budget Committee (LBC) and the Office of Financial Management.  The report noted several recommendations requiring statutory changes.

The LBC recommended that standards be adopted governing the size of businesses entitled to certification and the OMWBE not be required to provide economic impact information in its annual report.  The LBC also suggested cancelling the preliminary report by the Joint Committee on Sunset due June 30, 1990, and scheduling the chapter for sunset termination in 1995.

In order to qualify for OMWBE programs, a business must be certified as a minority or women's owned business.  It has been suggested that, to ensure only businesses which are actually owned and operated by a minority or women become certified, provisions should be included in the enabling statute which prohibit fraud or misrepresentation in the certification process and establish penalties and sanctions.

The certification of businesses for participation in OMWBE programs is performed by several entities separate from OMWBE.

It has been suggested that if the certification process for minority and women's business enterprises were centralized, the burden on affected business would be substantially reduced and unnecessary duplication of efforts would be eliminated.

SUMMARY:

No business is entitled to certification for OMWBE programs if it exceeds the federal size standards for a small business.  The OMWBE is not required to provide information regarding the economic impact of its programs on the public and private sector.  The June 30, 1990 sunset requirement is repealed.  The chapter is scheduled to expire on June 30, 1989.

A business must be owned and controlled by a minority or woman to be certified for OMWBE programs.  All applications for certification must be sworn under oath.

It is a violation of this chapter to fraudulently obtain certification or moneys or to knowingly make a false statement regarding certification.  The penalty for violation of the law or a contract provision is up to 10 percent of the contract amount or up to $5,000 for each violation. The OMWBE may adopt rules implementing the imposition of penalties.

The Attorney General is authorized to conduct investigations prior to instituting a civil action and is given powers to compel the production of documents, oral testimony and answers to interrogations.  The Attorney General is also authorized to bring a civil action to restrain any prohibited act.  Costs and attorney's fees may be recovered.

An agency or educational institution is not limited to procedures or sanctions under this chapter but may pursue any other action provided by statute or contract.

The office is required to investigate complaints of violations of the chapter and to cooperate with state and other governments and their minority and women's business enterprise programs in carrying out the purposes of the chapter.

The OMWBE is established as the sole authority for certifying minority, disadvantaged and women's business enterprises for OMWBE programs.  Certification by OMWBE applies for participation in programs with the state or any other political subdivision within the state.  Statewide certification is effective January 1, 1988.  Any business certified by specified governmental bodies prior to January 1, 1988 is deemed certified by OMWBE as of that date.

The Council of Minority and Women's Business Enterprises is created to assist and advise the OMWBE in the certification process.  Membership of the Council is specified.

If there is a belief that a business should not have been certified, a process is established to petition the office for reconsideration of the certification of any business that was certified prior to January 1, 1988.  Parties who may initiate a petition are specified.  A certification remains in effect during the petition process.

Fiscal Note:      available

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified: Rob Krell, LBC; Larry Stevens, NECA; Ralph C. Ruff, Director, OMWBE; Ernest Aguilar, President, Washington State Hispanic Chamber of Commerce; Dr. L.R. Smith, Port of Seattle; Pat Thibaudeau, Washington Women United; Doug Peterson; AGC of Washington; Mary Tennyson, ATG; Jim Bush, WSDOT

HOUSE AMENDMENT:

The OMWBE is required to consult with the minority and women's business enterprises advisory committee in carrying out any of the specified functions it is authorized to perform.

The OMWBE is to develop a definition of a small business concern consistent with the federal small business requirements.  A business is not entitled to certification for OMWBE programs unless it meets this definition.

The section establishing the Council of Minority and Women's Business Enterprises is set to expire on June 30, 1991.

The new section to 39.19 RCW setting June 30, 1989 as the expiration date of the chapter is stricken.  The sections which set the chapter for sunset termination in 1995 remain.