Senate Bill Report SHB 1259 (March 16, 2021)

Summary

A Senate Bill Report on SHB 1259, as of March 16, 2021, prepared by non-partisan staff of the Senate Committee on Business, Financial Services & Trade. The bill concerns public contracting opportunities for women and minority business enterprises and the oversight of the Office of Minority and Women's Business Enterprises (OMWBE). The report records that the bill passed the House on 3/3/21 by 93-4 and was before the committee on 3/18/21. It summarizes provisions creating an Audit and Review Unit within OMWBE, requiring annual identification of agencies with low utilization, and setting penalties including debarment for one to three years and civil penalties between 2 and 10 percent of the contract amount or up to $5,000 for each violation. It also states that the bill repeals the Attorney General's enforcement authority for OMWBE and lists no appropriation.

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                            SENATE BILL REPORT
                                 SHB 1259

                                      As of March 16, 2021

Title: An act relating to expanding public contracting opportunities for women and minority
     business enterprises by increasing the regulatory oversight and accountability of the office
     of minority and women's business enterprises.

Brief Description: Expanding public contracting opportunities for women and minority
     business enterprises by increasing the regulatory oversight and accountability of the office
     of minority and women's business enterprises.

Sponsors: House Committee on Appropriations (originally sponsored by Representatives
    Santos, Dolan, Ryu, Valdez, Fey, Ramel, Ortiz-Self, Hackney, Ramos, Kloba, Callan,
    Lekanoff, Macri, Gregerson, Slatter, Stonier and Harris-Talley).

Brief History: Passed House: 3/3/21, 93-4.
     Committee Activity: Business, Financial Services & Trade: 3/18/21.


                                     Brief Summary of Bill
           • Establishes an Audit and Review unit within the Office of Minority and
             Women's Business Enterprises (OMWBE) to detect and investigate fraud
             and violations pertaining to the certification of, and contracting with,
             minority- and women-owned businesses.
           • Repeals the Office of the Attorney General's authority to investigate and
             enforce prohibited and unlawful acts pertaining to the certification of,
             and contracting with, minority- and women-owned businesses.
           • Modifies the penalties for noncompliance of provisions related to the
             certification of, and contracting with, minority- and women-owned
             businesses.
           • Requires OMWBE to annually identify state agencies and educational
             institutions with low levels of participation by minority- and women-
             owned businesses in the execution of public contracts.




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

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SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: Office of Minority and Women's Business Enterprises, The Office of
     Minority and Women's Business Enterprises (OMWBE) was created in 1983 to mitigate
     discrimination and provide the greatest opportunity for increased participation by minority-
     and women-owned businesses in public works and the procurement process by state
     agencies and private sector educational institutions. In addition to certifying qualifying
     business enterprises and associated duties such as goal setting, OMWBE supports and
     facilitates the Governor's Subcabinet on Business Diversity and oversees the Linked
     Deposit Loan Program. OMWBE is led by a Governor-appointed director.

     Penalties and Enforcement by the Attorney General's Office on Behalf of the Office of
     Minority and Women's Business Enterprises. Any entity that knowingly makes or submits
     false statements to OMWBE or obtains public funds they are not entitled to are subject to
     the following, as enforced by the Attorney General's Office (AGO):
         • payment withholding;
         • contractor debarment;
         • suspension or termination of contract; and
         • civil penalties up to 10 percent of the contract amount up to $5,000 for each violation.

     Other procedures and sanctions may be pursued as required. The AGO may recover costs
     for fees and the investigation.

     Debarment. The Department of Enterprise Services (DES) is authorized to fine or debar
     contractors under state law.

     Debarment is a process by which a contractor, individual, or other entity is prohibited from
     submitting a bid, having a bid considered, or entering a state contract during a period
     specified in a debarment order.

     Summary of Bill: OMWBE is provided with additional duties and enforcement
     responsibilities including identifying certain agencies with low utilization and awards,
     auditing and reviewing for fraud and other violations, and imposing penalties. Under these
     new responsibilities, information identified and actions taken must be reported to the
     Governor and Legislature.

     Identifying Certain Agencies. Annually, OMWBE is required to identify those agencies in
     the lowest quintile of utilization and the lowest quintile of the dollar value awarded of
     minority and women-owned contractors. They must also identify agencies performing
     significantly below their established goals.

     For the agencies identified, OMWBE must meet with each one, review its plan, and provide


Senate Bill Report                             -2-                                       SHB 1259
     available tools and actions for increased participation.

     The Office of Minority and Women's Business Enterprises Audit and Review Unit. An
     Audit and Review Unit (unit) is established within OMWBE for detecting and investigating
     fraud and violations. Inquiries by the unit may require oaths and affirmations, subpoenas,
     taking evidence, or other documents or materials relevant to the inquiry. The OMWBE
     director or designee may apply for and obtain a superior court order for a subpoena in the
     county where the person or evidence is located. Certain information must be included in the
     application.

     Annually, the unit must conduct site reviews of no less than 3 percent of contracts awarded,
     submit responses for all complaints, and develop and implement certain processes for
     prioritizing and conducting investigations identified externally and internally to be the
     highest priority for the agency.

     Penalties and Enforcement. If an entity does not comply with the laws and contract
     requirements under OMWBE, the state may impose certain penalties already established
     under law. Penalties must be imposed if any of the following prohibited activities occur:
        • preventing or interfering with a contractor's compliance;
        • submitting false or fraudulent information;
        • fraudulently obtaining or retaining certification;
        • knowingly making a false statement for the purpose of influencing certification;
        • knowingly or attempting to obstruct or impede an official investigating an entity's
           qualification to certify;
        • fraudulently obtaining or attempting to obtain funds an entity is not qualified for; or
        • knowingly making false statements for obtaining a contract as a minority or women's
           business enterprise.

     Penalties imposed include those established under current law as well as the following:
        • debarring the contractor for a period between one and three years;
        • terminating the contract; or
        • subjecting the contractor to civil penalties between 2 and 10 percent of the amount of
           the contract or $1 and $5,000 for each violation.

     Willfully repeated violations will result in a three-year disqualification from further
     participation in state contracts. Penalties shall be implemented by rule and include the DES
     debarment process.

     Statutes providing the AGO authority to enforce penalties, investigate, and provide
     injunctive relief for OMWBE are repealed.

     Appropriation: None.

     Fiscal Note: Available.


Senate Bill Report                              -3-                                    SHB 1259
     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.




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