Substitute House Bill 1259 - Office of Minority and Women's Business Enterprises (2021 Regular Session)

Summary

Substitute House Bill 1259, State of Washington 67th Legislature 2021 Regular Session, by House Appropriations, read first time 02/22/21. The act relates 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. It amends RCW 39.19.020, 39.19.060, 39.19.080, 39.19.090, 39.19.200 and 39.19.250, adds a new section to chapter 39.19 RCW, and repeals RCW 39.19.100 and 39.19.110. Section 1 amends the definitions that apply throughout the chapter, and Section 8 repeals RCW 39.19.100 (Enforcement by attorney general) and RCW 39.19.110.

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     H-1035.1

                           SUBSTITUTE HOUSE BILL 1259


     State of Washington         67th Legislature       2021 Regular Session

     By House 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)

     READ FIRST TIME 02/22/21.




1        AN ACT Relating to expanding public contracting opportunities for
2    women and minority business enterprises by increasing the regulatory
3    oversight and accountability of the office of minority and women's
4    business enterprises; amending RCW 39.19.020, 39.19.060, 39.19.080,
5    39.19.090, 39.19.200, and 39.19.250; adding a new section to chapter
6    39.19 RCW; and repealing RCW 39.19.100 and 39.19.110.


7    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:


 8       Sec. 1.   RCW 39.19.020 and 2019 c 434 s 2 are each amended to
 9   read as follows:
10       The definitions in this section apply throughout this chapter
11   unless the context clearly requires otherwise.
12       (1) "Advisory committee" means the advisory committee on minority
13   and women's business enterprises.
14       (2) "Broker" means a person that provides a bona fide service,
15   such as professional, technical, consultant, brokerage, or managerial
16   services and assistance in the procurement of essential personnel,
17   facilities,   equipment,   materials,   or   supplies  required   for
18   performance of a contract.
19       (3) "Contractor" means an individual or entity granted state
20   certification and awarded either a direct contract with an agency or


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 1   an indirect contract as a subcontractor to perform a service or
 2   provide goods.
 3       (4) "Debar" means to prohibit a contractor, individual, or other
 4   entity from submitting a bid, having a bid considered, or entering
 5   into a state contract during a specified period of time as set forth
 6   in a debarment order.
 7       (5) "Director" means the director of the office of minority and
 8   women's business enterprises.
 9       (((5)))   (6)   "Educational   institutions"  means   the   state
10   universities, the regional universities, The Evergreen State College,
11   and the community colleges.
12       (((6))) (7) "Goals" means annual overall agency goals, expressed
13   as a percentage of dollar volume, for participation by minority and
14   women-owned and controlled businesses and shall not be construed as a
15   minimum goal for any particular contract or for any particular
16   geographical area. It is the intent of this chapter that such overall
17   agency goals shall be achievable and shall be met on a contract-by-
18   contract or class-of-contract basis.
19       (((7))) (8) "Goods and/or services" includes professional
20   services and all other goods and services.
21       (((8))) (9) "Office" means the office of minority and women's
22   business enterprises.
23       (((9)))   (10)  "Person"   includes   one   or   more  individuals,
24   partnerships,      associations,      organizations,      corporations,
25   cooperatives, legal representatives, trustees and receivers, or any
26   group of persons.
27       (((10))) (11) "Procurement" means the purchase, lease, or rental
28   of any goods or services.
29       (((11))) (12) "Public works" means all work, construction,
30   highway and ferry construction, alteration, repair, or improvement
31   other than ordinary maintenance, which a state agency or educational
32   institution is authorized or required by law to undertake.
33       (((12))) (13) "State agency" includes the state of Washington and
34   all agencies, departments, offices, divisions, boards, commissions,
35   and correctional and other types of institutions.


36       Sec. 2.   RCW 39.19.060 and 2019 c 434 s 3 are each amended to
37   read as follows:
38       (1) Each state agency and educational institution shall comply
39   with the annual goals established for that agency or institution
                                      p. 2                         SHB 1259
 1   under this chapter for public works and procuring goods or services.
 2   This chapter applies to all public works and procurement by state
 3   agencies and educational institutions, including all contracts and
 4   other procurement under chapters 28B.10, 39.04, 39.26, 43.19, and
 5   47.28 RCW.
 6       (2) Each state agency shall adopt a plan, developed in
 7   consultation with the director and the advisory committee, to ensure
 8   that minority and women-owned businesses are afforded the maximum
 9   practicable opportunity to directly and meaningfully participate in
10   the execution of public contracts for public works and goods and
11   services. The plan shall include specific measures the agency will
12   undertake to increase the participation of certified minority and
13   women-owned businesses.
14       (3) Of all state agencies and educational institutions, the
15   office must annually identify those: (a) In the lowest quintile of
16   utilization of minority and women-owned contractors as a percentage
17   of all contracts issued by the agency; (b) in the lowest quintile of
18   the dollar value awarded to minority and women-owned contractors as a
19   percentage of the dollar value of all contracts issued by the agency;
20   and (c) that are performing significantly below their established
21   goals, as determined by the office. The office must meet with each
22   identified agency to review its plan and identify available tools and
23   actions for increasing participation.
24       (4) The office shall annually notify the governor, the state
25   auditor, and the joint legislative audit and review committee of all
26   agencies and educational institutions not in compliance with this
27   chapter.

28       Sec. 3.   RCW 39.19.080 and 1987 c 328 s 5 are each amended to
29   read as follows:
30       (((1))) A person, firm, corporation, business, union, or other
31   organization shall not:
32       (((a))) (1) Prevent or interfere with a contractor's or
33   subcontractor's compliance with this chapter, or any rule adopted
34   under this chapter;
35       (((b))) (2) Submit false or fraudulent information to the state
36   concerning compliance with this chapter or any such rule;
37       (((c))) (3) Fraudulently obtain, retain, attempt to obtain or
38   retain, or aid another in fraudulently obtaining or retaining or


                                     p. 3                         SHB 1259
 1   attempting to obtain or retain certification as a minority or women's
 2   business enterprise for the purpose of this chapter;
 3       (((d))) (4) Knowingly make a false statement, whether by
 4   affidavit, verified statement, report, or other representation, to a
 5   state official or employee for the purpose of influencing the
 6   certification or denial of certification of any entity as a minority
 7   or women's business enterprise;
 8       (((e))) (5) Knowingly obstruct, impede, or attempt to obstruct or
 9   impede any state official or employee who is investigating the
10   qualification of a business entity that has requested certification
11   as a minority or women's business enterprise;
12       (((f))) (6) Fraudulently obtain, attempt to obtain, or aid
13   another person in fraudulently obtaining or attempting to obtain
14   public moneys to which the person is not entitled under this chapter;
15   or
16       (((g))) (7) Knowingly make false statements that any entity is or
17   is not certified as a minority or women's business enterprise for
18   purposes of obtaining a contract governed by this chapter.
19       (((2) Any person or entity violating this chapter or any rule
20   adopted under this chapter shall be subject to the penalties in RCW
21   39.19.090. Nothing in this section prevents the state agency or
22   educational institution from pursuing such procedures or sanctions as
23   are otherwise provided by statute, rule, or contract provision.))


24       Sec. 4.   RCW 39.19.090 and 1987 c 328 s 6 are each amended to
25   read as follows:
26       ((If)) (1)(a) Except as provided in (b) of this subsection, if a
27   person, firm, corporation, or business does not comply with any
28   provision of this chapter or with a contract requirement established
29   under this chapter, the state may ((withhold payment, debar the
30   contractor, suspend, or terminate the contract and subject)) impose
31   one or more of the following penalties: Withholding payment,
32   decertifying the contractor, debarring the contractor, suspending or
33   terminating the contract, or subjecting the contractor to civil
34   penalties of up to ((ten)) 10 percent of the amount of the contract
35   or up to ((five thousand dollars)) $5,000 for each violation. ((The
36   office shall adopt, by rule, criteria for the imposition of penalties
37   under this section. Wilful))
38       (b) If a person, firm, corporation, or business commits any of
39   the activities prohibited in RCW 39.19.080, the state must impose one
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 1   or more of the following penalties: Withholding payment, decertifying
 2   the contractor, debarring the contractor for a period between one and
 3   three years, terminating the contract, or subjecting the contractor
 4   to civil penalties of between two and 10 percent of the amount of the
 5   contract or between $1 and $5,000 for each violation.
 6       (c) In addition to any other penalties imposed, willful repeated
 7   violations, exceeding a single violation, ((may)) must disqualify the
 8   contractor from further participation in state contracts for a period
 9   of ((up to)) three years. A willful violation includes a conscious or
10   deliberate   false   statement,    misrepresentation,   omission,  or
11   concealment of a material fact, with the specific intent of
12   obtaining, continuing, or increasing benefits under this chapter.
13       (2) An apparent low-bidder must be in compliance with the
14   contract provisions required under this chapter as a condition
15   precedent to the granting of a notice of award by any state agency or
16   educational institution.
17       (3) The office shall follow administrative procedures under
18   chapter 34.05 RCW in determining a violation and imposing penalties
19   under this chapter. The office shall adopt by rule criteria for the
20   imposition of penalties under this section. The rule may incorporate
21   the debarment process authorized for the department of enterprise
22   services in RCW 39.26.200.
23       (4)(a) An audit and review unit is established within the office
24   for the purpose of detecting and investigating fraud and violations
25   of this chapter. The office must employ qualified personnel for the
26   unit.
27       (b) For the purpose of any investigation or proceeding under this
28   chapter, the director or the director's designee may administer oaths
29   and affirmations, subpoena witnesses, compel their attendance, take
30   evidence, and require the production of any books, papers,
31   correspondence, memoranda, agreements, or other documents or records
32   that the director or the director's designee deems relevant or
33   material to the inquiry.
34       (c) Subpoenas issued under this section may be enforced under RCW
35   34.05.588.
36       (d) The audit and review unit must annually:
37       (i) Conduct a site review of a minimum of three percent of
38   persons, firms, corporations, or businesses awarded a contract under
39   this chapter;


                                     p. 5                         SHB 1259
 1       (ii) Submit a response for all complaints for investigation made
 2   by an external agency to the agency submitting the complaint;
 3       (iii) Develop and implement a process for prioritizing and
 4   conducting thorough investigations of persons, firms, corporations,
 5   or businesses identified by an external complaint and determined to
 6   be the highest priority for the agency; and
 7       (iv) Develop and implement a process for prioritizing and
 8   conducting thorough investigations of persons, firms, corporations,
 9   or businesses internally identified and determined to be the highest
10   priority for the agency.
11       (5) The procedures and sanctions in this section are not
12   exclusive; nothing in this section prevents the state agency or
13   educational institution administering the contracts from pursuing
14   such procedures or sanctions as are otherwise provided by statute,
15   rule, or contract provision.


16       NEW SECTION.   Sec. 5.   A new section is added to chapter 39.19
17   RCW to read as follows:
18       (1) The director or director's designee may apply for and obtain
19   a superior court order approving and authorizing a subpoena in
20   advance of its issuance. The application may be made in the county
21   where the subpoenaed person resides or is found, or the county where
22   the subpoenaed documents, records, or evidence are located, or in
23   Thurston county. The application must:
24       (a) State that an order is sought under this section;
25       (b) Adequately specify the documents, records, evidence, or
26   testimony; and
27       (c) Include a declaration made under oath that an investigation
28   is being conducted for a lawfully authorized purpose related to an
29   investigation within the office's authority and that the subpoenaed
30   documents, records, evidence, or testimony are reasonably related to
31   an investigation within the office's authority.
32       (2) When an application under this section is made to the
33   satisfaction of the court, the court must issue an order approving
34   the subpoena. An order under this subsection constitutes authority of
35   law for the agency to subpoena the documents, records, evidence, or
36   testimony.
37       (3) The director or director's designee may seek approval and a
38   court may issue an order under this section without prior notice to
39   any person, including the person to whom the subpoena is directed and
                                     p. 6                         SHB 1259
 1   the person who is the subject of an investigation. An application for
 2   court approval is subject to the fee and process set forth in RCW
 3   36.18.012(3).


 4       Sec. 6.    RCW 39.19.200 and 1993 c 195 s 1 are each amended to
 5   read as follows:
 6       The minority and women's business enterprises account is created
 7   in the custody of the state treasurer. All receipts from RCW
 8   39.19.210, 39.19.220, and 39.19.230 and civil penalties imposed under
 9   RCW 39.19.090 shall be deposited in the account. Expenditures from
10   the account may be used only for the purposes defraying all or part
11   of the costs of the office in administering this chapter. Only the
12   director or the director's designee may authorize expenditures from
13   the account. Moneys in the account may be spent only after
14   appropriation.


15       Sec. 7.   RCW 39.19.250 and 2019 c 434 s 4 are each amended to
16   read as follows:
17       (1) For the purpose of annual reporting on progress required by
18   ((section 1 of this act)) this chapter, each state agency and
19   educational institution shall submit data to the office and the
20   office of minority and women's business enterprises on the
21   participation by qualified minority and women-owned and controlled
22   businesses in the agency's or institution's contracts and other
23   related information requested by the director. The director of the
24   office of minority and women's business enterprises shall determine
25   the content and format of the data and the reporting schedule, which
26   must be at least annually.
27       (2) The office must develop and maintain a list of contact people
28   at each state agency and educational institution who are able to
29   present to hearings of the appropriate committees of the legislature
30   its progress in carrying out the purposes of chapter 39.19 RCW.
31       (3) The office must submit a report aggregating the data received
32   from each state agency and educational institution, and the
33   information identified and actions taken under RCW 39.19.060(3) and
34   39.19.090(4), to the legislature and the governor.


35       NEW SECTION.   Sec. 8.   The following acts or parts of acts are
36   each repealed:


                                     p. 7                         SHB 1259
1       (1) RCW 39.19.100 (Enforcement     by   attorney   general—Injunctive
2   relief) and 1987 c 328 s 12; and
3       (2) RCW 39.19.110 (Enforcement by attorney general—Investigative
4   powers) and 1987 c 328 s 13.

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