Presentations by Claire Guthrie Gastañaga
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Legal and Political Environment
VRMSDC Annual Meeting for Minority Business Enterprises
by Claire Guthrie Gastañaga and Ashley L. Taylor, Jr., Troutman Sanders


Current Virginia Law:

Virginia Public Procurement Act, Section 2.2-4300 et seq
Competitive Sealed Bidding
Competitive Negotiation

Minority Business Participation in Procurement
Section 2.2-4310 (a) -- Nondiscrimination clause
Section 2.2-4310 (b) -- Programs to facilitate participation

Virginia Fair Employment Contracting Act, Section 2.2-4200 through 2.2-4201
Prohibits a contractor from discriminating against employees or applicants for employment; see also Procurement Act at Section 2.2-4311.
Section 2.2-4201 states that nothing in the act shall empower any agency to require any contractor to grant preferential treatment or discriminate because of “an imbalance” related to the total number or percentage of persons represented in any community or in the Commonwealth.

DGS Manual
Published pursuant to Section 2.2-1111
Section 3.10 requires agencies to establish internal procedures to establish internal procedures to facilitate the participation of small businesses and businesses owned by women and minorities.
A listing of minority and female vendors must be maintained by each agency for solicitation purposes.
Sealed bids or proposals must include businesses selected from a list maintained by the Department of Minority Business Enterprise.
Section 3.10(d) provides that procurements expected to result in contracts over $100,000 must comply with guidelines set by the Secretary of Administration
The guidelines provide that the offeror on such contracts must submit three sets of data regarding minority and women owned firms: 1) ownership; 2) utilization of such firms in the last 12 months; and 3) planned involvement in the current procurement.

External Legal Environment
Virginia does not have any law that establishes preferences, set-asides , quotas or goals to promote minority participation in state procurement.
Two Supreme Court cases have established the standards that any such program must meet to be constitutional: City of Richmond v. Croson Co.; and Adarand Constructors v. Pena.
Croson requires state and local governments wishing to adopt set-asides or even firm goals to identify with precision the discrimination such programs are designed to remedy.
Under Croson, significant statistical disparities between the level of minority participation in a particular field and the percentage of qualified minorities in the pool would support an inference of discrimination and support programs to correct these disparities.
In Adarand the Supreme Court held that “all racial classifications, imposed by whatever federal, state, or local entity, must be analyzed under strict scrutiny. In other words, such classifications are constitutional only if they are narrowly tailored measures that further compelling governmental interests.”
The Supreme Court decisions establish that, before Virginia can implement any firm minority-owned business goals or establish any preference programs to promote business with such firms, it must first demonstrate that minority-owned businesses have suffered discrimination by the government or private businesses in the martketplace.
The way to establish discrimination is through a “disparity study” that measures the availability of minority and women-owned businesses against the actual utilization of these businesses in procurement.
A significant statistical disparity can give rise to an inference of discrimination that may be used as the basis for implementing programs to correct the discrimination.


Department of Minority Business Enterprise (DMBE)
DMBE is responsible for certifying businesses to participate in the Commonwealth’s minority business program and for distributing a list of “certified minority enterprises” to all state agencies annually.
State agencies are required to include certified businesses in solicitations.
State agencies are required to submit annual progress reports on minority business procurement to DMBE.
The budget of the Department is currently about $1.8 million with $1 million coming from Commonwealth Transportation funds.
DMBE is to collect data and report each year on state expenditures to MBE’s.

Competition Council
The Council is a state agency charged under Section 2.2-2622 of the Code with:

– examining and promoting methods of providing a portion or all of select government-provided or government produced programs and services through the private sector through a competitive contracting program; and

– identifying inappropriate competition by public and non-profit organizations with the private sector.
The Competition Council adopted a work plan for a study of the minority certification program of the DMBE on April 2, 2001.
The stated desired result of this project was to increase the opportunity for minority businesses to contract with state and local governments.
The desired result was to be accomplished by:

– building on the existing certification program;

– consolidation of duplicate programs, outsourcing as appropriate;

– continuous improvement of existing programs; and

– publishing the certified firms on the internet.
The work plan indicated that the result could be accomplished because:

– Existing law and programs establish the program.

– Duplication exists currently which if addressed enhances the opportunity for all.

– The concept is to build on existing programs not duplicate them.
The Council has held public hearings and is due to report soon.


JLARC Study -- 1995
JLARC reviewed minority contracting in 1995 and found:

– Minority participation in agency procurement ranged from less than 1 % to 42%.

– Only 52% of state agencies had established written programs for minority business solicitation as required by state law.

– For FY 95, minority businesses had contracts totaling $108 million for goods and services.

– For FY 95 this meant that minority contractors received 3.9% of the total expenditure base of $2.78 billion.

– State agency compliance with applicable state law was inconsistent.

– Many agencies did not have minority business lists.

– DGS did not review compliance with the requirements of the Code or its Manual.

SJR 12 Subcommittee -- 1996
The legislature passed a resolution creating a joint subcommittee to study state procurement practices related to minority businesses in 1996.
The subcommittee was charged with conducting a disparity study.
The subcommittee adjourned without completing its work and did not submit a report.
Among the ideas considered by the subcommittee were:

– linking bonding requirements to the size of the business;

– mandating that state agencies have a minority business program in place;

– increasing the purview of the DMBE to increase oversight of state agencies; and

– promoting increased leadership at state agencies.

SJR 474 -- 1999
SJR 474 passed by the legislature in 1999 set up a joint legislative subcommittee to oversee a two year disparity study.

– The first phase of the study was to be preparatory leading up to a funding recommendation for a disparity study.

– During the second phase of the study, the subcommittee was to oversee the conduct of the disparity study.
The subcommittee met five times with the objective of completing the first phase of the study.
The subcommittee could not reach a consensus regarding the issue of going forward with a request to fund the study, although a majority of the members present at the last meeting voted to recommend funding.
Senator Lambert proposed a budget amendment in the 2000 Session that would have provided $950,000 for a disparity study.
The budget amendment was not adopted.
An interim report of the subcommittee was published in 2000, SD 55, which documents the subcommittee’s work.

The make up of the General Assembly will undergo a significant change as a result of the completion of redistricting and the outcome of the November 2001 elections.
The balance of power has shifted from Democrats to Republicans. The 2002 House will convene with 64 Republicans, 2 Independents, and 34 Democrats. This will make the House virtually veto proof.
The House will have 22 new House members – almost a quarter of its membership. Twenty-two is a large number of new members to educate about issues of importance to minority business enterprises.
The size of the Republican majority in the House means the end of the power-sharing agreement that has evenly balanced partisan representation on committees and provided for co-chairs from each party since 1998.
The Speaker has announced the consolidation of several committees and the reduction in the number of members on almost every committee. This will mean major shifts in membership on almost all of the House committees and the loss of the only two chairmanships currently held by minorities.
Memberships will change on Appropriations, Generals Laws and Transportation, all of which have jurisdiction of some issues related to minority contracting.
Delegate William Robinson’s defeat means the loss of the most senior African American legislator now serving on the Appropriations Committee. Delegates Mary Christian and Lionel Spruill are the only other minority persons currently serving on Appropriations.
Robinson also was one of 4 African Americans serving on House Transportation. He was co-chair. There are no minorities on House General Laws.
The Senate will experience little change in 2002, because none of the Senators were up for election this year.
The Senate currently has a majority of Republicans (22-18) but the split could change as a result of the special election scheduled for December 18th. In addition, a Democrat, Tim Kaine, now chairs the Senate as Lieutenant Governor.
There is a new Governor who will be making significant and substantial changes in the executive branch.
The Governor has already announced a nationwide search for a new Commissioner for VDOT.
Other agency heads may be replaced and vacancies on boards and commissions will be filled by the new administration.
Add to all this the facts that Virginia is in a recession and is facing a $1.3 billion dollar short fall in the budget.
Governor Gilmore will submit an outgoing budget, Governor-elect Warner will submit amendments to reshape it to fit his priorities, and the House and Senate will have priorities of their own.
All this will play out in the legislative session that runs from January 9 through March 9.
Given this environment, it will be necessary to reach across partisan, regional and racial lines to develop support for any MBE public policy or budget initiative.
It will also take a concerted and well-coordinated grass roots effort.

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