THE
LEGAL FRAMEWORK
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Current
Virginia Law:
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Virginia
Public Procurement Act, Section 2.2-4300 et seq
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Competitive
Sealed Bidding
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Competitive
Negotiation
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Minority
Business Participation in Procurement
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Section
2.2-4310 (a) -- Nondiscrimination clause
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Section
2.2-4310 (b) -- Programs to facilitate participation
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Virginia
Fair Employment Contracting Act, Section 2.2-4200 through 2.2-4201
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Prohibits
a contractor from discriminating against employees or applicants for
employment; see also Procurement Act at Section 2.2-4311.
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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.
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DGS Manual
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Published
pursuant to Section 2.2-1111
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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.
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A
listing of minority and female vendors must be maintained by each
agency for solicitation purposes.
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Sealed
bids or proposals must include businesses selected from a list
maintained by the Department of Minority Business Enterprise.
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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
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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.
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External Legal Environment
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Virginia
does not have any law that establishes preferences, set-asides , quotas
or goals to promote minority participation in state procurement.
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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.
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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.
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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.
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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.”
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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.
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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.
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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.
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THE
ORGANIZATIONAL STRUCTURE
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Department
of Minority Business
Enterprise (DMBE)
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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.
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State
agencies are required to include certified businesses in solicitations.
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State
agencies are required to submit annual progress reports on minority
business procurement to DMBE.
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The
budget of the Department is currently about $1.8 million with $1
million coming from Commonwealth Transportation funds.
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DMBE
is to collect data and report each year on state expenditures to MBE’s.
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Competition
Council
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The
Council is a state agency charged under Section 2.2-2622 of the Code
with:
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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
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identifying inappropriate competition by public and non-profit
organizations with the private sector.
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The
Competition Council adopted a work plan for a study of the minority
certification program of the DMBE on April 2, 2001.
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The
stated desired result of this project was to increase the opportunity
for minority businesses to contract with state and local governments.
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The
desired result was to be accomplished by:
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building on the existing certification program;
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consolidation of duplicate programs, outsourcing as appropriate;
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continuous improvement of existing programs; and
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publishing the certified firms on the internet.
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The
work plan indicated that the result could be accomplished because:
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Existing law and programs establish the program. |
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Duplication exists currently which if addressed enhances the
opportunity for all.
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– The
concept is to build on existing programs not duplicate them.
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The
Council has held public hearings and is due to report soon.
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LEGISLATIVE HISTORY
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JLARC Study -- 1995
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JLARC
reviewed minority contracting in 1995 and found:
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Minority participation in agency procurement ranged from less than 1 %
to 42%.
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Only 52% of state agencies had established written programs for
minority business solicitation as required by state law.
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– For
FY 95, minority businesses had contracts totaling $108 million for
goods and services.
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– For
FY 95 this meant that minority contractors received 3.9% of the total
expenditure base of $2.78 billion.
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State agency compliance with applicable state law was inconsistent.
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Many agencies did not have minority business lists.
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– DGS
did not review compliance with the requirements of the Code or its
Manual.
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SJR 12 Subcommittee -- 1996
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The
legislature passed a resolution creating a joint subcommittee to study
state procurement practices related to minority businesses in 1996.
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The
subcommittee was charged with conducting a disparity study.
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The
subcommittee adjourned without completing its work and did not submit a
report.
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Among
the ideas considered by the subcommittee were:
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linking bonding requirements to the size of the business;
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mandating that state agencies have a minority business program in place;
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increasing the purview of the DMBE to increase oversight of state
agencies; and
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promoting increased leadership at state agencies.
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SJR 474 -- 1999
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SJR
474 passed by the legislature in 1999 set up a joint legislative
subcommittee to oversee a two year disparity study.
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– The
first phase of the study was to be preparatory leading up to a funding
recommendation for a disparity study.
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During the second phase of the study, the subcommittee was to oversee
the conduct of the disparity study.
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The
subcommittee met five times with the objective of completing the first
phase of the study.
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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.
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Senator
Lambert proposed a budget amendment in the 2000 Session that would have
provided $950,000 for a disparity study.
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The
budget amendment was not adopted.
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An
interim report of the subcommittee was published in 2000, SD 55, which
documents the subcommittee’s work.
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CURRENT
POLITICAL ENVIRONMENT
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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.
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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.
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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.
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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.
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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.
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Memberships
will change on Appropriations, Generals Laws and Transportation, all of
which have jurisdiction of some issues related to minority contracting.
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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.
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Robinson
also was one of 4 African Americans serving on House Transportation. He
was co-chair. There are no minorities on House General Laws.
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The
Senate will experience little change in 2002, because none of the
Senators were up for election this year.
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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.
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There
is a new Governor who will be making significant and substantial
changes in the executive branch.
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The
Governor has already announced a nationwide search for a new
Commissioner for VDOT.
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Other
agency heads may be replaced and vacancies on boards and commissions
will be filled by the new administration.
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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.
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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.
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All
this will play out in the legislative session that runs from January 9
through March 9.
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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.
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It
will also take a concerted and well-coordinated grass roots effort.
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