PRINTER'S NO. 2899
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2462
Session of
2022
INTRODUCED BY A. DAVIS, GUENST AND BROOKS, MARCH 30, 2022
REFERRED TO COMMITTEE ON TRANSPORTATION, MARCH 30, 2022
AN ACT
Amending Title 74 (Transportation) of the Pennsylvania
Consolidated Statutes, in administrative practice and
procedure, repealing provisions relating to diverse business
participation; providing for small and diverse businesses;
and establishing the Small Diverse Business Program.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 303 of Title 74 of the Pennsylvania
Consolidated Statutes is repealed:
[§ 303. Diverse business participation.
(a) General rule.--In administering contracts for
construction and professional services relating to
transportation projects which are funded pursuant to the
provisions of this title or 75 Pa.C.S. (relating to vehicles),
the contracting entities shall:
(1) Be responsible for ensuring that all competitive
contract opportunities subject to this section which are
issued by the contracting entities seek to maximize
participation by diverse businesses.
(1.1) Include in solicitations for bids and requests for
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proposals on all competitive contracting opportunities
subject to this section notice to the bidder or offeror that:
(i) The bidder or offeror shall document and submit
to the applicable contracting entity all good faith
efforts to solicit subcontractors that are diverse
businesses during the bidding or proposal process.
(ii) The bidder or offeror shall provide within
seven days of being declared the low bidder or successful
offeror the name and business address of each
subcontractor that is a diverse business that will
provide the contractor with construction or professional
services in connection with the performance of the
contract.
(2) Include in the solicitations for bids and requests
for proposals under paragraph (1.1) language encouraging
bidders and offerors to utilize and give consideration to
contractors offering to utilize diverse businesses in the
selection and award of contracts.
(3) Ensure that the contracting entities' commitment to
participation by diverse businesses is clearly understood and
appropriately implemented and enforced by all the contracting
entities.
(4) Designate a responsible official to supervise the
contracting entities' diverse business program and ensure
compliance within the contracting entities.
(5) (Reserved).
(6) Impose sanctions, as may be appropriate under 62
Pa.C.S. § 531 (relating to debarment or suspension), against
businesses that fail to comply with this section or the
policies of the Commonwealth related to diverse businesses.
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This paragraph shall not apply to a local transportation
organization.
(7) Ensure that each contract entered into with a
contractor under this section includes provisions prohibiting
discrimination in accordance with 62 Pa.C.S. § 3701 (relating
to contract provisions prohibiting discrimination).
(a.1) Additional duties of department.--The department, with
the assistance of a diverse business enterprise supportive
services center, shall have the following duties:
(1) Conduct the necessary and appropriate outreach,
including using the database available on the Internet
website of the Department of General Services and the Federal
Government's system of award management database, for
purposes of identifying diverse businesses in general
construction or professional services capable of performing
contracts subject to this section.
(2) By October 1, 2014, and each October 1 thereafter,
submit a report to the chairman and minority chairman of the
Transportation Committee of the Senate and the chairman and
minority chairman of the Transportation Committee of the
House of Representatives summarizing the participation level
of diverse businesses in all competitive contract
opportunities issued by contracting entities. The commission
and local transportation organizations shall cooperate with
the department to complete the report. The report shall
include:
(i) The percentage of participation by diverse
businesses.
(ii) The total value of all contracts executed which
include participation by diverse businesses pursuant to
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this section in the prior year.
(iii) The number of businesses penalized for
violating this section.
(3) Transmit the report under paragraph (2) to the
Pennsylvania Minority Business Development Authority,
established under the act of July 22, 1974 (P.L.598, No.206),
known as the Pennsylvania Minority Business Development
Authority Act. The authority shall review the report to
assess the effectiveness in advancing this section and to
make any recommendations for changes in this section deemed
necessary or desirable to the secretary and the chairman and
minority chairman of the Transportation Committee of the
Senate and the chairman and minority chairman of the
Transportation Committee of the House of Representatives.
(a.2) Replacement of diverse business.--If, at any time
during the evaluation of a bid or proposal or the construction
of a project or the performance of a professional service
pursuant to a bid, proposal or contract subject to this section,
it becomes necessary to replace a subcontractor that is a
diverse business, the bidder, offeror or contractor, as
appropriate, shall immediately notify the contracting entity of
the need to replace the diverse business. The notice shall
include the reasons for the replacement.
(a.3) Applicability.--The following shall apply to a
contractor and contract subject to subsection (a):
(1) The provisions of 62 Pa.C.S. § 2108 (relating to
compliance with Federal requirements).
(2) Prompt payment policies between a contractor and
subcontractor adopted by the Department of General Services
pursuant to 62 Pa.C.S. Pt. II (relating to general
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procurement provisions).
(a.4) Construction.--Nothing in this section shall be
construed to supersede, nullify or otherwise affect 51 Pa.C.S. §
9603 (relating to participation goal). In the case of an
inconsistency between this section and 51 Pa.C.S. Ch. 96
(relating to veteran-owned small businesses), the provisions of
51 Pa.C.S. Ch. 96 shall prevail.
(b) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Commission." As defined in section 8102 (relating to
definitions).
"Contract." As defined in 62 Pa.C.S. § 103 (relating to
definitions).
"Contracting entities." The following:
(1) The department.
(2) The commission.
(3) A local transportation organization.
"Disadvantaged business." A business that is owned or
controlled by a majority of persons, not limited to members of
minority groups, who are subject to racial or ethnic prejudice
or cultural bias.
"Diverse business." A disadvantaged business, minority-owned
or women-owned business or service-disabled veteran-owned or
veteran-owned small business that has been certified by a third-
party certifying organization.
"Local transportation organization." Any of the following:
(1) A political subdivision or a public transportation
authority, port authority or redevelopment authority
organized under the laws of this Commonwealth or pursuant to
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an interstate compact or otherwise empowered to render,
contract for the rendering of or assist in the rendering of
transportation service in a limited area in this
Commonwealth, even though it may also render or assist in
rendering transportation service in adjacent states.
(2) A nonprofit association that directly or indirectly
provides public transportation service.
(3) A nonprofit association of public transportation
providers operating within this Commonwealth.
"Minority-owned business." A business owned and controlled
by a majority of individuals who are African Americans, Hispanic
Americans, Native Americans, Asian Americans, Alaskans or
Pacific Islanders.
"Professional services." An industry of infrequent,
technical or unique functions performed by independent
contractors or consultants whose occupation is the rendering of
the services. The term includes:
(1) Design professional services as defined in 62
Pa.C.S. § 901 (relating to definitions).
(2) Legal services.
(3) Advertising or public relations services.
(4) Accounting, auditing or actuarial services.
(5) Security consultant services.
(6) Computer and information technology services.
(7) Insurance underwriting services.
"Service-disabled veteran-owned small business." As defined
in 51 Pa.C.S. § 9601 (relating to definitions).
"Third-party certifying organization." An organization that
certifies a small business, minority-owned business, women-owned
business or veteran-owned small business as a diverse business.
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The term includes:
(1) The National Minority Supplier Development Council.
(2) The Women's Business Development Enterprise National
Council.
(3) The Small Business Administration.
(4) The Department of Veterans Affairs.
(5) The Pennsylvania Unified Certification Program.
"Veteran-owned small business." As defined in 51 Pa.C.S. §
9601 (relating to definitions).
"Women-owned business." A business owned and controlled by a
majority of individuals who are women.]
Section 2. Title 74 is amended by adding a chapter to read:
CHAPTER 4
SMALL AND DIVERSE BUSINESSES
Sec.
401. Policy.
402. Definitions.
403. Small Diverse Business Program.
404. Nonapplicability.
405. Duties of department.
406. Request for full or partial waiver and good-faith efforts.
407. Bonding and progress payments.
408. Report to General Assembly.
409. Compliance.
410. Aspirational target.
411. Disparity study.
412. Program review and expiration.
§ 401. Policy.
The policy of the department is to provide equitable
opportunities in its procurements to small businesses and small
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diverse businesses, both as prime contractors and
subcontractors, and to assist small businesses and small diverse
businesses in learning how to do business with the department.
The department shall implement this policy in accordance with
department regulations and policy.
§ 402. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Aspirational target." A target established by the secretary
under section 410 (relating to aspirational target).
"Bidder." A person that submits a bid in response to an
invitation for bids.
"Commonwealth agency." An executive agency, an independent
agency or a State-affiliated entity as defined in 62 Pa.C.S. §
103 (relating to definitions).
"Contract." A type of written agreement, regardless of what
it may be called, for the procurement or disposal of supplies,
services or construction and executed by all parties in
accordance with the act of October 15, 1980 (P.L.950, No.164),
known as the Commonwealth Attorneys Act.
"Contract-specific goal." A goal established by the
department in collaboration with the purchasing agency for use
of small diverse businesses on a specific procurement.
"Disparity study." A study conducted to determine whether
there is a disparity between the availability and use of small
diverse businesses in department procurement.
"Good-faith efforts." The practices or activities instituted
by a bidder or offeror to promote and ensure participation by
small diverse businesses in department procurement in order to
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meet a contract-specific goal.
"Local transportation organization." A political subdivision
or a public transportation authority, port authority or
redevelopment authority organized under the laws of this
Commonwealth or an interstate compact or otherwise empowered to
render contract for the rendering or assist in the rendering of
transportation service in a limited area in this Commonwealth
and in adjacent states.
"Offeror." A person that submits a proposal in response to a
request for proposals.
"Procurement." Buying, purchasing, renting, leasing,
licensing or otherwise acquiring any supplies, services or
construction. The term also includes all functions that pertain
to the obtaining of any supply, service or construction,
including description of requirements, selection and
solicitation of sources, preparation and award of contract and
all phases of contract administration.
"Program." The Small Diverse Business Program established
under section 403 (relating to Small Diverse Business Program).
"Purchasing agency." A Commonwealth agency or local
transportation organization authorized by this part or by other
law to enter into contracts for itself or as the agent of
another Commonwealth agency. When purchasing for another
Commonwealth agency, the purchasing agency acts on behalf of the
principal which needs the supplies, services and construction
and shall coordinate and cooperate with that agency.
"Race-neutral and gender-neutral measures." Methodologies
that are or can be used to assist businesses, notwithstanding
the social, economic, racial or gender composition of the
individuals that own or control the business.
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"Small business." A business in the United States that is
independently owned and is not dominant in its field of
operation.
"Small diverse business." A small business owned and
controlled by a majority of persons, not limited to members of
minority groups, women, service-disabled veterans or veterans
that have been deprived of the opportunity to develop and
maintain a competitive position in the economy because of
economic and social disadvantages.
"Utilization schedule." A document, submitted by a bidder or
offeror as part of a bid or proposal, in which a bidder or
offeror commits to a level of small diverse business
participation for a contract. If required by the solicitation, a
utilization schedule may also require a bidder or offeror to
identify:
(1) The small diverse businesses that will be utilized.
(2) Associated responsibilities and scopes of work.
(3) The dollar value or percentages of the work to be
performed.
§ 403. Small Diverse Business Program.
The Small Diverse Business Program is established in the
department.
§ 404. Nonapplicability.
This chapter shall not apply to procurements for parts and
materials.
§ 405. Duties of department.
The department shall administer the program. The department's
duties shall include:
(1) Formulating, proposing and implementing policy and
regulations for the development, implementation and
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monitoring of the program, including the process or
procedures to govern the following:
(i) The process and criteria for certification,
verification, recertification and decertification of
small businesses and small dive rse businesses.
(ii) The setting of contract-specific goals.
(iii) Changes to solicitation and contract language,
requirements and forms.
(iv) Monitoring and tracking contract commitments
and utilization of small diverse businesses.
(v) Mentor-protégé programs.
(vi) Program-related education, training, networking
and outreach.
(vii) Any other processes or procedures that the
department deems necessary to implement the program.
(2) Developing, using and assisting purchasing agencies
in using race-neutral and gender-neutral measures to
facilitate the participation of all firms in department
procurement activities, including the implementation of a
program to reserve procurements for award to small businesses
only.
(3) Developing and maintaining a directory of small
businesses and small diverse businesses.
(4) Providing information and assistance to small
businesses and small diverse businesses relating to the
program, including special training programs to assist small
businesses and small diverse businesses in learning how to do
business with the department and serving as a liaison to
community, contractors, professionals and supplier groups,
associations and organizations.
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(5) Establishing thresholds for procurements which
require the setting of contract-specific goals.
(6) Ensuring that small diverse businesses are solicited
on procurements for which the businesses may be suited.
(7) Establishing contract-specific goals, in
collaboration with the purchasing agency, based upon relevant
factors, including the availability of small diverse
businesses to provide the construction or professional
services required by the scope of work of the procurement.
(8) In collaboration with the purchasing agency,
reviewing utilization schedules, considering requests for
waivers of contract-specific goals based upon a showing of
good-faith efforts and evaluating the extent to which
contract-specific goals were achieved.
(9) Monitoring contracts to evaluate compliance with
contract-specific goals and commitments.
(10) Receiving, reviewing and acting upon complaints and
suggestions concerning the program, with the assistance of
the purchasing agency, as appropriate.
(11) Evaluating the effectiveness and utility of the
program.
(12) Monitoring the program and the department's
progress towards the aspirational target.
(13) Establishing business assistance offices throughout
this Commonwealth to assist and carry out the provisions of
the program.
(14) Requiring that all applications for small
businesses and small diverse businesses verification under
this chapter shall be sworn under oath.
(15) Identifying barriers to equitable participation by
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small diverse businesses in department procurement.
(16) Designating staff to assist small businesses and
small diverse businesses in learning how to participate in
department procurement in accordance with this chapter.
(17) Developing the conditions under which a contract-
specific goal may be waived, either partially or fully, upon
request of a bidder or offeror in accordance with section 407
(relating to bonding and progress payments).
§ 406. Request for full or partial waiver and good-faith
efforts.
Notwithstanding any provision of this chapter to the
contrary, bidders or offerors may request a partial or full
waiver of a contract-specific goal for small diverse business
participation. A bidder or offeror requesting a partial or full
waiver shall submit, in writing, a report detailing the bidder's
or offeror's efforts to meet the contract-specific goal as
required by the solicitation. In reviewing a bidder's or
offeror's written request for a partial or full waiver of a
contract-specific goal, the purchasing agency, based on the
recommendation of the department, shall determine if a bidder or
offeror has made good-faith efforts to meet the contract-
specific goal and to what extent the waiver request should be
granted. In determining if a bidder or offeror has made good-
faith efforts, the purchasing agency and the department may
consider levels of participation by small diverse businesses by
other bidders or offerors.
§ 407. Bonding and progress payments.
(a) Bonding.--Notwithstanding any provisions of law to the
contrary, a purchasing agency may reduce the amount or change
the types of bonding normally required or accept alternative
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forms of security to the extent reasonably necessary to
encourage procurement from small businesses and small diverse
businesses.
(b) Progress payments.--A purchasing agency may make special
provisions for progress payments as it deems reasonably
necessary to encourage procurement from small businesses and
small diverse businesses.
§ 408. Report to General Assembly.
The department shall annually report in writing to the
General Assembly concerning the awarding of contracts and
subcontracts to small businesses and small diverse businesses
during the preceding fiscal year. The report shall include
statistical information regarding the program and information
regarding small businesses and small diverse businesses,
including business classification, location and industry. In
preparing the report, the department shall verify whether
commitments made to small diverse businesses in the course of
awarding these contracts have been maintained or achieved.
§ 409. Compliance.
(a) Federal requirements.--If a procurement involves the
expenditure of Federal assistance or contract funds, the
purchasing agency shall comply with Federal law and authorized
regulations which are mandatorily applicable and which are not
presently reflected in this chapter.
(b) Federal disadvantaged business goals.--Notwithstanding
any other provision of this chapter, a local transportation
organization shall be deemed in compliance with this chapter if
the local transportation organization applies its Federal
disadvantaged business goals to State-funded contracts.
§ 410. Aspirational target.
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The secretary shall set an aspirational target for small
diverse business participation by the department, which shall be
reviewed and adjusted every five years upon completion of a
disparity study.
§ 411. Disparity study.
Beginning no later than June 30, 2022, and at least once
every five years thereafter, the department shall complete a
Statewide disparity study on the availability and use of small
diverse businesses, the results of which shall be used to set an
aspirational target under section 410 (relating to aspirational
target). The secretary shall transmit notification to the
Legislative Reference Bureau for publication in the Pennsylvania
Bulletin whether or not the disparity study shows a
statistically significant disparity.
§ 412. Program review and expiration.
(a) Review.--Upon completion of the disparity study
conducted under section 411 (relating to disparity study), the
department shall review the results and recommendations of the
disparity study and the operation of and evidentiary basis for
the program in order to determine whether the department has a
continuing compelling interest in remedying discrimination
against small diverse businesses in its marketplace and the
permissible scope of any narrowly tailored remedies to redress
discrimination against small diverse businesses so that the
department will not function as a passive participant in a
discriminatory marketplace.
(b) Expiration.--This chapter shall expire January 1, 2028,
unless the disparity study completed under section 411 shows a
statistically significant disparity in the utilization of small
diverse businesses. If the disparity study shows a statistically
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significant disparity, the program shall renew for an additional
five years with the review and expiration under this section
each occurring every five years thereafter until the disparity
study shows no statistically significant disparity in the
utilization of small diverse businesses.
Section 3. This act shall take effect in 120 days.
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