PRINTER'S NO. 3698
No. 2626 Session of 1976
INTRODUCED BY IRVIS, RICHARDSON, SHELTON AND RAPPAPORT,
SEPTEMBER 21, 1976
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE,
SEPTEMBER 21, 1976
AN ACT
1 To promote the welfare of the people of the Commonwealth by the
2 development of new small businesses or minority businesses or
3 the expansion or rehabilitation of existing small businesses
4 or minority businesses; establishing a Small Business Board
5 to designate certain portions of State contracts as Small
6 Business Set-asides for which bids shall only be received
7 from board defined Small Businesses or Minority Businesses;
8 and imposing duties on the Department of General Services.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Short Title.--This act shall be known and may be
12 cited as the "Small Business or Minority Business Set-aside
13 Law."
14 Section 2. Findings and Declaration of Policy.--It is hereby
15 determined and declared as a matter of legislative finding:
16 (1) That the existence of a strong and healthy free
17 enterprise system is directly related to the well-being and
18 strength of Small Business or Minority Business concerns and
19 their opportunity for free entry into business for growth and
20 expansions.
1 (2) That the present and prospective health, safety, morals
2 and general welfare of the Commonwealth require, as a public
3 purpose, the promotion and development of new, expanded and
4 rehabilitated Small Business or Minority Business concerns.
5 Therefore, it is hereby declared to be a policy of the
6 Commonwealth of Pennsylvania to insure that a fair proportion of
7 the Commonwealth's total contracts for property and services be
8 placed with Small Business or Minority Business concerns. Such
9 policy is hereby declared to be a public purpose.
10 Section 3. Definitions.--The following words and phrases
11 when used in this act shall have, unless the context clearly
12 indicates otherwise, the meanings given to them in this section:
13 "Minority business" means a business enterprise which meets
14 the qualifications of a small business and is owned or
15 controlled by one or more socially or economically disadvantaged
16 persons who are residents of the Commonwealth of Pennsylvania.
17 The disadvantages may arise from cultural, racial, chronic
18 economic circumstances, background or other similar causes. Such
19 persons include, but are not limited to, Negroes, Puerto Ricans,
20 Spanish-speaking Americans, American Indians, Eskimos and
21 Aleuts.
22 "Small business" means a business which is not dominate in
23 its field of operation and secures only a small portion of the
24 total market available. The Small Business Board created by this
25 act shall establish, by regulation, a detailed definition of
26 small business using the criteria set forth in this definition
27 and any other criteria which the board deems helpful in
28 determining what constitutes a small business. The board shall
29 consider the number of employees of the business, the dollar
30 volume of the business, the size status of the business in
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1 relation to other businesses in the same field, the annual sales
2 of the business and the gross and net receipts of the business.
3 The board may vary the definition to fit each particular
4 industry or field of endeavor. The board shall not classify as a
5 small business, the following:
6 (1) A wholesale business if its annual sales for the most
7 recently completed fiscal year exceed $4,000,000.
8 (2) A retail business, or a business selling services if its
9 annual sales and receipts exceed $1,000,000.
10 (3) A manufacturing business if its annual receipts exceed
11 $4,000,000.
12 (4) A construction business if its annual receipts exceed
13 $4,000,000.
14 The above limitations shall exclude the amount of any pending
15 bids, any uncompleted bid project or any sum of money the
16 receipt of which is not certain.
17 "Small Business Board" means the board established and
18 organized pursuant to the provisions of section 6.
19 "Small Business Board Set-aside" means that portion or part
20 of a contract or purchase which is determined by the Small
21 Business Board to be available exclusively for bids by small
22 businesses or minority businesses.
23 Section 4. Small Business Set-aside; Advertisement;
24 Limitation on Bids; Cancellation.--(a) Every department,
25 agency, board, bureau or commission or other instrumentality of
26 the Commonwealth which is authorized to contract for buildings,
27 highway commodities, equipment, supplies or services shall, upon
28 the determination of the Small Business Board, designate a
29 portion of all contracts for purchases as a Small Business Set-
30 aside.
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1 (b) The designation of the portion available as a Small
2 Business Set-aside shall be clearly set forth in all
3 advertisements for bids appearing in the Pennsylvania Bulletin
4 and all other media used to solicit bids for contracts of
5 purchase.
6 (c) The invitation to bid on that portion of the contract
7 designated as a Small Business Set-aside, shall be restricted to
8 bids received from businesses designated by the board as a small
9 or minority business. Bids from all other businesses shall be
10 rejected.
11 (d) The Small Business Set-aside portion of the contract
12 shall be awarded to the lowest responsible bidder among the
13 small or minority businesses in accordance with the rules and
14 regulations for purchasing promulgated by the Small Business
15 Board. The award of the Small Business Set-aside portion of a
16 contract under this act is subject to all other laws, rules and
17 regulations governing State purchases, except as altered by this
18 act or the rules and regulations promulgated thereunder.
19 (f) In the event that the department, agency, board, bureau,
20 commission, or the other instrumentality of the Commonwealth
21 soliciting a bid feels that responsive competitive bids at
22 reasonable prices were not obtained as a result of the Small
23 Business Set-aside solicitation, or that bids thereof were
24 received from only firms demonstrated to be not responsible, it
25 may request that the Small Business Board cancel the Small
26 Business Set-aside designation. Board action must be taken on
27 the request within 30 days of receipt. Upon the approval of the
28 cancellation by the board, the contract will be readvertised on
29 an unrestricted basis. Small or minority business bidding firms
30 will be notified of the Small Business Set-aside cancellation,
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1 the reason for bid rejection, and the Commonwealth's intent to
2 readvertise the contract on the unrestricted basis.
3 Section 5. Solicitation of Bids.--The department, agency,
4 board, bureau, commission, or other instrumentality of the
5 Commonwealth soliciting the bid shall be responsible for
6 carrying out the policies of this act, and to the extent
7 consistent with the best interests of the Commonwealth:
8 (1) Attempt to locate additional qualified small or minority
9 business suppliers by all appropriate methods, particularly
10 where only a limited number of small or minority businesses are
11 on bidders' list.
12 (2) Give wide publicity to Commonwealth purchasing
13 procedures.
14 (3) Publicize proposed contracts by use of advance notices
15 or other appropriate methods.
16 (4) Divide proposed contracts for supplies and services,
17 excluding construction, into quantities not less than economic
18 production runs, so as to permit bidding on quantities less than
19 the total requirements; allow the maximum time practicable for
20 preparation and submission of bids, proposals, or quotations and
21 where feasible, establish delivery schedules which will
22 encourage small or minority business participation.
23 (5) Use business and community development organizations to
24 send solicitations to all firms on the appropriate list.
25 Section 6. Creation of the Small Business Board.--(a) There
26 is hereby created within the Department of General Services a
27 board to be known as the Small Business Board. The board shall
28 consist of seven members, three of whom shall be the Secretary
29 of General Services who shall be the chairman of the board, the
30 Secretary of Commerce and the Secretary of Transportation. The
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1 remaining four members of the board shall be appointed by the
2 Governor. At least two of the Governor's appointees shall be
3 members of the small business community.
4 (b) The initial four members of the board shall be appointed
5 by the Governor to serve terms of one year, three years, five
6 years and seven years respectively, the Governor to determine
7 the term of each appointee. The initial four members shall serve
8 until their successors shall be duly appointed and qualified.
9 Thereafter their successors in office shall be appointed for a
10 term of four years, except that any person appointed to fill a
11 vacancy shall serve only for the unexpired portion of the term.
12 Board members shall be eligible for reappointment to the board.
13 (c) The four appointees of the Governor shall receive no
14 compensation for their services, but shall be entitled to
15 reimbursement for all necessary expenses incurred in connection
16 with the performance of their duties as board members.
17 Section 7. Operation of the Small Business Board.--Every
18 department, agency, board, bureau, commission or other
19 instrumentality of the Commonwealth shall submit to the Small
20 Business Board a list of its prospective contracts for each
21 fiscal year for those areas set forth in section 4(a). The Small
22 Business Board shall then review each prospective contract to
23 determine:
24 (1) What portion of the contract shall be set aside for
25 exclusive small or minority business participation if it can be
26 determined that there is a reasonable expectation that bids and
27 offers will be obtained from a sufficient number of reasonable
28 small or minority business concerns so that awards will be made
29 at reasonable prices. Partial set-asides of total contracts will
30 be considered and applied where that criterion for total set-
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1 asides is not met, but where the procurement is economically
2 severable into two or more parts, excluding construction, and
3 where it is anticipated that one or more small firms has the
4 technical competency and productive capacity to furnish a
5 severable portion of the contract at a reasonable price. In
6 those instances where partial set-asides are considered, there
7 must be a prior determination that such a set-aside
8 classification will not result in inequity in prices on various
9 portions of the organizational's total contract request.
10 (2) All set-aside designations, total or partial, shall be
11 made prior to the solicitation for bids or offers. The
12 solicitation shall identify the small or minority business size
13 standard, and require each bidder or offeror to identify his
14 size (large or small) pursuant to that standard.
15 (3) The Small Business Board shall set the amount of bonds
16 or securities on a small business set-aside. The amount of these
17 bonds shall not be greater than:
18 (i) Bid Bond - shall not be greater than 10% of the total
19 bid.
20 (ii) Performance Bond - shall not be greater than total
21 bid price.
22 (iii) Labor and Material Bond - shall be for the full
23 amount of labor and materials.
24 (4) The Small Business Board, with the explicit approval of
25 the department, agency, board, bureau, commission, or other
26 instrumentality of Commonwealth involved, may waive all bond
27 requirements for a particular small business set-aside.
28 Section 8. Administration of Program.--The Department of
29 General Services shall be responsible for the administration of
30 the program set forth within the act, including any expenses
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1 involved.
2 Section 9. Rules and Regulations; Annual Report.--(a) The
3 board shall adopt such rules and regulations as are consistent
4 with the provisions of this act and with normal purchasing
5 procedures used by the Commonwealth.
6 (b) The chairman of the Small Business Board shall make an
7 annual report of operations to the General Assembly and the
8 Governor. It is intended that the report indicate the progress
9 being made toward achieving the objectives of this act. The
10 reporting data shall include comparative contract and contract
11 award figures with small or minority firms which resulted from
12 small business set-asides (total and partial). One measure of
13 progress may be the comparison of small and/or minority business
14 award activity with previous fiscal years.
15 Section 10. Effective Date.--This act shall take effect
16 immediately.
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