AN ACT

 

1Amending Titles 18 (Crimes and Offenses) and 62 (Procurement) of
2the Pennsylvania Consolidated Statutes, in forgery and
3fraudulent practices, further providing for deception
4relating to certifications or verification of small diverse
5businesses; in general provisions, further providing for
6definitions; in procurement organization, further providing
7for powers and duties; providing for contractor
8responsibility program; and further providing for Office of
9the Budget; in small and disadvantaged businesses, further
10providing for policy and for definitions; repealing
11provisions relating to regulations; providing for department
12regulations and statements of policy; repealing provisions
13relating to duties of department; providing for
14administration, for enforcement and legal remedies, for
15duties of the bureau, for duties of the certification unit
16and for duties of the compliance unit; further providing for
17bonding and progress payments and for reporting requirements;
18providing for certification, for small diverse business
19compliance, for nonsmall diverse business compliance, for
20nonsmall diverse business diversity plan and for contract
21clauses and preference provisions; in antibid-rigging,
22further providing for definitions and prohibited activities;
23and making editorial changes.

24The General Assembly of the Commonwealth of Pennsylvania
25hereby enacts as follows:

26Section 1. Section 4107.2 of Title 18 of the Pennsylvania
27Consolidated Statutes is amended to read:

28§ 4107.2. Deception relating to [certification] certifications
 

1or verification of [minority business enterprise or
2women's business enterprise] small diverse 
3businesses.

4(a) Offense defined.--A person commits a felony of the third
5degree if, in the course of business, he:

6(1) Fraudulently obtains or retains certification as a
7[minority business enterprise or a women's business
8enterprise] small business or a diverse business.

9(2) Fraudulently obtains or retains verification as a
10small diverse business.

11[(2)] (3) Willfully makes a false statement, whether by
12affidavit, report or other representation, to an official or
13employee of a public body for the purpose of influencing the
14certification or denial of certification of any business
15entity as a [minority business enterprise or a women's
16business enterprise.] small business or diverse business, or 
17for the purpose of influencing the verification or denial of 
18verification as a small diverse business.

19[(3)] (4) Willfully obstructs or impedes any agency
20official or employee who is investigating the qualifications
21of a business entity which has requested certification as a
22[minority business enterprise or a women's business
23enterprise] small business or verification as a small diverse 
24business.

25[(4)] (5) Fraudulently obtains public moneys reserved
26for or allocated or available to [minority business
27enterprises or women's business enterprises.] small diverse 
28businesses.

29(6)  Fraudulently uses a certification or verification of
30a small diverse business to gain an advantage in an

1invitation for bid or request for proposal.

2(a.1) Enforcement.--The Department of General Services may
3enforce this section in accordance with 62 Pa.C.S. Ch. 45
4(relating to antibid-rigging).

5(b) Definitions.--As used in this section the following
6words and phrases shall have the meanings given to them in this
7subsection:

8"Certification." A determination made by a [public body]
9purchasing agency that a business entity is a [minority business
10enterprise or a women's business enterprise] small business for
11whatever purpose[.], or a determination made by a certification 
12entity that a business entity is a diverse business for whatever 
13purpose.

14"Certification entity." A third-party entity that certifies
15whether a business is a diverse business. The term includes the
16following entities:

17(1) The National Minority Supplier Development Council.

18(2) The Women's Business Enterprise National Council.

19(3) The United States Department of Veterans Affairs.

20(4) The United States Small Business Administration's
218(a) Program.

22(5) The Department of Transportation's Unified
23Certification Program for Disadvantaged Business Enterprises.

24"Control." The exclusive or ultimate and sole control of the
25business including, but not limited to, capital investment and
26all other financial, property, acquisition, contract
27negotiation, legal matters, officer-director-employee selection
28and comprehensive hiring, operating responsibility, cost-control
29matters, income and dividend matters, financial transactions and
30rights of other shareholders or joint partners. Control shall be

1real, substantial and continuing not pro forma. Control shall
2include the power to direct or cause the direction of the
3management and policies of the business and to make the day-to-
4day as well as major decisions in matters of policy, management
5and operations. Control shall be exemplified by possessing the
6requisite knowledge and expertise to run the particular business
7and control shall not include simple majority or absentee
8ownership. Further, control by a socially and economically
9disadvantaged individual or woman shall not be deemed to exist
10in any case where any nonminority owner or employee of the
11business is disproportionately responsible for the operation of
12the firm.

13"Diverse business." A small business which is owned or
14controlled by a majority of persons, not limited to members of
15minority groups, who have been deprived of the opportunity to
16develop and maintain a competitive position in the economy
17because of social disadvantages.

18"Minority business enterprise." [A small business concern
19which is:

20(1) A sole proprietorship, owned and controlled by a
21socially and economically disadvantaged individual.

22(2) A partnership or joint venture controlled by
23socially and economically disadvantaged individuals in which
2451% of the beneficial ownership interest is held by socially
25and economically disadvantaged individuals.

26(3) A corporation or other entity controlled by socially
27and economically disadvantaged individuals in which at least
2851% of the voting interest and 51% of the beneficial
29ownership interest are held by socially and economically
30disadvantaged individuals.] A small, for-profit business
 

1which is controlled by one or more minorities. In the case of 
2a corporation, at least 51% of the stock must be owned by one 
3or more minorities.

4["Public body." A department, bureau, agency, commission or
5other instrumentality of the Commonwealth, political
6subdivision, municipal authority or any wholly or partially
7owned government corporation which enters into contracts.]

8"Purchasing agency." A department, bureau, agency,
9commission or other instrumentality of the Commonwealth which
10enters into contracts.

11"Service-disabled veteran." A veteran who possesses either a
12disability rating letter issued by the United States Department
13of Veterans Affairs or a disability determination from the
14United States Department of Defense. In the case of a veteran
15with a permanent and severe disability, the term includes the
16spouse or permanent caregiver of that veteran.

17"Service-disabled veteran-owned business enterprise." A
18small, for-profit business that is controlled by one or more
19service-disabled veterans. In the case of a corporation, at
20least 51% of the stock must be owned by one or more service-
21disabled veterans. For procurement, a service-disabled veteran-
22owned business enterprise shall be certified by the United
23States Department of Veterans Affairs according to its
24regulations as a small business which is controlled by one or
25more service-disabled veterans.

26"Small business." A business in the United States which is
27independently owned, is not dominant in its field of operation
28and employs 100 or fewer employees.

29"Small diverse business." A small business which is also a
30diverse business.

1"Socially and economically disadvantaged individuals."
2Persons who are citizens of the United States and who are Black 
3Americans, Hispanic Americans, Native Americans, Asian-Pacific 
4Americans, women and other minorities or persons found to be 
5disadvantaged by the Small Business Administration pursuant to 
6the Small Business Act (15 U.S.C. § 631 et seq.). The term 
7includes veterans and service-disabled veterans.

8"Verification." The process through which a small diverse
9business is verified by the department that it is certified
10through one or more certification entities as a diverse business
11for the purpose of procurement.

12"Veteran." An individual who served on active duty in the
13United States Armed Forces, including any of the following:

14(1) A reservist or member of the National Guard who was
15discharged or released from the service under honorable
16conditions.

17(2) A reservist or member of the National Guard who
18completed an initial term of enlistment or qualifying period
19of service.

20(3) A reservist or member of the National Guard who was
21disabled in the line of duty during training.

22(4) An eligible surviving spouse of a veteran.

23"Veteran-owned business enterprise." A small, for-profit
24business which is controlled by one or more veterans. In the
25case of a corporation, at least 51% of the stock must be owned
26by one or more veterans. For procurement, a veteran-owned
27business enterprise shall be certified by the United States
28Department of Veterans Affairs according to its regulations as a
29small business concern which is controlled by one or more
30veterans.

1"Women's business enterprise." A small business concern
2which is at least 51% owned and controlled by women, or, in the
3case of any publicly owned business, at least 51% of the stock
4of which is owned by one or more women and whose management and
5daily business operations are controlled by one or more of the
6women who own it.

7Section 2. Section 103 of Title 62 is amended by adding a
8definition to read:

9§ 103. Definitions.

10Subject to additional definitions contained in subsequent
11provisions of this part which are applicable to specific
12provisions of this part, the following words and phrases when
13used in this part shall have the meanings given to them in this
14section unless the context clearly indicates otherwise:

15* * *

16"Contractor responsibility file."  A business's record in the
17contractor responsibility program.

18* * *

19Section 3. Section 321(6) of Title 62 is amended and the
20section is amended by adding a paragraph to read:

21§ 321. Powers and duties.

22Except as otherwise specifically provided in this part, the
23department shall have the following powers and duties:

24* * *

25(6) Participate in the management and maintenance of a
26contractor responsibility program as provided in section 323 
27(relating to contractor responsibility program) in
28coordination with the Office of the Budget and other agencies
29as may be directed by the Governor.

30(7)  Establish policies and promulgate regulations

1concerning the administration of a contractor responsibility
2program subject to the review of the Office of the Budget and
3other agencies as directed by the Governor.

4Section 4. Title 62 is amended by adding a section to read:

5§ 323.  Contractor responsibility program.

6(a) Program.--A contractor responsibility program shall be
7established by the department.

8(b)  Objectives.--The contractor responsibility program
9established under subsection (a) shall, at a minimum, provide
10for all of the following:

11(1)  Mandating agency reporting of nonresponsible
12contractors.

13(2)  Securing of information on contractor responsibility
14from the Federal Government.

15(3)  Agency investigations of allegations of contractor
16nonresponsibility.

17(4)  Standards and procedures for agency determinations
18of contractor responsibility.

19(5)  Centralizing the collection and dissemination of
20information concerning unsatisfactory or deficient
21performance and nonresponsible contractors.

22(6) Maintaining the confidentiality of the information
23contained in the Commonwealth contractor responsibility files
24and sanctions for the unauthorized use or disclosure of the
25information.

26(7) Collecting Commonwealth liabilities.

27(c)  Use.--For a procurement exceeding an amount to be
28determined by the department, a purchasing agency shall access
29the contractor responsibility file of the bidder or offeror to
30gather and analyze all of the following information regarding

1the bidder or offeror:

2(1) Current responsibility status.

3(2) Past performance.

4(3) Identification of tax delinquencies or other
5liabilities.

6(d) Violations.--All purchasing agencies shall maintain
7contractor responsibility files and update the files for
8violations of any of the following provisions:

9(1) 18 Pa.C.S. § 4107 (relating to deceptive or
10fraudulent business practices).

11(2) 18 Pa.C.S. § 4107.2 (relating to deception relating
12to certifications or verification of small diverse
13businesses).

14(3) Section 2111 (relating to small diverse business
15compliance).

16(4) Section 2111.1 (relating to relating to nonsmall
17diverse business compliance).

18(5) Chapter 23 (relating to ethics in public
19contracting).

20(6) Any other evidence of a business's nonresponsibility
21that a purchasing agency may consider in selecting the
22business as a contractor.

23(e) Penalties.--The following apply:

24(1)  The department may impose a fine of no more than
25$1,000 on a business for a negative entry in the business's
26contractor responsibility file under the following
27circumstances:

28(i) The business has a total of three negative
29entries in its contractor responsibility file.

30(ii) The business has a total of more than three

1negative entries in its contractor responsibility file.

2(iii) The business has incurred any single negative
3entry in the business's contractor responsibility file
4for which the department or a purchasing agency
5determines in its discretion that the underlying
6nonresponsible conduct is egregious.

7(2) Penalties given through the contractor
8responsibility program do not preclude the Commonwealth from
9imposing debarment, suspension, other penalties or further
10legal action under this title for the same underlying
11nonresponsible conduct in a business's contractor
12responsibility file.

13Fines shall be payable to the department and may be waived by
14department for cause shown.

15Section 5. Section 327(b) of Title 62 is amended to read:

16§ 327. Office of the Budget.

17* * *

18(b) Contractor responsibility program.--The Office of the
19Budget shall participate in the management and maintenance of a
20contractor responsibility program as provided in section 323 
21(relating to contractor responsibility program) in coordination
22with the department and other agencies as may be directed by the
23Governor.

24* * *

25Section 6. The heading of Chapter 21 of Title 62 is amended
26to read:

27CHAPTER 21

28SMALL AND [DISADVANTAGED] DIVERSE BUSINESSES

29Section 7. Sections 2101 and 2102 of Title 62 are amended to
30read:

1§ 2101. Policy.

2The policy of this Commonwealth is to assist small and 
3[disadvantaged] diverse businesses in learning how to do 
4business with [Commonwealth] purchasing agencies. The department 
5shall implement this policy in accordance with regulations 
6promulgated by the department.

7§ 2102. Definitions.

8[Subject to section 2103 (relating to regulations), the]
9Subject to section 2103.1 (relating to department regulations 
10and statements of policy), the following words and phrases when
11used in this chapter shall have the meanings given to them in
12this section unless the context clearly indicates otherwise:

13"Audit."  An investigation of business records in accordance
14with section 552 (relating to right to audit records).

15"Bureau."  The Bureau of Small Business Opportunities within
16the department.

17"Business."  A contractor or subcontractor for procurement.

18"Certification." A determination made by a purchasing agency
19that a business entity is a small business for whatever purpose,
20or a determination made by a certification entity that a
21business entity is a diverse business for whatever purpose.

22"Certification entity." A third-party entity that certifies
23whether a business is a diverse business. The term includes the
24following entities:

25(1) The National Minority Supplier Development Council.

26(2) The Women's Business Enterprise National Council.

27(3) The United States Department of Veterans Affairs.

28(4) The United States Small Business Administration's
298(a) program.

30(5) The Department of Transportation's Unified

1Certification Program for Disadvantaged Business Enterprises.

2"Control." The exclusive or ultimate and sole control of the
3business including, but not limited to, capital investment and
4all other financial, property, acquisition, contract
5negotiation, legal matters, officer-director-employee selection
6and comprehensive hiring, operating responsibility, cost-control
7matters, income and dividend matters, financial transactions and
8rights of other shareholders or joint partners. Control shall be
9real, substantial and continuing not pro forma. Control shall
10include the power to direct or cause the direction of the
11management and policies of the business and to make the day-to-
12day as well as major decisions in matters of policy, management
13and operations. Control shall be exemplified by possessing the
14requisite knowledge and expertise to run the particular business
15and control shall not include simple majority or absentee
16ownership. Further, control by a socially and economically
17disadvantaged individual or woman shall not be deemed to exist
18in any case where any nonminority owner or employee of the
19business is disproportionately responsible for the operation of
20the firm.

21["Disadvantaged business."] "Diverse business." A small
22business which is owned or controlled by a majority of persons,
23not limited to members of minority groups, who have been
24deprived of the opportunity to develop and maintain a
25competitive position in the economy because of social
26disadvantages.

27"Diversity plan." A plan submitted to the department by a
28business that establishes a separate goal of diversity in
29control, ownership, participation, operation and employment when
30fulfilling the obligations of an invitation for bid or request

1for proposal.

2"Inspection."  An on-site investigation of the place of
3business or worksite of a contractor or any subcontractor that
4is related to the performance of any contract awarded or to be
5awarded by the purchasing agency.

6"Minority business enterprise."  A small, for-profit business
7which is controlled by one or more minorities. In the case of a
8corporation, at least 51% of the stock must be owned by one or
9more minorities.

10"Self-certification."  The process through which a business
11obtains certification as a diverse business through a
12certification entity.

13"Service-disabled veteran."  A veteran who possesses either a
14disability rating letter issued by the United States Department
15of Veterans Affairs or a disability determination from the
16United States Department of Defense. In the case of a veteran
17with a permanent and severe disability, the term includes the
18spouse or permanent caregiver of that veteran.

19"Service-disabled veteran-owned business enterprise."  A
20small, for-profit business that is controlled by one or more
21service-disabled veterans. In the case of a corporation, at
22least 51% of the stock must be owned by one or more service-
23disabled veterans. For procurement, a service-disabled veteran-
24owned business enterprise shall be certified by the United
25States Department of Veterans Affairs according to its
26regulations as a small business which is controlled by one or
27more service-disabled veterans.

28"Small business." A business in the United States which is
29independently owned, is not dominant in its field of operation
30and employs 100 or fewer employees.

1"Small Business Procurement Initiative." The process through
2which a small business concern is certified by the department as
3a small business and thereby registers as a small business
4eligible for the purpose of procurement.

5"Small diverse business." A small business which is also a
6diverse business.

7"Socially and economically disadvantaged individuals."
8Persons who are citizens of the United States and who are Black
9Americans, Hispanic Americans, Native Americans, Asian-Pacific
10Americans, women and other minorities or persons found to be
11disadvantaged by the Small Business Administration pursuant to
12the Small Business Act (15 U.S.C. § 631 et seq.). The term
13includes veterans and service-disabled veterans.

14"Verification." The process through which a small diverse
15business is verified by the department that it is certified
16through one or more certification entities as a diverse business
17for the purpose of procurement.

18"Veteran." An individual who served on active duty in the
19United States Armed Forces, including any of the following:

20(1) A reservist or member of the National Guard who was
21discharged or released from the service under honorable
22conditions.

23(2) A reservist or member of the National Guard who
24completed an initial term of enlistment or qualifying period
25of service.

26(3) A reservist or member of the National Guard who was
27disabled in the line of duty during training.

28(4) An eligible surviving spouse of a veteran.

29"Veteran-owned business enterprise." A small, for-profit
30business which is controlled by one or more veterans. In the

1case of a corporation, at least 51% of the stock must be owned
2by one or more veterans. For procurement, a veteran-owned
3business enterprise shall be certified by the United States
4Department of Veterans Affairs according to its regulations as a
5small business concern which is controlled by one or more
6veterans.

7"Women's business enterprise." A small business concern
8which is at least 51% owned and controlled by women, or, in the
9case of any publicly owned business, at least 51% of the stock
10of which is owned by one or more women and whose management and
11daily business operations are controlled by one or more of the
12women who own it.

13Section 8. Section 2103 of Title 62 is repealed:

14[§ 2103. Regulations.

15The department shall establish policy for executive and those
16independent agencies for which the department acts as purchasing
17agency and may promulgate regulations establishing detailed
18definitions of the words and phrases defined in section 2102
19(relating to definitions) using, in addition to the criteria set
20forth in section 2102, other criteria as it deems appropriate,
21including the number of employees and the dollar volume of
22business. State-affiliated entities shall implement the policy
23for their procurement programs.]

24Section 9. Title 62 is amended by adding a section to read:

25§ 2103.1.  Department regulations and statements of policy.

26(a)  Regulations.--The department shall promulgate
27regulations in accordance with this chapter. Regulations shall
28be sufficient to ensure reasonable predictability in small
29diverse business procurement for contractors and subcontractors.
30Regulations shall establish all of the following:

1(1)  Certification procedures as provided in section 2109
2(relating to certification).

3(2) Verification procedures as provided in section 2110
4(relating to verification).

5(3)  Compliance as provided in sections 2111 (relating to
6small diverse business compliance) and 2111.1 (relating to
7nonsmall diverse business compliance).

8(b)  Statements of policy.--The department shall establish
9policies for purchasing agencies for which the department acts
10as a purchasing agency. Purchasing agencies shall implement the
11policies for their procurement programs.

12Section 10. Section 2104 of Title 62 is repealed:

13[§ 2104. Duties of department.

14The department shall have the following duties:

15(1) Where feasible, provide appropriate staff who shall
16be responsible to the department and who shall serve within
17designated Commonwealth agencies to assist small and
18disadvantaged businesses in this Commonwealth in learning how
19to do business with Commonwealth agencies.

20(2) Give special publicity to procurement procedures and
21issue special publications designed to assist small and
22disadvantaged businesses in learning how to do business with
23Commonwealth agencies.

24(3) Compile, maintain and make available source lists of
25small and disadvantaged businesses for the purpose of
26encouraging procurement from small and disadvantaged
27businesses.

28(4) Include small and disadvantaged businesses on
29solicitation mailing lists.

30(5) Assure that small and disadvantaged businesses are

1solicited on each procurement for which the businesses may be
2suited.

3(6) Develop special training programs to assist small
4and disadvantaged businesses in learning how to do business
5with Commonwealth agencies.]

6Section 11. Title 62 is amended by adding sections to read:

7§ 2104.1.  Administration.

8(a) Bureau of Small Business Opportunities.--The department
9shall establish the Bureau of Small Business Opportunities to
10administer this chapter.

11(b) Certification unit.--The department shall establish a
12staffed certification unit within the bureau that shall assist
13small diverse businesses in obtaining or renewing certification
14for procurement in accordance with this chapter. At least one
15employee of the certification unit shall be fluent in both
16English and Spanish.

17(c) Compliance unit.--The department shall establish a
18staffed compliance unit within the bureau that shall ensure all
19small diverse businesses and nonsmall diverse businesses that
20subcontract or plan to subcontract with a small diverse business
21maintain compliance with this chapter. At least one employee of
22the compliance unit shall be fluent in both English and Spanish.

23(d) Duties of the department.--The department shall have the
24following duties:

25(1)  Provide appropriate staff who shall be responsible
26to the department and who shall serve within designated
27purchasing agencies to assist small diverse businesses in
28learning how to do business with purchasing agencies and to
29enforce the provisions of this chapter.

30(2)  Assure that participation by small diverse

1businesses is, if appropriate, factored into the evaluation
2of proposals for supplies, services or construction when a
3purchasing agency uses the competitive sealed proposals
4method under section 513 (relating to competitive sealed
5proposals).

6(3)  Exercise authority over the bureau to carry out the
7provisions of this chapter.

8(4)  Approve or reject any contract modification
9regarding the respective responsibilities of contractors and
10subcontractors in an existing contract before such contract
11modification is accepted and enforceable.

12(5) Determine the employment data that shall be included
13in a nonsmall diverse business's performance report that
14demonstrates its achievement of a diversity plan in
15accordance with section 2112 (relating to nonsmall diverse
16business diversity plan).

17§ 2104.2. Enforcement and legal remedies.

18(a) Enforcement.--The following apply:

19(1)  The bureau shall monitor and enforce contractor
20compliance, contractor responsibility and may recommend a
21case of noncompliance or nonresponsibility to the department
22for further action.

23(2) The department may develop other enforcement
24mechanisms that are derived from the provisions of this
25chapter.

26(b) Legal remedies.--At the department's discretion, a
27business may be subject to legal action by the Attorney General
28for civil liability or criminal prosecution, including, but not
29limited to, the following:

30(1)  A violation of 18 Pa.C.S. § 4107.2 (relating to

1deception relating to certifications or verification of small
2diverse businesses).

3(2)  A violation of Chapter 45 (relating to antibid-
4rigging).

5(3) Any other legal remedies provided by law.

6§ 2104.3. Duties of the bureau.

7(a) Duties.--The bureau shall have the following duties:

8(1)  Give special publicity to procurement procedures and
9issue special publications designed to assist small diverse
10businesses in learning how to do business with purchasing
11agencies.

12(2)  Compile, maintain and make available source lists of
13verified small diverse businesses for the purpose of
14encouraging procurement from small diverse businesses.

15(3)  Include verified small diverse businesses on
16solicitation mailing lists.

17(4)  Ensure that verified small diverse businesses are
18solicited on each procurement for which the businesses may be
19suited.

20(5)  Develop and publicize training programs to assist
21small diverse businesses in learning how to do business with
22purchasing agencies, including assistance with certification,
23verification, compliance, bonding and diversity plans.

24(6)  Conduct regular meetings with all purchasing
25agencies to monitor compliance with this chapter.

26(7)  Develop and publicize educational initiatives
27including, but not limited to, informational sessions,
28programs and courses designed to educate small diverse
29businesses on the processes and benefits of doing business
30with purchasing agencies.

1(b) Hotline.--The bureau shall establish a hotline telephone
2number for contractors, subcontractors and the public to connect
3with the bureau for all of the following purposes:

4(1)  Obtaining guidance on the certification process.

5(2)  Obtaining guidance on contractor compliance.

6(3)  Reporting any of the following suspected activities:

7(i)  Abuse or misuse of one's certified status as a
8small diverse business in procurement.

9(ii)  A violation of any of the provisions of this
10chapter.

11(iii)  A violation of 18 Pa.C.S. § 4107.2 (relating
12to deception relating to certifications or verification
13of small diverse businesses).

14(iv)  Fraud.

15(c) Distribution.--The bureau shall distribute the hotline
16established under subsection (b) to all contractors and
17subcontractors engaging in procurement in accordance with this
18chapter.

19(d) Maintenance.--The bureau shall maintain the contractor
20responsibility file within the contractor responsibility program
21as provided in section 323 (relating to contractor
22responsibility program) of the following entities:

23(1) A small diverse business.

24(2) A nonsmall diverse business as a prime contractor
25that uses or plans to use a small diverse business as a
26subcontractor.

27(e) Enforcement.--If the bureau finds a business is in
28noncompliance, then the bureau may take the following actions:

29(1) Record a negative entry in the business's contractor
30responsibility file.

1(2) Cancel the contract.

2(3) Suspend the business for a period of no more than 90
3days.

4(4) Debar the business for a period of no more than
5three years.

6(5) Decertify the business from the Small Business
7Procurement Initiative.

8(6) Withdraw verification of the business.

9(7) Impose fines.

10(8) Make a recommendation to the department to refer the
11case to the Attorney General for legal action.

12(9) Exercise authority over the certification unit and
13the compliance unit to ensure this chapter is effective.

14§ 2104.4. Duties of the certification unit.

15(a) Duties.--The certification unit shall have the following
16duties:

17(1)  Assist small diverse businesses in obtaining
18certification.

19(2) Certify and decertify small businesses through the
20Small Business Procurement Initiative.

21(3)  Verify or withdraw verification of a business
22seeking or relying on verification as a small diverse
23business.

24(b) Decertification and withdrawal of verification.--The
25certification unit may decertify a business's certification as a
26small business or withdraw verification of a small diverse
27business for any of the following reasons:

28(1) The business received certification or verification
29by knowingly submitting false and misleading information.

30(2) The business knowingly allowed the abuse or misuse

1of its certification or verification status.

2(3) The business failed to cooperate with or respond to
3a request for information from the department or other
4purchasing agency or official.

5(4) A certification entity decertifies the business.

6(5) The business otherwise violates any of the following
7provisions:

8(i) 18 Pa.C.S. § 4107.2 (relating to deception
9relating to certifications or verification of small
10diverse businesses).

11(ii) Section 2111 (relating to small diverse
12business compliance).

13(iii) Section 4503 (relating to prohibited
14activities).

15(iv) The certification unit shall give the business
16notice of proposed decertification or withdrawal of
17verification and the right to due process through
18regulations promulgated by the department.

19(v) The certification unit shall record a
20decertification or withdrawal of verification in the
21business's contractor responsibility file within the
22contractor responsibility program as provided in section
23323 (relating to contractor responsibility program).

24(c) Audit and inspection.--The certification unit shall
25audit and inspect a business for proper certification and
26verification according to the following:

27(1) An inspection shall be performed during verification
28to ensure proper certifications of a small diverse business
29in accordance with this chapter. The certification unit may
30perform any subsequent inspection at the discretion of the

1bureau to ensure proper certifications and verification.

2(2) The certification unit may recommend the grounds for
3decertifying a small business or not verifying a small
4diverse business to the department for further action.

5§ 2104.5. Duties of the compliance unit.

6(a) Duties.--The compliance unit shall have all of the
7following duties:

8(1)  Assist contractors and subcontractors in maintaining
9compliance with this chapter.

10(2)  Conduct an audit or an inspection of the business
11when it is suspected of noncompliance.

12(b) Audits and inspections.--The compliance unit shall audit
13or inspect a small diverse business according to the following:

14(1) The compliance unit shall audit or inspect a
15business suspected of noncompliance under section 2111
16(relating to small diverse business compliance) or
17noncompliance under section 2111.1 (relating to nonsmall
18diverse business compliance).

19(2) The compliance unit may conduct further audits or
20inspections at its discretion to ensure compliance with this
21chapter.

22(c) Negative entry.--The compliance unit may report a 
23negative entry in the business's contractor responsibility file 
24to the department and the purchasing agency for further action.

25(d) Noncompliance.--The compliance unit may impose any other
26consequences for noncompliance at its discretion in accordance
27with this chapter.

28Section 12. Sections 2105 and 2107 of Title 62 are amended
29to read:

30§ 2105. Bonding and progress payments.

1(a) Bonding.--Notwithstanding other provisions of this part,
2a purchasing agency may reduce the level or change the types of
3bonding normally required or accept alternative forms of
4security to the extent reasonably necessary to encourage
5procurement from small [and disadvantaged] diverse businesses.

6(b) Progress payments.--A purchasing agency may make special
7provisions for progress payments as it deems reasonably
8necessary to encourage procurement from small [and
9disadvantaged] diverse businesses.

10§ 2107. Report to General Assembly.

11The department shall annually, before October 1, report in
12writing [to the General Assembly concerning the awarding of
13contracts to small and disadvantaged businesses during the
14preceding fiscal year. The report shall include a list of all
15small and disadvantaged businesses that participated as
16contractors, subcontractors or suppliers during the preceding
17fiscal year for contracts if the number of contractors under a
18previously existing contract for the same supply or service is
19reduced to a single contractor or reduced by more than 50% of
20the number existing on September 30, 2003.] on the actual 
21utilization of small diverse businesses as contractors, 
22subcontractors, suppliers and professional service providers. 
23The department shall annually, before October 1, deliver the 
24report in writing to the General Assembly and post the report on 
25the bureau's Internet website. In preparing the report, the
26department shall [verify whether commitments made to small and
27disadvantaged businesses in the course of awarding these
28contracts have been maintained.] include the following data from 
29the preceding fiscal year:

30(1) A list of all small diverse businesses that

1participated as contractors, subcontractors, suppliers or
2professional service providers utilized by purchasing
3agencies.

4(2) The dollar amounts spent on the actual utilization
5of small diverse businesses as contractors, subcontractors,
6suppliers or professional service providers, including the
7following categories:

8(i) The total amount spent by the Commonwealth on
9small diverse business procurement, including, but not
10limited to, the following:

11(A) A comparison with the total amount spent by
12the Commonwealth on all procurement contracts.

13(B) The total amounts spent by the Commonwealth
14on all contracts awarded to minority business
15enterprises, women's business enterprises, veteran-
16owned business enterprises and service-disabled
17veteran-owned business enterprises.

18(ii) The amount spent by each purchasing agency on
19small diverse business procurement, including, but not
20limited to, the following:

21(A) A comparison with the total amount spent by
22each purchasing agency on all of its procurement
23contracts.

24(B) The amounts spent by each purchasing agency
25on all contracts awarded to minority business
26enterprises, women's business enterprises, veteran-
27owned business enterprises and service-disabled
28veteran-owned business enterprises.

29(3) The percentages of actual utilization of small
30diverse businesses as contractors, subcontractors, suppliers

1or professional service providers as compared to the actual
2utilization of nonsmall diverse businesses, including, but
3not limited to, the following categories:

4(i) The percentage of small diverse business
5procurement out of the total amount spent by the
6Commonwealth on procurement, including, but not limited
7to, the percentages of total amounts spent by the
8Commonwealth on all contracts awarded to minority
9business enterprises, women's business enterprises,
10veteran-owned business enterprises and service-disabled
11veteran-owned business enterprises.

12(ii) The percentage of small diverse business
13procurement out of the total amount spent by each
14purchasing agency on all procurement, including, but not
15limited to, the percentages of the amounts spent by each
16purchasing agency on all contracts awarded to minority
17business enterprises, women's business enterprises,
18veteran-owned business enterprises and service-disabled
19veteran-owned business enterprises.

20(4) Confirmation of whether commitments made to small
21diverse businesses in the course of awarding these contracts
22have been maintained.

23Section 13. Title 62 is amended by adding sections to read:

24§ 2109. Certification.

25(a) Requirements.--A small diverse business shall be
26certified by the department as a small business and self-
27certified by a certification entity as a diverse business before
28being verified by the department to engage in Commonwealth
29procurement as a small diverse business.

30(b) Supplier registration.--The business shall register as a

1supplier with the Commonwealth through the Pennsylvania Supplier
2Portal before obtaining certification as a small business.

3(c) Certification as a small business.--A business shall be
4certified by the department as a small business through the
5Small Business Procurement Initiative by proving the following
6criteria:

7(1) The business is a for-profit United States business.

8(2) The business is independently owned.

9(3) The business is not dominant in its field of
10operation.

11(4) The business does not exceed more than 100 full-time
12equivalent employees.

13(5) The average gross income sales of the business do
14not exceed an amount to be determined by the department.

15(d) Self-certification as a diverse business.--A business
16self-certifies as a diverse business by completing all of the
17following steps:

18(1) Obtaining certification that the business is a
19diverse business through one or more of the following
20certification entities:

21(i) The National Minority Supplier Development
22Council.

23(ii) The Women's Business Enterprise National
24Council.

25(iii) The United States Department of Veterans
26Affairs.

27(iv) The United States Small Business
28Administration's 8(a) program.

29(v) The Department of Transportation's Unified
30Certification Program for Disadvantaged Business

1Enterprises.

2(2) Submitting proof of self-certification as a diverse
3business by presenting diverse business certification through
4a certification entity to the department.

5§ 2110. Verification.

6(a) Obtaining verification.--To obtain verification as a
7small diverse business, a business shall perform all of the
8following:

9(1) Complete the process of certification in accordance
10with section 2109 (relating to certification).

11(2) Pay a first-time verification fee of $40 to the
12department.

13(3) Allow the bureau to conduct an audit and an
14inspection.

15(4) Submit any other documentation the bureau may
16request to the bureau for verification.

17(5) Complete a training program provided by the bureau
18concerning small diverse business procurement that includes,
19but is not limited to, training in certifications,
20verification, compliance, bonding and diversity plans.

21(b) Renewing verification.--Verification shall be renewed
22annually. To renew verification as a small diverse business, a
23small diverse business shall perform all of the following:

24(1) Maintain certification in accordance with section
252109.

26(2) Pay an annual verification fee of $25 to the
27department.

28(3) Allow the bureau to conduct annually an audit and an
29inspection and to conduct additional audits or inspections at
30the bureau's discretion.

1(4) Submit any other documentation the bureau may
2request to the bureau for verification.

3(5) Complete an annual training program provided by the
4bureau concerning small diverse business procurement that
5includes, but is not limited to, training in certification,
6verification, compliance, bonding and diversity plans.

7(6) Maintain a record of good standing in the small
8diverse business's contractor responsibility file as
9determined by the bureau.

10(7) Maintain small diverse business compliance in
11accordance with section 2111 (relating to small diverse
12business compliance) or maintain nonsmall diverse business
13compliance in accordance with section 2111.1 (relating to
14nonsmall diverse business compliance).

15§ 2111.  Small diverse business compliance.

16(a)  Compliance.--A small diverse business that contracts
17with a purchasing agency shall do all of the following:

18(1)  Maintain a record of good standing in the nonsmall
19diverse business's contractor responsibility file as
20determined by the compliance unit.

21(2)  Allow any audits or inspections by the department.

22(3)  Annually attend a training program provided by the
23department on small diverse business procurement procedures
24and maintaining compliance.

25(b) Display and distribute the hotline.--The following
26apply:

27(1) A small diverse business shall display the hotline
28on-site and distribute the hotline to all contractors,
29subcontractors and employees.

30(2) A small diverse business or any other person may use

1this hotline for any of the following purposes:

2(i)  Obtaining guidance on certification and
3verification processes.

4(ii)  Obtaining guidance on contractor compliance.

5(iii) Reporting any of the following suspected
6activities:

7(A)  Abuse or misuse of one's certified status as
8a small business or of one's verified status as a
9small diverse business.

10(B) A violation of 18 Pa.C.S. § 4107.2 (relating
11to deception relating to certifications or
12verification of small diverse businesses).

13(C) A violation of this section.

14§ 2111.1 Nonsmall diverse business compliance.

15(a) Compliance.--A nonsmall diverse business acting as a
16prime contractor that subcontracts or plans to subcontract with
17a small diverse business shall have the following duties:

18(1) Maintain a record of good standing in the nonsmall
19diverse business's contractor responsibility file as
20determined by the compliance unit.

21(2) Annually attend a training program provided by the
22department on small diverse business procurement and
23maintaining compliance.

24(3) Submit a diversity plan with each invitation for bid
25or request for proposal in accordance with section 2112
26(relating to nonsmall diverse business diversity plan).

27(4) Maintain compliance with the submitted diversity
28plan for its corresponding contract in accordance with
29section 2111 (relating to small diverse business compliance).

30(b) Prohibitions.--A nonsmall diverse business acting as a

1prime contractor that subcontracts or plans to subcontract with
2a small diverse business may not do the following:

3(1) Misuse a small diverse business's certification or
4verification to gain an unfair advantage in its invitation
5for bid or request for proposal.

6(2) Abuse or otherwise take advantage of a
7subcontracting small diverse business, including, but not
8limited to, withholding performance of the contract according
9to its terms accepted by the parties and approved by the
10department.

11§ 2112.  Nonsmall diverse business diversity plan.

12(a) Diversity plan.--A nonsmall diverse business that
13subcontracts or plans to subcontract with a small diverse
14business for procurement shall submit a diversity plan with its
15invitation for bid or request for proposal and deliver a copy of
16the diversity plan to the subcontractor.

17(b) Requirements.--A diversity plan shall meet the following
18requirements at the bureau's discretion:

19(1) The diversity plan shall reasonably assure the
20bureau that all persons are afforded equality of opportunity
21in contracting and employment by the business and its
22contractors, subcontractors, assignees, lessees and agents.

23(2)  The diversity plan shall be a representation from
24which a good faith effort is measured to assure the bureau
25that all persons are afforded equal opportunities in
26contracting and employment by the business and its
27contractors, subcontractors, assignees, lessees and agents.

28(c) Enforceability.--A diversity plan is legally enforceable
29by the Commonwealth and considered part of the invitation for
30bid or request for proposal.

1(d) Achievement demonstration.--A nonsmall diverse business
2may demonstrate achievement of a diversity plan's goals through
3one or more of the following:

4(1) Contracting or transacting directly with a small
5diverse business.

6(2) Contracting with a nonsmall diverse business under
7terms and conditions that establish a participation plan.

8(e)  Performance report.--As part of an application to renew
9a contract, a nonsmall diverse business shall file a report with
10the bureau concerning the performance of its diversity plan. The
11report shall include, but not be limited to, all of the
12following:

13(1)  Employment data to be determined by the department.

14(2)  The total number and value of all contracts or
15transactions awarded for goods and services.

16(3)  The total number and value of all contracts awarded
17to small diverse businesses.

18(4)  A list containing each contract or transaction
19awarded to small diverse businesses and the actual value of
20each contract or transaction.

21(5)  The total number and value of all contracts awarded
22that contain a participation plan.

23(6)  The total number and value of all subcontracts
24awarded to small diverse businesses under contracts
25containing a participation plan.

26(7)  A list of each subcontract awarded to small diverse
27businesses under contracts containing a participation plan
28and the actual value of each subcontract.

29(8)  A comprehensive description of all efforts made by
30the business to monitor and enforce the participation plan.

1(9)  Information on equity ownership or diversity
2management opportunities initiated or promoted by the
3nonsmall diverse business.

4(10)  Other information the purchasing agency, department
5or bureau requires or requests in writing.

6(f)  Definitions.--As used in this section, the term
7"participation plan" shall mean a contractor's diversity plan
8for participation that establishes a separate goal of diversity
9in ownership, participation, operation and employment when
10fulfilling the obligations of an invitation for bid or request
11for proposal.

12§ 2113.  Contract provisions protecting small diverse businesses
13as subcontractors.

14A nonsmall diverse business that subcontracts or plans to
15subcontract with a small diverse business shall place the
16following provisions in each subcontract with a small diverse
17business:

18(1) The responsibilities of this contract shall be
19provided before acceptance. Any contract modification of
20responsibilities shall be negotiated between the parties and
21receive approval from the Department of General Services
22before the contract modification may be accepted and
23enforceable.

24(2) The party who has the prime contract with a
25purchasing agency agrees to the following rights of the
26subcontractor:

27(i)  The subcontractor may accept or reject any
28contract modification.

29(ii)  If the subcontractor rejects the modification,
30the subcontractor has the right to do the following:

1(A) Continue its relationship with the prime
2contractor under the terms and conditions of the
3previously accepted contract without the contract
4modification.

5(B) Report complaints to the Department of
6General Services.

7(C) Cancel the contract if it is impossible to
8perform without the modification. If the contract is
9canceled, the subcontractor shall be entitled to
10either actual damages or half of the compensation
11promised to the subcontractor when the contract was
12last previously accepted, whichever is greater.

13(3) The parties recognize that the Department of General
14Services may reject the modification of the contract for
15cause.

16Section 14. The definition of "bid-rigging" in section 4502
17of Title 62 is amended to read:

18§ 4502. Definitions.

19The following words and phrases when used in this chapter
20shall have the meanings given to them in this section unless the
21context clearly indicates otherwise:

22"Bid-rigging." The concerted activity of two or more persons
23to determine in advance the winning bidder of a contract let or
24to be let for competitive bidding by a government agency. The
25term includes, but is not limited to, any one or more of the
26following:

27(1) Agreeing to sell items or services at the same
28price.

29(2) Agreeing to submit identical bids.

30(3) Agreeing to rotate bids.

1(4) Agreeing to share profits with a contractor who does
2not submit the low bid.

3(5) Submitting prearranged bids, agreed-upon higher or
4lower bids or other complementary bids.

5(6) Agreeing to set up territories to restrict
6competition.

7(7) Agreeing not to submit bids.

8(8)  Colluding, conspiring, or combining with another in
9order to commit or attempt to commit the activities
10prohibited by this chapter.

11The term includes any concerted activity to use one's small
12diverse business certifications or verification status to gain
13an unlawful advantage in procurement.

14* * *

15Section 15. Section 4503(a) of Title 62 is amended to read:

16§ 4503. Prohibited activities.

17(a) Bid-rigging unlawful.--It is unlawful for any person [to
18conspire, collude or combine with another in order] to commit or
19attempt to commit bid-rigging involving:

20(1) A contract for the purchase of equipment, goods,
21services or materials or for construction or repair let or to
22be let by a government agency.

23(2) A subcontract for the purchase of equipment, goods,
24services or materials or for construction or repair with a
25prime contractor or proposed prime contractor for a
26government agency.

27* * *

28Section 16.  The provisions of this act are severable. If any
29provision of this act or its application to any person or
30circumstance is held invalid, the invalidity shall not affect

1other provisions or applications of this act which can be given
2effect without the invalid provision or application.

3Section 17.  This act shall take effect in 60 days.