Second Regular Session Seventieth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 16-0460.01 Nicole Myers x4326 HOUSE BILL 16-1134 HOUSE SPONSORSHIP Carver, Landgraf, Lee, Priola, Roupe SENATE SPONSORSHIP Todd, House Committees Senate Committees Business Affairs and Labor A BILL FOR AN ACT Concerning modifications to the service-disabled veteran-owned small businesses preference in state procurement. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) In 2014, the general assembly established a goal that, in awarding contracts that are subject to the state "Procurement Code", the state would award at least 3% of all contracts by dollar value to service-disabled veteran-owned small businesses. The bill changes the procurement goal into a requirement as follows: In the 2016-17 fiscal year, at least one percent of state contracts by dollar value shall be awarded to service-disabled veteran-owned small businesses; In the 2017-18 fiscal year, at least 2% of state contracts by dollar value shall be awarded to service-disabled veteran-owned small businesses; and In the 2018-19 fiscal year and in each fiscal year thereafter, at least 3% of state contracts by dollar value shall be awarded to service-disabled veteran-owned small businesses. Current law allows a state agency to grant a preference to a service-disabled veteran-owned small business to satisfy the procurement goal. The bill maintains the ability for a state agency to grant such a preference to satisfy the procurement requirement and also allows a state agency to grant a preference for a business that includes in its bid that it will use at least one service-disabled veteran-owned small business as a subcontractor if the business is awarded the contract. The bill also authorizes a state agency to include work performed by a subcontractor that is a service-disabled veteran-owned small business to satisfy the procurement requirements. If a business is given a preference on the basis of using one or more service-disabled veteran-owned small businesses as a subcontractor, the bill requires the business to submit certain information to the state agency that awarded the contract regarding the number of such subcontractors used and the approximate dollar value of work that was performed by such subcontractors. Current law requires a business to be certified as a service-disabled veteran-owned small business by the center for veterans enterprise within the United States department of veterans affairs before being given a preference. Due to the significant amount of time that it takes for a business owner to obtain a service-disabled veteran-owned small business certification, the bill extends service-disabled veteran-owned eligibility to business owners who have applied for certification from the center for veterans enterprise and who have submitted certain documentation to the secretary of state's office regarding the business owner's release or discharge from active duty military, the business owner's military service-related disability, and the business owner's efforts to become an officially registered and verified service-disabled veteran-owned small business by the center for veterans enterprise. The bill directs the secretary of state to create and maintain on its website a list of businesses that have not yet been officially registered and verified as a service-disabled veteran-owned small business by the center for veterans enterprise but that have submitted the required documentation for service-disabled veteran-owned small business eligibility. The bill specifies that businesses that are on the list maintained by the secretary of state are eligible for a preference in state contracting and authorizes a state agency to include work performed by businesses on the list to satisfy the procurement requirements. In addition, the bill modifies the information that a business must submit with a bid to be eligible to receive the preference and modifies existing reporting requirements. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, amend 24-103-211 as follows: 24-103-211. Service-disabled veteran-owned small businesses - state procurement requirement - preference - definitions. (1) As used in this section, unless the context otherwise requires: (a) "Service-disabled veteran-owned small business" means a business that is: (I) Incorporated or organized in the state or that is maintaining a place of business or office in the state; and (II) Owned by a veteran with a disability that is service-connected, as defined in 38 U.S.C. sec. 101 (16); (III) At least fifty-one percent owned by one or more service-disabled veterans or, in the case of any publicly owned business, at least fifty-one percent of the stock is owned by one or more service-disabled veterans; (IV) Managed and controlled in its daily business operations by one or more service-disabled veterans, or in the case of a veteran with a permanent and severe disability, by the spouse or permanent care-giver of such veteran; and (V) (A) Officially registered and verified as a service-disabled veteran-owned small business by the center for veterans enterprise within the United States department of veterans affairs; or (B) On the list of service-disabled veteran-owned small businesses maintained by the secretary of state pursuant to subsection (5) of this section. (b) "State agency" means a principal department of the executive branch of state government as specified in section 24-1-110, including any division, office, agency, or other unit created within a principal department, including institutions of higher education and the Colorado commission on higher education; except that "state agency" does not include those entities that have elected to be exempt from the code pursuant to section 24-101-105 (1) (b). (2) In awarding all contracts that are subject to this code, the state shall have the goal of awarding at least three percent of all such contracts, by dollar value, director of the department of personnel shall work with state agencies to ensure that contracts are awarded to service-disabled veteran-owned small businesses in the following percentages: (a) In the 2016-17 fiscal year, at least one percent of all state contracts by dollar value; (b) In the 2017-18 fiscal year, at least two percent of all contracts by dollar value; and (c) In the 2018-19 fiscal year and in each fiscal year thereafter, at least three percent of all contracts by dollar value. (2.5) To satisfy this goal the requirements specified in subsection (2) of this section, a state agency may grant a preference, including a bidding preference, for service-disabled veteran-owned small businesses. A state agency may also grant a preference for a business that specifies in its bid that it will use at least one service-disabled veteran-owned small business as a subcontractor if the business is awarded the contract. A state agency may include work performed by a subcontractor that is a service-disabled veteran-owned small business to satisfy the requirements specified in subsection (2) of this section in the dollar amounts that a contractor reports to the agency pursuant to subsection (3.5) of this section. (3) When a state agency intends to award a contract to a business in furtherance of the three percent goal requirements specified in subsection (2) of this section, the state agency shall, prior to awarding the contract, require the business to either submit to the agency documentation from the United States department of veterans affairs that verifies that the business is a service-disabled veteran-owned small business or notify the agency that it is on the list of service-disabled veteran-owned small businesses maintained by the secretary of state pursuant to subsection (5) of this section. (3.5) A contractor that was given a preference by a state agency due to the contractor's use of one or more subcontractors that is a service-disabled veteran-owned small business shall provide the state agency with the number of service-disabled veteran-owned businesses that it hired as subcontractors to perform work on the contract and the approximate total dollar value of the work performed by all service-disabled veteran-owned small businesses that it hired as subcontractors to perform work on the contract. (4) On or before September 30, 2015 September 30, 2017, and on or before September 30 each year thereafter, the executive director shall submit a report regarding the state's progress in satisfying the three percent goal compliance with the requirements established in subsection (2) of this section to the department of military and veterans affairs, the members of the Colorado board of veterans affairs, and to the members of the committees of the house of representatives and the senate that have jurisdiction over state affairs and veterans affairs. The report shall include the following: (a) The total number of contracts that all state agencies awarded to service-disabled veteran-owned small businesses in the prior fiscal year and the number of such contracts that each state agency awarded; (b) The total dollar amount of contracts that all state agencies awarded to service-disabled veteran-owned small businesses, the estimated total dollar amount of work performed on contracts by subcontractors that are service-disabled veteran-owned small businesses in the prior fiscal year, and the percentage that the total of such dollar amount bears amounts bear to the total dollar amount of contracts awarded by all state agencies in the prior fiscal year; (c) The total dollar amount of contracts that each state agency awarded to service-disabled veteran-owned small businesses, the estimated total dollar amount of work performed on contracts by subcontractors that are service-disabled veteran-owned small businesses in the prior fiscal year, and the percentage that the total of such dollar amount bears amounts bear to the total dollar amount of contracts awarded by the state agency in the prior fiscal year; and (d) The total number of service-disabled veteran-owned small businesses that responded to solicitation for bids or proposals issued by all state agencies in the prior fiscal year and the total number of such businesses that responded to solicitations for bids or proposals issued by each state agency. (5) (a) The secretary of state shall create and maintain on its website a list of service-disabled veteran-owned small businesses that are not yet officially registered and verified as a service-disabled veteran-owned small business by the center for veterans enterprise within the United States department of veterans affairs but that have submitted the documentation required in paragraph (b) of this subsection (5) to the secretary of state. (b) Any small business that is owned by a service-disabled veteran but that is not yet officially registered and verified as a service-disabled veteran-owned small business by the center for veterans enterprise within the United States department of veterans affairs may submit the following documents to the secretary of state to be included on the list of service-disabled veteran-owned small businesses that is maintained on the secretary of state's website: (I) A "DD Form 214" or successor certificate of release or discharge from active duty military issued by the United States department of defense for the small business owner; (II) Official documentation issued by the United States department of veterans affairs regarding the small business owner's military service-related disabilities; and (III) An affidavit signed by the small business owner stating that he or she has initiated the process to become officially registered and verified as a service-disabled veteran-owned small business by the center for veterans enterprise within the United States department of veterans affairs. (c) Upon receipt of the information specified in paragraph (b) of this subsection (5) from a small business owner, the secretary of state shall add the small business owner to the list of service-disabled veteran-owned small businesses. (d) A service-disabled veteran-owned small business that is on the list of service-disabled veteran-owned small businesses shall notify the office regarding the outcome of its efforts to become officially registered and verified as a service-disabled veteran-owned small business by the center for veterans enterprise within the United States department of veterans affairs; except that, if the service-disabled veteran-owned small business was not officially registered and verified by the center for veterans enterprise, this requirement shall not take effect until the business has exhausted all of its opportunities to appeal the decision of the center for veterans enterprise or submit additional documentation requested by the center for veterans enterprise. If the business was not officially registered and verified as a service-disabled veteran-owned small business, the secretary of state shall remove the business from the list of service-disabled veteran-owned small businesses. (e) Documents submitted to the secretary of state pursuant to subparagraphs (I) and (II) of paragraph (b) of this subsection (5) are confidential and not subject to the "Colorado Open Records Act", part 2 of article 72 of this title. (f) The secretary of state shall promulgate rules in accordance with the "State Administrative Procedure Act", article 4 of this title, as may be necessary to implement and administer the requirements of this subsection (5). SECTION 2. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 10, 2016, if adjournment sine die is on May 11, 2016); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2016 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.