Bill Summary – FastDemocracy

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 Councilmember Mary M. Cheh                             Councilmember Robert C. White, Jr.

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 Councilmember Charles Allen                            Councilmember Brianne K. Nadeau

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 Councilmember Janeese Lewis George                     Councilmember Brooke Pinto

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                                           A BILL

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                   IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

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 To amend the Quick Payment Act of 1984 to provide remediation for subcontractors in the event

       of non-payment by contractors or higher-tier subcontractors; to amend the Procurement

       Practices Reform Act of 2010 to ensure that small and certified business enterprises

       receive contracts set aside for small and certified business enterprises that are

       subsequently issued on the open market; and to amend the Small, Local, and

       Disadvantaged Business Enterprise Development Assistance Act of 2005 by clarifying

       category definitions within the Certified Business Enterprise program, standardizing

       program compliance verification with a site visit schedule, creating an anonymous

       violation reporting mechanism, incentivizing small business subcontracting, and closing

       loopholes to prevent program abuse and manipulation.

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          BE IT ENACTED BY THE COUCIL OF THE DISTRICT OF COLUMBIA, That this

 act may be cited as the Small Business Procurement Reform Omnibus Amendment Act of

 2021.

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        Sec. 2. The Quick Payment Act of 1984, effective March 15, 1985 (D.C. Law 5-164,

 D.C. Official Code  2-221.01 et seq.), is amended as follows:

        (a) Section 2 (D.C. Official Code  2-221.01) is amended as follows:

                (1) Paragraph (5) is amended by striking the phrase contractor in performance of

 the contractors and inserting the phrase contractor or higher-tier subcontractor in performance

 of the contractors or higher-tier subcontractors in its place.

                (2) A new paragraph (6) is added to read as follows:

                (6) Undisputed amount means an amount owed by a contractor to a

 subcontractor for which there is no good faith dispute between the contractor and subcontractor

 regarding the payment amount due for work completed..

        (b) Section 3 (D.C. Official Code  2-221.02) is amended as follows:

                (1) Subsection (d) is amended as follows:

                        (A) The lead-in language is amended by striking the phrase shall

 include: and inserting the phrase shall obligate the contractor and any subcontractors to adhere

 to the following provisions, which shall be included in each agency contract and any

 subcontracts stemming from the agency contract, including lower-tier subcontracts: in its place.

                        (B) Paragraph (1) is amended to read as follows:

                (1) A payment clause that obligates any contractor or subcontractor to, within 7

 days of receipt of any amount paid to the contractor by the District agency or to a subcontractor

 by an higher-tier subcontractor, subject to enforcement pursuant to subsection (d-1) of this

 section:

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                        (A) Pay any subcontractors for the proportionate share of the total

 payment received from the District agency or higher-tier contractor that is attributable to the

 subcontractor for work performed under the contract; or

                        (B) Notify the District agency and subcontractor, in writing, of the

 contractors intention to withhold all or part of the subcontractors payment with the reason for

 the nonpayment..

                (2) A new subsection (d-1) is added to read as follows:

        (d-1)(1) Any District agency awarding contracts shall publish on its website the date and

 amount of payments made to prime contractors.

                (2) If a subcontractor does not receive a payment or written notice within 7

 business days as required in subsection (d) of this section, the subcontractor may give written

 notice of the nonpayment to the Ombudsman for Contracting and Procurement, established in

 section 207 of the Procurement Practices Reform Act of 2011, effective October 8, 2016 (D.C.

 Law 21-158; D.C. Official Code  2-352.07), which shall include:

                        (A) The name of the contractor or higher-tier subcontractor, the contract

 number, the project or task order under which the dispute exists, and the amount in dispute;

                        (B) A detailed description of the basis of the amount due; and

                        (C) If known, an explanation of any dispute concerning the contractors

 or higher-tier subcontractors payment.

                (3) Within 5 business days of receipt of written notice from a subcontractor or

 upon receipt of the notice required under subsection (d)(1)(B) of this section, the Ombudsman

 shall contact the contractor to ascertain whether the amount withheld is an undisputed amount;

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                  (4) The Ombudsman shall determine in writing, in consultation with the contract

 administrator and project manager, whether the withheld payment is an undisputed amount and

 issue the determination to the impacted contractor and subcontractor;

                  (5) If the Ombudsman determines that a part or all of the amount withheld is an

 undisputed amount, the Ombudsman shall instruct the contractor to pay the subcontractor the

 undisputed amount within 5 business days of issuing that determination;

                  (6) If the contractor is instructed to pay the subcontractor and the subcontractor

 is not paid within 5 business days of that instruction, the subcontractor may report the

 nonpayment in writing to the Ombudsman;

                  (7) If the subcontractor notifies the Ombudsman of non-payment under

 paragraph (5) of this subsection, the Ombudsman shall schedule a meeting not later than 10

 business days after receiving notice from the subcontractor under paragraph (5) of this

 subsection to discuss the dispute with the contract administrator, other agency and contracting

 staff as appropriate, the contractor, and the subcontractor, to establish why the contractor has not

 paid the subcontractor as instructed under paragraph (4) of this subsection, and formulate a

 second written determination providing the contractor an additional 5 business days to pay the

 subcontractor.

                  (8) Unless the contractor and subcontractor notify the Ombudsman that the

 payment dispute has been settled, the Ombudsman shall take the following enforcement actions:

                         (A) If the subcontractor is unpaid after the second determination is issued

 and 5 business days pass, the Ombudsman shall instruct the contract administrator to withhold

 from the next District payment to the contractor, an amount equal to the undisputed amount plus

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 interest described in subsection (b)(1) of this section until the subcontractor is paid or for 5

 business days;

                         (B) If payment is not made to the subcontractor within 5 business days of

 the Ombudsmans instruction to withhold payment as described in subparagraph (A), the

 Ombudsman:

                                (i) May require the contractor to pay a penalty to the

 subcontractor, in an amount not exceeding $100 per day, from the date that payment was

 originally required under subparagraph (A) of this paragraph; or

                                (ii) May instruct the contract administrator to make payment

 directly to the subcontractor in the undisputed amount plus interest withheld under subparagraph

 (A) if the contractor continues to withhold payment..

                  (9) Any determinations made under this subsection by the Ombudsman with

 regard to contractor non-payment are appealable to the Contract Appeals Board..

        Sec. 3. Section 412(c) of the Procurement Practices Reform Act of 2010, effective April

 8, 2011 (D.C. Law 18-371, D.C. Official Code  2-354.12(c)),

        (a) Section 412(c) (D.C. Official Code  2-354.12(c)) is amended as follows:

                  (1) The existing language is amended by striking the phrase open market. and

 inserting the phrase open market; except that, after issuing the procurement or solicitation in the

 open market, if the agency receives a bid from a small or certified business enterprise which is

 the lowest bid or 12% or less above the lowest bid by a business that is not a small or certified

 business enterprise, the agency shall only consider bids from small or certified business

 enterprises, unless the agency issues a determination and findings to support another selection

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 that describes why the small business or certified business enterprise respondents lack the

 capability to perform the contract. in its place.

                 (2) A new paragraph (1) is added to read as follows:

                 (1) Each written determination pursuant to this subsection shall be posted so that

 it can reasonably be accessed by the public on the Department of Small and Local Business

 Developments website, at any location where the procurement or solicitation is posted, and at

 such other locations as the Department of Small and Local Business Development may

 establish..

         (b) Section 1003(a) (D.C. Official Code  2-360.03(a)) is amended as follows:

                 (1) Paragraph (2) is amended by striking the phrase ; and and inserting a

 semicolon in its place.

                 (2) Paragraph (3) is amended by striking the period and inserting the phrase ;

 and in its place.

                 (3) A new paragraph (4) is added to read as follows:

                 (4) Any appeal of determinations made pursuant to Section 3(d-1) of the Quick

 Payment Act of 1984, effective March 15, 1985 (D.C. Law 5-164, D.C. Official Code  2-221.01

 et seq.)..

         Sec. 4. The Small, Local, and Disadvantaged Business Enterprise Development

 Assistance Act of 2005, effective October 20, 2005 (D.C. Law 16-33, D.C. Official Code  2-

 218.01 et seq.), is amended as follows:

          (a) Section 2337 (D.C. Official Code  2-218.37) is amended by striking the phrase its

 principal offices are and inserting the phrase its managerial functions are performed at its

 principal offices, and those offices are in its place.

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        (b) Section 2339a(a) (D.C. Official Code  2-218.39a(a)) is amended by striking the

 phrase pursuant to section 2302(1D) and inserting the phrase pursuant to section 2302(1D),

 and which will directly perform, at minimum, 35% of the work under the contract. in its place.

        (c) A new Section 2339b is added to read as follows:

        Sec. 2339b. CBE compliance verification

        (a) The Department shall perform a site visit of each certified business enterprise to

 verify compliance with the Certified Business Enterprise program criteria and requirements at

 least every 18 months, starting upon the effective date of the Small Business Procurement

 Omnibus Amendment Act of 2020 (B23-0545), or the year that the certified business enterprise

 is certified, whichever is later, and may perform announced or unannounced site visits upon

 receipt of complaints regarding the compliance of a certified business enterprise.

        (b) The Department shall publish the date of the last site visit conducted for each

 certified business enterprise pursuant to subsection (a) of this section, on the Departments

 website.

        (c)(1) The Department shall create and maintain an anonymous reporting mechanism for

 the community to report potential violations associated with the certified business enterprise

 program;

                (2) Within 90 days of establishing the anonymous reporting mechanism required

 by paragraph (1) of this subsection, the Department shall publish quarterly on its website the

 number of anonymous complaints received through the anonymous reporting mechanism, the

 number of investigations conducted as a result of those complaints, and any specific enforcement

 actions taken as a result of those investigations..

        (d) Section 2344 (D.C. Official Code  2-218.44) is amended as follows:

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                 (1) Subsection (b) is amended by striking the phrase market. and inserting the

 phrase market. After issuing the procurement or solicitation in the open market, if the agency

 receives a bid from a small business enterprise which is the lowest price bid or 12% or less above

 the lowest bid by a business that is not a small or certified business enterprise, the agency shall

 only consider bids from small or certified business enterprises, unless the agency issues a

 determination and findings to support another selection that describes why the small business or

 certified business enterprise respondents lack the capability to perform the contract. in its place.

                 (2) Subsection (c) is amended by striking the phrase via the Departments

 website or and inserting the phrase on the Departments website, at any location where the

 procurement or solicitation is posted, and at in its place.

         (e) Section 2345 (D.C. Official Code  2-218.45) is amended as follows:

                 (1) Subsection (c) is amended by striking the phrase market. and inserting the

 phrase market. After issuing the procurement or solicitation in the open market, if the agency

 receives a bid from a small or certified business enterprise which is the lowest price bid or 12%

 or less above the lowest bid by a business that is not a small or certified business enterprise, the

 agency shall only consider bids from small or certified business enterprises, unless the agency

 issues a determination and findings to support another selection that describes why the small

 business or certified business enterprise respondents lack the capability to perform the contract.

 in its place.

                 (2) Subsection (d) is amended by striking the phrase via the Departments

 website or and inserting the phrase on the Departments website, at any location where the

 procurement or solicitation is posted, and at in its place.

                 (3) A new subsection (e) is added to read as follows:

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        (e) The Office of Contracting and Procurement shall notify the Department of

 Employment Services of each task order issued under a District of Columbia Supply Schedule

 contract within 5 business days of issuance in order to facilitate compliance with the First Source

 Employment Agreement..

        (f) Section 2346(a) (D.C. Official Code  2-218.46(a)) is amended by adding paragraphs

 (4) and (5) to read as follows:

                (4) For the purposes of this section, to the extent of available funds and pursuant

 to rules promulgated by the Mayor, the contracting officer may authorize an additional payment

 after the final payment on the contract of up to 10% of the dollar volume by which the contractor

 exceeds the subcontracting requirement set forth in paragraphs (1) and (2).

                (5) The subcontracting requirements set forth in paragraphs (1) and (2) shall not

 be fulfilled by subcontracts to business entities in which the contractor has an ownership stake..

        (g) Section 2361(b)(2) (D.C. Official Code  2-218.61(b)(2)) is amended as follows:

                (1) Subparagraph (A) is amended by striking the phrase certification and

 inserting the phrase certification, under penalty of perjury, in its place.

                (2) Subparagraph (B)(i) is amended to read as follows:

                                   (i) A bona fide local business enterprise, including evidence of

 compliance with each applicable element of Section 2331 of the Small, Local, and

 Disadvantaged Business Enterprise Development and Assistance Act of 2005, effective October

 20, 2005 (D.C. Law 16-33; D.C. Official Code  2-218.31), including:

                                          (I) If the local business enterprise is certified based on

 paragraph (2A)(A) or (B) of Section 2331 of the Small, Local, and Disadvantaged Business

 Enterprise Development and Assistance Act of 2005, effective October 20, 2005 (D.C. Law 16-

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 33; D.C. Official Code  2-218.31), evidence that more than 50% of employees or owners are

 District residents, including certified payroll and a list of employees with home addresses; and

                                         (II) A copy of a deed or lease and evidence that the location

 is listed as the principal office of the enterprise is the bona fide principle office, such as the

 address of record with the enterprises bank or on the enterprises federal tax return..

         (h) Section 2363(c)(4) (D.C. Official Code  2-218.63(c)(4)) is amended by striking

 equal to 10% and inserting the phrase no less than 25% in its place.

         Sec. 5. Fiscal impact statement.

         The Council adopts the fiscal impact statement in the committee report as the fiscal

 impact statement required by section 4a of the General Legislative Procedures Act of 1975,

 approved October 16, 2006 (120 Stat. 2038; D.C. Official Code  1-301.47a).

         Sec. 6. Effective date.

         This act shall take effect following approval by the Mayor (or in the event of veto by the

 Mayor, action by the Council to override the veto), a 60-day period of congressional review as

 provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December

 24, 1973 (87 Stat. 813; D.C. Official Code  1-206.02(c)(1)), and publication in the District of

 Columbia Register.

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