NY State Senate Bill 2017-S3807

Senate Bill S3807

2017-2018 Legislative Session

Relates to minority and women-owned business enterprises post completion certification, duties of the director and creating the minority and women-owned business enterprise fund

download bill text pdf

Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to finance
Jan 27, 2017	referred to finance

2017-S3807 (ACTIVE) - Details

See Assembly Version of this Bill:: A702
Current Committee:: Senate Finance
Law Section:: Executive Law
Laws Affected:: Add §314-a, amd §§311, 314 & 316, Exec L; add §97-j, St Fin L
Versions Introduced in Other Legislative Sessions:: 2015-2016: S7517, A5243
2019-2020: S2217, A2670
2021-2022: S3390, A4173, A9259

2017-S3807 (ACTIVE) - Summary

Requires post completion certifications to be completed, under penalty of perjury, that the MWBE performed the work, performed the services, or delivered the materials; that the division of minority and women's business development create an internet registry, and perform inspections of MWBEs to weed out fraud and abuse; that additional regulations to be adopted related to revocations of certifications for felony convictions for fraudulently misrepresenting the status of an MWBE; permits a court to issue fines double the amount that should have been paid to an MWBE upon conviction for felony fraud related to the MWBE program.

2017-S3807 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S3807

 TITLE OF BILL :  An act to amend the executive law and the state
finance law, in relation to minority and women-owned business
enterprises post completion certification, duties of the director and
creating the minority and women-owned business enterprise fund

 PURPOSE OR GENERAL IDEA OF BILL :

The purpose of this bill is to reduce fraud and misuse of the minority
and women-owned business enterprise (MWBE) program.

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1 requires post completion certifications to be completed,
under penalty of perjury, that the MWBE actually performed the work,
performed the services, or delivered the materials.

Section 2 requires the division of minority and women's business
development to create an internet registry, and to perform inspections
of MWBEs to weed out fraud and abuse.

Section 3 requires additional regulations to be adopted related to
revocations of certifications for felony convictions for fraudulently
misrepresenting the status of an MWBE.

Section 4 permits a court to issue fines double the amount that should
have been paid to an MWBE upon conviction for felony fraud related to
the MWBE program.

Section 5 permits certain fines to be directed to the MWBE fund.

Section 6 establishes the MWBE fund.

Section 7 provides for the effective date.

 JUSTIFICATION :

The Minority-and Women-Owned Business Enterprise (MWBE) program has
served to increase the participation of disadvantaged individuals in
public contracts, and it has significantly leveled the playing field
in that regard. However, fraud and misuse of MWBEs serves to undercut
the purpose of the program. Each case of MWBE fraud cheats a
legitimate minority- or women-owned business out of a contract.

In November 2014, a New York State Supreme Court Grand Jury issued a
report on the vulnerability of MWBE programs to fraud and misuse. The
report revealed significant criminal conduct in the construction
industry spanning at least a decade and, within the relatively small
sample of cases reviewed, found evidence that over $10 million
intended for honest MWBEs had instead gone to fraudulent non-MWBEs.

In many cases, contractors claimed to use MWBEs to perform work or
provide the materials required under the contract, but in fact used
businesses that were neither women- nor minority-owned. Contractors
also misrepresented that MWBEs were providing the services or
materials, when the companies that they listed did not have the
capacity to do so. In some instances, invoices and other billing
documents were created to make it appear as though the work and
payments flowed to MWBEs, when the money was merely passed through
those businesses to the non-MWBEs that actually performed the work.

The grand jury report concluded that current laws are not adequate to
prevent MWBE fraud and misuse. This bill, in conjunction with steps
taken at state- and city-level agencies, will serve to deter MWBE

fraud so that legitimate MWBEs are not burdened with additional
barriers to entry.

 PRIOR LEGISLATIVE HISTORY :

2015-16: S.7517-B/A.5243-E(Rodriguez)- Passed Assembly referred to
Finance

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
This act shall take effect immediately, provided, however, that the
amendments to article 15-A of the executive law made by sections one,
two, three, and five of this act shall not affect the expiration of
such article and shall be deemed to expire therewith.

2017-S3807 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3807
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             January 27, 2017
                                ___________
 
 Introduced  by  Sen.  BAILEY -- read twice and ordered printed, and when
   printed to be committed to the Committee on Finance
 
 AN ACT to amend the executive law and the state finance law, in relation
   to minority  and  women-owned  business  enterprises  post  completion
   certification,  duties  of  the director and creating the minority and
   women-owned business enterprise fund
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. The executive law is amended by adding a new section 314-a
 to read as follows:
   § 314-A. POST COMPLETION CERTIFICATION. THE DIRECTOR, IN COLLABORATION
 WITH THE DIVISION OF MINORITY AND WOMEN'S BUSINESS DEVELOPMENT  AND  THE
 DEPARTMENT  OF  SMALL  BUSINESS  SERVICES,  SHALL  DEVELOP THE FOLLOWING
 STANDARDIZED CERTIFICATION FORMS THAT MUST BE COMPLETED UNDER PENALTY OF
 PERJURY PRIOR TO THE PRIME CONTRACTOR BEING PAID:
   1. CERTIFICATION FROM A REPRESENTATIVE OF THE  PRIME  CONTRACTOR  THAT
 THE  MINORITY  OR  WOMEN-OWNED BUSINESS ENTERPRISE IN FACT PERFORMED THE
 SERVICES OR PROVIDED THE MATERIALS THAT THEY WERE CONTRACTED TO  PERFORM
 OR PROVIDE; AND
   2.  CERTIFICATION FROM A REPRESENTATIVE OF THE MINORITY OR WOMEN-OWNED
 BUSINESS ENTERPRISE THAT THEY IN FACT PERFORMED THE SERVICES OR PROVIDED
 THE MATERIALS THAT THEY WERE CONTRACTED TO PERFORM OR PROVIDE.
   § 2. Paragraphs (f), (h) and (i) of subdivision 3 of  section  311  of
 the  executive law, paragraph (f) as added by chapter 261 of the laws of
 1988, paragraph (h) as amended and paragraph (i) as added by  section  1
 of  part BB of chapter 59 of the laws of 2006, are amended and three new
 paragraphs (j), (k) and (l) are added to read as follows:
   (f) to prepare and update periodically a directory of certified minor-
 ity and women-owned business enterprises which shall, wherever practica-
 ble, be divided into categories of labor, services, supplies, equipment,
 materials and recognized construction trades and  which  shall  indicate
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD04010-01-7

 S. 3807                             2
 
 areas  or locations of the state where such enterprises are available to
 perform services, AND TO USE THIS  INFORMATION  TO  CREATE  AN  INTERNET
 BASED,  SEARCHABLE, CENTRALIZED STATE REGISTRY DETAILING CERTIFICATIONS,
 DENIALS,  WAIVERS  AND  ALL  DOCUMENTS  SUBMITTED DURING THE LIFE OF THE
 CONTRACT;
   (h) notwithstanding the provisions of section two  hundred  ninety-six
 of  this  chapter,  to  file  a  complaint pursuant to the provisions of
 section two hundred ninety-seven of this chapter where the director  has
 knowledge  that  a  contractor may have violated the provisions of para-
 graph (a), (b) or (c) of subdivision one of section two hundred  ninety-
 six  of  this  chapter  where  such  violation is unrelated, separate or
 distinct from the state contract as expressed by its terms; [and]
   (i) to streamline the state certification process  to  accept  federal
 and municipal corporation certifications[.];
   (J) TO PERFORM INSPECTIONS OF MINORITY OR WOMEN-OWNED BUSINESS'S PLACE
 OF BUSINESS, WAREHOUSE OR STORAGE FACILITY TO CONFIRM THE EXISTENCE OF A
 WORKFORCE, EQUIPMENT AND SUPPLIES;
   (K)  TO PERFORM INSPECTIONS OF FINANCIAL RECORDS OF MINORITY OR WOMEN-
 OWNED BUSINESS ENTERPRISES TO ENSURE SUCH ENTERPRISES ARE IN  COMPLIANCE
 WITH APPLICABLE LAWS; AND
   (L)  TO  ENSURE  THE  PROTECTION  OF  INDIVIDUALS WHO REPORT SUSPECTED
 VIOLATIONS OF THIS ARTICLE AND APPLICABLE LAWS RELATED TO  MINORITY  AND
 WOMEN-OWNED BUSINESS ENTERPRISES.
   §  3.  Subdivision  1 of section 314 of the executive law, as added by
 chapter 261 of the laws of 1988, is amended to read as follows:
   1. The director shall promulgate rules and regulations  providing  for
 the  establishment  of a statewide certification program including rules
 and regulations governing the approval, denial or revocation of any such
 certification, INCLUDING REVOCATIONS FOR FELONY CONVICTIONS FOR  FRAUDU-
 LENTLY  MISREPRESENTING  THE  STATUS OF MINORITY OR WOMEN-OWNED BUSINESS
 ENTERPRISES.   Such rules and regulations  shall  include,  but  not  be
 limited  to,  such  matters as may be required to ensure that the estab-
 lished procedures thereunder shall at least be in  compliance  with  the
 code  of  fair procedure set forth in section seventy-three of the civil
 rights law, AND CONSISTENT WITH THE PROVISIONS OF ARTICLE TWENTY-THREE-A
 OF THE CORRECTION LAW.
   § 4. Section 316 of the executive law, as amended by  chapter  175  of
 the laws of 2010, is amended to read as follows:
   § 316. Enforcement.  1. Upon receipt by the director of a complaint by
 a contracting agency that a contractor has violated the provisions of  a
 state contract which have been included to comply with the provisions of
 this  article  or of a contractor that a contracting agency has violated
 such provisions or has failed or refused to issue a waiver where one has
 been applied for pursuant to subdivision six of  section  three  hundred
 thirteen  of  this  article or has denied such application, the director
 shall attempt to resolve the matter giving rise to  such  complaint.  If
 efforts  to  resolve  such matter to the satisfaction of all parties are
 unsuccessful, the director shall refer the matter, within thirty days of
 the receipt of the complaint, to the division's hearing  officers.  Upon
 conclusion  of  the  administrative  hearing,  the hearing officer shall
 submit to the  director  his  or  her  decision  regarding  the  alleged
 violation  of  the contract and recommendations regarding the imposition
 of sanctions, fines or penalties.  The  director,  within  ten  days  of
 receipt  of  the decision, shall file a determination of such matter and
 shall cause a copy of such determination along with a copy of this arti-
 cle to be served upon the contractor by personal service or by certified

 S. 3807                             3
 
 mail return receipt requested. The decision of the hearing officer shall
 be final and may only be vacated or  modified  as  provided  in  article
 seventy-eight  of  the  civil practice law and rules upon an application
 made  within the time provided by such article. The determination of the
 director as to the imposition of any fines, sanctions or penalties shall
 be reviewable pursuant to article seventy-eight of  the  civil  practice
 law and rules. The penalties imposed for any violation which is premised
 upon  either  a  fraudulent  or  intentional  misrepresentation  by  the
 contractor or the contractor's willful and intentional disregard of  the
 minority  and  women-owned  participation  requirement  included  in the
 contract may include a determination that the contractor shall be ineli-
 gible to submit a bid to any contracting agency or be awarded  any  such
 contract  for a period not to exceed one year following the final deter-
 mination; provided however, if a contractor has previously  been  deter-
 mined  to  be  ineligible  to submit a bid pursuant to this section, the
 penalties imposed for any subsequent violation, if such violation occurs
 within five years of the first violation, may  include  a  determination
 that the contractor shall be ineligible to submit a bid to any contract-
 ing  agency  or  be awarded any such contract for a period not to exceed
 five years following the final determination. The division  of  minority
 and  women's  business  development shall maintain a website listing all
 contractors that have been deemed ineligible to submit a bid pursuant to
 this section and the date after which each contractor shall  once  again
 become eligible to submit bids.
   2.  ANY  FINES,  OR PORTION THEREOF, IMPOSED PURSUANT TO THE FOREGOING
 SUBDIVISION, OR IMPOSED BY A COURT OF COMPETENT JURISDICTION RELATED  TO
 CONVICTIONS INVOLVING FRAUD RELATED TO THIS ARTICLE OR OTHERWISE INVOLV-
 ING  A  MINORITY  OR WOMEN-OWNED BUSINESS ENTERPRISE, MAY BE REQUIRED BY
 THE ENTITY IMPOSING SUCH FINES TO BE PAID TO  THE  MINORITY  AND  WOMEN-
 OWNED  BUSINESS  ENTERPRISE FUND ESTABLISHED PURSUANT TO SECTION NINETY-
 SEVEN-J OF THE STATE FINANCE LAW.
   § 5. The state finance law is amended by adding a new section 97-j  to
 read as follows:
   § 97-J. MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISE FUND. 1. THERE IS
 HEREBY ESTABLISHED IN THE JOINT CUSTODY OF THE STATE COMPTROLLER AND THE
 COMMISSIONER  OF  TAXATION AND FINANCE A SPECIAL FUND TO BE KNOWN AS THE
 "MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISE FUND".
   2. SUCH FUNDS SHALL CONSIST OF ALL MONEYS APPROPRIATED FOR THE PURPOSE
 OF SUCH FUND, ALL MONEYS TRANSFERRED OR PAID TO SUCH  FUND  PURSUANT  TO
 LAW,  INCLUDING  PURSUANT TO SECTION THREE HUNDRED SIXTEEN OF THE EXECU-
 TIVE LAW, AND CONTRIBUTIONS CONSISTING OF GRANTS,  INCLUDING  GRANTS  OR
 OTHER  FINANCIAL ASSISTANCE FROM ANY AGENCY OF GOVERNMENT AND ALL MONEYS
 REQUIRED BY THE PROVISIONS OF THIS SECTION OR ANY OTHER LAW TO  BE  PAID
 INTO OR CREDITED TO THIS FUND.
   3.  MONIES  OF  THE  FUND, FOLLOWING APPROPRIATION BY THE LEGISLATURE,
 SHALL BE EXPENDED TO ACQUIRE SOFTWARE, EMPLOY PERSONNEL TO AUDIT, INVES-
 TIGATE AND PROSECUTE MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISE  FRAUD
 AND  TO UNDERWRITE MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISE PROGRAMS
 TO ASSIST MINORITY AND  WOMEN  BUSINESS  ENTERPRISE  OWNERS  TO  DEVELOP
 SUSTAINABLE BUSINESSES.
   §  6.  This act shall take effect immediately, provided, however, that
 the amendments to article 15-A of the executive  law  made  by  sections
 one, two, three, and four of this act shall not affect the expiration of
 such article and shall be deemed to expire therewith.

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