Section 1.4545  Small Business

a)         Set-Aside

1)         The CPO may determine categories of supplies or service procurements that will be set aside for small business located in Illinois.   The set-aside designation may be made for current and future procurements of a specific supply, service or construction, or for a class of like supplies, services or construction.  A set-aside designation may last indefinitely or for a stated period of time.

2)         State agencies shall set aside for small businesses the following categories of supplies and services unless the CPO establishes a master contract to meet agency needs or unless the CPO grants a waiver:

b)         Small Business List

            The CPO will maintain a list of responsible vendors that meet the criteria of small business and the supplies and services that each provides.  Each purchasing agency will have web-based access to the list.  A business that fits the definition of small on the day of award or proposal opening will be considered small for the duration of the contract.

c)         Required Use

1)         If a Procurement Officer wishes to make a procurement covered by a set-aside designation, the solicitation must note responses are limited to those from responsible small businesses.  Bids or proposals received from large businesses will be rejected as nonresponsive.

2)         A Procurement Officer may request a waiver of the set-aside requirement from the Department of Central Management Services.  To obtain a waiver, the Procurement Officer must demonstrate a measurable substantial impact, taking into account factors such as cost, supply base, quality, statutory preferences, regional or geographic requirements, acquisition cycle times, and terms and conditions.  Following are examples of guidelines that may be considered:

A)        the product or service is provided by a large business sole source vendor;

B)        there is a need for a brand-name product and there are no small businesses that provide the product;

C)        there is an opportunity to establish a no-bid contract with a State use vendor (see Sheltered Workshop for the Severely Handicapped [30 ILCS 500/45-35]);

D)        the supply base for the product or service includes several larger diversified vendors that can be counted towards the goal authorized in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575];

E)         the product or service is available from Illinois Correctional Industries;

F)         the prices offered by qualified small businesses are substantially greater than the prices offered by large businesses; and

G)        the small business supply base does not meet regional or geographic requirements for the product or service.

d)         Withdrawal of Set-Aside

            If the Procurement Officer determines that acceptance of the best bid or proposal will result in the payment of an unreasonable price, the Procurement Officer shall reject all bids or proposals and withdraw the designation of small business set-aside for the procurement in question.  When a small business set-aside is withdrawn, notification shall be published in the Illinois Procurement Bulletin with an explanation.  After withdrawal of the small business set-aside, the procurement shall be conducted in accordance with the limitations of the Code and this Part.

e)         Criteria for Small Business

            Unless the CPO provides a definition for a particular procurement that reflects industrial characteristics, a small business is:

1)         An Illinois business, independently owned and operated.

2)         Not dominant in its field of operations.  This means the business does not exercise a controlling or major influence in a kind of business activity in which a number of business concerns are primarily engaged.  In determining dominance, consideration shall be given to all appropriate factors, including volume of business, number of employees, financial resources, competitive status or position, ownership or control of materials, processes, patents, license agreements, facilities, sales territory, and nature of business activity.

3)         With annual sales, including sales of affiliates, for most recently ended fiscal year no greater than:

A)        $10,000,000 for wholesale business;

B)        $10,000,000 for construction business; or

C)        $6,000,000 for retail/service business.

4)         With no more than 250 employees, including those of affiliates, if a manufacturing business.

A)        A manufacturing business shall calculate how many people it employs by determining its average full-time equivalent employment, based on the number of persons employed on a full-time, part-time, temporary or other basis, for its most recently ended fiscal year.

B)        If a manufacturing business has been in existence for less than a full fiscal year, its average employment should be calculated for the period through one month prior to the bid or proposal due date.

5)         If the business is any combination of retailer, wholesaler or construction business, then the annual sales for each component may not exceed the amounts shown in subsection (e)(3).  For example, a business that is both a retailer and wholesaler may not have total sales exceeding $16,000,000 and the retail component may not exceed $6,000,000 and the wholesale component may not exceed $10,000,000.  If the business is also a manufacturer, in addition to meeting the annual sales requirement, the number of manufacturing employees may not exceed the number shown in subsection (e)(4).

6)         When computing the size status of a vendor, the number of employees and annual sales and receipts, as applicable, of the vendor and all affiliates shall be included.  Concerns are affiliates when either one directly or indirectly controls or has the power to control the other, or when a third party or parties controls or has the power to control both.  In determining whether concerns are independently owned and operated and whether affiliation exists, consideration shall be given to all appropriate factors, including use of common facilities, common ownership and management and contractual arrangements.  However, a franchise relationship shall not affect small business status if the franchise has the right to profit commensurate with ownership and bears the risk of loss or failure.

f)          Vendors desiring to submit bids or proposals or to otherwise contract for items set aside for small businesses shall submit information verifying that the vendor qualifies as a small business under the Code and this Part.  The CPO may establish procedures for verifying such information.

(Source:  Amended at 30 Ill. Reg. 18635, effective November 17, 2006)