ADMINISTRATIVE CODE

TITLE 44: GOVERNMENT CONTRACTS, GRANTMAKING, PROCUREMENT AND PROPERTY MANAGEMENT
SUBTITLE A: PROCUREMENT AND CONTRACT PROVISIONS
CHAPTER V: COMMISSION ON EQUITY AND INCLUSION
PART 40 SERVICE-DISABLED AND VETERAN-OWNED SMALL BUSINESSES

SUBPART A: GENERAL

Section 40.10 Introduction

Section 40.20 Definitions

SUBPART B: GOAL AND GOAL MEASUREMENT

Section 40.100 Goal

Section 40.110 Contracts and Expenditures Subject to the Goal

Section 40.120 Categories of Contracts and Expenditures Exempt from the Goal

Section 40.130 Review of Agency Requests for Specific Exemptions

Section 40.140 Goal Measurement

Section 40.150 Subcontracting

SUBPART C: AGENCY COMPLIANCE AND REPORTING

Section 40.200 Agency Compliance and Reporting

SUBPART D: PROGRAM ELIGIBILITY

Section 40.300 Program Eligibility

SUBPART E: CERTIFICATION

Section 40.400 General

Section 40.410 Program Information

SUBPART F: CERTIFICATION REQUIREMENTS AND PROCEDURES

Section 40.500 Application

Section 40.510 Application Requirements

Section 40.520 Eligibility Determination

Section 40.530 Certification by Other Certifying Entities

Section 40.540 Sales Limitation; Exception

Section 40.550 State Residency

Section 40.560 Ownership/Control by Members of Eligible Groups

Section 40.570 Ownership

Section 40.580 Control

Section 40.590 Notice of Certification or Denial

SUBPART G: RECONSIDERATION, DECERTIFICATION AND RECERTIFICATION

Section 40.600 Review and Reconsideration

Section 40.610 Decertification Process

Section 40.620 Annual Confirmation of Eligibility

SUBPART H: SPECIAL ASSISTANCE FOR CERTIFIED BUSINESSES

Section 40.700 Special Assistance

SUBPART I: SOLICITATION/CONTRACT REQUIREMENTS

Section 40.800 Change in Eligibility

Section 40.810 Good Faith Efforts and Waiver Request Procedures

SUBPART J: VIOLATIONS BY VENDOR

Section 40.900 Violations by Vendor

SUBPART A: GENERAL

TITLE 44: GOVERNMENT CONTRACTS, GRANTMAKING, PROCUREMENT, AND PROPERTY MANAGEMENT
SUBTITLE A: PROCUREMENT AND CONTRACT PROVISIONS
CHAPTER V: COMMISSION ON EQUITY AND INCLUSION
PART 40 SERVICE-DISABLED AND VETERAN-OWNED SMALL BUSINESSES
SECTION 40.10 INTRODUCTION

Section 40.10 Introduction

It is the goal of the State to promote and encourage the continued economic development of small businesses owned and controlled by qualified veterans and that qualified service-disabled veteran-owned small businesses and veteran-owned small businesses participate in the State's procurement process as both prime contractors and subcontractors.

(Recodified from Section 20.10 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.20 Definitions

"Armed Forces of the United States" means the United States Army, Navy, Air Force, Marine Corps, Coast Guard, or service in active duty as defined under 38 USC 101. Service in the Merchant Marine that constitutes active duty under section 401 of PL 95-202 shall also be considered service in the armed forces for purposes of this Section. [30 ILCS 500/45-57(e)]

"Certification" means a determination made by the Illinois Department of Veterans' Affairs and the Department of Central Management Services that a business entity is a qualified service-disabled veteran-owned small business or a qualified veteran-owned small business for whatever purpose. A SDVOSB or VOSB owned and controlled by females, minorities, or persons with disabilities, as those terms are defined in Section 2 of the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, may also select and designate whether that business is to be certified as a "female-owned business", "minority-owned business" or "business owned by a person with a disability", as defined in Section 2 of the Business Enterprise for Minorities, Females, and Persons with Disabilities Act. [30 ILCS 500/45-57(e)]

"CMS" refers to the Department of Central Management Services.

"Committee" means a group made up of 5 individuals appointed by the Director of CMS and the Director of the Department of Veterans' Affairs (DVA) for the purpose of overseeing the certification process for qualified service-disabled veteran-owned small businesses and qualified veteran-owned small businesses. The Director of CMS will appoint 2 persons and the Director of DVA will appoint 3 persons. The appointees will serve for 2 years. The committee shall select a chair person who shall serve until his or her term expires.

"Control" means the exclusive, ultimate, majority, or sole control of the business, including but not limited to capital investment and all other financial matters, property, acquisitions, contract negotiations, legal matters, officer-director-employee selection and comprehensive hiring, operation responsibilities, cost-control matters, income and dividend matters, financial transactions, and rights of other shareholders or joint partners. Control shall be real, substantial, and continuing, not pro forma. Control shall include the power to direct or cause the direction of the management and policies of the business and to make the day-to-day as well as major decisions in matters of policy, management, and operations. Control shall be exemplified by possessing the requisite knowledge and expertise to run the particular business, and control shall not include simple majority or absentee ownership. [30 ILCS 500/45-57(e)]

"Construction" means building, altering, repairing, improving, or demolishing any public structure or building, or making improvements of any kind to public real property. Construction does not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property.

"Construction-related Services" means those services including construction design, layout, inspection, support, feasibility or location study, research, development, planning or other investigative study undertaken by a construction agency concerning construction or potential construction.

"Construction Agency" means the Capital Development Board for construction or construction-related services of State-owned facilities; the Illinois Department of Transportation for construction or maintenance of roads, highways, bridges, and airports; and the Illinois State Toll Highway Authority for construction or maintenance of toll highways.

"Eligible Group Member" means a person who meets the eligibility requirements set forth in Section 20.300.

"General Discharge (Under Honorable Conditions)" means a confirmation of an administrative separation of a service member from military service whose service has been honest and faithful and appropriate to characterize that service under honorable conditions. A general discharge (under honorable conditions) meets the qualification standard under the SDVOSB and VOSB Program. (See DoD Dir. 1332.14.E3.A2.1.3.2 and E4.3.b(2)(b).)

"Illinois Procurement Code" or "Code" means 30 ILCS 500.

"Qualified Service-Disabled Veteran" means a veteran who has been found to have 10% or more service-connected disability by the United States Department of Veterans Affairs or the United States Department of Defense [30 ILCS 500/45-57(e)].

"Qualified Service-Disabled Veteran-Owned Small Business" or "SDVOSB" means a small business that is at least 51% owned by one or more qualified service-disabled veterans living in Illinois or, in the case of a corporation, at least 51% of the stock of which is owned by one or more qualified service-disabled veterans living in Illinois; that has its home office in Illinois; and for which these ownership requirements are factually verified annually by CMS. [30 ILCS 500/45-57(e)]

"Qualified Veteran-Owned Small Business" or "VOSB" means a small business that is at least 51% owned by one or more qualified veterans living in Illinois or, in the case of a corporation, at least 51% of the stock of which is owned by one or more qualified veterans living in Illinois; that has its home office in Illinois; and for which these ownership requirements are factually verified annually by CMS. [30 ILCS 500/45-57(e)]

"Service-Connected Disability" means a disability incurred in the line of duty in the active military, naval, or air service as described in 38 USC 101(16). [30 ILCS 500/45-57(e)]

"Small Business" means a business that has annual gross sales of less than $75,000,000 as evidenced by the federal income tax return of the business. A firm with gross sales in excess of this cap may apply to CMS for certification for a particular contract if the firm can demonstrate that the contract would have significant impact on the SDVOSB or VOSB as suppliers or subcontractors or in employment of veterans or service-disabled veterans. [30 ILCS 500/45-57(e)]

"State Agency" means all departments, officers, boards, commissions, institutions and bodies politic and corporate of the State, but does not include the Board of Trustees of the University of Illinois, the Board of Trustees of Southern Illinois University, the Board of Trustees of Chicago State University, the Board of Trustees of Eastern Illinois University, the Board of Trustees of Governors State University, the Board of Trustees of Illinois State University, the Board of Trustees of Northeastern Illinois University, the Board of Trustees of Northern Illinois University, the Board of Trustees of Western Illinois University, municipalities or other local governmental units, or other State constitutional officers. [30 ILCS 575/2(6)]

"Time of Hostilities with a Foreign Country" means any period of time in the past, present, or future during which a declaration of war by the United States Congress has been or is in effect or during which an emergency condition has been or is in effect that is recognized by the issuance of a Presidential proclamation or a Presidential executive order and in which the armed forces expeditionary medal or other campaign service medals are awarded according to Presidential executive order. [30 ILCS 500/45-57(e)]

"Utilization Plan" means a plan that describes how the bidder/offeror intends to utilize SDVOSBs or VOSBs to meet the State goal in a solicitation.

"Veteran" means a person who has been a member of the armed forces of the United States or, while a citizen of the United States, was a member of the armed forces of allies of the United States in time of hostilities with a foreign country and has served under one or more of the following conditions:

the veteran served a total of at least 6 months;

the veteran served for the duration of hostilities regardless of the length of the engagement;

the veteran was discharged on the basis of hardship; or

the veteran was released from active duty because of a service connected disability and was discharged under honorable conditions. [30 ILCS 500/45-57(e)]

"Veterans Small Business Program" or "Program" means the State's program that:

fosters economic opportunities for Illinois' military veterans by encouraging the establishment of SDVOSBs and VOSBs; and

establishes an annual, ongoing, percentage goal for all State agencies' award of supplies and services contracts and construction-related State spending that shall be set aside for competitive bidding by Illinois SDVOSBs and VOSBs.

(Recodified from Section 20.20 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART B: GOAL AND GOAL MEASUREMENT

Section 40.100 Goal

In accordance with Section 45-57(a) of the Code, not less than 3% of the total dollar amount of State contracts, as defined by the Director of CMS, shall be the goal for awarding contracts to SDVOSBs and VOSBs. For contracts other than for construction and construction-related services entered into by a construction agency, CMS will determine goals for individual contracts unless that authority is delegated to the procuring State agency. For contracts for construction and construction-related services entered into by a construction agency, CMS delegates to the construction agency the authority to determine the goal for the individual contract.

(Recodified from Section 20.100 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.110 Contracts and Expenditures Subject to the Goal

All contracts funded in whole or in part with funds appropriated by the General Assembly are subject to the goal unless exempted elsewhere in this Part.

(Recodified from Section 20.110 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.120 Categories of Contracts and Expenditures Exempt from the Goal

a) Contracts shall be exempt from the goal if:

1) The contract is subject to federal reimbursement; or

2) Receipt of funds for a contract would be jeopardized by including them in the Program.

b) CMS has determined that the following categories of contracts and expenditures, including but not limited to the detailed expenditure accounts listed below each category, are exempt from the goal. This determination was made based on the best information available that these categories do not represent procurement opportunities for SDVOSBs or VOSBs, or that there are not sufficient SDVOSBs or VOSBs to ensure competition and an expectation of reasonable prices. The detailed expenditure accounts have the same meaning as used by the State Comptroller (see the Statewide Accounting Management System (SAMS) manual, available from CMS).

1) Contracts between, or within, State agencies that do not include payments to private vendors.

2) Contracts with or payments to other governmental entities:

A) Payments to Local Governments for Employees;

B) Reimbursements to Governmental Units;

C) Postage and Postal Charges;

D) Operating Taxes, Licenses and Fees;

E) Revenue Stamps;

F) Taxes and Transfers;

G) Fire Protection Services;

H) Shared Waterway Agreements; and

I) Shared Revenue Payments.

3) Employee wages, salaries and other payroll and employee related costs:

A) Payments into Pension Funds;

B) Pensions, Annuities and Benefits;

C) Purchase of Investments;

D) Employee Tuition Fees;

E) Social Security;

F) Retirement;

G) Unemployment Compensation Payments;

H) Legislative Staff Services;

I) Registration Fees and Conference Expenses;

J) Industrial Commission Awards or Settlement Awards for Injured Employees; and

K) Awards, Benefits and Treatment Expenses − Injured Employees.

4) Payments of money to individuals or groups in the nature of reimbursement, settlement, entitlement or assistance:

A) Assistance Payments to Individuals;

B) Awards and Grants to Students;

C) Burial Expense Awards;

D) Community Services for Department of Human Services- Divisions of Mental Health and Developmental Disabilities Clients and the Chemically Dependent;

E) Court of Claims Awards;

F) Reimbursement for Living Expenses for State Wards Outside State Institutions;

G) Tuition, Training Supplies and Equipment for Aided Persons;

H) Lottery Prizes;

I) Interviewee Expenses; and

J) Tort Claims.

5) Debt retirement and refunds of money:

A) Debt Retirement;

B) Loans; and

C) Refunds.

6) Grants:

A) Grants for Educational Purposes − School Districts;

B) Grants for Educational Purposes − Higher Education;

C) Grants to Local Governments (other);

D) Grants to Non-Profit Organizations;

E) Grants to Other State Agencies; and

F) Grants to or on Behalf of Veterans and their Dependents who Qualified under Wartime Service.

7) Public utility contracts and payments:

A) Electricity;

B) Gas (Natural Gas);

C) Telecommunications (regulated service only);

D) Water; and

E) Utilities (Other).

8) Real estate acquisition:

A) Land, Relocation Costs;

B) Land, Relocation Costs (Highways);

C) Land, Relocation Costs (Waterways);

D) Land, Rights of Way and Easements;

E) Land, Rights of Way and Easements (Highway); and

F) Land, Rights of Way and Easements (Waterways).

9) Miscellaneous contracts and expenditures:

A) Association Dues; and

B) Periodical Subscriptions.

c) Prior to the end of each fiscal year, CMS shall investigate the categories of contracts and expenditures to determine whether, based on the best information available, these categories continue to represent procurements in which there are no opportunities for SDVOSBs or VOSBs, or that there are not sufficient SDVOSBs or VOSBs to ensure competition and an expectation of reasonable prices.

(Recodified from Section 20.120 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.130 Review of Agency Requests for Specific Exemptions

a) A contract may be exempted from the goal prior to the solicitation being posted if it is determined that the specific contract does not represent a procurement opportunity for SDVOSBs and VOSBs as defined in Section 20.120, or that there are not sufficient SDVOSBs and VOSBs to ensure competition and an expectation of reasonable prices.

b) The exemption request must be documented in a written memorandum of decision. The memorandum must indicate, based on the best information available, that the particular contract does not represent a procurement opportunity for SDVOSBs and VOSBs, or that there are not sufficient SDVOSBs and VOSBs to ensure competition and an expectation of reasonable prices. The memorandum must be approved in writing by the agency Director.

c) CMS or the procuring State agency, as delegated by CMS, shall exempt specific contracts from the goal if it determines that the agency did provide reasonable proof that certified SDVOSBs and VOSBs are not available to meet the contracting need.

d) A construction agency may exempt specific contracts from the goal if it documents reasonable proof that certified SDVOSBs and VOSBs are not available to meet the contracting need.

(Recodified from Section 20.130 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.140 Goal Measurement

a) The goal shall be measured on a full fiscal year basis and shall be measured against the total dollar amount of expenditures subject to the goal. Expenditures not subject to the goal are those described in Sections 20.110 and 20.120.

b) Contract expenditures established by an agency shall be included in the agency's goal attainment statistics. Orders by a user agency against contracts established on behalf of one or more user agencies shall be counted toward goal attainment statistics of the user agency.

(Recodified from Section 20.140 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.150 Subcontracting

An agency may satisfy its goal, in whole or in part, by counting expenditures made by State vendors to certified SDVOSBs and VOSBs as subcontractors.

(Recodified from Section 20.150 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART C: AGENCY COMPLIANCE AND REPORTING

Section 40.200 Agency Compliance and Reporting

a) All State agencies, including the construction agencies, shall report to the Committee and CMS each quarter all of the following:

1) The aggregate amount of dollars spent on State contracts with SDVOSBs and VOSBs;

2) The number of approved memorandums exempting specific contracts from the goal and the reason for the exemption; and

3) The number of good faith effort waivers granted.

b) Fiscal Year Reports: By each September 1, each Chief Procurement Officer (CPO) shall report to CMS on all of the following for the immediately preceding fiscal year, and by each March 1 CMS shall compile and report that information to the General Assembly:

1) The total number of SDVOSBs, and the number of VOSBs, who submitted bids and/or proposals under this Part.

2) The total number of SDVOSBs, and the number of VOSBs, who entered into contracts with the State under this Part and the total value of those contracts. [30 ILCS 500/45-57(b)]

c) Yearly Review and Recommendations: Each year, each CPO shall review the progress of all State agencies under its jurisdiction in meeting the goal described in Section 20.100, with input from statewide veterans' service organizations and from the business community, including SDVOSBs and VOSBs. Each CPO shall make recommendations to be included in the CMS report to the General Assembly regarding continuation, increases, or decreases of the percentage goal. The recommendations shall be based upon the number of businesses that are owned by qualified veterans and on the continued need to encourage and promote businesses owned by qualified veterans. [30 ILCS 500/45-57(c)]

(Recodified from Section 20.200 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART D: PROGRAM ELIGIBILITY

Section 40.300 Program Eligibility

To qualify as a SDVOSB or VOSB:

a) The business must be owned and controlled by veterans and/or service-disabled veterans;

b) It must be a small business that does not exceed the sales limitation established in the definition in Section 20.20;

c) It must be an authorized business registered within the State of Illinois;

d) Qualified veterans who are Illinois residents must hold 51% of ownership of the business; and

e) The business home office must be in the State of Illinois.

(Recodified from Section 20.300 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART E: CERTIFICATION

Section 40.400 General

a) The certification process verifies that the business is owned and controlled by eligible individuals in accordance with requirements of the Code and this Part. CMS will oversee the certification process outlined in this Section.

1) CMS will certify an entity, business or firm that meets the requirements listed in this Part. All certifications, new and existing, shall be valid for a period of 5 years from the effective date of the certification, subject to annual confirmation.

2) Only certified SDVOSBs and VOSBs are eligible for the benefits of the Program. Agencies may count only those expenditures with a certified business or certified business subcontractor toward meeting the goal.

3) A business owned and controlled by at least 51% service-disabled veterans and veterans shall be counted as a business owned and controlled by the eligible group that has the largest percentage of ownership.

b) These classifications facilitate consistent accounting of agency contract awards to businesses covered by the Code. Certification under the Program does not preclude those businesses from receiving any contract that may be awarded under the Code or other applicable law.

(Recodified from Section 20.400 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.410 Program Information

a) CMS shall compile a list of businesses certified under the Code and may compile and maintain other information regarding the Program, including general vendor lists.

b) The list will contain the name, address, telephone and facsimile numbers, e-mail address, type of certification (SDVOSB or VOSB) and business classification (e.g., accounting or furniture sales) of certified businesses.

c) The list shall be available to the Chief Procurement Officers and State Purchasing Officers defined in the Code and to other interested State agencies for use in State purchasing.

d) The list of certified businesses shall be available to the public. This list and other information shall be provided electronically via the CMS website (http://www2.illinois.gov/cms/business/).

(Recodified from Section 20.410 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART F: CERTIFICATION REQUIREMENTS AND PROCEDURES

Section 40.500 Application

The business seeking certification must complete an application package. CMS personnel may conduct a personal interview with the applicant that may include a telephone interview and/or an on-site visit. Additional on-site visits may be conducted at any time during the life of a certification to verify continued eligibility for the Program.

(Recodified from Section 20.500 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.510 Application Requirements

The applicant for initial certification, or recertification, must meet all of the requirements set forth in the Code and this Part. Should the applicant fail to meet any of the certification requirements, or refuse to supply information requested by CMS, the applicant will be denied certification or recertification. These requirements include, but are not limited to, the veteran's certification application; DD-214 (Report of Separation) which will confirm veteran's characterization of service and discharge status; and the U.S. Department of Veterans Affairs Rating Decision Letter which will confirm the veteran's service and non-service connected disability compensation rating.

(Recodified from Section 20.510 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.520 Eligibility Determination

CMS shall contact all applicants seeking certification, via U.S. Mail or electronic correspondence, within 60 days after receipt of the application and all supporting documents. CMS shall grant certification, deny certification, or request additional or clarifying information necessary to make the certification decision.

(Recodified from Section 20.520 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.530 Certification by Other Certifying Entities

a) CMS may accept a certification by another entity, such as a local government or a federal program for veteran small business owners. That entity must have certification requirements and procedures equaling or exceeding those required by the Code and under Subpart D of this Part (Program Eligibility).

b) CMS shall investigate requirements and procedures of other certifying entities and shall maintain a list of those certifying entities whose certifications can be accepted.

1) CMS may periodically meet with the other certifying entities to ensure compliance.

2) If the other entities' requirements or procedures no longer equal or exceed the requirements and procedures of CMS, CMS will no longer accept those certifications.

3) Applicants must immediately report the denial/loss of certification or recertification by another certifying entity to CMS, along with detailed reasons for the action.

(Recodified from Section 20.530 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.540 Sales Limitation; Exception

a) Annual gross sales must be less than $75 million. In determining the annual gross sales, sales of any affiliated business shall also be counted.

b) An affiliated business is one related to the other by virtue of significant commonality of management or commonality of ownership (at least 5% of one company owned by owner or management personnel of the other). Other factors that may be considered in determining affiliation include, but are not limited to, sharing of office space, workers or equipment.

(Recodified from Section 20.540 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.550 State Residency

a) The veterans claiming 51% ownership and control of the applicant business must be living in the State of Illinois or, in the case of a corporation, at least 51% of the stock of which is owned by one or more qualified veterans living in the State of Illinois. Proof of residency may include Illinois driver's license or ID card, Illinois tax documents, or W-2s.

b) Qualifying SDVOSBs or VOSBs must provide proof that they have a home office in the State of Illinois.

(Recodified from Section 20.550 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.560 Ownership/Control by Members of Eligible Groups

a) Individuals claiming ownership and control of the applicant business must be members of the eligible groups identified in Section 40.300.

b) The applicant must provide proof of eligible veteran group status. Proof must be in the form of official documentation, i.e., the DD-214 (Report of Separation) and the U.S. Department of Veterans Affairs Rating Decision Letter.

(Recodified from Section 20.560 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.570 Ownership

a) The individuals claiming ownership and control of the applicant business must own at least 51% of the business.

b) The ownership shall be real, substantial and continuing and not simply a matter of form. "Real" is a bona fide investment in the business done at arm's length and in good faith. "Substantial" is the level of investment necessary to initiate or acquire the particular business in light of its value, the business field, the organization of the concern, and the potential sources of outside financing. The following factors, among others, are weighed together to help determine whether ownership is real, substantial, continuing and not a matter of form.

1) How ownership was obtained, including, but not limited to, purchase, gift or inheritance.

2) How substantial was the contribution toward ownership in terms of expertise, money or other such factors? The following are some examples of factors that may indicate insufficient contribution:

A) Minimal cash outlay or personal investment;

B) A promise or agreement to contribute capital;

C) A note payable to the firm or other owners who are not eligible group members;

D) Contributions for services rather than capital, except when services are unique, specialized or of a value commensurate with the ownership value of the services;

E) Payment of contribution with funds loaned by a non-eligible group, former employer or stockholder;

F) No recourse loans when the borrower assumes no liability for repayment upon default; and

G) No recourse stock purchases in which the purchaser assumes no liability upon default of payment other than transaction of shares.

3) How the applicant holds ownership. In terms of stock holdings, the following are factors that may indicate ownership is not as stated:

A) Minimal cash outlay or personal investment;

B) A promise or agreement to buy stock;

C) Stock issued, but not purchased;

D) Stock certificates purchased but not in the possession of the applicant; or

E) Stock held in trust.

4) The applicant must provide documentary proof of ownership, including, but not limited to, the following:

A) Canceled checks or bookkeeping entries;

B) Signed purchase agreements;

C) Stock certificates, transfer ledgers and stockholder agreements;

D) Partnership agreements;

E) Profit sharing agreements; and

F) Buy-out-right agreements.

(Recodified from Section 20.570 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.580 Control

a) Ownership by eligible group members does not equate to control.

b) The individuals claiming ownership and control of the applicant business must actually control the applicant business. Those individuals must be in direct control of the day to day operations and must have, and exercise, the power to make major decisions on management, policy, fiscal and operational matters. At a minimum, the following factors will be considered in determining control:

1) Do the articles of incorporation show the eligible group owners were involved at the time of incorporation and in what way? If the eligible group owners were not involved at the time of incorporation, when did they become involved?

2) Corporate by-laws will be reviewed to determine:

A) The duties of the directors and officers who occupy these positions;

B) The voting rights of the shareholders; and

C) Any restrictive language that may affect the eligible group owner's stock voting rights.

3) Are there any stock options/shareholders agreements that, if exercised, will dilute or eliminate eligible group owner control?

4) Do the eligible group owners make decisions independently?

5) Does a review of resumes show the eligible group owners have sufficient background, including education and training, to run the particular business and for the responsibilities assigned?

6) Do the eligible group owners continue to work for a firm not eligible to be certified SDVOSBs or VOSBs and, if so, what is the relationship of the firm to the applicant business?

7) Who in the firm negotiates contracts and loans, prepares estimates and makes other management and supervisory decisions?

(Recodified from Section 20.580 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.590 Notice of Certification or Denial

a) Notification of Certification

When CMS has determined that the applicant meets the requirements of this Part, CMS will notify the applicant in writing that it has been certified.

b) Notification of Denial of Certification

When CMS determines that the applicant does not meet the requirements of this Part, CMS will send a letter to the applicant setting forth the rationale for the determination and advising the applicant of the appeal review process.

c) Effect of Denial

After all reconsiderations and reviews provided in this Part have been exhausted, if the decision remains to deny certification, the vendor will not be included in the list of certified vendors.

d) Reapplication

If a certification application is denied, the business may reapply one year after the date of denial. Applications submitted prior to that date will not be considered.

(Recodified from Section 20.590 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART G: RECONSIDERATION, DECERTIFICATION AND RECERTIFICATION

Section 40.600 Review and Reconsideration

a) The applicant may request that CMS reconsider a certification denial. CMS shall inform the applicant of the reconsideration decision within 60 days after receipt of the request for reconsideration.

b) The applicant may request a review of an unfavorable reconsideration decision of CMS. The applicant must submit this request in writing to CMS postmarked no later than 30 days after the applicant received the decision. The request must state why the applicant believes the decision is wrong, must address all points raised in the decision and must include any supportive documentation. Upon receipt of this request, CMS shall refer all documentation to the Committee for review.

c) The Committee (see Section 40.20) shall consider any requested appeal reviews from CMS. CMS will attempt to schedule a Committee meeting within 30 days after receipt of the request for review. The meeting may be held in Chicago or Springfield and CMS will notify the applicant at least 10 days prior to the meeting of the location, date and time.

d) CMS shall provide each Committee member with a copy of the request for review, other relevant information and a response to the points raised in the request for review. Each Committee member shall review the files prior to the meeting.

e) The Committee Chair shall call the meeting to order, announce the matter at issue and explain the meeting procedures. The Chair shall briefly restate the reasons given for the decision for denial and open the floor to the applicant. The meeting shall proceed in an informal manner within these procedures. All information obtained shall be considered.

f) The applicant may make an opening statement, but must respond to each of the reasons for denial given in the decision. The applicant may bring and question any witnesses. The Committee may ask questions of the applicant, CMS or any other person present. CMS may comment at any time. When the applicant is finished, CMS may call witnesses. Both the applicant and CMS may make closing statements. Although the applicant may have an attorney or other representatives assisting at the meeting, the applicant must be present and respond to questions of the Committee.

g) The Committee shall consider the information obtained at the meeting. The Committee's decision will be based upon majority vote to be given at a Committee meeting or submitted individually to CMS, who shall record and report the vote.

h) If the decision is favorable to the applicant, CMS will reverse its denial decision, notify the applicant, and place the applicant on the list of certified vendors. If the decision is adverse to the applicant, CMS will notify the applicant accordingly, providing the Committee's reasons for supporting CMS' original denial decision.

(Recodified from Section 20.600 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.610 Decertification Process

a) The State, or a third-party, may challenge the certification status of a SDVOSB or VOSB at any time.

b) Upon receipt of information that questions the validity of a certification, CMS shall conduct an investigation. This may include on-site or telephone interviews, review of existing records, or collection and examination of new records to supplement, explain or clarify records previously submitted.

c) If the investigation results in a finding that the firm is no longer eligible for SDVOSB or VOSB status, CMS shall notify the firm that it is decertified. The applicant may appeal using the review and reconsideration procedure of this Subpart G. After decertification, the applicant may not reapply for certification until one year has passed since the date of decertification. A certification of the applicant by another entity shall not be accepted during the one year period following decertification.

(Recodified from Section 20.610 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.620 Annual Confirmation of Eligibility

a) To maintain its certification, a certified business must file a No Change Affidavit with CMS on an annual basis, confirming there have been no changes in ownership or control from the last certification that would affect the eligibility of the certification and shall provide any additional information requested by CMS. The No Change Affidavit shall be in the form specified by CMS and shall include, but not be limited to, owner demographics, annual gross sales, current licensing, ownership interest, certification documentation with other entities, and a signed and notarized affidavit.

b) At least 60 days prior to the anniversary of a certification, CMS shall send a notice to the certified business advising that it must complete and return the No Change Affidavit, postmarked by the date specified in the notice.

c) If the certified business fails to submit the No Change Affidavit, CMS shall issue a provisional revocation of the certification and so notify the business. If the No Change Affidavit is not received within 30 days after the mailing of the provisional revocation to the certified business, the revocation shall become final and the business shall be decertified.

d) If the certified business submits a No Change Affidavit that indicates that ownership or control has changed so that the certified business is, or may be, no longer eligible for certification, CMS may request further information or may issue a final decertification.

e) Upon receipt of the notice of final decertification, the decertified business must submit a new and complete application for certification.

f) In addition to the annual confirmation, CMS may require confirmation of eligibility at any time during the term of certification.

(Recodified from Section 20.620 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART H: SPECIAL ASSISTANCE FOR CERTIFIED BUSINESSES

Section 40.700 Special Assistance

a) Purchasing agencies may waive or reduce bond requirements for certified vendors when allowed by law and when the reduced bond amount would adequately protect the State's interests.

b) Purchasing agencies may enter into contracts with certified vendors that contain a provision allowing advance or progress payments or both, except that a construction contract may not contain an advance payment provision. The advance or progress payment provision may be added to a contract at any time by agreement of the parties. Agencies must consider the application of Section 9.05 of the State Finance Act [30 ILCS 105/9.05] before including the provisions in contracts.

(Recodified from Section 20.700 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART I: SOLICITATION/CONTRACT REQUIREMENTS

Section 40.800 Change in Eligibility

a) Any contract awarded to a SDVOSB or VOSB may not be assigned to another vendor without approval of the CPO, in consultation with CMS.

b) Should a vendor who received a contract with the advance or progress payment provisions cease to qualify as a SDVOSB or VOSB during contract performance, the purchasing agency may cancel the contract immediately without penalty to a State agency. Any change in the eligibility status of a vendor awarded a contract with advance or progress payment provisions shall be reported to the Program and the purchasing agency.

(Recodified from Section 20.800 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

Section 40.810 Good Faith Efforts and Waiver Request Procedures

a) Vendors must make a good faith effort to meet the stated goal. A vendor that fails to meet the goal may still be awarded a contract if it can establish that it made a good faith effort to do so. CMS will determine whether a vendor has made a good faith effort to meet the goal unless that authority is delegated to the procuring agency. For contracts for construction and construction-related services entered into by a construction agency, the construction agency, if delegated that authority by CMS, will determine whether a vendor has made a good faith effort to meet the goal.

b) Vendors must submit a utilization plan with each bid or offer that demonstrates the vendor has either met or exceeded the goal or made good faith efforts toward meeting the goal. Any vendor claiming good faith relief must fully document in the utilization plan the steps taken to obtain SDVOSBs or VOSBs as subcontractors. CMS or the construction agency will consider the quality, quantity and intensity of the vendor's efforts.

c) The following is a list of types of actions that CMS or the construction agency may consider as evidence of the vendor's good faith efforts to meet the goal. Other factors or efforts brought to the attention of CMS may be relevant in appropriate cases.

1) Utilize the Sell2Illinois website (www.Sell2.illinois.gov) to identify certified SDVOSBs or VOSBs.

2) Soliciting through all reasonable and available means (e.g., attendance at a vendor conference, advertising and/or written notices) the interest of certified SDVOSBs or VOSBs that have the capability to perform the work of the contract. The Vendor must solicit this interest within sufficient time to allow certified SDVOSBs or VOSBs to respond to the solicitation. The vendor must determine with certainty if the certified SDVOSBs or VOSBs are interested by taking appropriate steps to follow up initial solicitations and encourage them to submit a bid or proposal. The vendor must provide interested certified SDVOSBs or VOSBs with adequate information about the plans, specifications and requirements of the contract in a timely manner to assist them in responding promptly to the solicitation.

3) Selecting portions of the work to be performed by certified SDVOSBs or VOSBs in order to increase the likelihood that the goal will be achieved. This includes, when appropriate, breaking out contract work items into economically feasible units to facilitate certified SDVOSBs or VOSBs participation, even when the vendor might otherwise prefer to perform these work items with its own forces.

4) Making a portion of the work available to certified SDVOSBs or VOSBs and selecting those portions of the work or material needs consistent with their availability, so as to facilitate certified SDVOSBs or VOSBs participation. Availability may include considerations of how the location of the SDVOSBs or VOSBs would affect the performance or cost of the contract.

5) Negotiating in good faith with interested certified SDVOSBs or VOSBs. Evidence of such negotiation must include the names, addresses and telephone numbers of certified SDVOSBs or VOSBs that were considered; a description of the information provided regarding the plans and specifications for the work selected for subcontracting, and evidence as to why additional agreements could not be reached for certified SDVOSBs or VOSBs to perform the work. A vendor using good business judgment may consider a number of factors in negotiating with certified SDVOSBs or VOSBs and may take a firm's price and capabilities into consideration. The fact that there may be some additional costs involved in finding and using certified SDVOSBs or VOSBs may not be in itself sufficient reason for a vendor's failure to meet the goal, as long as such costs are reasonable. Vendors are not required to accept higher quotes from certified SDVOSBs or VOSBs if the price difference is excessive or unreasonable.

6) Thoroughly investigating the capabilities of certified SDVOSBs or VOSBs and not rejecting them as unqualified without documented reasons.

7) Making efforts to assist interested certified SDVOSBs or VOSBs in obtaining lines of credit or insurance as required by the State.

8) Making efforts to assist interested certified SDVOSBs or VOSBs in obtaining necessary equipment, supplies, materials, or related assistance or services.

d) If CMS or the construction agency determines that a vendor demonstrated good faith efforts towards meeting the stated goal on a bid or offer, a waiver will be issued. If CMS or the construction agency determines that a vendor did not demonstrate good faith efforts towards meeting the goal on a bid or offer, the bid or offer may be deemed non-responsible by the CPO.

e) A vendor who obtains a State contract requiring the utilization of SDVOSBs or VOSBs, or who makes a voluntary contractual commitment to hire SDVOSBs or VOSBs, and who fails to do so is subject to having the contract canceled. If a vendor seeks a waiver of its contractual commitment to utilize or hire SDVOSBs/VOSBs, the agency must contact the SDVOSB or VOSB prior to granting the waiver to substantiate the vendor's claim. If the agency cancels the contract, the vendor may be liable for any damages the State suffers as a result of the cancellation. A vendor may not make changes to its certified SDVOSB or VOSB commitments or substitute certified SDVOSBs or VOSBs without the prior written approval of the State.

(Recodified from Section 20.810 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)

SUBPART J: VIOLATIONS BY VENDOR

Section 40.900 Violations by Vendor

Should a vendor violate the Code, this Part, or the terms of contracts let pursuant to this Program, the State may pursue any or all of the following actions:

a) A certified vendor may be decertified and an applicant for certification may be denied certification for reasons including, but not limited to:

1) Refusal to supply information sufficient for the Program or the Committee to make a determination for eligibility or continued eligibility;

2) Refusal to supply additional proof of eligibility for the Program, particularly after receiving a contract with the advance or progress payment (Special Assistance) provisions;

3) Accepting a contract with the advance or progress payment (Special Assistance) provisions when the vendor does not qualify for the Program; or

4) Any other violation of the Code or this Part.

b) The State, in consultation with the CPO's office, may cancel, without penalty to the State, any contract entered into by a vendor in violation of:

1) The Code or this Part;

2) The requirements of a contract let with the advance or progress payment (Special Assistance) provisions; or

3) Commitments regarding use of certified vendors, including, but not limited to, those in Section 40.540 (Sales Limitation; Exception) and Section 40.810 (Good Faith Efforts and Waiver Request Procedures).

c) In the case of a cancellation, the amount of profit applicable to amounts paid to the vendor shall be withheld from any amounts owed to the vendor. If the amount owed the vendor is insufficient to off-set profits, the vendor shall be liable to pay back to the State any balance of those profits. The profit rate shall be deemed 20% unless a lesser or greater amount can be conclusively proven.

d) Suspension of Vendor

1) The CPO or CMS, pursuant to the relevant statute, may suspend a vendor for a period of not less than 3 years and a contracting agency may cancel a contract for a violation of:

A) The Code or this Part;

B) The requirements of a contract let with the advance or progress payment (Special Assistance) provisions; or

C) Commitments regarding use of certified vendors, including, but not limited to, those in Section 20.540 (Sales Limitation; Exception) and Section 20.810 (Good Faith Efforts and Waiver Request Procedures).

2) Except for any person who commits a violation of Section 17-10.3 (Deception of a Public Agency) or 33E-6(d) (Interference with a Public Agency) of the Illinois Criminal Code of 2012 [720 ILCS 5], will be suspended for a period of not less than 3 years.

e) Depending on the seriousness of the violation, the suspension shall be:

1) From participation in the Program; or

2) From further contracting with the State.

f) A vendor may appeal any of the actions of the Committee taken pursuant to this Section in the same manner as a vendor denied certification (see Subpart G of this Part).

g) CMS shall notify the Chief Procurement Officers, State Purchasing Officers and other interested parties of SDVOSBs or VOSBs whose certification has been either suspended or revoked within 3 business days.

h) If any agency finds or suspects that a business is in violation of the Code or this Part, the violation should be reported to CMS immediately upon that finding.

i) Each State agency shall report to CMS any violations of Section 17-10.3 or 33E-6(d) of the Criminal Code of 2012. CMS shall monitor the status of reported violations of these statutes and subsequently report all such allegations to the Attorney General, who shall further determine whether to bring civil action against any person for the violation.

j) CMS shall monitor the status of all reported violations of Section 17-10.3 or 33E-6(d) of the Criminal Code of 2012.

k) If a person is suspended for violations of Section 17-10.3 or 33E-6(d) of the Criminal Code of 2012, a State agency shall not enter into any contract with that person or with any contractor using the services of that person as a subcontractor for the entire suspension period.

l) If a person is suspended for violations of Section 17-10.3 or 33E-6(d) of the Criminal Code of 2012 and is certified as a SDVOSB or VOSB, then CMS shall revoke the business' certification for a period not less than 3 years. An additional or subsequent violation shall extend the periods of suspension and revocation for a period not less than 5 years. The suspension and revocation shall apply to principals of the business and any subsequent business formed or financed by, or affiliated with, those principals.

(Recodified from Section 20.900 of 44 Ill. Adm. Code 20 (Central Management Services) pursuant to Section 45-57 of the Illinois Procurement Code [30 ILCS 500/45-57], at 47 Ill. Reg. 12484)