HB3720 103RD GENERAL ASSEMBLY

LRB103 29497 DTM 55892 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3720

Introduced 2/17/2023, by Rep. Elizabeth "Lisa" Hernandez

SYNOPSIS AS INTRODUCED:

30 ILCS 575/4	from Ch. 127, par. 132.604
805 ILCS 5/8.12

Amends the Business Enterprise for Minorities, Women, and Persons with Disabilities Act. Provides that the Commission on Equity and Inclusion shall establish goals based on the types of communities served by businesses. Requires corporations that are publicly held domestic or foreign corporation with their principal executive office located in Illinois to provide in their annual report the percentage of professional services procurements from business enterprises owned by minority persons, women, or persons with disabilities as those terms are defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act. Provides that the Secretary of State shall establish a publicly accessible and searchable database of the information in each annual report.

A BILL FOR

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Business Enterprise for Minorities, Women, and Persons with Disabilities Act is amended by changing Section 4 as follows:

(30 ILCS 575/4) (from Ch. 127, par. 132.604)

(Section scheduled to be repealed on June 30, 2024)

Sec. 4. Award of State contracts.

(a) Except as provided in subsection (b), not less than 30% of the total dollar amount of State contracts, as defined by the Secretary of the Council and approved by the Council, shall be established as an aspirational goal to be awarded to businesses owned by minorities, women, and persons with disabilities; provided, however, that of the total amount of all State contracts awarded to businesses owned by minorities, women, and persons with disabilities pursuant to this Section, contracts representing at least 16% shall be awarded to businesses owned by minorities, contracts representing at least 10% shall be awarded to women-owned businesses, and contracts representing at least 4% shall be awarded to businesses owned by persons with disabilities.

(a-5) In addition to the aspirational goals in awarding State contracts set under subsection (a), the Commission shall by rule further establish targeted efforts to encourage the participation of businesses owned by minorities, women, and persons with disabilities on State contracts and shall establish goals based on the types of communities served by businesses. Such efforts shall include, but not be limited to, further concerted outreach efforts to businesses owned by minorities, women, and persons with disabilities.

The above percentage relates to the total dollar amount of State contracts during each State fiscal year, calculated by examining independently each type of contract for each agency or public institutions of higher education which lets such contracts. Only that percentage of arrangements which represents the participation of businesses owned by minorities, women, and persons with disabilities on such contracts shall be included. State contracts subject to the requirements of this Act shall include the requirement that only expenditures to businesses owned by minorities, women, and persons with disabilities that perform a commercially useful function may be counted toward the goals set forth by this Act. Contracts shall include a definition of "commercially useful function" that is consistent with 49 CFR 26.55(c).

(b) Not less than 20% of the total dollar amount of State construction contracts is established as an aspirational goal to be awarded to businesses owned by minorities, women, and persons with disabilities; provided that, contracts representing at least 11% of the total dollar amount of State construction contracts shall be awarded to businesses owned by minorities; contracts representing at least 7% of the total dollar amount of State construction contracts shall be awarded to women-owned businesses; and contracts representing at least 2% of the total dollar amount of State construction contracts shall be awarded to businesses owned by persons with disabilities.

(c) (Blank).

(c-5) All goals established under this Section shall be contingent upon the results of the most recent disparity study conducted by the State.

(d) Within one year after April 28, 2009 (the effective date of Public Act 96-8), the Department of Central Management Services shall conduct a social scientific study that measures the impact of discrimination on minority and women business development in Illinois. Within 18 months after April 28, 2009 (the effective date of Public Act 96-8), the Department shall issue a report of its findings and any recommendations on whether to adjust the goals for minority and women participation established in this Act. Copies of this report and the social scientific study shall be filed with the Governor and the General Assembly.

By December 1, 2020, the Department of Central Management Services shall conduct a new social scientific study that measures the impact of discrimination on minority and women business development in Illinois. By June 1, 2022, the Department shall issue a report of its findings and any recommendations on whether to adjust the goals for minority and women participation established in this Act. Copies of this report and the social scientific study shall be filed with the Governor and the General Assembly. By December 1, 2022, the Commission on Equity and Inclusion Business Enterprise Program shall develop a model for social scientific disparity study sourcing for local governmental units to adapt and implement to address regional disparities in public procurement.

(e) All State contract solicitations that include Business Enterprise Program participation goals shall require bidders or offerors to include utilization plans. Utilization plans are due at the time of bid or offer submission. Failure to complete and include a utilization plan, including documentation demonstrating good faith efforts when requesting a waiver, shall render the bid or offer non-responsive.

Except as permitted under this Act or as otherwise mandated by federal regulation, a bidder or offeror whose bid or offer is accepted and who included in that bid a completed utilization plan but who fails to meet the goals set forth in the plan shall be notified of the deficiency by the contracting agency or public institution of higher education and shall be given a period of 10 calendar days to cure the deficiency by contracting with additional subcontractors who are certified by the Business Enterprise Program or by increasing the work to be performed by previously identified vendors certified by the Business Enterprise Program.

Deficiencies that may be cured include: (i) scrivener's errors, such as transposed numbers; (ii) information submitted in an incorrect form or format; (iii) mistakes resulting from failure to follow instructions or to identify and adequately document good faith efforts taken to comply with the utilization plan; or (iv) a proposal to use a firm whose Business Enterprise Program certification has lapsed or is not yet recognized. Cure is not authorized if the bidder or offeror submits a blank utilization plan, a utilization plan that shows lack of reasonable effort to complete the form on time, or a utilization plan that states the contract will be self-performed, by a non-certified vendor, without showing good faith efforts or a request for a waiver. All cure activity shall address the deficiencies identified by the purchasing agency and shall require clear documentation, including that of good faith efforts, to address those deficiencies. Any increase in cost to a contract for the addition of a subcontractor to cure a bid's deficiency shall not affect the bid price and shall not be used in the request for an exemption under this Act, and, in no case, shall an identified subcontractor with a Business Enterprise Program certification made under this Act be terminated from a contract without the written consent of the State agency or public institution of higher education entering into the contract. The purchasing agency or public institution of higher education shall make the determination whether the cure is adequate.

Vendors certified with the Business Enterprise Program at the time and date submittals are due and who do not submit a utilization plan or have utilization plan deficiencies shall have 10 business days to submit a utilization plan or to correct the utilization plan deficiencies.

(f) (Blank).

(g) (Blank).

(h) State agencies and public institutions of higher education shall notify the Commission on Equity and Inclusion of all non-responsive bids or proposals for State contracts.

(Source: P.A. 101-170, eff. 1-1-20; 101-601, eff. 1-1-20; 101-657, Article 1, Section 1-5, eff. 1-1-22; 101-657, Article 40, Section 40-130, eff. 1-1-22; 102-29, eff. 6-25-21; 102-558, eff. 8-20-21; 102-1119, eff. 1-23-23.)

Section 10. The Business Corporation Act of 1983 is amended by changing Section 8.12 as follows:

(805 ILCS 5/8.12)

Sec. 8.12. Female, minority, and LGBTQ directors.

(a) Findings and purpose. The General Assembly finds that women, minorities, and LGBTQ people are still largely underrepresented nationally in positions of corporate authority, such as serving as a director on a corporation's board of directors. This low representation could be contributing to the disparity seen in wages made by females and minorities versus their white male counterparts. Increased representation of these individuals as directors on boards of directors for corporations may boost the Illinois economy, improve opportunities for women, minorities, and LGBTQ people in the workplace, and foster an environment in Illinois where the business community is representative of our residents. Therefore, it is the intent of the General Assembly to gather more data and study this issue within the State so that effective policy changes may be implemented to eliminate this disparity.

(b) As used in this Section:

"Annual report" means the report submitted annually to the Secretary of State pursuant to this Act.

"Female" means a person who is a citizen or lawful permanent resident of the United States and who self-identifies as a woman, without regard to the individual's designated sex at birth.

"Minority person" means a person who is a citizen or lawful permanent resident of the United States and who is any of the following races or ethnicities:

(1) American Indian or Alaska Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment).

(2) Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam).

(3) Black or African American (a person having origins in any of the black racial groups of Africa). Terms such as "Haitian" or "Negro" can be used in addition to "Black" or "African American".

(4) Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race).

(5) Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands).

(6) "Publicly held domestic or foreign corporation" means a corporation with outstanding shares listed on a major United States stock exchange.

(c) Reporting to the Secretary of State. As soon as practical after August 27, 2019 (the effective date of Public Act 101-589), but no later than January 1, 2021, the following information shall be provided in a corporation's annual report submitted to the Secretary of State under this Act and made available by the Secretary of State to the public online as it is received:

(1) Whether the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois.

(2) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, data on specific qualifications, skills, and experience that the corporation considers for its board of directors, nominees for the board of directors, and executive officers.

(3) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, the self-identified gender of each member of its board of directors.

(4) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, whether each member of its board of directors self-identifies as a minority person and, if so, which race or ethnicity to which the member belongs.

(5) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, the self-identified sexual orientation of each member of its board of directors.

(6) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, the self-identified gender identity of each member of its board of directors.

(7) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, a description of the corporation's process for identifying and evaluating nominees for the board of directors, including whether and, if so, how demographic diversity is considered.

(8) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, a description of the corporation's process for identifying and appointing executive officers, including whether and, if so, how demographic diversity is considered.

(9) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, a description of the corporation's policies and practices for promoting diversity, equity, and inclusion among its board of directors and executive officers.

(10) Where the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois, the percentage of professional services procurements from business enterprises owned by minority persons, women, or persons with disabilities as those terms are defined in Section 2 of the Business Enterprise for Minorities, Women, and Persons with Disabilities Act.

Information reported under this subsection shall be updated in each annual report filed with the Secretary of State thereafter. The Secretary of State shall establish a publicly accessible and searchable database of the information in each annual report.

(d) Beginning no later than March 1, 2021, and every March 1 thereafter, the University of Illinois Systems shall review the information reported and published under subsection (c) and shall publish on its website a report that provides aggregate data on the demographic characteristics of the boards of directors and executive officers of corporations filing an annual report for the preceding year along with an individualized rating for each corporation. The report shall also identify strategies for promoting diversity and inclusion among boards of directors and corporate executive officers.

(e) The University of Illinois System shall establish a rating system assessing the representation of women, minorities, and LGBTQ people on corporate boards of directors of those corporations that are publicly held domestic or foreign corporations with their principal executive office located in Illinois based on the information gathered under this Section. The rating system shall consider, among other things: compliance with the demographic reporting obligations in subsection (c); the corporation's policies and practices for encouraging diversity in recruitment, board membership, and executive appointments; and the demographic diversity of board seats and executive positions.

(Source: P.A. 101-589, eff. 8-27-19; 102-223, eff. 1-1-22; 102-813, eff. 5-13-22.)