98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB0102

 

Introduced 1/10/2013, by Rep. William Davis

 

SYNOPSIS AS INTRODUCED:
 
220 ILCS 5/4-503 new

    Amends the Public Utilities Act. Requires the Illinois Commerce Commission to establish a procedure for entities regulated by it and their Commission-regulated subsidiaries and affiliates to submit annual detailed and verifiable plans for increasing female, minority, and disabled veteran business's procurement in all categories. Provides that the Commission shall provide a clearinghouse for the sharing of identification and verification information of qualifying businesses. Sets forth guidelines and goals for each regulated entity's program to ensure that qualifying businesses are encouraged to become potential suppliers of products and services to the regulated entity, including provisions regarding outreach programs and subcontracting programs. Requires each regulated entity to set substantial and verifiable short-term, mid-term, and long-term goals for the utilization of qualifying businesses. Requires each regulated entity to submit an annual report and an annual plan with respect to these goals. Requires the Commission to provide an annual report to the General Assembly on the progress of activities undertaken by each regulated entity. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Utilities Act is amended by adding
5Section 4-503 as follows:
 
6    (220 ILCS 5/4-503 new)
7    Sec. 4-503. Procurement from female owned, minority owned,
8and qualified service-disabled veteran-owned small businesses;
9goals; reports.
10    (a) For the purpose of this Section:
11    "Certification" means a determination made under the
12Business Enterprise for Minorities, Females, and Persons with
13Disabilities Act, Section 45-57 of the Illinois Procurement
14Code, or the clearinghouse that a business entity is a female
15owned business, minority owned business, or qualified
16service-disabled veteran-owned small business for whatever
17purpose. A business owned and controlled by females shall
18select and designate whether such business is to be certified
19as (i) a female owned business or minority owned business if
20the females are also minorities or (i) a female owned business
21or qualified service-disabled veteran-owned small business if
22the females are qualified service-disabled veterans.
23    "Clearinghouse" means the clearinghouse authorized under

 

 

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1subsection (d) of this Section.
2    "Control" has the meaning given to that term in the
3Business Enterprise for Minorities, Females, and Persons with
4Disabilities Act.
5    "Female owned business" has the meaning given to that term
6in the Business Enterprise for Minorities, Females, and Persons
7with Disabilities Act.
8    "Goal" means a target that, when achieved, indicates
9progress in a preferred direction. A goal is neither a
10requirement nor a quota.
11    "Long-term goal" means a goal applicable to a period of 5
12years.
13    "Mid-term goal" means a goal applicable to a period of 3
14years.
15    "Minority owned business" has the meaning given to that
16term in the Business Enterprise for Minorities, Females, and
17Persons with Disabilities Act.
18    "Product and service categories" means product and service
19categories as defined by the Standard Industrial
20Classification (SIC) system maintained by the United States
21Department of Labor, Occupational Safety and Health
22Administration.
23    "Qualified service-disabled veteran-owned small business"
24has the meaning given to that term in Section 45-57 of the
25Illinois Procurement Code.
26    "Qualifying business" means a female owned business,

 

 

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1minority owned business, or qualified service-disabled
2veteran-owned small business.
3    "Regulated entity" means any entity that is regulated by
4the Commission and their Commission-regulated subsidiaries and
5affiliates.
6    "Short-term goal" means a goal applicable to a period of
7one year.
8    "Subcontract" means an agreement or arrangement between a
9contractor and any party or person in which the parties do not
10stand in the relationship of an employer and an employee (i)
11for the furnishing of supplies or services for the use of real
12or personal property, including lease arrangements, which, in
13whole or in part, is necessary to the performance of any one or
14more contracts or (ii) under which any portion of the
15contractor's obligation under any one or more contracts is
16performed, undertaken, or assumed.
17    (b) The Commission shall establish a procedure for
18regulated entities to submit annual detailed and verifiable
19plans for increasing female, minority, and disabled veteran
20business's procurement in all categories. In addition, the
21Commission may accept such plans from cable operators.
22    In cases where the application of this Section results in
23undue hardship or unreasonable expense to a regulated entity,
24the regulated entity may request relief by filing an
25application with the Commission. Where the relief requested is
26of minor importance or temporary in nature, the regulated

 

 

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1entity may apply for such relief through an advice letter
2filing. Any advice letter filing must, at a minimum, be served
3on all parties on the service list of this proceeding.
4    (c) The clearinghouse shall supply a verification form to
5applicants. An applicant may complete the verification forms
6and return them to the clearinghouse for processing and
7inclusion in the database. In addition to verification by the
8clearinghouse, a regulated entity may accept verification of a
9qualifying business's status made under the Business
10Enterprise for Minorities, Females, and Persons with
11Disabilities Act or Section 45-57 of the Illinois Procurement
12Code or made by the Supplier Clearinghouse used by the
13California Public Utilities Commission.
14    In assessing the suitability of a qualifying business to
15bid for procurement contracts, a regulated entity may require
16additional information or the completion of additional forms to
17comply with specific requirements created by the unique
18character of its business, including, but not limited to,
19insurance requirements, product and service codes, and bonding
20limits. A regulated entity may not, however, require such
21additional information in order to verify that a business is in
22fact a qualifying business.
23    Female owned businesses and minority owned businesses
24shall be required to submit verification forms at least once
25every 3 years.
26    Completion of the verification application only initiates

 

 

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1a verification of the business's status as a female owned
2business or minority owned business. Filing of an application
3does not guarantee verification.
4    The fact that a verified qualifying business is included in
5the clearinghouse database shall not be construed as an
6endorsement of its ability to perform, nor shall such inclusion
7guarantee it business with the utilities.
8    Verification forms for female owned businesses or minority
9owned businesses shall be available for inspection by the
10Commission.
11    Falsification of information on the verification form is
12subject to penalties as set by the Commission by administrative
13rule.
14    (d) The Commission shall provide a clearinghouse for the
15sharing of identification and verification information of
16qualifying businesses. The Commission may establish and
17operate such a clearinghouse internally or authorize, by
18decision or resolution, a regulated entity-formed entity or
19arrangement to fund the operation of such a clearinghouse. In
20authorizing a regulated entity-formed entity or arrangement,
21the Commission must specify sufficient terms and conditions to
22specify how verifications and audits shall be performed and to
23ascertain and ensure that the clearinghouse is operated in
24accordance with this Section and other applicable legal
25requirements.
26    The primary purpose of the clearinghouse shall be to audit

 

 

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1and verify the status of qualifying businesses and to establish
2and maintain a database of qualifying businesses that is
3accessible to the Commission and to participating utilities.
4The clearinghouse auditing and verification program shall
5preclude the need for an individual regulated entity to audit
6and verify the status of the qualifying businesses it does
7business with.
8    The clearinghouse shall distribute renewal verification
9forms to female owned businesses or minority owned businesses
10at least once every 3 years. If the renewal is not completed
11and returned within a reasonable time, the clearinghouse shall
12notify the female owned business or minority owned business and
13utilities that the female owned business or minority owned
14business will not be listed as a verified female owned business
15or minority owned business in the shared database until the
16renewal is completed.
17    (d) Each regulated entity's program shall be designed to
18ensure that qualifying businesses are encouraged to become
19potential suppliers of products and services to the utilities
20subject to this Section. Nothing in this Section authorizes or
21permits a regulated entity to utilize setasides, preferences,
22or quotas in administration of its program. The regulated
23entity retains its authority to use its legitimate business
24judgment to select the supplier for a particular contract.
25    Each regulated entity shall maintain an appropriately
26sized staff to provide overall program direction and guidance

 

 

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1and to implement program requirements. Each regulated entity
2shall ensure that its employees with procurement
3responsibilities receive training in the implementation of its
4program.
5    Each regulated entity shall implement an outreach program
6to inform and recruit qualifying businesses to apply for
7procurement contracts. Outreach activities may vary for each
8regulated entity depending on its size, service territory, and
9specific lines of business. However, each regulated entity
10shall, at a minimum:
11        (1) actively seek out opportunities to identify
12    qualifying businesses and to expand qualifying business
13    source pools;
14        (2) actively support the efforts of organizations
15    experienced in the field who promote the interests of
16    qualifying businesses;
17        (3) work with qualifying businesses to facilitate
18    contracting relationships by explaining regulated entity
19    qualification requirements, bid and contracting
20    procedures, materials requirements, invoicing and payment
21    schedules, and other procurement practices and procedures;
22        (4) at the request of any unsuccessful qualifying
23    business bidder, provide information concerning the
24    relative range or ranking of the qualifying business's bid
25    as contrasted with the successful bid; information on
26    additional selection criteria, such as warranty periods,

 

 

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1    maintenance costs, and delivery capability, shall be
2    provided when requested if disclosure would not violate the
3    proprietary nature of the specific contract element;
4        (5) to the extent possible, make available to
5    qualifying businesses lists of regulated entity purchase
6    and contract categories that offer them the best
7    opportunity for success;
8        (6) encourage employees involved in procurement
9    activities to break apart purchases and contracts as
10    appropriate to accommodate the capabilities of qualifying
11    businesses; and
12        (7) summarize this Section in its outreach program
13    handouts.
14    Each regulated entity is directed to offer the same
15assistance set forth in this subsection (d) to entities that
16are not qualifying businesses, upon request.
17    (e) Each regulated entity shall establish and maintain a
18subcontracting program for the purpose of encouraging its prime
19contractors to utilize qualifying businesses. The
20subcontracting program shall serve as an enhancement to, and
21not as a replacement for, the regulated entity's prime
22contractor outreach program. The subcontracting program shall
23apply to:
24        (1) purchases or contracts exceeding $500,000 for
25    products and services;
26        (2) construction contracts exceeding $1,000,000; and

 

 

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1        (3) purchases or contracts that offer subcontracting
2    opportunities to qualifying businesses, regardless of
3    value, where appropriate.
4    The subcontracting program need not be applied to the
5procurement of products manufactured for general consumption,
6such as paper, pens, and the like.
7    Each regulated entity shall encourage and assist its prime
8contractors to develop plans to increase the utilization of
9qualifying businesses as subcontractors. Prime contractors
10shall be encouraged to submit to the regulated entity plans
11that include goals for the utilization of qualifying businesses
12as subcontractors. These plans may be incorporated into the
13contract between the regulated entity and the prime contractor.
14The prime contractor may submit periodic reports on its
15compliance with the plan to the regulated entity.
16    Each regulated entity is encouraged to incorporate in all
17purchase orders, requests for bid proposals, and other
18appropriate procurement documents related to procurement
19efforts subject to the subcontracting program, a statement in
20substantially the following form:
21    "UTILIZATION OF FEMALE OWNED BUSINESSES, MINORITY OWNED
22    BUSINESSES, AND QUALIFIED SERVICE-DISABLED VETERAN-OWNED
23    SMALL BUSINESSES
24        (1) It is the policy of (insert the name of the
25    regulated entity) that female owned businesses, minority
26    owned businesses, or qualified service-disabled

 

 

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1    veteran-owned small businesses shall have the maximum
2    practicable opportunity to participate in the performance
3    of contracts. However, this policy shall not be used to
4    exclude other qualified businesses from participating in
5    regulated entity contracting.
6        (2) The contractor agrees to use his or her best
7    efforts to carry out this policy in the award of
8    subcontracts to the fullest extent consistent with the
9    efficient performance of this contract.
10        (3) The contractor agrees to inform prospective female
11    owned businesses, minority owned businesses, or qualified
12    service-disabled veteran-owned small businesses of their
13    opportunity to request from the clearinghouse a
14    verification application form and to return the completed
15    form to the clearinghouse for processing and inclusion in
16    the database.".
17    Each regulated entity is encouraged to inform suppliers of
18products and services that suppliers' good faith efforts to
19subcontract with qualifying businesses is a factor that will be
20considered in the bid evaluation process. A statement to that
21effect could be included in all appropriate procurement
22documents.
23    Each regulated entity shall monitor and include in its
24annual report to the Commission a summary of prime contractor
25progress in increasing the participation of qualifying
26businesses. Each regulated entity shall include in its annual

 

 

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1plan a description of future plans for encouraging both prime
2contractors and grantees to engage qualifying businesses in all
3procurement categories that provide subcontracting
4opportunities. Each regulated entity may include awards to
5verified qualifying businesses in its results.
6    (f) Each regulated entity shall set substantial and
7verifiable short-term, mid-term, and long-term goals for the
8utilization of qualifying businesses. Goals shall be set
9annually for each major product and service category that
10provides opportunities for procurement. A goal shall be
11considered substantial if it is realistic and clearly
12demonstrates a regulated entity's commitment to encourage the
13participation of qualifying businesses in regulated entity
14purchases and contracts. The utilities shall consider the
15following factors in setting their goals:
16        (1) total regulated entity purchasing and contracting
17    projections;
18        (2) availability of qualifying businesses and
19    competitiveness in the geographical area served by the
20    regulated entity;
21        (3) market dynamics based on historical data and
22    trends; and
23        (4) other appropriate factors that would increase the
24    qualifying businesses' share of regulated entity business.
25    Each regulated entity shall establish initial minimum
26long-term goals for each major category of products and

 

 

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1services the regulated entity purchases from outside vendors of
2not less than 11% for minority owned businesses and not less
3than 7% for female owned businesses. For the purposes of this
4Section, contracts with minority female owned businesses can be
5counted toward either the minority owned business goal or the
6female owned business goal, but not toward both. Similarly,
7contracts with qualified service-disabled veteran-owned small
8businesses can be counted either as service-disabled
9veteran-owned small business procurement or the appropriate
10female or minority business goal, but not toward both. The goal
11for qualified service-disabled veteran-owned small business
12participation in procurement programs of the participating
13utilities is set at 3%. The specification of initial long-term
14goals in this subsection shall not prevent the utilities from
15seeking to reach a goal of awarding 30% or more of their
16contracts to female owned businesses and minority owned
17businesses.
18    Goals shall also be established for both minority female
19owned businesses and non-minority female owned businesses.
20These goals are to be a subset of the overall goal for female
21owned businesses and minority owned businesses established by
22this subsection (f). These goals are intended to ensure that
23utilities do not direct their female owned business and
24minority owned business procurement programs toward
25non-minority female owned businesses and minority male owned
26businesses to the detriment or exclusion of minority female

 

 

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1owned businesses.
2    Goals shall be set for each major category of products or
3services. For each major category of products and services
4where the minimum long-term goals required by this subsection
5(f) are not met, the regulated entity shall include a
6comprehensive discussion and detailed description of any
7efforts made to find or recruit qualifying businesses'
8suppliers of products or services in areas where qualifying
9businesses' suppliers are currently the only available
10procurement method. The regulated entity may also explain in
11detail in its annual report how its ability to meet its
12qualifying business's goals are affected because the
13qualifying businesses capable of supplying certain products
14and services are unavailable, or because sole source
15procurement is the only available procurement method.
16    A regulated entity that, on the effective date of this
17Section, is purchasing products or services from affiliates may
18subtract the dollars paid to affiliates for these products or
19services from the total dollars used as the basis for
20establishing goals for purchases from qualifying businesses of
21these categories of products or services, provided that the
22regulated entity encourages the affiliate to establish an
23appropriate subcontracting program where such affiliate
24employs subcontractors. Any regulated entity that subtracts
25these dollars must, in its annual report to the Commission,
26state whether the affiliates have established a subcontracting

 

 

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1program and describe the results of any such program. The
2regulated entity's annual plan must describe any future plans
3to encourage such a subcontracting program.
4    Goals for each specific product or service category shall
5be expressed as a percentage of total dollars awarded by a
6regulated entity to outside vendors in that category; however,
7where appropriate, non-numeric goals may also be included.
8Overall program goals shall be expressed as a percentage of
9total dollars awarded to outside vendors in all categories of
10products and services purchased by a regulated entity other
11than products and services which are included in a fuel
12procurement base established pursuant to this subsection (f).
13Payments to other utilities, franchise tax fees, other taxes,
14and postage need not be included in the standard procurement
15base used to establish goals.
16    Each regulated entity may establish a separate fuel
17procurement base for reporting progress and establishing goals
18for procurement of fuels from qualifying businesses. Utilities
19choosing to report fuel purchases separately from the purchase
20of other products and services must follow the following
21guidelines:
22        (i) Fuel used to power vehicles, heat facilities, and
23    supply emergency generators may not be included in the fuel
24    procurement base. Such fuel must be included in the
25    standard procurement base used to establish goals.
26        (ii) The fuel procurement base must, at a minimum,

 

 

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1    include all purchases of natural gas from domestic on-shore
2    natural gas markets.
3        (iii) Utilities that purchase fuels other than
4    domestic on-shore natural gas from qualifying businesses
5    must include such purchases in the fuel procurement base.
6    Each regulated entity shall make special efforts to
7increase utilization and encourage entry into the marketplace
8of qualifying businesses in product or service categories where
9there has been low utilization of qualifying businesses, such
10as legal and financial services, fuel procurement, and areas
11that are considered technical in nature.
12    No penalty shall be imposed for failure of any regulated
13entity to meet or exceed goals.
14    (g) Utilities shall report their goals in an annual report.
15Each regulated entity shall serve 12 copies of its annual
16report on its qualifying business program on the Executive
17Director by March 1 of each year beginning in 2014. The annual
18report shall contain at least:
19        (1) a description of the activities of its qualifying
20    business program engaged in during the previous calendar
21    year, including both internal and external activities;
22        (2) a summary of purchases and contracts with
23    qualifying businesses, with breakdowns by ethnicity,
24    product, and service categories compared with total
25    contract dollars awarded to outside vendors in those
26    categories;

 

 

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1        (3) an itemization of its qualifying business program
2    expenses, provided in the format required by the
3    Commission;
4        (4) a description of its progress in meeting or
5    exceeding set goals and an explanation of any circumstances
6    that may have caused the regulated entity to fall short of
7    its goals;
8        (5) a summary of prime contractor utilization of
9    qualifying business subcontractors; and
10        (6) a description of any efforts made to recruit
11    qualifying business suppliers of products or services in
12    procurement categories where qualifying business
13    utilization has been low, such as legal and financial
14    services, fuel procurement, and areas that are considered
15    highly technical in nature.
16    Utilities shall retain all documents and data they rely on
17in preparing their annual report for the longer of either 3
18years or in conformance with the utilities' individual document
19retention policies, and shall provide these documents and data
20to the Commission upon request.
21    (h) Each regulated entity that elects to report fuel
22procurement separately must file with the Executive Director by
23March 1 of each year, beginning in 2014, a separate detailed
24and verifiable report on qualifying business participation in
25fuel markets. These reports must include, at a minimum, the
26results of purchases in each fuel category. Each regulated

 

 

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1entity shall report purchases by:
2        (1) market origin and fuel type;
3        (2) volume and dollar magnitude;
4        (3) the term of sale, such as spot, intermediate, or
5    long-term; and
6        (4) the ethnicity and gender of the supplier.
7    Each regulated entity shall provide (i) an explanation of
8how existing and changing market conditions are affecting the
9regulated entity's ability to meet or exceed its qualifying
10business goals for fuel; (ii) a comprehensive description of
11the specific out-reach programs used to seek qualifying
12business fuel suppliers in each market in which fuel is
13purchased; and (iii) a justification for any exclusion of a
14specific fuel category from the regulated entity's fuel
15procurement base.
16    (i) Nothing in this Section shall prohibit any regulated
17entity from breaking down specific categories further than
18specifically required under this Section.
19    (j) Utilities shall serve 12 copies of a detailed and
20verifiable plan for encouraging qualifying business
21procurement in all categories on the Executive Director by
22March 1 of each year, beginning in 2014. The annual plan shall
23contain at least:
24        (1) the short-term, mid-term, and long-term goals set
25    as required by this Section;
26        (2) a description of qualifying business program

 

 

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1    activities planned for the next calendar year, which shall
2    include both internal and external activities;
3        (3) plans for recruiting qualifying business suppliers
4    of products or services where utilization of qualifying
5    businesses has been low, such as legal and financial
6    services, fuel procurement, and areas that are considered
7    highly technical in nature;
8        (4) plans for seeking and recruiting qualifying
9    business suppliers of products or services where
10    qualifying business suppliers are currently unavailable;
11        (5) plans for encouraging both prime contractors and
12    grantees to engage qualifying businesses in subcontracts
13    in all categories that provide subcontracting
14    opportunities; and
15        (6) plans for complying with the qualifying business
16    program guidelines established by the Commission by rule.
17    (k) The Commission shall provide an annual report to the
18General Assembly, beginning in January of 2015, on the progress
19of activities undertaken by each regulated entity to implement
20this Section. In this report, the Commission shall recommend a
21program for carrying out the policy declared in this Section,
22together with recommendations for legislation it deems
23necessary or desirable to further that policy. This report
24shall include recommendations to the utilities for the
25achievement of maximum results in implementing this Section.
 
26    Section 99. Effective date. This Act takes effect upon

 

 

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1becoming law.