AGENDA #4f
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Resolution Amending the Town’s Policy and Procedures Regarding Participation by Minority Businesses in Awarding Building Construction Contracts
DATE: February 25, 2002
Legislation adopted by the N. C. General Assembly in December 2001 modified several sections of State laws relating to formal bids and purchasing practices by local and State governments, including strengthening the procedures and requirements of local governments and construction contractors to ensure participation by minority businesses in building construction contracts.
Adoption of the attached resolution would amend the Town’s existing policies and regulations regarding participation by minority businesses in building construction contracts to incorporate the new regulations and requirements that local governments and construction contractors must perform to comply with the new legislation.
BACKGROUND
In December 2001, the General Assembly adopted several modifications to existing laws regarding public formal bidding procedures and thresholds for local and State governments. The modifications included: increasing the thresholds for formal bids for equipment purchases from $50,000 to $90,000; increasing the threshold for construction contracts from $100,000 to $300,000; and changing the options that local governments have in bidding building construction contracts to allow these projects to be bid as a single prime bid.
In addition to these changes the new legislation also modified the steps and procedures that local governments and construction contractors and subcontractors must follow to strengthen participation by minority businesses in bids and contracts for building construction. These new requirements apply only to building construction contracts, and not to other types of construction or to purchase contracts. The new requirements for local governments and contractors and our recommendations for adding these requirements to the Town’s existing minority business participation procedures are discussed below.
DISCUSSION
The new legislation requires State and local governments to have a verifiable percentage goal for minority business participation in building construction contracts if the governmental unit has not already adopted a goal in past years. The participation goal suggested by the new legislation is 10% of all building construction awards. The Town adopted a verifiable percentage goal of 10% in its minority businesses participation policy in 1990 (Resolution 90-3-6/R-20). We believe this goal continues to be a realistic one and recommend no change in the percentage goal portion of our existing policy.
The main additional change included in the new law for building construction contracts is that the law includes good faith efforts that both local governments and first tier construction contractors must follow in bidding and awarding contracts for all types of building construction bids (single prime, multiple prime, or any other methods allowed by the new law.) The new law is clear that these requirements apply only to building construction and not to other types of construction or to other types of purchase contracts. Below is a listing of the good faith effort requirements of the new law for local governments and first tier contractors.
Local Government Requirements
In accord with the new law, before awarding a building contract, public entities must do the following:
1. Develop and implement a minority business participation outreach plan to identify minority businesses that can perform public building projects and implement outreach efforts to encourage minority business participation in these projects.
2. Attend the scheduled prebid conferences.
3. At least 10 days prior to the scheduled day of bid opening, notify minority business that have requested notices form the public entity for public building construction or repair work and minority business that otherwise indicated to the Office of Historically Underutilized Business and interest in the type of work being bid or potential contracting opportunities listed in the proposal. The notification shall include the following:
a. A description of the work for which the bid is being solicited.
b. The date, time, and location where bids are to be submitted.
c. The name of the individual within the public entity who will be available to answer questions about the project.
d. Where bid documents may be reviewed.
e. Any special requirements that may exist.
4. Utilize other media, as appropriate, likely to inform potential minority businesses of the bid being sought.
5. A public entity shall require bidders to undertake the good faith efforts to the extent required by the Secretary of Administration on projects subject to this section. The Secretary shall adopt rules establishing points to be awarded for taking each effort and the minimum number of points required, depending on project size, cost, type, and other factors considered relevant by the Secretary. In establishing the point system, the Secretary may not require a contractor to earn more than fifty (50) points, and the Secretary must assign each of the efforts listed at least 10 points.
Contractor Requirements
In accord with the new law, contractors and first tier subcontractors must do the following:
1. Each bidder, on a project bid under any of the methods authorized under G.S. 143-128 (al) shall identify on its bid the minority businesses that it will use on the project and an affidavit listing the good faith efforts it has made and the total dollar value of the bid that will be performed by the minority
businesses.
2. The apparent lowest responsible, responsive bidder shall also file the following:
a. An affidavit that includes a description of the portion of work to be executed by minority businesses, expressed as a percentage of the Total contract price, which is equal to or more than the applicable goal. An affidavit shall give rise to a presumption that the bidder has made the required good faith effort.
b. Documentation of its good faith effort to meet the goal. The documentation must include evidence of all good faith efforts that were implemented, including any advertisements, solicitations, and evidence of other specific actions demonstrating recruitment and selection of minority business for participation in the contract.
c. Within 30 days after award of the contract, a list of all identified subcontractors that the contractor will use on the project. Failure to file a required affidavit or documentation that demonstrates that the contractor made the required good faith effort is grounds for rejection of the bid.
d. Good faith efforts as set forth in G.S. 143-131 (b) shall apply to the selection of a substitute subcontractor. Prior to substituting a subcontractor, the contractor shall identify the subcontractor and inform the public entity of its good faith efforts as set forth in G.S. 143-131 (b).
We believe we can incorporate all of the above requirements in the Town’s policy and procedures for bidding and awarding building construction contracts. We have already incorporated these efforts and steps into the Town’s procedures and are prepared to monitor good faith efforts required in the new law for contractors and first tier subcontractors. We recommend an amendment to the Town’s existing minority business policy and plan to add the requirements and efforts specified in the new law for both the Town and contractors.
The renovations currently planned for the Hargraves Recreation Center and A. D. Clark Pool and Bathhouse would be the Town’s first building construction project to come under the new law. Prior to soliciting the bids that have been issued for this project, we reviewed all the new requirements of this law for both the Town and for contractors, and have taken steps necessary to comply with provisions of the new law. We have updated our list of minority businesses for the project and have conveyed information to contractors regarding the required good faith efforts they must make in submitting bids for this project.
The attached resolution would amend the Town’s existing minority business participation policy to include the new requirements discussed above for the Town and contractors. In 1990, the Town adopted a verifiable percentage goal of 10% participation by minority business in building construction contracts. We believe this goal remains valid and realistic. Therefore, no change in our current 10% percentage goal is recommended.
That the Council adopt the attached resolution amending the Town’s policy for minority business participation in building construction contracts by adding the requirements and good faith efforts for the Town and contractors as specified in amendments to State purchasing laws adopted in November, 2001.
A RESOLUTION AMENDING THE TOWN’S POLICY AND PROCEDURES REGARDING PARTICIPATION BY MINORITY BUSINESSES IN THE AWARDING OF BUILDING CONSTRUCTION CONTRACTS (2002-02-25/R-7)
WHEREAS, the Chapel Hill Town Council established, by Resolution 90-3-6/R-2, a policy and verifiable percentage goal for participation by minority businesses in the awarding of building construction contracts; and
WHEREAS, the North Carolina General Assembly, in December 2001, enacted Chapter 496 of the 2001 Session Laws and modified several sections of State Law relating to bid and purchasing practices by local governments; and
WHEREAS, the amendments to State law enacted by the General Assembly in December, 2001, specify certain responsibilities that Local Governments are to assume regarding the recruitment of minority business participation in construction contracts, including:
1. Developing and implementing a minority business participation outreach plan to identify minority businesses that can perform public building projects and implement outreach efforts to encourage minority business participation in these projects.
2. Attending the scheduled pre-bid conferences.
3. At least 10 days prior to the scheduled day of bid opening, notifying minority business that have requested notices form the public entity for public building construction or repair work and minority business that otherwise indicated to the Office of Historically Underutilized Business and interest in the type of work being bid or potential contracting opportunities listed in the proposal. The notification shall include the following:
a. A description of the work for which the bid is being solicited.
b. The date, time, and location where bids are to be submitted.
c. The name of the individual within the public entity who will be available to answer questions about the project.
d. Where bid documents may be reviewed.
e. Any special requirements that may exist.
4. Utilizing other media, as appropriate, likely to inform potential minority businesses of the bid being sought.
5. Requiring bidders to undertake the good faith efforts to the extent required by the Secretary of Administration on projects subject to the new law.
NOW, THEREFORE, BE IT RESOLVED BY the Council of the Town of Chapel Hill as follows:
This the 25th day of February, 2002.