MURIEL BOWSER
MAYOR
February 27, 2024
The Honorable Phil Mendelson, Chairman
Council
of the District of Columbia
John
A. Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC 20004
Dear Chairman Mendelson:
Enclosed for consideration by the Council is the "Certified Business Enterprise Program
Compliance and Enforcement Support Emergency Declaration Resolution
of 2024", the
"Certified Business Enterprise Program Compliance and Enforcement Support Emergency
Amendment Act
of 2024" and the "Certified Business Enterprise Program Compliance and
Enforcement Support Temporary Amendment Act
of 2024."
The resolution and accompanying emergency and temporary bills close gaps in the District's
Certified Business Enterprise (CBE) Program
by making critical amendments to sections 2302,
2346, and 2363
of the Small and Certified Business Enterprise Development and Assistance Act
of 2005 ("the Act").
More specifically, these amendments will: (1) establish uniform hearing procedures for all
departmental enforcement actions before OAH; (2) expand the scope
of DSLBD's complaint
hotline for the public reporting
of issues beyond allegations of potential certified business
enterprise program fraud; (3) add penalties for any person that violates section 2363
of the Act;
( 4) increase the penalty for beneficiaries who fail
to show commercially reasonable best efforts
to meet required CBE subcontracting requirements; (5) establish minimwn periods
of
departmental suspensions and revocations for violations under the Act; and ( 6) expand the
statutory definition
of "beneficiary" to include non-profit entities, ensuring that all prime
contractors on government-assisted projects are subject
to the Act's CBE subcontracting and
reporting requirements.
These necessary, time-sensitive changes will allow the District to more effectively and
efficiently enforce the District's CBE compliance requirements.
I urge the Council
to take prompt and favorable action on the enclosed legislation. 1
2
3
4 ~~
A BILL
Chairman Phil Mendelson
at the request
of the Mayor
5
6
7
8 IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
9
10
11 To amend, on an emergency basis, the Small and Certified Business Enterprise Development and
12 Assistance Act of 2005 to establish uniform hearing procedures for enforcement actions
13 under the act, to expand the scope of the Department of Small and Local Business
14 Development's complaint hotline, to add penalties for any business enterprise that
15 violates section 2363 of the act, to increase the penalty for beneficiaries who fail to show
16 commercially reasonable best efforts to meet required certified business enterprise
17 subcontracting requirements, to include non-profit entities as beneficiaries subject to
18 certified business enterprise subcontracting and reporting requirements, and to establish
19 minimum and maximum periods of revocations for violations under the act.
20
21 BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this
22 act may be cited
as the "Certified Business Enterprise Program Compliance and Enforcement
23 Support Emergency Amendment Act of 2024".
24 Sec.
2. The Small and Certified Business Enterprise Development and Assistance Act of
25 2005, effective October 20, 2005 (D.C. Law 16-33; D.C. Official Code§ 2-218. 01 et seq.), is
26 amended as follows:
27 (a) Section 2302 (D.C. Official
Code§ 2-218.02) is amended as follows:
28 (1) Paragraph
(lB) is amended to read as follows:
29 " (lB) "Beneficiary" means a business enterprise, not-for-profit business, or other
30 person that
is the prime contractor or developer on a government-assisted project.".
31 (2) A new paragraph (9A) is added to read as follows: “(9A) “Formal complaint” means a complaint that is submitted to the Department 32
in writing, sworn to by the complainant, and notarized.”. 33
(3) A new paragraph (10A) is added to read as follows: 34
“(10A) “Informal complaint” means a complaint other than a formal complaint 35
and includes complaints submitted in person, by email, by tele phone, or through the 36
Department’s complaint hotline.”. 37
(4) Paragraph (13B) is redesignated as paragraph (13D). 38
(5) New paragraphs (13B) and (13C ) are added to read as follows: 39
“(13B) “Person” means any individual, firm, partnership, joint venture, general 40
partner of a partnership, limited liability company, registered limited liability partnership, foreign 41
limited liability partnership, association, corporation, unincorporated business, company, 42
syndicate, estate, trust, business trust, trustee, trustee in bankruptcy, receiver, executor, 43
administrator, assignee, fiduciary, or entity of any kind. 44
“(13C) “Principal office” means the location where the central operational, 45
financial, and recordkeeping functions of the business occur.”. 46
(b) Section 2363 (D.C. Official Code § 2- 218.63) is amended as follows: 47
(1) Subsection (a) is amended as follows: 48
(A) Paragraph (3) is amended as follows: 49
(i) Subparagraph (B) is amended by striking the word “city” and 50
inserting the phrase “District government” in its place. 51
(ii) Subparagraph (C) is amended as follows: 52
(I) Sub-subparagraph (i ii) is amended by striking the word 53
“Made” and inserting the phrase “Willfully made” in its place. 54 (II) Sub-subparagraph (iv) is amended to read as follows: 55
“(iv) Used a document that the person knows to contain a false 56
statement or entry; or”. 57
(III) A new sub -subparagraph (v) is added to read as 58
follows: 59
“(v) Willfully omitted a material fact in a submission to the 60
Department.”. 61
(iii) Subparagraph (H) is amended to read as follows: 62
“(H) Substantially failed to operate and manage a certified joint venture in 63
accordance with section 2339; provided, that: 64
“(i) There shall be a rebuttable presumption that the failure to 65
operate and manage the joint venture in accordance with the joint venture application was the 66
parties’ intent; and 67
“(ii) If the joint venture demonstrates that the failure to operate and 68
manage the joint venture in accordance with the joint venture application was necessary due to 69
unforeseen business or operational issues, the failure shall not be a violation of this act.”. 70
(iv) Subparagraph (I) is amended by striking the word “submits” 71
and inserting the word “submitted” in its place. 72
(v) Subparagraph (J) is amended by striking the period at the end 73
and inserting the phrase “; or” in its place. 74
(B) A new paragraph (4) is added to read as follows: 75
“(4) A business enterprise: 76 “(A) Willfully obstructed or impeded, or attempted to obstruct or impede, 77
a District government official or employee investigating the qualifications of a business 78
enterprise that has requested certification; or 79
“(B) In any certified business enterprise matter administered under this 80
act: 81
“(i) Fraudulently obtained, attempted to obtain, or aided another 82
person in fraudulently obtaining or attempting to obtain, public moneys to which the person is 83
not entitled; 84
“(ii) Willfully falsified, concealed, or covered up a material fact by 85
any scheme or device; 86
“(iii) Willfully made a materially false statement or representation; 87
“(iv) Used a document that the business enterprise knows to 88
contain a false statement or entry; or 89
“(v) Willfully omitted a material fact in a submission to the 90
Department.”. 91
(2) Subsection (b) is amended by striking the phrase “an individual or business” 92
and inserting the phrase “a person” in its place. 93
(3) Subsection (c) is amended as follows: 94
(A) The lead-in language is amended to read as follows: 95
“(c) If the Department determines, in accordance with procedures set forth in subsection 96
(g) of this section, that a person:”. 97
(B) Paragraph (1)(C) is amended as follows: 98
(i) Sub-subparagraph (i) is amended to read as follows: 99 “(i) Assess a civil penalty of not more than $25,000 for the third 100
and any subsequent offense.”. 101
(ii) Sub-subparagraph (ii) is repealed. 102
(C) Paragraph (2) is amended to read as follows: 103
“(2) Has committed a violation of subsection (a)(2) or (a)(3) of this section and is 104
a certified business enterprise or certified joint venture, the Department shall suspend or revoke 105
its certification;”. 106
(D) Paragraph (3) is repealed. 107
(E) Paragraph (4) is amended as follows: 108
(i) Strike the word “reasonably” and insert the word “reasonable” 109
in its place. 110
(ii) Strike the phrase “10% of the dollar volume of the contract that 111
the beneficiary or certified joint venture was required but failed to subcontract.” and insert the 112
phrase “the difference between the dollar volume the beneficiary or certified joint venture was 113
required to subcontract to certified business enterprises under section 2346 and the actual dollar 114
volume subcontracted to certified business enterprises.” in its place. 115
(iii) Strike the phrase “; and” and insert a semicolon in its place. 116
(F) Paragraph (5) is amended by striking the period at the end and 117
inserting the phrase “; and” in its place. 118
(G) A new paragraph (6) is added to read as follows: 119
“(6) Ceases to meet the requirements of a particular category of certification and 120
is a certified business enterprise, the Department may change the business enterprise’s certificate 121
of registration by removing the category of certification for which the business enterprise no 122 longer meets the requirements of certification; provided, that this paragraph shall not apply if a 123
certified business enterprise ceases to qualify as a local business enterprise.”. 124
(4) New subsections (d- 1) and (d-2) are added to read as follows: 125
“(d-1) The Department may refer matters to the Office of Contracting and Procurement, 126
including matters involving agencies not subject to the Office of Contracting and Procurement’s 127
authority pursuant to section 201(b) of the Procurement Practices Reform Act of 2010, effective 128
April 8, 2011 (D.C. Law 18- 371; D.C. Official Code § 2- 352.01(b)), for investigation. If the 129
Office of Contracting and Procurement through its hearing procedures determines that a 130
beneficiary, business enterprise, or certified joint venture has committed more than 2 violations 131
of subsection (a)(1) of this section, or any violations of subsections (a)(3) or (a)(4) of this 132
section, the beneficiary, business enterprise, or certified joint venture shall be: 133
“(1) Debarred from consideration of award of contracts or subcontracts with the 134
District government for a period of no more than 5 years; and 135
“(2) Deemed ineligible from consideration for government-assisted projects with 136
the District government for a period of no more than 5 years. 137
“(d-2) The Department may refer any suspected violation of subsection (a)(3) or (a)(4) of 138
this section to the Attorney General for the District of Columbia, who may bring a civil action in 139
the Superior Court of the District of Columbia against any person, including the directors or 140
officers of a business enterprise, alleged to have committed the violation. A person alleged to 141
have violated subsection (a)(3) or (a)(4) of this section shall be subject to civil penalties of 142
$100,000, or triple the profit earned by the person on all contracts awarded, whichever is greater. 143
If the Department does not refer the violation to the Attorney General or if the Attorney General 144 does not timely bring an action following a referral, the Department may assess a fine in 145
accordance with subsection (c) of this section.”. 146
(5) Subsection (e) is amended as follows: 147
(A) Paragraphs (1) through (3) are amended to read as follows: 148
“(1) Any person may file with the Department a formal or informal complaint 149
alleging a violation of this act. The Department shall maintain a hotline for the filing of informal 150
complaints. 151
“(2) The Department shall investigate each formal or informal complaint filed 152
with it, except as provided in paragraph (3) of this subsection. 153
“(3) The Department may dismiss a complaint without conducting an 154
investigation if the Department determines the complaint is f rivolous or otherwise without merit. 155
If the Department dismisses a formal complaint as frivolous or otherwise without merit, the 156
Department shall prepare a report documenting the following: 157
“(A) A statement detailing the formal complaint, including the name, 158
address, and telephone number of the person filing the complaint; 159
“(B) The name of the person or certified joint venture alleged to be in 160
violation of this act ; 161
“(C) The facts and law considered in rendering the determination; and 162
“(D) Any other information considered in rendering the determination.”. 163
(B) Paragraph (4) is repealed. 164
(C) New paragraphs (5) and (6) are added to read as follows: 165
“(5) After the completion of an investigation conducted pursuant to this 166
subsection, the Department shall take such enforcement action, if any, as it deems appropriate. 167 “(6) The Department shall maintain a record listing all formal complaints, which 168
shall contain the following information: 169
“(A) The name of the person alleged to be in violation of this act; 170
“(B) The date the formal complaint was made to the Department; and 171
“(C) A description of the formal complaint. ”. 172
(6) Subsection (f) is repealed. 173
(7) Subsection (g) is amended to read as follows: 174
“(g)(1) Except as provided in paragraph (8) of this subsection, before issuing a civil 175
penalty to, or denying, suspending, changing, or revoking a certification of, a person or a 176
certified joint venture, the Department shall issue a notice of determination to the person or 177
certified joint venture. The notice of determination shall describe the basis for the Department’s 178
determination; the proposed penalty , if any; and the process and timeline by which the person or 179
certified joint venture may request a hearing. 180
“(2) The person or designated representative on behalf of a certified joint venture 181
may request a hearing before the Office of Administrative Hearings, pursuant to paragraph (3) of 182
this subsection, within 10 calendar days after receiving the notice. If the person or certified joint 183
venture does not request a hearing within that time, the civil penalty, denial, suspension, change, 184
or revocation shall become final, and the person or certified joint venture shall be deemed to 185
have waived the opportunity for judicial review. 186
“(3) If a hearing is requested, the Office of Administrative Hearings shall consider 187
the matter pursuant to the provisions of the Office of Administrative Hearings Establishment Act 188
of 2001, effective March 6, 2002 (D.C. Law 14- 76; D.C. Official Code § 2 -1831.16.), and the 189 rules promulgated thereunder . The Department shall bear the burden of establishing the 190
violation by a preponderance of the evidence. 191
“(4) The decision of the Office of Administrative Hearings shall be the final 192
administrative decision for purpose of judicial review. 193
“(5) Notice of a final suspension or revocation of a certification shall be published 194
on the Department’s website. 195
“(6) A business enterprise or joint venture whose certification has been revoked 196
shall not be eligible to apply for a new certification from the Department until 36 months after 197
the date that the revocation became final. 198
“(7) The Department may at any time, upon motion by a business enterprise or 199
joint venture whose certification has been suspended or revoked, remove the suspension or 200
reissue a certification, if the Department determines that it is in the District government's interest 201
to remove the suspension or reissue the certification before the end of the 36-month period and 202
such removal or reissuance does not endanger the health, safety, or welfare of the general public. 203
In determining whether to remov e a suspension or reissuance a certification, the Department 204
shall consider in part whether the business enterprise or joint venture submitted satisfactory 205
proof that conditions within, or actions by, the business enterprise or joint venture that led to the 206
suspension or revocation have been corrected. A business enterprise or joint venture whose 207
certification is reissued shall cease to be subject to the 36-month waiting period established in 208
paragraph (5) of this subsection. 209
“(8) If, after an investigation, the Department determines that a business 210
enterprise or joint venture certified under this act has violated any provision of this act in such a 211
manner as to present an imminent danger to the health, safety, or welfare of any person or the 212 general public, the Department may summarily suspend the certification of the business 213
enterprise or joint venture upon issuing the notice of determination described in paragraph (1) of 214
this subsection. The notice of determination shall inform the business enterprise or joint venture 215
of the reason for the summary suspension and the right to request a hearing before the Office of 216
Administrative Hearings pursuant to paragraph (1) of this subsection. If a business enterprise or 217
joint venture timely requests a hearing on a summary suspension, the Office of Administrative 218
Hearings shall conduct the hearing within 14 days after receiving the request, unless a longer 219
period of time is agreed to by the business enterprise or joint venture, and shall issue a decision 220
within 14 days after the record for the hearing closes.”. 221
(c) Section 2375(c)(2) (D.C. Official Code § 2- 218.75(c)(2)) is amended by striking the 222
phrase “pursuant to section 2363(c)” and inserting the phrase “pursuant to section 2363(d- 2)” in 223
its place. 224
Sec. 3. Fiscal i mpact s tatement. 225
The Council adopts the fiscal impact statement in the committee report as the fiscal 226
impact statement required by section 4a of the General Legislative Procedures Act of 1975, 227
approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1- 301.47a). 228
Sec. 4. Effective date. 229
The act shall take effect following approval by the Mayor (or in the event of veto by the 230
Mayor, action by the Council to override the veto), a 30- day period of congressional review as 231
provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 232
24, 1973 (87 Stat. 813; D.C. Official Code § 1- 206.02(c)(1)), and publication in the District of 233
Columbia Register. 234 2
GOVERNMENT OF THE DISTRICT OF COLUMBIA
O
FFICE OF THE ATTORNEY GENERAL
BRIAN L. SCHWALB
ATTORNEY GENERAL
LEGAL COUNSEL DIVISION
MEMORANDUM
TO: T ommy Wells
Director
Office of Policy and Legislative Affairs
FROM: Megan D. Browder
Deputy Attorney General
Legal Counsel Division
DATE: September 5, 2023
SUBJECT: Legal Sufficiency Review – Draft “ Certified Business Enterprise Program
Compliance and Enforcement Support Emergency Amendment Act of 2023,”
“Certified Business Enterprise Program Compliance and Enforcement Support
Temporary Amendment Act of 2023,” and “Certified Business Enterprise Program
Compliance and Enforcement Support Emergency Declaration Resolution of 2023”
(AE-23-284)
_____________________________________________________________________________________
This is to Certify that this Office has reviewed the above- referenced draft
legislation and found it to be legally sufficient. If you have any questions in this regard, please do
not hesitate to call me at (202) 724-5524.
_________________________________ M
egan D. Browder