| 1 | 1 | | MURIEL BOWSER |
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| 2 | 2 | | MAYOR |
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| 3 | 3 | | February 27, 2024 |
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| 4 | 4 | | The Honorable Phil Mendelson, Chairman |
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| 5 | 5 | | Council |
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| 6 | 6 | | of the District of Columbia |
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| 7 | 7 | | John |
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| 8 | 8 | | A. Wilson Building |
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| 9 | 9 | | 1350 Pennsylvania A venue, NW |
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| 10 | 10 | | Washington, DC 20004 |
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| 11 | 11 | | Dear Chairman Mendelson: |
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| 12 | 12 | | Enclosed for consideration |
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| 13 | 13 | | by the Council is the "Certified Business Enterprise Program |
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| 14 | 14 | | Compliance and Enforcement Support Emergency Declaration Resolution |
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| 15 | 15 | | of 2024", the |
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| 16 | 16 | | "Certified Business Enterprise Program Compliance and Enforcement Support Emergency |
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| 17 | 17 | | Amendment Act |
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| 18 | 18 | | of 2024" and the "Certified Business Enterprise Program Compliance and |
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| 19 | 19 | | Enforcement Support Temporary Amendment Act |
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| 20 | 20 | | of 2024." |
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| 21 | 21 | | The resolution and accompanying emergency and temporary bills close gaps in the District's |
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| 22 | 22 | | Certified Business Enterprise (CBE) Program |
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| 23 | 23 | | by making critical amendments to sections 2302, |
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| 24 | 24 | | 2346, and 2363 |
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| 25 | 25 | | of the Small and Certified Business Enterprise Development and Assistance Act |
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| 26 | 26 | | of 2005 ("the Act"). |
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| 27 | 27 | | More specifically, these amendments will: (1) establish uniform hearing procedures for all |
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| 28 | 28 | | departmental enforcement actions before OAH; (2) expand the scope |
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| 29 | 29 | | of DSLBD's complaint |
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| 30 | 30 | | hotline for the public reporting |
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| 31 | 31 | | of issues beyond allegations of potential certified business |
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| 32 | 32 | | enterprise program fraud; (3) add penalties for any person that violates section 2363 |
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| 33 | 33 | | of the Act; |
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| 34 | 34 | | ( 4) increase the penalty for beneficiaries who fail |
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| 35 | 35 | | to show commercially reasonable best efforts |
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| 36 | 36 | | to meet required CBE subcontracting requirements; (5) establish minimum periods |
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| 37 | 37 | | of |
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| 38 | 38 | | departmental suspensions and revocations for violations under the Act; and (6) expand the |
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| 39 | 39 | | statutory definition |
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| 40 | 40 | | of "beneficiary" to include non-profit entities, ensuring that all prime |
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| 41 | 41 | | contractors on government-assisted projects are subject to the |
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| 42 | 42 | | Act's CBE subcontracting and |
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| 43 | 43 | | reporting requirements. |
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| 44 | 44 | | These necessary, time-sensitive changes will allow the District |
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| 45 | 45 | | to more effectively and |
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| 46 | 46 | | efficiently enforce the District's CBE compliance requirements. |
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| 47 | 47 | | I urge the Council to take prompt and favorable action on the enclosed legislation. 1 |
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| 48 | 48 | | 2 |
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| 49 | 49 | | 3 |
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| 50 | 50 | | 4 ~~ |
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| 51 | 51 | | 5 |
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| 52 | 52 | | 6 |
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| 53 | 53 | | 7 |
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| 54 | 54 | | A BILL |
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| 55 | 55 | | Chairman Phil Mendelson |
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| 56 | 56 | | at the request |
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| 57 | 57 | | of the Mayor |
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| 58 | 58 | | 8 IN THE COUNCIL OF THE DISTRICT OF COLUMBIA |
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| 59 | 59 | | 9 |
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| 60 | 60 | | 10 |
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| 61 | 61 | | 11 To amend, on an emergency basis, the Small and Certified Business Enterprise Development and |
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| 62 | 62 | | 12 Assistance Act of 2005 to establish uniform hearing procedures for enforcement actions |
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| 63 | 63 | | 13 under the act, to expand the scope of the Department of Small and Local Business |
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| 64 | 64 | | 14 Development's complaint hotline, to add penalties for any business enterprise that |
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| 65 | 65 | | 15 violates section 2363 of the act, to increase the penalty for beneficiaries who fail to show |
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| 66 | 66 | | 16 commercially reasonable best efforts to meet required certified business enterprise |
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| 67 | 67 | | 17 subcontracting requirements, to include non-profit entities as beneficiaries subject to |
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| 68 | 68 | | 18 certified business enterprise subcontracting and reporting requirements, and to establish |
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| 69 | 69 | | 19 minimum and maximum periods of revocations for violations under the act. |
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| 70 | 70 | | 20 |
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| 71 | 71 | | 21 BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this |
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| 72 | 72 | | 22 act may be cited |
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| 73 | 73 | | as the "Certified Business Enterprise Program Compliance and Enforcement |
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| 74 | 74 | | 23 Support Emergency Amendment Act of 2024". |
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| 75 | 75 | | 24 Sec. |
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| 76 | 76 | | 2. The Small and Certified Business Enterprise Development and Assistance Act of |
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| 77 | 77 | | 25 2005, effective October 20, 2005 (D.C. Law 16-33; D.C. Official Code§ 2-218.01 et seq.), is |
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| 78 | 78 | | 26 amended as follows: |
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| 79 | 79 | | 27 (a) Section 2302 (D.C. Official |
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| 80 | 80 | | Code§ 2-218.02) is amended as follows: |
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| 81 | 81 | | 28 (1) Paragraph |
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| 82 | 82 | | (lB) is amended to read as follows: |
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| 83 | 83 | | 29 " |
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| 84 | 84 | | (lB) "Beneficiary" means a business enterprise, not-for-profit business, or other |
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| 85 | 85 | | 30 person that |
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| 86 | 86 | | is the prime contractor or developer on a government-assisted project.". |
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| 87 | 87 | | 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 |
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| 88 | 88 | | in writing, sworn to by the complainant, and notarized.”. 33 |
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| 89 | 89 | | (3) A new paragraph (10A) is added to read as follows: 34 |
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| 90 | 90 | | “(10A) “Informal complaint” means a complaint other than a formal complaint 35 |
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| 91 | 91 | | and includes complaints submitted in person, by email, by tele phone, or through the 36 |
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| 92 | 92 | | Department’s complaint hotline.”. 37 |
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| 93 | 93 | | (4) Paragraph (13B) is redesignated as paragraph (13D). 38 |
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| 94 | 94 | | (5) New paragraphs (13B) and (13C ) are added to read as follows: 39 |
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| 95 | 95 | | “(13B) “Person” means any individual, firm, partnership, joint venture, general 40 |
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| 96 | 96 | | partner of a partnership, limited liability company, registered limited liability partnership, foreign 41 |
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| 97 | 97 | | limited liability partnership, association, corporation, unincorporated business, company, 42 |
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| 98 | 98 | | syndicate, estate, trust, business trust, trustee, trustee in bankruptcy, receiver, executor, 43 |
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| 99 | 99 | | administrator, assignee, fiduciary, or entity of any kind. 44 |
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| 100 | 100 | | “(13C) “Principal office” means the location where the central operational, 45 |
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| 101 | 101 | | financial, and recordkeeping functions of the business occur.”. 46 |
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| 102 | 102 | | (b) Section 2363 (D.C. Official Code § 2- 218.63) is amended as follows: 47 |
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| 103 | 103 | | (1) Subsection (a) is amended as follows: 48 |
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| 104 | 104 | | (A) Paragraph (3) is amended as follows: 49 |
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| 105 | 105 | | (i) Subparagraph (B) is amended by striking the word “city” and 50 |
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| 106 | 106 | | inserting the phrase “District government” in its place. 51 |
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| 107 | 107 | | (ii) Subparagraph (C) is amended as follows: 52 |
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| 108 | 108 | | (I) Sub-subparagraph (i ii) is amended by striking the word 53 |
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| 109 | 109 | | “Made” and inserting the phrase “Willfully made” in its place. 54 (II) Sub-subparagraph (iv) is amended to read as follows: 55 |
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| 110 | 110 | | “(iv) Used a document that the person knows to contain a false 56 |
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| 111 | 111 | | statement or entry; or”. 57 |
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| 112 | 112 | | (III) A new sub -subparagraph (v) is added to read as 58 |
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| 113 | 113 | | follows: 59 |
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| 114 | 114 | | “(v) Willfully omitted a material fact in a submission to the 60 |
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| 115 | 115 | | Department.”. 61 |
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| 116 | 116 | | (iii) Subparagraph (H) is amended to read as follows: 62 |
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| 117 | 117 | | “(H) Substantially failed to operate and manage a certified joint venture in 63 |
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| 118 | 118 | | accordance with section 2339; provided, that: 64 |
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| 119 | 119 | | “(i) There shall be a rebuttable presumption that the failure to 65 |
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| 120 | 120 | | operate and manage the joint venture in accordance with the joint venture application was the 66 |
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| 121 | 121 | | parties’ intent; and 67 |
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| 122 | 122 | | “(ii) If the joint venture demonstrates that the failure to operate and 68 |
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| 123 | 123 | | manage the joint venture in accordance with the joint venture application was necessary due to 69 |
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| 124 | 124 | | unforeseen business or operational issues, the failure shall not be a violation of this act.”. 70 |
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| 125 | 125 | | (iv) Subparagraph (I) is amended by striking the word “submits” 71 |
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| 126 | 126 | | and inserting the word “submitted” in its place. 72 |
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| 127 | 127 | | (v) Subparagraph (J) is amended by striking the period at the end 73 |
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| 128 | 128 | | and inserting the phrase “; or” in its place. 74 |
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| 129 | 129 | | (B) A new paragraph (4) is added to read as follows: 75 |
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| 130 | 130 | | “(4) A business enterprise: 76 “(A) Willfully obstructed or impeded, or attempted to obstruct or impede, 77 |
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| 131 | 131 | | a District government official or employee investigating the qualifications of a business 78 |
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| 132 | 132 | | enterprise that has requested certification; or 79 |
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| 133 | 133 | | “(B) In any certified business enterprise matter administered under this 80 |
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| 134 | 134 | | act: 81 |
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| 135 | 135 | | “(i) Fraudulently obtained, attempted to obtain, or aided another 82 |
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| 136 | 136 | | person in fraudulently obtaining or attempting to obtain, public moneys to which the person is 83 |
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| 137 | 137 | | not entitled; 84 |
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| 138 | 138 | | “(ii) Willfully falsified, concealed, or covered up a material fact by 85 |
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| 139 | 139 | | any scheme or device; 86 |
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| 140 | 140 | | “(iii) Willfully made a materially false statement or representation; 87 |
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| 141 | 141 | | “(iv) Used a document that the business enterprise knows to 88 |
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| 142 | 142 | | contain a false statement or entry; or 89 |
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| 143 | 143 | | “(v) Willfully omitted a material fact in a submission to the 90 |
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| 144 | 144 | | Department.”. 91 |
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| 145 | 145 | | (2) Subsection (b) is amended by striking the phrase “an individual or business” 92 |
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| 146 | 146 | | and inserting the phrase “a person” in its place. 93 |
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| 147 | 147 | | (3) Subsection (c) is amended as follows: 94 |
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| 148 | 148 | | (A) The lead-in language is amended to read as follows: 95 |
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| 149 | 149 | | “(c) If the Department determines, in accordance with procedures set forth in subsection 96 |
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| 150 | 150 | | (g) of this section, that a person:”. 97 |
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| 151 | 151 | | (B) Paragraph (1)(C) is amended as follows: 98 |
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| 152 | 152 | | (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 |
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| 153 | 153 | | and any subsequent offense.”. 101 |
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| 154 | 154 | | (ii) Sub-subparagraph (ii) is repealed. 102 |
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| 155 | 155 | | (C) Paragraph (2) is amended to read as follows: 103 |
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| 156 | 156 | | “(2) Has committed a violation of subsection (a)(2) or (a)(3) of this section and is 104 |
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| 157 | 157 | | a certified business enterprise or certified joint venture, the Department shall suspend or revoke 105 |
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| 158 | 158 | | its certification;”. 106 |
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| 159 | 159 | | (D) Paragraph (3) is repealed. 107 |
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| 160 | 160 | | (E) Paragraph (4) is amended as follows: 108 |
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| 161 | 161 | | (i) Strike the word “reasonably” and insert the word “reasonable” 109 |
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| 162 | 162 | | in its place. 110 |
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| 163 | 163 | | (ii) Strike the phrase “10% of the dollar volume of the contract that 111 |
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| 164 | 164 | | the beneficiary or certified joint venture was required but failed to subcontract.” and insert the 112 |
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| 165 | 165 | | phrase “the difference between the dollar volume the beneficiary or certified joint venture was 113 |
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| 166 | 166 | | required to subcontract to certified business enterprises under section 2346 and the actual dollar 114 |
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| 167 | 167 | | volume subcontracted to certified business enterprises.” in its place. 115 |
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| 168 | 168 | | (iii) Strike the phrase “; and” and insert a semicolon in its place. 116 |
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| 169 | 169 | | (F) Paragraph (5) is amended by striking the period at the end and 117 |
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| 170 | 170 | | inserting the phrase “; and” in its place. 118 |
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| 171 | 171 | | (G) A new paragraph (6) is added to read as follows: 119 |
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| 172 | 172 | | “(6) Ceases to meet the requirements of a particular category of certification and 120 |
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| 173 | 173 | | is a certified business enterprise, the Department may change the business enterprise’s certificate 121 |
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| 174 | 174 | | 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 |
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| 175 | 175 | | certified business enterprise ceases to qualify as a local business enterprise.”. 124 |
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| 176 | 176 | | (4) New subsections (d- 1) and (d-2) are added to read as follows: 125 |
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| 177 | 177 | | “(d-1) The Department may refer matters to the Office of Contracting and Procurement, 126 |
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| 178 | 178 | | including matters involving agencies not subject to the Office of Contracting and Procurement’s 127 |
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| 179 | 179 | | authority pursuant to section 201(b) of the Procurement Practices Reform Act of 2010, effective 128 |
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| 180 | 180 | | April 8, 2011 (D.C. Law 18- 371; D.C. Official Code § 2- 352.01(b)), for investigation. If the 129 |
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| 181 | 181 | | Office of Contracting and Procurement through its hearing procedures determines that a 130 |
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| 182 | 182 | | beneficiary, business enterprise, or certified joint venture has committed more than 2 violations 131 |
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| 183 | 183 | | of subsection (a)(1) of this section, or any violations of subsections (a)(3) or (a)(4) of this 132 |
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| 184 | 184 | | section, the beneficiary, business enterprise, or certified joint venture shall be: 133 |
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| 185 | 185 | | “(1) Debarred from consideration of award of contracts or subcontracts with the 134 |
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| 186 | 186 | | District government for a period of no more than 5 years; and 135 |
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| 187 | 187 | | “(2) Deemed ineligible from consideration for government-assisted projects with 136 |
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| 188 | 188 | | the District government for a period of no more than 5 years. 137 |
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| 189 | 189 | | “(d-2) The Department may refer any suspected violation of subsection (a)(3) or (a)(4) of 138 |
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| 190 | 190 | | this section to the Attorney General for the District of Columbia, who may bring a civil action in 139 |
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| 191 | 191 | | the Superior Court of the District of Columbia against any person, including the directors or 140 |
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| 192 | 192 | | officers of a business enterprise, alleged to have committed the violation. A person alleged to 141 |
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| 193 | 193 | | have violated subsection (a)(3) or (a)(4) of this section shall be subject to civil penalties of 142 |
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| 194 | 194 | | $100,000, or triple the profit earned by the person on all contracts awarded, whichever is greater. 143 |
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| 195 | 195 | | 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 |
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| 196 | 196 | | accordance with subsection (c) of this section.”. 146 |
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| 197 | 197 | | (5) Subsection (e) is amended as follows: 147 |
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| 198 | 198 | | (A) Paragraphs (1) through (3) are amended to read as follows: 148 |
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| 199 | 199 | | “(1) Any person may file with the Department a formal or informal complaint 149 |
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| 200 | 200 | | alleging a violation of this act. The Department shall maintain a hotline for the filing of informal 150 |
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| 201 | 201 | | complaints. 151 |
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| 202 | 202 | | “(2) The Department shall investigate each formal or informal complaint filed 152 |
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| 203 | 203 | | with it, except as provided in paragraph (3) of this subsection. 153 |
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| 204 | 204 | | “(3) The Department may dismiss a complaint without conducting an 154 |
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| 205 | 205 | | investigation if the Department determines the complaint is f rivolous or otherwise without merit. 155 |
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| 206 | 206 | | If the Department dismisses a formal complaint as frivolous or otherwise without merit, the 156 |
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| 207 | 207 | | Department shall prepare a report documenting the following: 157 |
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| 208 | 208 | | “(A) A statement detailing the formal complaint, including the name, 158 |
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| 209 | 209 | | address, and telephone number of the person filing the complaint; 159 |
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| 210 | 210 | | “(B) The name of the person or certified joint venture alleged to be in 160 |
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| 211 | 211 | | violation of this act ; 161 |
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| 212 | 212 | | “(C) The facts and law considered in rendering the determination; and 162 |
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| 213 | 213 | | “(D) Any other information considered in rendering the determination.”. 163 |
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| 214 | 214 | | (B) Paragraph (4) is repealed. 164 |
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| 215 | 215 | | (C) New paragraphs (5) and (6) are added to read as follows: 165 |
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| 216 | 216 | | “(5) After the completion of an investigation conducted pursuant to this 166 |
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| 217 | 217 | | 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 |
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| 218 | 218 | | shall contain the following information: 169 |
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| 219 | 219 | | “(A) The name of the person alleged to be in violation of this act; 170 |
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| 220 | 220 | | “(B) The date the formal complaint was made to the Department; and 171 |
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| 221 | 221 | | “(C) A description of the formal complaint. ”. 172 |
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| 222 | 222 | | (6) Subsection (f) is repealed. 173 |
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| 223 | 223 | | (7) Subsection (g) is amended to read as follows: 174 |
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| 224 | 224 | | “(g)(1) Except as provided in paragraph (8) of this subsection, before issuing a civil 175 |
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| 225 | 225 | | penalty to, or denying, suspending, changing, or revoking a certification of, a person or a 176 |
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| 226 | 226 | | certified joint venture, the Department shall issue a notice of determination to the person or 177 |
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| 227 | 227 | | certified joint venture. The notice of determination shall describe the basis for the Department’s 178 |
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| 228 | 228 | | determination; the proposed penalty , if any; and the process and timeline by which the person or 179 |
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| 229 | 229 | | certified joint venture may request a hearing. 180 |
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| 230 | 230 | | “(2) The person or designated representative on behalf of a certified joint venture 181 |
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| 231 | 231 | | may request a hearing before the Office of Administrative Hearings, pursuant to paragraph (3) of 182 |
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| 232 | 232 | | this subsection, within 10 calendar days after receiving the notice. If the person or certified joint 183 |
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| 233 | 233 | | venture does not request a hearing within that time, the civil penalty, denial, suspension, change, 184 |
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| 234 | 234 | | or revocation shall become final, and the person or certified joint venture shall be deemed to 185 |
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| 235 | 235 | | have waived the opportunity for judicial review. 186 |
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| 236 | 236 | | “(3) If a hearing is requested, the Office of Administrative Hearings shall consider 187 |
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| 237 | 237 | | the matter pursuant to the provisions of the Office of Administrative Hearings Establishment Act 188 |
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| 238 | 238 | | 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 |
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| 239 | 239 | | violation by a preponderance of the evidence. 191 |
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| 240 | 240 | | “(4) The decision of the Office of Administrative Hearings shall be the final 192 |
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| 241 | 241 | | administrative decision for purpose of judicial review. 193 |
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| 242 | 242 | | “(5) Notice of a final suspension or revocation of a certification shall be published 194 |
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| 243 | 243 | | on the Department’s website. 195 |
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| 244 | 244 | | “(6) A business enterprise or joint venture whose certification has been revoked 196 |
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| 245 | 245 | | shall not be eligible to apply for a new certification from the Department until 36 months after 197 |
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| 246 | 246 | | the date that the revocation became final. 198 |
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| 247 | 247 | | “(7) The Department may at any time, upon motion by a business enterprise or 199 |
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| 248 | 248 | | joint venture whose certification has been suspended or revoked, remove the suspension or 200 |
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| 249 | 249 | | reissue a certification, if the Department determines that it is in the District government's 201 |
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| 250 | 250 | | interest to remove the suspension or reissue the certification before the end of the 36- month 202 |
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| 251 | 251 | | period and such removal or reissuance does not endanger the health, safety, or welfare of the 203 |
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| 252 | 252 | | general public. In determining whether to remov e a suspension or reissuance a certification, the 204 |
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| 253 | 253 | | Department shall consider in part whether the business enterprise or joint venture submitted 205 |
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| 254 | 254 | | satisfactory proof that conditions within, or actions by, the business enterprise or joint venture 206 |
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| 255 | 255 | | that led to the suspension or revocation have been corrected. A business enterprise or joint 207 |
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| 256 | 256 | | venture whose certification is reissued shall cease to be subject to the 36-month waiting period 208 |
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| 257 | 257 | | established in paragraph (5) of this subsection. 209 |
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| 258 | 258 | | “(8) If, after an investigation, the Department determines that a business 210 |
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| 259 | 259 | | enterprise or joint venture certified under this act has violated any provision of this act in such a 211 |
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| 260 | 260 | | 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 |
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| 261 | 261 | | enterprise or joint venture upon issuing the notice of determination described in paragraph (1) of 214 |
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| 262 | 262 | | this subsection. The notice of determination shall inform the business enterprise or joint venture 215 |
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| 263 | 263 | | of the reason for the summary suspension and the right to request a hearing before the Office of 216 |
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| 264 | 264 | | Administrative Hearings pursuant to paragraph (1) of this subsection. If a business enterprise or 217 |
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| 265 | 265 | | joint venture timely requests a hearing on a summary suspension, the Office of Administrative 218 |
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| 266 | 266 | | Hearings shall conduct the hearing within 14 days after receiving the request, unless a longer 219 |
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| 267 | 267 | | period of time is agreed to by the business enterprise or joint venture, and shall issue a decision 220 |
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| 268 | 268 | | within 14 days after the record for the hearing closes.”. 221 |
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| 269 | 269 | | (c) Section 2375(c)(2) (D.C. Official Code § 2- 218.75(c)(2)) is amended by striking the 222 |
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| 270 | 270 | | phrase “pursuant to section 2363(c)” and inserting the phrase “pursuant to section 2363(d- 2)” in 223 |
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| 271 | 271 | | its place. 224 |
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| 272 | 272 | | Sec. 3. Fiscal i mpact s tatement. 225 |
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| 273 | 273 | | The Council adopts the fiscal impact statement in the committee report as the fiscal 226 |
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| 274 | 274 | | impact statement required by section 4a of the General Legislative Procedures Act of 1975, 227 |
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| 275 | 275 | | approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1- 301.47a). 228 |
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| 276 | 276 | | Sec. 4. Effective date. 229 |
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| 277 | 277 | | The act shall take effect following approval by the Mayor (or in the event of veto by the 230 |
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| 278 | 278 | | Mayor, action by the Council to override the veto), a 30- day period of congressional review as 231 |
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| 279 | 279 | | provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 232 |
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| 280 | 280 | | 24, 1973 (87 Stat. 813; D.C. Official Code § 1- 206.02(c)(1)), and publication in the District of 233 |
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| 281 | 281 | | Columbia Register. 234 |
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