Session of 2024
SENATE BILL No. 464
By Senator Faust Goudeau
2-6
AN ACT creating the Kansas minority, woman, disadvantaged and
service-disabled veteran small business enterprise development act;
providing for development of such business enterprises through a
program to facilitate and increase participation by such business
enterprises in providing goods and services to state agencies and
postsecondary educational institutions; establishing the office of
minority and women business development within the department of
commerce to develop such program and assist state agencies and
postsecondary educational institutions to establish plans and goals for
such participation; providing for an advisory committee on certified
small business enterprises that may be established by the assistant
director of such office; authorizing the adoption of rules and
regulations; providing for penalties for violations of the provisions of
the act or rules and regulations adopted pursuant to the act.
Be it enacted by the Legislature of the State of Kansas:
Section 1. Sections 1 through 12, and amendments thereto, shall be
known and may be cited as the Kansas minority, woman, disadvantaged
and service-disabled veteran small business enterprise development act.
Sec. 2. As used in this act:
(a) "Affiliate or division of a larger business" or "affiliate" means two
or more business entities or concerns in which one controls or has the
power to control the other. "Affiliate" status shall be determined by the
assistant director upon consideration of the factors set forth by the small
business administration in 13 C.F.R. § 121.103.
(b) "Airport concession disadvantaged business enterprise" means a
concession that:
(1) Is at least 51%-owned by one or more individuals who are United
States citizens or lawful permanent residents and who are both socially and
economically disadvantaged or, if organized as a corporation, at least 51%
of the stock is owned by one or more such individuals;
(2) has management and daily business operations controlled by one
or more of such socially and economically disadvantaged individuals
specified in paragraph (1);
(3) meets United States department of transportation size standards
for a small business eligible to be certified as an airport concession
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disadvantaged business enterprise pursuant to 49 C.F.R. § 23.33, including
size standards applicable to any affiliate;
(4) is an independent and viable for-profit business as determined by
the assistant director;
(5) has a real and substantial presence in Kansas;
(6) is a small business;
(7) performs a commercially useful function; and
(8) is certified as an "airport concession disadvantaged business
enterprise" by the assistant director or the office of civil rights within the
Kansas department of transportation.
(c) ''Assistant director'' means the assistant director for minority and
women business development of the office of minority and women
business development of the department of commerce established pursuant
to K.S.A. 74-5010a, and amendments thereto.
(d) ''Broker'' means a person that provides bona fide professional,
technical, consultant, brokerage or managerial services and assistance in
the procurement of essential personnel, facilities, equipment, materials or
supplies required for performance of a contract.
(e) "Certified small business enterprise" means an airport concession
disadvantaged business enterprise, minority business enterprise, woman
business enterprise, disadvantaged business enterprise or service-disabled
veteran-owned business enterprise.
(f) "Commercially useful function" means real and actual services
that are a distinct and verifiable element of the contracted work based
upon private sector trade or industry standards.
(g) ''Committee'' means the advisory committee on certified small
business enterprises that may be established by the assistant director as
provided by this act.
(h) "Concession" means one or more of the following types of for-
profit businesses:
(1) A business located at an airport or that has a facility at an airport
that is engaged in the sale of consumer goods or services to the public
pursuant to an agreement with the recipient, another concessionaire or the
owner or lessee of a terminal if other than the recipient; or
(2) a business conducting one or more of the following covered
activities, even if it does not maintain an office, store or other business
location at an airport, if the business:
(A) Manages contracts and subcontracts for goods or services for the
airport;
(B) is a web-based or other electronic business with service locations
at an airport terminal or that provides services that the public can access at
the terminal;
(C) is an advertising business that provides advertising displays or
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messages to the public at the airport; or
(D) is a business that provides goods and services to concessionaires
that are located at the airport.
(i) "Contractor utilization plan" means a statement, in a form
prescribed by the assistant director, that must be submitted in a bid or
proposal for a performance contract that states a plan to utilize qualified
certified small business enterprises in the performance contract.
(j) "Control" means having day-to-day decision-making authority as
measured by:
(1) Voting power;
(2) officer and director votes;
(3) ability to bind the business entity;
(4) financial authority;
(5) shared officers and directors; or
(6) having more than 20% of the small business contracts directly or
indirectly attributable to the affiliate or any combination thereof.
(k) "Disadvantaged business enterprise" means a for-profit small
business concern that:
(1) Is at least 51%-owned, managed and independently controlled by
one or more individuals who are United States citizens or lawful
permanent residents and who are socially and economically
disadvantaged;
(2) meets United States department of transportation size standards
for a small business eligible to be certified as a disadvantaged business
enterprise pursuant to 13 C.F.R. part 121 and that does not exceed the cap
on average annual gross receipts specified in 49 C.F.R. § 26.65(b) and as
provided by 49 C.F.R. § 26.5.
(3) is an independent and viable for-profit business as determined by
the assistant director;
(4) has a real and substantial presence in Kansas;
(5) is a small business;
(6) performs a commercially useful function; and
(7) is certified as a "disadvantaged business enterprise" by the
assistant director or the office of civil rights of the Kansas department of
transportation.
(l) ''Goals'' means annual overall agency goals, expressed as a
percentage of dollar volume, for participation by certified small business
enterprises. "Goals" shall not be construed as minimum goals or quotas for
any particular contract or for any particular geographical area.
(m) "Good faith efforts" are efforts that, given all relevant
circumstances, the proposed bidder or potential contract recipient
documents as evidence of intent to meet the prescribed objectives of the
contract or modified objectives of the contract if the proposed bidder or
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potential contract recipient submits evidence establishing why such
objectives should be modified to reflect availability or lack thereof in the
scope of work.
(n) ''Goods or services'' includes professional services and all other
goods and services.
(o) "Minority" means a person who is a citizen or lawful permanent
resident of the United States and who is an:
(1) African American, which means a person whose origins are in any
of the black racial groups of Africa and who has historically and
consistently identified such self as being such a person;
(2) Hispanic or Latino American, which means a person whose
origins are in Mexico, Central or South America, or any of the Spanish-
speaking islands of the Caribbean, regardless of race and who has
historically and consistently identified such self as being such a person;
(3) Asian or Pacific Islander American, which means a person whose
origins are in any of the original peoples of the Far East, Southeast Asia,
the islands of the Pacific or the Northern Marianas or the Indian
subcontinent and who has historically and consistently identified such self
as being such a person; or
(4) Native American, which means a person whose origins are from
any of the original peoples of North America and who maintains tribal
affiliation as demonstrated by active enrollment as a recognized member
of any federally or state-recognized tribe.
(p) "Minority business enterprise" means a for-profit small business
concern that:
(1) Is at least 51%-owned, managed and independently controlled by
one or more individuals who are United States citizens or lawful
permanent residents and who belong to a minority group;
(2) has a real and substantial presence in Kansas;
(3) is a small business;
(4) performs a commercially useful function; and
(5) is certified as a "minority business enterprise" by the assistant
director or the office of civil rights of the Kansas department of
transportation.
(q) ''Office'' means the office of minority and women business
development within the department of commerce established pursuant to
K.S.A. 74-5010a, and amendments thereto.
(r) ''Person'' includes one or more individuals, proprietorships,
partnerships, associations, labor or other organizations, corporations,
cooperatives, firms, legal representatives, trustees or receivers.
(s) "Personal net worth" means the net value of the assets of an
individual remaining after total liabilities are deducted. An individual's
personal net worth does not include the individual's ownership interest in
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an applicant or participating certified small business enterprise or the
individual's equity in such individual's primary place of residence. An
individual's personal net worth includes only such individual's own share
of assets held jointly or as community property with the individual's
spouse.
(t) ''Postsecondary educational institution'' means the same as in
K.S.A. 74-3201b, and amendments thereto.
(u) ''Procurement'' means the purchase, lease or rental of any goods or
services.
(v) ''Public works'' means all work, construction, highway and ferry
construction, alteration, repair or improvement other than ordinary
maintenance that a state agency or postsecondary educational institution is
authorized or required by law to undertake.
(w) "Real and substantial presence" means:
(1) The small business enterprise maintains an office or place of
business in the state of Kansas;
(2) if the small business enterprise has employees, the small business
enterprise maintains the employees in one or more of the small business
enterprise's offices within this state to conduct or solicit the small business
enterprise's business in this state for the majority of their working time;
(3) the small business enterprise has transacted business more than
once in the state within the last three years; and
(4) if in business for less than one year, the small business enterprise
has provided information on in-progress and completed contracts,
including letters of reference or past performance reports to establish
successful contract performance, and any information demonstrating
performance of work in the industry for which the applicant small business
enterprise seeks certification as a certified small business enterprise.
(x) "Service-disabled veteran" means an individual who served in the
active military, naval or air services of the United States, who was
discharged or released under conditions other than dishonorable and whose
disability was incurred or aggravated in the line of duty in the active
military, naval or air services of the United States.
(y) "Service-disabled veteran-owned business enterprise" means a
for-profit small business concern pursuant to the small business act, 15
U.S.C. 632(q), and the federal small business administration's
implementing regulations, 13 C.F.R. 125, that:
(1) Is at least 51%-owned, managed and independently controlled by
one or more service-disabled veterans who are United States citizens or
lawful permanent residents;
(2) has a real and substantial presence in the state of Kansas;
(3) is a small business;
(4) performs a commercially useful function; and
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(5) is certified by the United States department of veterans affairs and
meets the federal small business administration's service-disabled veteran-
owned small business concern program regulations.
(z) "Small business" means the same as defined in the federal small
business administration in 13 C.F.R. 121.101-107.
(aa) "Socially and economically disadvantaged individual" means any
individual who is a citizen or lawfully admitted permanent resident of the
United States and who:
(1) Is an owner of a firm, in which ownership and control are relied
upon for certification of the firm as a disadvantaged business enterprise;
(2) has been subjected to racial or ethnic prejudice or cultural bias
within American society because of such individual's identity as a member
of certain groups without regard to such individual's qualities. The social
disadvantage must stem from circumstances beyond the individual's
control. Any individual in the following groups is rebuttably presumed to
meet this requirement:
(A) Black Americans;
(B) Hispanic Americans;
(C) Native Americans;
(D) Asian-Pacific Americans;
(E) subcontinent Asian Americans; and
(F) women; and
(3) certifies that the individual has a personal net worth that does not
exceed the amount set forth in 49 C.F.R. 26 and 26.67.
(bb) "State agency" means the same as defined in K.S.A. 75-3701,
and amendments thereto.
(cc) "Woman" means a female person who is a citizen or lawful
permanent resident of the United States.
(dd) "Woman business enterprise" means a for-profit small business
concern that:
(1) Is at least 51%-owned, managed and independently controlled by
one or more women who are United States citizens or lawful permanent
residents;
(2) has a real and substantial presence in the state of Kansas;
(3) is a small business;
(4) performs a commercially useful function; and
(5) is certified as a "woman business enterprise" by the assistant
director or the office of civil rights of the Kansas department of
transportation.
Sec. 3. There is hereby created within the department of commerce a
Kansas certified small business enterprise development program. The
assistant director of the office of minority and woman business of the
department of commerce shall administer the provisions of the Kansas
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certified small business enterprise development program. In administering
the provisions of the program, the assistant director is directed and
authorized to:
(a) Employ such staff as are necessary to carry out the purposes of
this act;
(b) develop, plan and implement, in consultation with the committee,
one or more programs to provide an opportunity for participation by
certified small business enterprises in public works and the process by
which goods and services are procured by state agencies and
postsecondary educational institutions from the private sector;
(c) develop, in consultation with the committee, a comprehensive
plan insuring that certified small business enterprises are provided an
opportunity to participate in public contracts for public works, goods and
services;
(d) identify, in consultation with the committee, any barrier to equal
participation by a certified small business enterprise in all state agency and
postsecondary educational institution contracts;
(e) establish annual overall goals for participation by certified small
business enterprises for each state agency and postsecondary educational
institution to be administered on a contract-by-contract basis or on a class-
of-contracts basis;
(f) develop and maintain a central certified small business enterprise
list for use by state agencies and postsecondary educational institutions.
No business shall be entitled to certification by the assistant director unless
the business meets the definition of a certified small business enterprise as
established by this act and the rules and regulations of the office. There
shall be a rebuttable presumption that when a certified small business
enterprise subcontracts a greater portion of the contract work than normal
industry practice, the certified small business enterprise is not performing
a commercially useful function;
(g) develop, implement and operate a system of monitoring
compliance with the provisions of this act;
(h) adopt rules and regulations, approved by the secretary of
commerce, as necessary to implement the provisions of this act, including
the:
(1) Establishment of agency goals;
(2) development and maintenance of a central certified small business
enterprise certification and qualification program, including applicable
definitions that shall be consistent with the small business requirements
defined by applicable federal regulations and Kansas law. Only persons
meeting the requirements as provided by this act and the rules and
regulations of the office shall be deemed a certified small business
enterprise by the assistant director. Except for instances of
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misrepresentation or fraud, any person listed as a certified small business
enterprise on the office's online certified small business enterprise
directory on the date a contractor utilization plan is submitted shall be
eligible to participate as a certified small business enterprise on such
contract;
(3) procedures for monitoring and enforcing compliance with goals,
regulations, contract provisions and this act;
(4) utilization of standard clauses by state agencies and postsecondary
educational institutions;
(5) requirements for standard clauses in requests for proposals,
advertisements, bids or calls for bids, necessary to carry out the purposes
of this act, including notice of the statutory penalties for noncompliance
pursuant to section 10, and amendments thereto; and
(6) determination of an agency's or postsecondary educational
institution's attainment of the goals pursuant to this act of such agency or
postsecondary educational institution;
(i) submit an annual report to the governor and the legislature on the
progress in implementing this act;
(j) investigate complaints of violations of this act or the rules and
regulations adopted by the office pursuant to this act with the assistance of
any agency or postsecondary educational institution involved in the
alleged violation. Such investigations shall not include investigations of
alleged violations of any local ordinance, rule, regulation or resolution of a
political subdivision of this state;
(k) cooperate and act jointly with the federal government, other states
and political subdivisions of the state of Kansas, and their respective
certified small business enterprise programs, to carry out the purposes of
this act;
(l) develop policies to carry out the purposes of this act in
consultation with the committee and any other ad hoc advisory
committees, as may be of assistance to the assistant director;
(m) develop specific indicia of "good faith efforts" in cooperation
with the secretary of administration, who shall cooperate with the assistant
director for this purpose and to achieve the objectives of this act; and
(n) enter into contracts necessary to carry out the provisions of this
act.
Sec. 4. (a) Each state agency and postsecondary educational
institution shall comply with the annual goals established for that agency
or institution pursuant to section 3, and amendments thereto, for public
works and procuring goods or services. The provisions of this act and the
rules and regulations adopted pursuant to section 3, and amendments
thereto, shall be adhered to in all public works and procurement by state
agencies and postsecondary educational institutions, including all contracts
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and other procurement pursuant to chapter 75 of the Kansas Statutes
Annotated, and amendments thereto. All program opportunities for
certified small business enterprises developed by the assistant director
shall be developed with the intent of compliance with the provisions of
K.S.A. 75-3739, and amendments thereto, to the extent possible. If any
provisions of this act are in conflict with the provisions of K.S.A. 75-3739,
and amendments thereto, then to such extent the provisions of this act shall
be construed as an exception, as provided by K.S.A. 75-3739(a)(4).
(b) Each state agency shall adopt a plan, developed in consultation
with the assistant director and the advisory committee on certified small
business enterprises, to ensure that certified small business enterprises are
afforded the maximum practicable opportunity to directly and
meaningfully participate in the execution of public contracts for public
works and goods and services. The plan shall include specific measures the
agency will undertake to increase the participation of certified small
business enterprises.
(c) The assistant director shall annually notify the governor, the post
auditor and the respective legislative house and senate committees with
applicable oversight responsibility of all agencies and postsecondary
educational institutions not in compliance with this act.
(d) Each city, county and unified school district may adopt a certified
small business enterprise procurement program in coordination with the
assistant director and in compliance with the provisions of this act and
applicable rules and regulations established pursuant to this act.
Sec. 5. (a) The office of minority and women business development
and the office of civil rights of the Kansas department of transportation
shall be the only authorities to perform certification of small business
enterprises in the state of Kansas. Such certification shall permit certified
small business enterprises to participate in programs for these enterprises
administered by the state of Kansas, any city, town, county, special
purpose district, public corporation created by the state, municipal
corporation or quasi-municipal corporation within the state of Kansas.
Sec. 6. The assistant director may create an advisory committee or
committees and appoint the members thereof, upon consultation with the
office of civil rights of the department of transportation, when the assistant
director determines that such advisory committee is useful for the
administration of this act. The members shall serve at the pleasure of the
assistant director. Such advisory committees shall consult with and advise
the assistant director and the office of civil rights of the department of
transportation as requested with regard to any matters pertaining to the
implementation or administration of this act. Members of any advisory
committee created pursuant to this section attending meetings of such
committee or attending a subcommittee meeting thereof authorized by the
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assistant director shall be paid subsistence allowances, mileage and other
expenses as provided in K.S.A. 75-3223, and amendments thereto, but
shall receive no compensation for services as such members. The secretary
of commerce is authorized to expend funds to provide space for holding
meetings or other necessary expenses of any advisory committee or
subcommittee. The advisory committee shall meet at the request of the
assistant director.
Sec. 7. (a) It is the intent of this act that agency goals established
pursuant to this act for participation by certified small business enterprises
in public contracts be achievable, complimentary to federal objectives,
flexible and be met on a contract-by-contract or class-of-contract basis.
(b) Notwithstanding the provisions of K.S.A. 75-3739, and
amendments thereto, or any other law to the contrary, if necessary to
accomplish the intent of this act, any contract may be awarded to the next
lowest responsible bidder in turn, or all bids may be rejected and new bids
obtained, if the lowest responsible bidder, without justification, does not
meet the goals established for a particular contract pursuant to this act. The
dollar value of the total contract used for the calculation of the specific
contract goal may be increased or decreased to reflect executed change
orders. An apparent low bidder shall be in compliance with the contract
provisions required pursuant to this act as a condition precedent to the
granting of a notice of award by any state agency or postsecondary
educational institution, including either goal attainment or submission and
approval of an acceptable request for waiver.
(c) For purposes of subsection (b), justification for failure to meet the
goals established for a particular contract shall require the assistant
director's approval, in the sole discretion of the assistant director, of a
notarized affidavit submitted to the assistant director by the lowest
responsible bidder that sets forth the good faith efforts made by the bidder
to meet the goals and specifies the specific reasons such goals were not
attainable on the project at the time of bid.
Sec. 8. For the purpose of measuring a state agency's or
postsecondary educational institution's attainment of goals pursuant to this
act:
(a) Regulations adopted pursuant to section 3, and amendments
thereto, shall provide that if a certified small business enterprise is a broker
of goods or materials required by a contract, the contracting agency or
postsecondary educational institution may count only requests for
proposals, advertisements, bids or calls for bids necessary to carry out the
purposes of this act, which shall include notice of the statutory penalties
pursuant to section 10, and amendments thereto, for noncompliance; and
(b) any regulations adopted pursuant to section 3, and amendments
thereto, shall provide that if a certified small business enterprise is a broker
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of goods or materials required by a contract, the contracting agency or
postsecondary educational institution may count only the dollar value of
the fee or commission charged and not the value of goods or materials
provided. The contracting agency or postsecondary educational institution
may, at its discretion, fix the dollar value of the fee or commission charged
at either the actual dollar value of such fee or commission or at a standard
percentage of the total value of the brokered goods, which percentage must
reflect the fees or commissions generally paid to brokers for providing
such services.
Sec. 9. (a) No person shall:
(1) Prevent or interfere with a contractor's or subcontractor's
compliance with this act or any rule and regulation adopted pursuant to
this act;
(2) submit any false or fraudulent information to the director
concerning compliance with this act or any rule and regulation adopted
pursuant to this act;
(3) fraudulently obtain, retain, attempt to obtain or retain or aid
another in fraudulently obtaining, retaining or attempting to obtain or
retain certification as a certified small business enterprise for the purpose
of this act;
(4) knowingly make a false statement, whether by affidavit, verified
statement, report or other representation, to any state official or employee
for the purpose of influencing the certification or denial of certification of
any entity as a certified small business enterprise;
(5) knowingly obstruct, impede or attempt to obstruct or impede any
state official or employee who is investigating the qualification of a
business entity that has requested certification as a certified small business
enterprise;
(6) fraudulently obtain, attempt to obtain or aid another person in
fraudulently obtaining or attempting to obtain public moneys to which the
person is not entitled pursuant to this act or any rule and regulation
adopted pursuant to this act; or
(7) knowingly make any false statement or representation that any
entity is or is not certified as a certified small business enterprise for
purposes of obtaining a contract governed by this act or any rule and
regulation adopted pursuant to this act.
(b) Any person or entity violating this act, or any rule and regulation
adopted pursuant to this act shall be subject to the penalties in section 10,
and amendments thereto. No provision of this section, and amendments
thereto, shall prevent a state agency or postsecondary educational
institution from pursuing any such procedure or sanction as is otherwise
provided by statute, rule and regulation or contract provision.
Sec. 10. (a) If the assistant director determines that, after notice and
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an opportunity for a hearing in accordance with the Kansas administrative
procedure act, an individual, firm, corporation, partnership or other
business entity has engaged in or is engaging in any act or practice
constituting a violation of any provision of this act, any rule and regulation
adopted pursuant to this act or a contract requirement established pursuant
to this act, the assistant director may, pursuant to a written order, withhold
payment, debar the contractor, suspend or terminate the contract or subject
the contractor to civil penalties. The assistant director shall adopt rules and
regulations establishing criteria for the imposition of penalties pursuant to
this section. A civil monetary penalty imposed by the assistant director
shall not exceed the amount of $5000 for each separate violation.
(b) Any willful repeated violation, exceeding a single violation, may,
in addition to any other penalties, disqualify the contractor from further
participation in state contracts for a minimum period of three years up to a
maximum of permanent disbarment. An apparent low bidder must be in
compliance with the contract provisions required pursuant to this act as a
condition precedent to the granting of a notice of award by any state
agency or postsecondary educational institution.
(c) Any business entity aggrieved by an order of the assistant director
made pursuant to this section may appeal such order to the district court in
the manner provided by the Kansas judicial review act. An appeal to the
district court or to an appellate court may stay the payment of a civil
penalty but shall not stay any other action of the director as provided by
subsection (a).
(d) Any penalty recovered pursuant to the provisions of this section
shall be remitted to the state treasurer, deposited in the state treasury and
credited to the state general fund.
(e) The procedures and sanctions provided in this section, and
amendments thereto, shall be in addition to any other remedies, civil
penalties or criminal penalties provided by law. No provision of this
section shall prevent any state agency or postsecondary educational
institution administering a contract from pursuing such other procedures or
sanctions as are otherwise provided by statute, rule and regulation or
contract provision.
Sec. 11. The attorney general may bring an action in the name of the
state against any person to restrain and prevent the doing of any act
prohibited or declared to be unlawful in this act. The attorney general may,
in the discretion of the court, recover the costs of the action including
reasonable attorney fees and the costs of investigation.
Sec. 12. If any provision or clause of this act or application thereof to
any person or circumstance is held invalid, such invalidity shall not affect
other provisions or applications of this act that can be given effect without
the invalid provision or application, and to this end the provisions of this
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act are declared to be severable.
Sec. 13. This act shall take effect and be in force from and after its
publication in the statute book.
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