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[COMMITTEE SUBSTITUTE FOR]ORDINANCE NO. 260692, AS AMENDED
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Sponsor: Mayor Quinton Lucas, Councilmembers Andrea Bough, Kevin O’Neill, Johnathan Duncan, Melissa Robinson, Melissa Patterson Hazley, Darrell Curls, Lindsay French and Eric Bunch
COMMITTEE SUBSTITUTE
Amending Chapter 3 of the Code of Ordinances by enacting a new Article IV, Division 2 to be titled “Certified Small Business Enterprises” for the purpose of creating a new certified small business enterprise program for the City of Kansas City, Missouri; and further amending Chapter 3 by repealing Article IV, Division 4 titled “Small Local Business Enterprises (SLBE)” in its entirety.
Finance Committee recommends “Advance and Do Pass as a Committee Substitute”
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WHEREAS, the City Council finds that small businesses owned and controlled by economically disadvantaged persons contribute to the economic vitality, competitiveness, and resiliency of the Kansas City metropolitan area; and
WHEREAS, the City has a longstanding interest in promoting equal opportunity in public contracting and in encouraging participation by small businesses in City contracts, subcontracts, and incentive-supported development projects; and
WHEREAS, the City Council desires to continue to provide contracting opportunities for economically disadvantaged small businesses while the City evaluates and develops long-term business enterprise program improvements; and
WHEREAS, the City Council finds that establishing a local Certified Small Business Enterprise (“SBE”) program utilizing objective eligibility criteria, commercially useful function requirements, and business size standards will facilitate participation by qualified small businesses in City contracting opportunities; and
WHEREAS, the proposed SBE program applies to City contracts and certain incentive-supported projects, establishes citywide participation goals, provides for certification and compliance oversight by the Civil Rights and Equal Opportunity Department, and includes reporting requirements intended to measure program effectiveness; and
WHEREAS, the City Council further finds that, during the operation of this interim program, an expedited administrative review process conducted by the Director of the Civil Rights and Equal Opportunity Department will provide an efficient mechanism for resolving disputes and program determinations while avoiding delay in contract procurement and project delivery; and
WHEREAS, the City Council determines that enacting the local Certified Small Business Enterprise program established herein is in the best interests of the City and will promote continuity in contracting opportunities for qualified small businesses; and
WHEREAS, the City Council finds that the measures adopted in this ordinance are intended to encourage participation by qualified small business enterprises through race and gender neutral and economically based criteria while maintaining competition and protecting the City’s procurement interests; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF KANSAS CITY:
Section 1. That Chapter 3 of the Code of Ordinances is hereby amended by enacting a new Article IV, Division 2 to be titled “Certified Small Business Enterprises (SBE)”, to read as follows:
DIVISION 2. - CERTIFIED SMALL BUSINESS ENTERPRISES.
Sec 3-421. - Definitions.
(a) The following definitions apply to this division 2, except where an alternate definition has specifically been made applicable:
(1) Affidavit of intended utilization: An affidavit, in a form prescribed by the director, stating the bidder's intent to meet the Small Business Enterprise (SBE) goals or to timely request a waiver of the SBE goals.
(2) Affiliates/Affiliation: see 13 CFR 121.103.
(3) Agency head: The individual authorized to act on behalf of an agency.
(4) Award of contract: Execution of a contract and, if necessary, city council or park board authorization.
(5) Bid: An offer to enter into a contract submitted pursuant to an invitation for bid.
(6) Bidder: Any person who submits a bid to the city or an incentive agency in response to an invitation for bid.
(7) Bid opening: The event whereby bids are opened and read aloud at the place, date and time specified in the invitation for bid and any subsequent amendment thereto.
(8) Bid shopping: The practice whereby a person divulges or requires another to divulge a subcontractor’s bid or proposal for the purpose of securing a lower bid or proposal.
(9) Budget: The total costs reflected within a contract for which SBE goals are to be set pursuant to this division.
(10) Business: An individual, corporation, partnership, limited liability company, or other recognized business association that may lawfully be established for the purpose of conducting a for-profit business within the state.
(11) City: The City of Kansas City, Missouri.
(12) Commercially useful function: Real and actual services that are a distinct and verifiable element of the contracted work based upon private sector trade or industry standards. Determination that an enterprise performs a commercially useful function will be made based on the following considerations:
a. A SBE performs a commercially useful function when it is responsible for execution of the ordinary and necessary work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved. To perform a commercially useful function, the SBE must also be responsible, with respect to materials and supplies used on the contract, for negotiating price, determining the quality and quantity, ordering the material, installing (where applicable) and paying for the material itself. To determine whether an SBE is performing a commercially useful function, one must evaluate the following:
1. The amount of work subcontracted; and
2. Industry practices; and
3. Whether the amount the enterprise is to be paid under the contract is commensurate with the work it is actually performing with its own focus; and
4. Whether an SBE has the skill and expertise to perform work for which it is being utilized; and
5. The credit claimed for its performance of the work; and
6. Other relevant factors.
b. A SBE does not perform a commercially useful function if its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of SBE participation. In determining whether an SBE is such an extra participant, one must examine similar transactions, particularly those in which SBEs do not participate.
c. An SBE firm is not performing a commercially useful function if the SBE subcontracts a greater portion of the work on a contract or purchases a greater amount of material than would be expected on the basis of normal industry practice for the type of work involved.
d. Whether the SBE is participating in the contract as a middle person or broker in the normal course of that business or trade by purchasing the goods and/or services from another business, thereby qualifying expenditures for such goods and/or services to be counted toward utilization requirements for SBEs.
e. Whether the SBE is responsible for the purchase and quality of, and payment for, materials used to perform its work under the contract.
There shall be a rebuttable presumption that, when the SBE subcontracts a greater portion of the contract work than normal industry practice, the SBE is not performing a commercially useful function.
(13) Construction contract: A contract for the construction, reconstruction, improvement, enlargement or alteration of any fixed work or construction site preparation, of which any amount is paid for out of city or agency funds.
(14) Construction supply contract: A contract for the purchase of construction materials, supplies, articles or equipment intended to be used or consumed pursuant to a construction contract, the majority of which is paid for out of city or agency funds.
(15) Contract:
a. SBE-eligible contract: Any city or incentive agency contract, except the
following:
1. Personal services contracts;
2. Emergency contracts as provided for in section 3-7 of this Code;
3. Imprest accounts in the nature of petty cash funds;
4. Land acquisitions;
5. Previously existing external government contracts;
6. Inter-governmental contracts; and
7. Sole source and sole brand contracts.
(16) Contractor: Any person who enters into a contract with the city or an incentive agency.
(17) Contractor utilization plan or CUP: The statement, in a form prescribed by the director, that must be submitted by a bidder or proposer pursuant to section 3-433 and that states its plan to utilize qualified SBEs in the performance of a contract.
(18) Day: A calendar day, except as otherwise indicated.
(19) Disadvantaged business enterprise or DBE: A business concern that meets the federal Department of Transportation requirements for certification as a disadvantaged business enterprise (DBE).
(20) Department: The civil rights and equal opportunity department.
(21) Developer: An entity seeking tax increment financing or city tax abatement incentives from an incentive agency described in section 3-425(b) or 3-425(c).
(22) Director: The director of the civil rights and equal opportunity department or their authorized representative.
(23) SBE/DBE Kansas City, MO. online directory or directory: A source list compiled, maintained and updated by the civil rights and equal opportunity department containing (when provided) the names, mailing addresses, e-mail addresses and facsimiles of certified SBE/DBEs and the NAICS codes denoting scopes of work for which each such SBE/DBE is certified, which SBE/DBE are in the business of providing construction, professional services and other services and goods from whom bids and proposals can be solicited. The directory is to facilitate identifying SBE/DBE subcontractors with capabilities relevant to general contracting requirements and to particular solicitations.
(24) Economic disadvantage: A diminished ability to compete in the free enterprise system due to diminished capital and credit opportunities as compared to others in the same or similar line of business. In determining whether an individual is economically disadvantaged, the director shall follow the guidance provided in 49 CFR Part 26.
(25) Expertise: Experience or training in a specialized field that is critical to the firm's operations, indispensable to the firm's potential success, and specific to the type of work the firm performs.
(26) Goal: A numerical objective stated as a percentage of contract dollars for participation by qualified SBEs in contracts.
(27) Incentive agency or agency: Each of the commissions, agencies and authorities described in section 3-425 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-425APLETAINFITAABEN>(b) or 3-425 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-425APLETAINFITAABEN>(c), or any entity with the authority to recommend to the city tax increment financing or tax abatement.
(28) Incentive agency head: Person authorized to act on behalf of an incentive agency.
(29) Incentive project: A project receiving tax increment financing or tax abatement or exemption from an incentive agency pursuant to contracts described in sections 3-425 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-425APLETAINFITAABEN>(b) and 3-425 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-425APLETAINFITAABEN>(c).
(30) Invitation for bid: A request or invitation for submission of an offer to enter into a contract pursuant to a competitive bidding process.
(31) Kansas City metropolitan area: The Missouri counties of Cass, Clay, Jackson and Platte and the Kansas counties of Johnson, Leavenworth and Wyandotte.
(32) Letter of intent to subcontract: A document, in a form prescribed by the director that demonstrates the prime contractor or developer's intent to enter a contractual agreement with a selected SBE.
(33) Mentor-protégé: A relationship between an SBE (protégé) and a person in the same trade or industry (mentor). The mentor-protégé relationship is to provide technical, financial, bonding, equipment and personnel assistance. The purpose of the relationship is to increase the capacity of SBEs to perform contracts.
(34) North American Industry Classification System (NAICS) code: A six-digit number used to classify businesses establishments by industry for statistical, regulatory, and economic purposes.
(35) Person: One or more individuals, corporations, partnerships, associations, labor organizations, legal representatives, mutual companies, joint stock companies, trusts, unincorporated organizations, trustees, trustees in bankruptcy, receivers, fiduciaries and other organizations; except "person" does not include any local, state or federal governmental entity.
(36) Personal net worth: The net value of the assets of an individual after total liabilities is deducted. An individual's personal net worth does not include the individual's ownership interest in a certified SBE or applicant for such certification or the individual's equity, if any, in their primary place of residence, or the value of any personal retirement accounts. An individual's personal net worth includes only their share of assets held individually or jointly with the individual's spouse.
a. Except as set forth in subsection b, an individual's personal net worth also includes any assets which that individual has transferred to an immediate family member, to a trust a beneficiary of which is the individual or an immediate family member, or to the certified SBE or applicant firm for less than fair market value, within two (2) years prior to an application for certification as an SBE or within two (2) years of submission of the firm's annual affidavit, unless the individual can demonstrate that the transfer is to or on behalf of an immediate family member for that family member's education, medical expenses, or some other form of essential support.
b. Any assets transferred by an individual to an immediate family member that are consistent with the customary recognition of special occasions, such as, but not limited to, birthdays, graduations, weddings, anniversaries, and retirements shall not be included in the personal net worth calculation.
(37) Personal services contract: A contract or agreement of employment with an individual who is not acting as an independent contractor and who is not part of the cities classified or unclassified service.
(38) Principal place of business: The location at which the business records of the SBE applicant concern are maintained and the location at which the minority or woman individual owner who manages and controls the day-to-day operations spends the majority of his/her working hours.
(39) Professional services or supplies: The term includes contracts for purely labor-related services up to and including highly technical or specialized services and design professional services, as well as contracts for the purchase of materials, supplies, articles or equipment intended to be used or consumed by the city or agency procuring the same, provided however that the term excludes construction contracts and construction supply contracts.
(40) Proposal: Any offer or list of qualifications submitted to the city in response to a request for proposal.
(41) Proposer: Any person who submits a proposal to enter into a contract, either in response to a request for proposals, request for qualifications or otherwise, but not pursuant to an invitation for bid.
(42) Qualified: Possessing the demonstrated ability to perform the contracted task.
(43) Request for proposals: An invitation for submission of an offer to enter into a contract pursuant to a negotiated process and not a competitive bid, including requests for qualifications.
(44) Small business enterprise (SBE): A for-profit small business concern that:
a. Is at least fifty-one percent (51%) owned, managed, and independently controlled by one or more economically disadvantaged persons; and
b. Whose economically disadvantaged owner’s, or each individual owner’s who collectively holds at least fifty-one percent (51%) ownership interest in the firm, personal net worth is less than or equal to the permissible personal net worth amount determined by the U.S. Department of Transportation to be applicable to its DBE program; and
c. Has a real and substantial presence in the Kansas City metropolitan area as defined by section 3-421; and
d. Meets the business size standards for the scopes of work performed by the firm pursuant to 13 CFR 121.201 as subsequently amended and this division; and
e. Performs a commercially useful function; and
f. Is certified as a local small business enterprise by the civil rights and equal opportunity department.
Only firms meeting all of the above criteria shall be deemed a SBE for purposes of this division. In order to be counted for credit towards the goals on a particular solicitation for a particular scope of work, the SBE shall be either certified or listed in the directory as of the date a contractor utilization plan is submitted
(45) Supplier: An enterprise that owns, operates or maintains a store, warehouse, or other establishment in which materials, supplies, articles or equipment of the general character described by the specifications and required under the contract are bought, kept in stock and regularly sold or leased to the public in the usual course of business.
(46) Supply broker: An enterprise that acts as an agent in negotiating contracts for the purchase of materials, supplies, articles or equipment but does not itself own, operate or maintain a store, warehouse or other establishment where such materials, supplies, articles or equipment are bought, kept in stock and regularly sold or leased to the public in the usual course of business.
Sec. 3-422. - Reserved.
Sec. 3-423. - Application of division.
(a) The provisions of this division shall apply to all contracts, as defined in section 3-421 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-421DE>, entered into by the city or incentive agency. Federal or state requirements for disadvantaged business enterprise participation shall supersede this division when required by law or federal or state contract.
(b) Each department director and agency head is responsible for using good faith efforts to achieve the city-wide SBE goals set forth in section 3-427 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-427CIDEGO>.
(c) Each contractor or developer with whom the city or an incentive agency enters into a contract for which goals have been set shall either:
(1) Meet or exceed the goals set for that contract; or
(2) Make and provide evidence of good faith efforts to achieve the goals and request a waiver of the contract goals, which waiver shall be granted in the event the contractor or developer has demonstrated that it has made a good faith effort to meet or exceed the goals.
(d) Limited solicitation contracts:
(a) The small business enterprise (SBE) program will provide opportunities by limiting solicitations to SBEs on contracts under $400,000.00. These limited solicitation contracts will not be assigned numerical goals and are intended to solicit SBEs as prime contractors.
(b) The SBE program, when applicable, shall extend to eligible contracts solicited by the city or any agency. No ordinance shall be passed to approve any development plan, redevelopment plan, urban renewal plan, or particular project arising under any such plan and for which economic incentives have been approved or recommended for approval by an agency, nor shall the city execute a contract with an agency for the purpose of providing funds for their development and redevelopment services, unless the agency has first adopted and implemented an emerging business enterprise program in the manner provided for herein.
(c) The director shall review the SBE program and, as appropriate, make recommendations to the city council regarding modification of the program.
(4) The city council shall have the authority to waive, by ordinance, the application of the SBE program in its entirety, or any portion thereof, if it determines that doing so is in the city's best interests.
Sec. 3-424. - Reserved.
Sec. 3-425. - Application to leases, tax increment financing and tax abatement entities.
(a) Lease of city property for development. The provisions of this division shall apply to all projects on property leased by the city to any person for development of the property by that person or any other authorized person.
(b) Projects under tax increment financing. The tax increment financing commission shall adopt the city's affirmative action or nondiscrimination requirements, as well as the city's SBE program which shall apply to all projects financed in whole or in part by tax increment financing as that term is used in RSMo § 99.800 et seq. All redevelopment agreements between the tax increment financing commission and a developer must contain SBE goals and workforce utilization goals which are approved by the director, as applicable, and which are applicable to one hundred percent (100%) of all redevelopment project costs, identified within a tax increment financing plan approved by the city council pursuant to RSMo § 99.800 et seq. For purposes of this section, the "affirmative action program" shall have the same definition as section 3-401(a) of this Code.
(c) Projects under tax abatement entities. All corporations organized under RSMo § 353.010 et seq. for the purpose of redevelopment within the city limits, land clearance for redevelopment authority with an area of operation within the city, enhanced enterprise zone boards with an area of operation within the city and planned industrial expansion authority for the city shall adopt the city's affirmative action or nondiscrimination requirements, as well as the city's SBE program which shall apply to all projects receiving city tax abatement in whole or in part.
Sec. 3-426. - Reserved.
Sec. 3-427. - City-wide goals.
(a) The goals set forth in this section are city-wide annual goals to be used by city departments and incentive agencies. The city-wide goals are not goals for individual contracts. They are goals for total SBE participation in all contracts entered into each year. The city-wide goals are established as follows:
|
Classification |
Annual Goal |
|
SBE |
30% |
(b) Neither city-wide annual goals nor individual contract goals should be construed as a limitation on contracting opportunities for the above listed classification. Such classification shall be eligible to be awarded contracts consistent with bidding or other contract procedures over and above the percentages listed.
Sec. 3-428. - Reserved.
Sec. 3-429. - City department and incentive agency SBE utilization plan.
(a) In planning its individual contracts, each city department and incentive agency shall utilize the methodologies described in this division and use its good faith efforts to encourage and attempt to obtain participation of qualified SBE contractors and shape the scope, specifications and size of a contract to enhance such participation.
(b) City departments and incentive agencies shall make reasonable efforts to:
(1) Advertise contract opportunities in general circulation media, trade and professional association publications, and small business media; and
(2) Send written notice of specific contract opportunities to small business organizations and those entities on the departmental bidder's and proposer's list; and
(3) With the assistance of the director, shape the scope, specifications and size of a contract to enhance participation opportunities for qualified SBEs.
Sec. 3-430. - Reserved.
Sec. 3-431. - Setting goals for individual contracts.
(a) Goals shall be established for individual contracts by the director, as determined pursuant to this section. Goals shall be applied to the total dollar value of the contract, unless otherwise authorized by the director.
(b) Individual contract goals shall be flexible and are to be determined on a contract-by-contract basis. In determining whether goals should be established for an individual contract or in setting the specific goal for an individual contract, the following shall be considered:
(1) The scope of work; and
(2) The number and types of qualified SBE available to perform such work, or portions of it; and
(3) Whether the contract can be structured to create potential opportunities for qualified SBEs to participate as subcontractors, service providers and/or suppliers; and
(4) The level of participation of certified SBE in similar contracts awarded by other city departments and incentive agencies, and on local projects awarded by the state and federal governments in the previous and current fiscal years; and
(5) The city department's or incentive agency's progress toward meeting its annual SBE goals and its expectations as to how future contracts will be used toward meeting such goals; and
(6) The potential dollar amount of the contract.
(c) When goals for individual contracts are set, they shall be set as follows:
(1) For all city and incentive agency professional service and goods and services contracts with an estimated cost of $400,000.00 or more, upon the recommendation of the director, as provided in section 3-451.
(d) When goals are established for a contract, such goals shall be stated in any invitation for bid or request for proposals. No invitation for bid or request for proposals shall be released until goals have been requested and set in accordance with subsection (b) of this section, or until the city department or incentive agency soliciting the contract has been notified by the director that goals will not be established.
(e) For contracts other than construction contracts and contracts for projects leased for development or receiving economic development incentives or tax abatement as described in section 3-425 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-425APLETAINFITAABEN>, the director is authorized to require a bidder or proposer to make good faith efforts to achieve SBE participation without setting a numeric SBE goal on the solicitation as long as the director could have set a SBE goal based on the factors in section 3-431(b).
Sec. 3-432. - Reserved.
Sec. 3-433. - Contractor utilization plan.
(a) When goals have been established for a contract, each bidder, proposer, contractor, or developer shall submit to the director, or to the agency for incentive agency projects, a contractor utilization plan (CUP) in the manner required by the department, which shall include the following:
(1) Names and addresses of each qualified SBE that will participate in the contract; and
(2) The work to be performed by each qualified SBE, and the amounts each is to be paid for such work.
(b) Bid shopping is prohibited.
(c) At the time of submission of the CUP, the bidder, proposer, contractor or developer, shall also provide to the director, and to the incentive agency for incentive projects, a letter of intent signed by each SBE included in the CUP and by the bidder, proposer, contractor or developer. Upon submission of a CUP in the manner required by the department, the director must approve or reject the CUP within thirty (30) calendar days of the date of submission.
(d) Prior to an incentive agency providing tax incentives to a developer, including the issuance of a tax abatement certificate or the payment or reimbursement of redevelopment project costs, the developer shall have provided to the incentive agency and the incentive agency shall have incorporated within the incentive agency contract a CUP for construction services and professional services that has been approved or deemed approved by the director or in the event a CUP has not been approved or deemed approved by the director then the incentive agency or city department shall incorporate within the incentive agency contract a CUP which provides for goals established pursuant to section 3-431 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-431SEGOINCO>.
Sec. 3-434. - Reserved.
Sec. 3-435. - Determining contract participation credit for SBE.
(a) The following contract amounts shall be credited toward achieving the goals:
(1) The total contract dollar amount that a prime contractor has paid or is obligated to pay to a subcontractor that is a certified SBE, except as otherwise expressly provided for herein.
(2) The total contract dollar amount that a prime contractor that is a certified SBE performed itself.
(3) Sixty percent (60%) of the total dollar amount paid or to be paid by a prime contractor to obtain supplies or goods from a supplier who is a certified SBE.
(4) Forty percent (40%) of the total dollar amount paid or to be paid by a prime contractor to obtain supplies or goods from a supplier who is a certified SBE who is acting as a broker on the transaction.
(5) Ten percent (10%) of the total dollar amount paid or to be paid by a prime contractor to obtain supplies or goods from a supply broker who is a certified SBE.
(6) One hundred percent (100%) of the total dollar amount paid or to be paid by a prime contractor to a manufacturer or fabricator of construction supplies who is a certified SBE.
(7) Subcontractor participation with a lower tier SBE subcontractor by the subcontractor using one of the above methods of participation.
(b) Notwithstanding any other provision of this section, no credit toward achieving the goals on an individual contract shall be given for:
(1) Participation in a contract by any qualified SBE that does not perform a commercially useful function. The prime contractor shall have the burden of proving that an SBE is performing a commercially useful function.
(2) Any portion of the value of the contract that an SBE subcontractor subcontracts back to the prime contractor or any other contractor who is not a qualified SBE.
(3) Materials and supplies used on the contract unless the SBE is responsible for negotiating price, determining quality and quantity, ordering the materials and installing (where applicable) and paying for material itself.
(4) Work performed by an SBE in a scope of work other than that in which the SBE is currently certified.
(c) In order to be credited towards the SBE goals on a particular solicitation for a particular scope of work, the applicable SBE shall be certified by the date on which the CUP is due.
(d) All prime contractors on a city or incentive agency contract or development agreement are to report names, address, scope of work, contract value of each subcontractor retained by them or other subcontractors for the project and the amount paid to each respective subcontractor.
(e) Joint ventures and mentor-protégé participation for credit will be based on the work performed by the certified SBE.
Sec. 3-436. - Reserved.
Sec. 3-437. - Waiver of SBE goals.
(a) When a request for waiver has been filed on a city contract, the director may grant a full or partial waiver of contract goals when the director has determined a bidder or proposer has not met the goals despite its good faith efforts, as provided for in section 3-441. When a request for waiver has been filed on an incentive agency contract, the director and incentive agency shall make a mutual determination as to whether the developer or its prime contractor has made good faith efforts, as provided for in section 3-441 to meet the contract goals, and to the extent the director and incentive agency fail to mutually agree the developer or prime contractor may request review by the City Manager and submit additional evidence of it’s good faith efforts. Within ten (10) calendar days of the request, the City Manager shall determine whether good faith efforts were exerted and that determination shall be final.
(b) Notwithstanding any other provision of this division, the city council may waive the requirements of this article and award a city contract to a lowest and best bidder or a best proposer if the council determines it is in the best interests of the city. Moreover, the city council or any city incentive agency may waive the requirements of this division and authorize a city incentive, as defined in section 3-623(a)(3), if the council or any city incentive agency determines it is in the best interests of the city. If the request for waiver comes to any city incentive agency, the incentive agency shall inform the director no less than thirty (30) days before considering the request for waiver. The director shall then make a written recommendation regarding the request for waiver to the city incentive agency for its consideration. The director shall provide a copy of their recommendation to the city manager and the members of the city council.
(c) Each city incentive agency shall annually, on or before May 1st, report in writing to the city manager on the number of waivers the city incentive agency has granted pursuant to subsection (b). The report shall identify each project for which a waiver was granted, along with a description of the incentive provided to the project.
Sec. 3-438. - Reserved.
Sec. 3-439. - Joint venture and mentor-protégé programs.
(a) The joint venture relationship. The department shall encourage voluntary establishment of joint ventures on all requests for proposals (RFPs) and requests for qualifications (RFQs). Joint ventures have the potential to create prime contracting opportunities for businesses that include SBEs on eligible projects.
(1) A written joint venture agreement must be completed by all parties to the joint venture and executed before a notary public, which clearly delineates the rights and responsibilities of each member or partner, complies with any requirements of the department, as set forth in RFP or RFQ documents, and provides that the joint venture shall continue for the duration of the project. The department shall review joint venture agreements prior to the award of a contract to determine whether the partners, in fact, share a mutual interest in the operation and success or failure of the joint venture. The department may consider:
a. The initial capital investment of each joint venture partner; and
b. The proportional allocation of profits and losses to each venture partner, at least forty percent (40%) of which must be allocated to the SBE partners; and
c. The partners’ rights to management, control, and ownership; and
d. Whether the partners maintain a joint checking account; and
e. The method of and responsibility for accounting; and
f. The method by which disputes are resolved; and
g. Any additional or further information required by the director or department as set forth in the request for qualifications or proposal documents or otherwise.
(2) The joint venture, and each member of the joint venture shall provide the department with access to review all records pertaining to joint venture agreements before and after the award of a contract in order to reasonably assess compliance with this division.
(3) The failure of any joint venture partner to comply with this section shall render the joint venture agreement invalid and subject the joint venture partners to any or all of the penalties contained in section 3-465 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-465PENONORE>.
(b) The mentor-protégé certification. Mentor-protégé certifications are voluntary and designed to provide SBE firms with advice, technical assistance and/or training. The program is not intended to remove the responsibility of the economically disadvantaged owner(s) from the actual day-to-day management of their firm. The mentor-protégé team shall perform work as designated by the mentor within its relevant scope of work, provided however that the mentor cannot be responsible for the management of the SBE firm and the mentor and the SBE must remain separate and independent business entities.
(1) Mentor companies shall require approval by the department to participate in the program; protégé companies must meet the certification requirements of section 3-461 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-461CEAP> to participate in the program.
(2) The mentor-protégé relationship must be established by a written agreement, completed by both parties to the relationship, and executed before a notary public. This agreement shall clearly delineate the rights and responsibilities of the mentor-protégé.
(3) The department shall review the mentor-protégé agreement for compliance with this section prior to certifying a mentor-protégé relationship.
(4) The mentor-protégé relationship shall exist at least three (3) years, but no more than five (5) years as agreed to by the mentor-protégé team with approval by the department. Both the mentor and protégé can terminate the relationship at any time for any reason and must notify the director of the termination in writing.
(5) A mentor may utilize multiple protégés on a city contract but may have no more than three (3) protégés at any one time, each of which shall be mentored in different commercially useful functions.
(6) A protégé is limited to two (2)mentor/protégé relationships as a participant in the SBE program, and each relationship must be with a different mentor.
(7) During the term of the mentor-protégé certification, the mentor and protégé businesses must each provide to the department a quarterly summary of the mentor skills provided to the protégé, which shall include:
a. The time spent between mentor and protégé business in furtherance of the mentor-protégé relationship; and
b. The nature and extent of managerial, technical, financial and/or bonding assistance provided; and
c. A summary and explanation of any projects bid on or undertaken by the mentor-protégé team in the private sector or for a governmental entity other than the city; and
d. Any additional or further information required by the department or incentive agency as set forth in bid documents or otherwise.
(8) Assistance the mentor may provide the protégé includes, but is not limited to, the following:
a. Extending financial assistance, in the forms of time notes, loans and stock purchases; and
b. Providing technical advice, including cost accounting, estimating, training, plan interpretation, business management, loan packaging, financial counseling, and advice relevant to the success of the particular type of business concern; and
c. Providing equipment and personnel for specific and limited purposes, provided that the equipment and personnel are clearly identified through lease agreements and personnel records, and the protégé exercise the necessary control of personnel and equipment within the normal course of business practice regardless of how the personnel and equipment are acquired; and
d. Providing bonding by either bonding or guaranteeing the bonding on a project-by-project basis, provided that the mentor and protégé create a development plan that includes provisions for ensuring that the protégé acquires the ability to independently bond its projects; and
e. Providing office space, clerical assistance, and other assistance at below market rates.
(9) The following practices within the mentor-protégé relationship are prohibited:
a. A mentor requiring, or a protégé voluntarily entering, an agreement with the mentor to have an exclusive bidding agreement; and
b. Subcontracting arrangements created to artificially inflate SBE participation; and
c. Formal or informal agreements that unreasonably limit the protégés control or management of its company; and
d. A mentor entering into any agreement on behalf of the protégé; and
e. An employer/employee relationship between the mentor and protégé at any time during the term of the mentor/protégé relationship.
(10) Termination of the mentor-protégé relationship. Either party to the mentor-protégé relationship may terminate the relationship at will. The department may terminate the mentor-protégé relationship for good cause shown. At the end of the certification, the mentor shall no longer provide the protégé with any assistance and a protégés acceptance of such assistance shall result in the protégé not meeting the eligibility requirements for SBE certification.
(11) Mentor-protégé business thresholds.
a. Notwithstanding anything to the contrary herein, a mentor's business with a protégé shall not exceed the following amounts:
End of year one: Eighty percent (80%) of the protégé's gross receipts;
End of year two: Seventy percent (70%) of the protégé's gross receipts;
End of year three: Sixty percent (60%) of the protégé's gross receipts;
End of year four: Fifty percent (50%) of the protégé's gross receipts;
End of year five: Fifty percent (50%) of the protégé's gross receipts; unless the director approves a waiver for good cause or the protégé does not exceed the limitation applicable to the previous year.
b. If the protégé is in its second mentor-protégé relationship, a mentor's business with a protégé shall not exceed the following amounts:
End of year one 1: Fifty percent (50%) of the protégé's gross receipts;
End of year two: Fifty percent (50%) of the protégé's gross receipts;
End of year three: Forty percent (40%) of the protégé's gross receipts;
End of year four: Thirty percent (30%) of the protégé's gross receipts;
End of year five 5: Thirty percent (30%)of the protégé's gross receipts.
Sec. 3-440. - Reserved.
Sec. 3-441. - Standards to determine good faith efforts.
(a) Good faith efforts are efforts that, given all relevant circumstances, a bidder, proposer, contractor, or developer actively and aggressively demonstrates in attempting to meet the prescribed goals. Good faith efforts must be demonstrated to be meaningful and not merely formalistic compliance. Notwithstanding the foregoing or anything in this division to the contrary, to the extent a bidder, proposer, contractor or developer, as applicable, has performed the following, the bidder, proposer, contractor or developer, as applicable, shall be presumptively determined to be in compliance with this section and only determined not to be in compliance upon a clear and convincing showing of an affirmative act or omission that is intentionally contrary to the spirit of this division:
(1) Advertised for at least fifteen (15) calendar days prior to the bid or proposal due date opportunities to participate in the contract in general circulation media, trade and professional association publications, small business media, and publications of small business organizations which are included in a list along with their contact information identified on the directory as the list of publications available to publish such advertisements, which list shall be updated by the department no less than every three (3) months, and such fifteen (15) calendar days shall be deemed sufficient time to allow SBE firms to participate effectively. Each advertisement shall contain the information required by section 3-441 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-441STDEGOFAEF>(a)(9); and
(2) Sent written notices at least fifteen (15) calendar days prior to the bid or proposal due date containing the information required by section 3-441 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-441STDEGOFAEF>(a)(9), by e-mail or other electronic means, to at least eighty percent (80%) of the small business organizations which are included in a list along with their contact information identified on the directory as the list of organizations available to receive such notices, which list shall be updated daily by the departments, and such fifteen (15) calendar days shall be deemed sufficient time to allow SBE firms to participate effectively; and
(3) Sent written notices, containing the information required by section 3-441(a)(9), by e-mail or other electronic means, to at least eighty percent (80%) of SBEs listed on the directory certified in the applicable scopes of work for the particular bid soliciting their participation in the contract at least fifteen (15) calendar days prior to the bid or proposal due date and such fifteen (15) calendar days shall be deemed sufficient time to allow them to participate effectively; and
(4) Attempted to identify portions of the work for qualified SBE participation in order to increase the likelihood of meeting the goals, including breaking down contracts into economically feasible units that take into consideration the capacity of available SBEs appearing on the directory; and
(5) At any time prior to submission of the CUP or submittal of a request for modification of a CUP, requested assistance in writing in achieving the SBE goals from the director and acted on the director's recommendations; and
(6) Conferred with certified SBEs which inquired about or responded to the bid solicitation and explained to such SBEs the scope and requirements of the work for which their bids or proposals were solicited, and if not all certified SBEs in the particular scopes listed on the directory have inquired about or responded to the bid solicitation for each scope of work, then contact by e-mail or other electronic means or telephone the greater of ten or eighty percent (80%) of additional certified SBEs in the particular scopes listed on the directory and offer to confer with such SBEs for such particular scope of work and request such SBEs to submit a proposal; and
(7) Attempted to negotiate in good faith with certified SBEs which responded to the bid solicitation or those certified SBEs that were conferred with as contemplated by section 3-441 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-441STDEGOFAEF>(a)(6), and other qualified SBEs, at the option of the bidder, proposer, contractor or developer, as applicable, to perform specific subcontracts, not rejecting them as unqualified without sound reasons based on a thorough investigation of their capabilities by the bidder, proposer, contractor or developer; in the event an SBE is the low bid, but rejected as unqualified, the bidder, proposer, contractor or developer and the director, as applicable, shall provide sound reasons for rejecting such SBE; and
(8) Attended pre-bid meetings when such meetings were indicated in the solicitation of bids or otherwise by the bidder, proposer, contractor or developer, as applicable or by the director provided the director provides written direction to the bidder, proposer, contractor or developer at the time the goals are recommended by the director pursuant to section 3-431 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-431SEGOINCO> to provide for a pre-bid meeting(s); and
(9) Written notices and advertisements sent and/or published pursuant to subsections (1), (2) and (3) above shall include, at a minimum, the following information:
a. The bid due date;
b. The name of the project;
c. The address or general location of the project;
d. The location of plans and specifications for viewing;
e. Contact information of the prime contractor or developer, as applicable;
f. A general description of the scopes of work that are the subject of the solicitation;
g. The goals established for the applicable contract;
h. If the project or any portion of the project is subject to prevailing wage then a statement that all or a portion of the project will be subject to prevailing wage, as applicable; and if only a portion of the scopes are subject to prevailing wage, then identification of such scopes provided that such scopes are known as of the time of bid solicitation;
i. The date and time of any pre-bid meeting(s), if any, which have been scheduled by the bidder, proposer, contractor or developer as of the bid solicitation; and
j. Any other information deemed relevant by the bidder, proposer, contractor or developer, as applicable, or the director to the extent the director provides written direction to the bidder, proposer, contractor or developer of such additional information at the time the goals are recommended by the director pursuant to section 3-431 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-431SEGOINCO>.
(10) In the event the bidder, proposer, contractor or developer amends the scopes previously bid or decides to further open bids, and determines that further notice and/or advertising is necessary, the time for giving notices and/or advertising as provided for in subsections (1), (2) and (3) above shall be deemed sufficient if given seven (7) business days in advance of the applicable updated bid due; and
(11) For city construction contracts only, within five (5) business days after drawing the bid specifications, sent certified letters, verifiable e-mails to qualified SBEs listed on the SBE/DBE Kansas City, MO Online Directory.
(b) Good faith efforts analysis may be performed in the event that (1) a CUP is rejected, (2) a request for modification is rejected, or (3) as of the completion of the project, if the bidder, proposer, contractor or developer is not able to meet the goals following the approval of a CUP or request for modification. In the event of one of the foregoing, a bidder, proposer, or developer or its prime contractor shall submit documentation of its good faith efforts when requested by the city or incentive agency.
(c) Good faith efforts shall be made prior to submission of the contractor utilization plan to the director; provided, efforts made to increase participation of SBEs following submission of the CUP can be considered as evidence of good faith efforts to meet the goals.
(d) For incentive projects, the director shall submit to the relevant incentive agency, their initial findings of good faith prior to sending the final good faith efforts finding to the developer and as soon as practicable thereafter the director and incentive agency shall mutually agree as to whether good faith efforts were exerted prior to submitting a final determination to the developer. To the extent the director and incentive agency fail to agree the developer or prime contractor may request review by the City Manager and submit additional evidence of it’s good faith efforts. Within ten (10) calendar days of the request, the City Manager shall determine whether good faith efforts were exerted and that determination shall be final.
(e) Notwithstanding anything herein to the contrary, to the extent that the proposer, bidder, contractor or developer or its prime contractor has not met each of the criteria set forth in section 3-441 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-441STDEGOFAEF>(a) for a presumptive determination that they have exerted good faith efforts, the director, or the director and incentive agency together, may nonetheless determine, given all relevant circumstances, that good faith efforts were exerted by the proposer, bidder, contractor, developer or its prime contractor. To the extent good faith efforts are determined with respect to the contractor utilization plan, modification or waiver submitted by a bidder, proposer, or developer or its prime contractor, such contractor utilization plan, modification or waiver, shall be deemed approved by the director and the applicable waiver granted.
Sec. 3-442. - Reserved.
Sec. 3-443. - Modification or substitution.
(a) A bidder, proposer, contractor, or developer shall not make any modification or substitution with regard to an approved contractor utilization plan unless that modification or substitution has first been approved by the director. For city contracts at any point after bid and before execution, the director may approve substitutions of other qualified SBEs for those listed in the contractor utilization plan or approve modifications of the amount of participation listed in the contractor utilization plan, if the director determines or, in the case of incentive projects, if the applicable incentive agency and the director mutually determine that (1) the bidder, proposer, contractor, or developer made and provided evidence of good faith efforts to substitute the listed SBE with other qualified SBEs for the listed scope of work or any other scope of work in the project, (2) finds that the bidder, proposer, or contractor has not attempted intentionally to evade the requirements of this division, (3) it is in the best interests of the city and applicable incentive agency to allow a modification or substitution, and (4) also finds one of the following:
(1) The listed SBE is non-responsive or cannot perform; or
(2) The listed SBE has increased its previously quoted price to the bidder, proposer, contractor, or developer without a corresponding change in the scope of the work; or
(3) The listed SBE has committed a material default or breach of its contract with the contractor or developer; or
(4) Requirements of the scope of work of the contract have changed and render subcontracting not feasible or not feasible at the levels required by the goals established for the contract; or
(5) The listed SBE is unacceptable to the contracting department; the department must provide written explanation/justification of unacceptability; or
(6) The listed SBE thereafter had its certification revoked.
(b) For incentive projects, the director shall submit to the relevant incentive agency their initial determination of whether a modification or substitution is appropriate and as soon as practicable thereafter the director and incentive agency shall confer as to whether a modification or substitution is appropriate prior to submitting their final determination to the developer. However, in the event that the incentive agency and director fail to mutually agree the developer or prime contractor may request review by the City Manager and submit additional evidence for modification or substitution to the City Manager. Within ten (10) calendar days of the request, the City Manager shall make their determination, and the City Manager’s determination after review shall be final.
(c) If there is an increase in the quantity of the scope of work performed by an SBE, contractor or developer shall make good faith efforts to use such SBE for the increased work. If extra work not within the general scope of the contract and in excess of $400,000.00 is required, the director shall assign SBE goals for the extra work, if appropriate, and the contractor or director shall make good faith efforts under the circumstances to achieve the goal.
(d) Bid shopping is prohibited.
Sec. 3-444. - Reserved.
Sec. 3-445. - Contract award process.
(a) Whenever a bidder or proposer has submitted a bid or proposal that is not in material compliance with the requirements of this division, the contracting department or incentive agency shall reject the bid or proposal unless the goals are waived pursuant to section 3-437 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-437WAMBWBGO>.
(b) If, after a contract is awarded, it is determined that a solicitation or award is in violation of this division, the contractor or developer may continue performance if the department director makes a written determination that it is in the best interests of the city, without prejudice to any other legal remedies available to it under the contract.
Sec. 3-446. - Reserved.
Sec. 3-447. - Liquidated damages.
(a) All city and incentive agency contracts which contain goals shall contain a provision which provides for liquidated damages in the event the contractor or developer fails to achieve the SBE participation specified in the contractor utilization plan as finally approved by the director or the goals established pursuant to section 3-431 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-431SEGOINCO>, whichever is lower, and fails to exert good faith efforts. For city contracts, the determination of whether the contractor failed to exert good faith efforts shall be made by the director. For incentive agency contracts, the director and the applicable incentive agency shall confer regarding whether the contractor or developer failed to exert good faith efforts. Any contractor, developer, city department, or incentive agency affected by a determination concerning good faith efforts or the assessment or amount of liquidated damages may request expedited CREO review pursuant to section 3-451.
(b) The amount of liquidated damages for city contracts shall be in an amount as determined by the director. For incentive agency contracts, the director and incentive agency shall jointly agree on the amount of liquidated damages and may jointly agree to a remedy alternative to liquidated damages which promotes the goals of the city's SBE program. The liquidated damages may not exceed the difference between the monetary amount of the SBE participation finally approved, and as may be modified or waived, in accordance with this division, and the amount actually paid to certified SBEs appearing on a CUP or modification approved by the director, unless waived pursuant to section 3-437 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-437WAMBWBGO>.
Sec. 3-448. - Reserved.
Sec. 3-449. -Reserved.
Sec. 3-450. -Reserved.
Sec. 3-451. -Expedited CREO review.
(a) Expedited CREO review. During the effective period of this division, any bidder, proposer, contractor, developer, city department, or incentive agency affected by a determination made under this division may request an expedited review by the director. The request shall be submitted in writing to the director within five (5) calendar days after notice of the determination.
(b) Scope of review. Expedited CREO review may be requested for determinations concerning good faith efforts, waiver requests, contractor utilization plans, modifications or substitutions, contract participation credit, or the assessment or amount of liquidated damages.
(c) Review process. Upon receipt of a timely request, the director shall review the determination, any materials submitted by the requesting party, and any additional information the director determines is necessary to complete the review. The director may designate appropriate CREO staff to assist with the review, provided that the final written decision shall be issued by the director.
(d) Time for decision. The director shall issue a written decision as soon as practicable, but no later than ten (10) calendar days after receipt of the request for expedited CREO review, unless the director determines that additional time is necessary due to the complexity of the matter. Any extension shall be limited to the shortest period reasonably necessary to complete the review.
(e) Effect of decision. The director’s written decision after expedited CREO review shall constitute the final administrative determination of the department for purposes of this division, subject to any authority retained by the city council to waive or modify the application of this division when the city council determines that such action is in the best interests of the city.
(f) Temporary nature of review process. Because this division is intended to operate as an interim stop-gap program for a limited period, the expedited CREO review process established by this section shall apply notwithstanding any other appeal process that would otherwise be available under this chapter.
Sec. 3-452. - Reserved.
Sec. 3-453. - Reserved.
Sec. 3-454. - Reserved.
Sec. 3-455. - Procedures for construction contracts.
(a) The following shall apply to construction contracts in which the estimated cost thereof is more than $400,000.00:
(1) Bid submissions. Bidders shall submit an affidavit of intended utilization with their bids.
(2) Forty-eight-hour submissions. Bidders on city contracts shall submit the following within forty-eight (48) hours after bid opening:
a. A contractor utilization plan in conformance with section 3-433 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-433COUTPL> hereof; and
b. Confirmation of subcontractor participation or letters of intent to subcontract; and
c. Good faith efforts documentation pursuant to sections 3-437 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-437WAMBWBGO> and 3-441 if the bidder failed to meet or exceed the goals.
(3) Timely submission of the contractor utilization plan is a material element of the submission. The director is authorized to extend the forty-eight-hour deadline for confirmation of participation or letters of intent to subcontract but not the deadline for submission of the contractor utilization plan.
(4) The apparent successful bidder shall submit documentation of good faith efforts made prior to forty-eight (48) hours after bid opening when requested by the city or the incentive agency.
(5) A notarized affidavit certifying actual SBE participation in the contract, including the names of such SBEs and the participation amount, and a certification that all SBE subcontractors and other subcontractor have been paid must be submitted by the contractor prior to the city's release of retainage under the contract. Partial release of retainage for subcontractors whose work is completed may be approved with the submission of a notarized affidavit certifying that their work under the contract is complete.
(6) Any increase in the amount of SBE participation after submission of the contractor utilization plan shall not count toward meeting the contract goals, unless otherwise permitted under section 3-443 hereof.
(7) Bid shopping is prohibited.
Sec. 3-456. - Procedures for incentive agency agreements.
For incentive projects, the incentive agency shall require that the CUP be approved prior to granting the applicable incentive. If the incentive project is bid in phases, the developer(s) shall submit an estimated timetable for additional phases. The director shall approve or reject the CUP within thirty (30) calendar days of receiving the same and, if rejected, provide a written explanation for such rejection. If the director fails to reach a decision within thirty (30) calendar days of receiving the CUP, the CUP will be deemed approved by the director or in the event a CUP has not been approved or deemed approved by the director then the incentive agency shall incorporate within the incentive agency contract a contractor utilization plan which provides for goals established pursuant to section 3-431 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-431SEGOINCO>.
Sec. 3-457. - Procedures for all other contracts.
(a) The following procedures shall apply to all contracts not covered by section 3-455 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-455PRCOCO> and 3-456 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-456PRINAGAG>, and for which goals have been established:
(1) For contracts awarded pursuant to competitive bidding, bidders shall submit an affidavit of intended utilization with their bid. Within forty-eight (48) hours after bid opening, they shall submit the following additional documentation:
a. A contractor utilization plan in conformance with section 3-433 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-433COUTPL> hereof; and
b. Confirmation of subcontractor participation or letters of intent to subcontract for each certified SBE firm utilized; and
c. Good faith efforts documentation pursuant to sections 3-437 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-437WAMBWBGO> and 3-441 if the bidder failed to meet or exceed the goals.
(2) For contracts awarded pursuant to requests for proposals, proposers shall submit an affidavit of intended utilization with their proposal. Prior to the award of any contract, they shall submit the following additional documentation:
a. A contractor utilization plan in conformance with section 3-433 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-433COUTPL> hereof; and
b. Confirmation of subcontractor participation or letters of intent to subcontract for each certified SBE firm utilized; and
c. Good faith efforts documentation pursuant to sections 3-437 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-437WAMBWBGO> and 3-441 if the bidder failed to meet or exceed the goals.
(3) Timely submission of the contractor utilization plan is a material element of the bid or proposal submission. The director is authorized to extend the forty-eight-hour deadline for the confirmation of participation or letters of intent to subcontract but not the deadline for submission of the contractor utilization plan. However, for contracts for the award of grant funds or contracts for the sale of real property, the director may waive the requirements of subsection (1) or (2), provided that the contract requires that all documentation be submitted and approved prior to the city reimbursing or paying any funds under the contract.
(4) Documentation of good faith efforts shall be submitted when requested by the city or an incentive agency.
(5) Any increase in the amount of SBE participation after submission of the contractor utilization plan shall not count toward meeting the contract goals, unless otherwise permitted under section 3-443 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-443MOSU> hereof.
Sec. 3-458. - Required reporting for city departments.
City departments engaging in contracting shall provide any and all information required by the director in a format prescribed by the director in such intervals are the director may determine, including but not limited to the following:
(a) Contract awards;
(b) Contractor utilization plans;
(c) Contract amendments;
(d) Contract change orders;
(e) Requests for modification or substitution;
(f) Partial releases of retainage;
(g) Contract renewals;
(h) Contract closeouts.
Sec. 3-459. - Required reporting for contractors and developers.
All contractors and developers with a contractor utilization plan shall provide any and all information required by the director in a format prescribed by the director in such intervals as the director may determine.
Sec. 3-460. - Reserved.
Sec. 3-461. - Certification and appeals.
(a) To ensure that this article benefits only SBEs that are owned and controlled by bona fide economically disadvantaged owners, the director shall certify SBEs and joint ventures who wish to participate in the program. Any person not certified by the civil rights and equal opportunity department shall not be regarded as an SBEs or joint venture under this division.
(b) Each entity seeking certification as an SBE must demonstrate by written documentation or affidavit that its owner’s (or each individual owner who collectively holds at least fifty-one percent (51%) ownership interest in the firm) personal net worth is equal to or less than the permissible amount determined by 49 CFR 26.68. Entities seeking certification as an SBE shall submit all information or documentation requested by the city's civil rights and equal opportunity department in determining whether the entity complies with this subsection.
(c) Each person that seeks certification as an SBE in the Kansas City metropolitan area must demonstrate that the business enterprise has a real and substantial presence. Any business enterprise shall be deemed to have a real and substantial presence in the Kansas City metropolitan area if:
(1) The firm's principal office or place of business is in the Kansas City metropolitan area; and
(2) The firm maintains full-time employees in one or more of the firm's offices within the Kansas City metropolitan area to conduct or solicit business in the Kansas City metropolitan Area the majority of their working time; and
(3) The firm has transacted business more than once in the Kansas City metropolitan area within the last three (3) years; and
(4) The firm's principal office or place of business has been in existence in the Kansas City metropolitan area at least six (6) months prior to application for participation in the SBE program.
(d) All applicants and certified businesses shall be subject to an audit by the director at any time. An applicant's or certified business' refusal to facilitate an audit shall be grounds for denial of its certification application or revocation of its certification.
(e) All applicants and certified businesses shall be required to demonstrate and prove that the business has the skill and expertise to perform as a subcontractor in the particular area of work for which it is requesting listing or is listed on the SBE/DBE Kansas City Online Directory.
(f) All applicants and certified businesses shall submit such information or documentation as may be required by the director in connection with its certification as an SBE, including, but not limited to current licenses and federal, state and local tax returns and schedules (business and personal) for all owners holding an ownership interest in the firm of five percent (5%) or more, and all other forms that are required to be included with or attached to the return at the time of filing. Failure to submit such information or documentation shall result in the denial of its certification application or revocation of its certification.
(g) A certification application may be withdrawn by an applicant without prejudice at any time prior to a final determination. All applications and documentation submitted to support an application will not be returned to the applicant.
(h) Burden of proof in the certification process. The firm seeking certification has the burden of demonstrating to the director, by a preponderance of the evidence, that it meets all the requirements for certification. The director shall make determinations concerning whether individuals and firms have met their burden of demonstrating economically disadvantaged status, business size, expertise, commercially useful function, ownership, management, independence and control by considering all the facts in the record, viewed as a whole.
(i) Business size determinations. To be an SBE, a firm (including its affiliates as defined by 13 CFR 121.103) must be an existing and currently functioning small business. The director shall apply the SBA business size standard(s) found in 13 CFR 121.201 and as amended as of the date of application and appropriate to the type(s) of work the firm seeks to perform.
(1) SBE Certification: Firms with 5 year average gross receipts of less than $10,000,000 and meeting the SBA size standards for the scopes of work performed by the firm.
(j) Determination of ownership. In determining whether the economically disadvantaged participants in a firm own the firm, the director shall consider all the facts in the record, viewed as a whole.
(1) To be an SBE, a firm must be at least fifty-one percent (51%) owned by one or more economically disadvantaged individuals, reflected as follows:
a. In the case of a corporation, such individuals must own at least fifty-one percent (51%) of each class of voting stock outstanding and fifty-one percent (51%) of the aggregate of all stock outstanding.
b. In the case of a partnership, fifty-one percent (51%) of each class of partnership interest must be owned by economically disadvantaged individuals. Such ownership must be reflected in the firm's partnership agreement.
c. In the case of a limited liability company, at least fifty-one percent (51%) of each class of member interest must be owned by the economically disadvantaged individuals.
(2) The firm's ownership by economically disadvantaged owner(s) must be real, substantial, and continuing, going beyond pro forma ownership of the firm as reflected in ownership documents. The economically disadvantaged owner(s) must enjoy the customary incidents of ownership and share in the risks and profits commensurate with their ownership interests, as demonstrated by the substance, not merely the form, of arrangements.
(3) All securities that constitute ownership of a firm shall be held directly by the economically disadvantaged owner(s). Except as provided in this subsection (3), no securities or assets held in trust, or by any guardian for a minor, are considered as held by economically disadvantaged individual(s) in determining the ownership of a firm. However, securities or assets held in trust are regarded as held by an economically disadvantaged individual(s) for purposes of determining ownership of the firm, if:
a. The beneficial owner of securities or assets held in trust is an economically disadvantaged individual, and the trustee is the same or another such individual; or
b. The beneficial owner of a trust is an economically disadvantaged individual who, rather than the trustee, exercises effective control over the management, policymaking, and daily operational activities of the firm. Assets held in a revocable living trust may be counted only in the situation where the same economically disadvantaged individual is the sole grantor, beneficiary, and trustee.
(4) The contributions of capital or expertise by the economically disadvantaged owner or owners to acquire their ownership interests must be real and substantial. Examples of insufficient contributions include a promise to contribute capital, an unsecured note payable to the firm or an owner who is not an economically disadvantaged individual, or mere participation in a firm's activities as an employee. Debt instruments from financial institutions or other organizations that lend funds in the normal course of their business do not render a firm ineligible, even if the debtor's ownership interest is security for the loan.
(5) In situations where expertise is relied upon as part of an economically disadvantaged owner's contribution to acquire ownership:
a. The owner's expertise must be:
1. In a specialized field; and
2. In areas critical to the firm's operations; and
3. Indispensable to the firm's potential success; and
4. Specific to the type of work the firm performs; and
5. Documented in the records of the firm. These records must clearly show the contribution of expertise and its value to the firm.
b. The individual whose expertise is relied upon must have a significant financial investment in the firm.
(6) The director shall always deem as being held by an economically disadvantaged individual, for purposes of determining ownership, all interests in a business or other assets obtained by the individual:
a. As the result of a final property settlement or court order in a divorce or legal separation, provided that no term or condition of the agreement or divorce decree is inconsistent with this section; or
b. Through inheritance, or otherwise because of the death of the former owner.
(7) Presumptions regarding interests obtained without consideration:
a. The director shall presume as not being held by an economically disadvantaged individual, for purposes of determining ownership, all interests in a business or other assets obtained by the individual as the result of a gift, or transfer without adequate consideration, from any non-economically disadvantaged individual or non-SBE firm who is:
1. Involved in the same firm for which the individual is seeking certification, or an affiliate of that firm; or
2. Involved in the same or a similar line of business; or
3. Engaged in an ongoing business relationship with the firm, or an affiliate of the firm, for which the individual is seeking certification.
b. To overcome this presumption and permit the interests or assets to be counted, the economically disadvantaged individual must demonstrate to the director, by clear and convincing evidence, that:
1. The gift or transfer to the economically disadvantaged individual was made for reasons other than obtaining certification as an SBE; and
2. The economically disadvantaged individual actually controls the management, policy, and operations of the firm, notwithstanding the continuing participation of non-economically disadvantaged individuals or non-SBE; firm who provided the gift or transfer.
(8) The director shall apply the following rules in situations in which marital assets form a basis for ownership of a firm:
a. When marital assets (other than the assets of the business in question), held jointly or as community property by both spouses, are used to acquire the ownership interest asserted by one spouse, the director shall deem the ownership interest in the firm to have been acquired by that spouse with their own individual resources, provided that the other spouse irrevocably renounces and transfers all rights in the ownership interest in the manner sanctioned by the laws of the state in which either spouse or the firm is domiciled. The director shall not count a greater portion of joint or community property assets toward ownership than state law would recognize as belonging to the economically disadvantaged owner of the applicant firm.
b. A copy of the document legally transferring and renouncing the other spouse's rights in the jointly owned or community assets used to acquire an ownership interest in the firm must be included as part of the firm's application for SBE certification.
(9) The director may consider the following factors in determining the ownership of a firm. However, the director must not regard a contribution of capital as failing to be real and substantial, or find a firm ineligible, solely because:
a. An economically disadvantaged individual acquired their ownership interest as the result of a gift, or transfer without adequate consideration, other than the types set forth in subsection (7) of this section; or
b. There is a provision for the co-signature of a spouse who is not an economically disadvantaged individual on financing agreements, contracts for the purchase or sale of real or personal property, bank signature cards, or other documents; or
c. Ownership of the firm in question or its assets is transferred for adequate consideration from a spouse who is not anna economically disadvantaged to a spouse who is such an individual. In this case, the director must give particularly close and careful scrutiny to the ownership and control of a firm to ensure that it is owned and controlled, in substance as well as in form, by an economically disadvantaged individual.
(k) Determinations concerning control. In determining whether the economically disadvantaged owner controls a firm, the director must consider all the facts in the record, viewed as a whole.
(1) Only an independent business may be certified as an SBE. An independent business is one whose viability does not depend on its relationship with another firm or firms.
a. In determining whether a potential SBE is an independent business, the director must scrutinize relationships with non-SBE firms, in such areas as personnel, facilities, equipment, financial and/or bonding support, and other resources.
b. The director must consider whether present or recent employer/employee relationships between the economically disadvantaged owner(s) of the potential SBE and non-SBE firms or persons associated with non-SBE firms compromise the independence of the potential SBE firm.
c. The director must examine the firm's relationships with prime contractors to determine whether a pattern of exclusive or primary dealings with a prime contractor compromises the independence of the potential SBE firm.
d. In considering factors related to the independence of a potential SBE firm, the director must consider the consistency of relationships between the potential SBE and non-SBE firms with normal industry practice.
(2) An SBE firm must not be subject to any formal or informal restrictions which limit the customary discretion of the economically disadvantaged owners. There can be no restrictions through corporate charter provisions, by-law provisions, contracts or any other formal or informal devices (e.g., cumulative voting rights, voting powers attached to different classes of stock, employment contracts, requirements for concurrence by non-disadvantaged partners, conditions precedent or subsequent, executory agreements, voting trusts, restrictions on or assignments of voting rights) that prevent the economically disadvantaged owners, without the cooperation or vote of any non-economically disadvantaged owners, from making any business decision of the firm. This paragraph does not preclude spousal co-signature on documents.
(3)The economically disadvantaged owners must possess the power to direct or cause the direction of the management and policies of the firm and to make day-to-day as well as long-term decisions on matters of management, policy and operations.
a. An economically disadvantaged owner must hold the highest officer position in the company (e.g., chief executive officer or president).
b. In a corporation, economically disadvantaged owners must control the board of directors.
c. In a partnership, one or more economically disadvantaged owners must serve as general partners, with control over all partnership decisions.
(4) Individuals who are not economically disadvantaged may be involved in an SBE firm as owners, managers, employees, stockholders, officers, and/or directors. Such individuals must not, however, possess or exercise the power to control the firm, or be disproportionately responsible for the operation of the firm.
(5) The economically disadvantaged owners of the firm may delegate various areas of the management, policymaking, or daily operations of the firm to other participants in the firm, regardless of whether these participants are economically disadvantaged owners. Such delegations of authority must be revocable, and the economically disadvantaged owners must retain the power to hire and fire any person to whom such authority is delegated. The managerial role of the economically disadvantaged owners in the firm's overall affairs must be such that the recipient can reasonably conclude that the economically disadvantaged owners actually exercise control over the firm's operations, management, and policy.
(6) The economically disadvantaged owners must have an overall understanding of, and managerial and technical competence and experience directly related to, the type of business in which the firm is engaged and the firm's operations. The economically disadvantaged owners are not required to have experience or expertise in every critical area of the firm's operations, or to have greater experience or expertise in a given field than managers or key employees. The economically disadvantaged owners must have the expertise, technical competence, and ability to intelligently and critically evaluate information presented by other participants in the firm's activities and to use this information to make independent decisions concerning the firm's daily operations, management, and policymaking. Generally, expertise limited to office management, administration, or bookkeeping functions unrelated to the principal business activities of the firm is insufficient to demonstrate control.
(7) If state or local law requires the persons to have a particular license or other credential in order to own and/or control a certain type of firm, then the economically disadvantaged persons who own and control a potential SBE firm of that type must possess the required license or credential. If state or local law does not require such a person to have such a license or credential to own and/or control a firm, the director must not deny certification solely on the ground that the person lacks the license or credential. However, the director may take into account the absence of the license or credential as one factor in determining whether the economically disadvantaged owners actually control the firm.
(8) The director may consider differences in remuneration between the economically disadvantaged owners and other participants in the firm in determining whether to certify a firm as an SBE. Such considerations shall be in the context of the duties of the persons involved, normal industry practices, the firm's policy and practice concerning reinvestment of income, and any other explanations for the differences provided by the firm. The director may determine that a firm is controlled by its economically disadvantaged owner although that owner's remuneration is lower than that of some other participants in the firm. In a case where a non-economically disadvantaged individual formerly controlled the firm, and an economically disadvantaged owner individual now controls it, the director may consider a difference between the remuneration of the former and current controller of the firm as a factor in determining who controls the firm, particularly when the non-economically disadvantaged individual remains involved with the firm and continues to receive greater compensation than the economically disadvantaged individual.
(9) In order to be viewed as controlling a firm, an economically disadvantaged owner cannot engage in outside employment or other business interests that conflict with the management of the firm or prevent the individual from devoting sufficient time and attention to the affairs of the firm to control its activities. For example, absentee ownership of a business and part-time work in a full-time firm are not viewed as constituting control. However, an individual could be viewed as controlling a part-time business that operates only in the evenings and/or on weekends, if the individual controls it all the time it is operating.
(10) An economically disadvantaged individual may control a firm even though one or more of the individual's immediate family members (who themselves are not economically disadvantaged) participate in the firm as a manager, employee, owner, or in another capacity. Except as otherwise provided in this paragraph, the director must make a judgment about the control of the economically disadvantaged owner exercises vis-à-vis other persons involved in the business as in other situations, without regard to whether or not the other persons are immediate family members. If the director cannot determine whether the economically disadvantaged owners, as distinct from the family as a whole, control the firm, then the economically disadvantaged owners have failed to carry their burden of proof concerning control, even though they may participate significantly in the firm's activities.
(11) Where a firm was formerly owned and/or controlled by a non-economically disadvantaged individual (whether or not an immediate family member), ownership and/or control were transferred to an economically disadvantaged individual, and the non-economically disadvantaged individual remains involved with the firm in any capacity, the economically disadvantaged individual now owning the firm must demonstrate to the director, by clear and convincing evidence, that:
a. The transfer of ownership and/or control to the economically disadvantaged individual was made for reasons other than obtaining certification as an SBE; and
b. The economically disadvantaged individual actually controls the management, policy, and operations of the firm, notwithstanding the continuing participation of a non-economically disadvantaged individual who formerly owned and/or controlled the firm.
(12) In determining whether a firm is controlled by its economically disadvantaged owners, the director shall consider whether the firm owns equipment necessary to perform its work. However, the director must not determine that a firm is not controlled by economically disadvantaged individuals solely because the firm leases, rather than owns, such equipment, where leasing equipment is a normal industry practice and the lease does not involve a relationship with a prime contractor or other party that compromises the independence of the firm.
(13) The director shall grant certification to a firm only for specific types of work in which they are currently functioning and in which the economically disadvantaged owners have the ability to control the firm. To become certified in an additional type of work, the firm needs to demonstrate to the director that its economically disadvantaged owners are able to control the firm with respect to that type of work. The director may not, in this situation, require that the firm be recertified or submit a new application for certification, but must verify the economically disadvantaged owner's control of the firm in the additional type of work.
(14) A business operating under a franchise or license agreement may be certified if it meets the standards in this subpart and the franchiser or licenser is not affiliated with the franchisee or licensee. In determining whether affiliation exists, the director should generally not consider the restraints relating to standardized quality, advertising, accounting format, and other provisions imposed on the franchisee or licensee by the franchise agreement or license, provided that the franchisee or licensee has the right to profit from its efforts and bears the risk of loss commensurate with ownership. Alternatively, even though a franchisee or licensee may not be controlled by virtue of such provisions in the franchise agreement or license, affiliation could arise through other means, such as common management or excessive restrictions on the sale or transfer of the franchise interest or license.
(15) In order for a partnership to be controlled by economically disadvantaged individuals, any non-economically disadvantaged partner must not have the power, without the specific written concurrence of the economically disadvantaged partner(s), to contractually bind the partnership or subject the partnership to contract or tort liability.
(16) The economically disadvantaged individuals controlling a firm may use a professional and commercial employee leasing company. The use of such a company does not preclude the economically disadvantaged individuals from controlling their firm if they continue to maintain an employer-employee relationship with the leased employees. This includes being responsible for hiring, firing, training, assigning, and otherwise controlling the on-the-job activities of the employees, as well as ultimate responsibility for wage and tax obligations related to the employees.
(17) The director may consider, in making certification decisions, whether a firm has exhibited a pattern of conduct indicating its involvement in attempts to evade or subvert the intent or requirements of the SBE program.
(18) The director shall evaluate the eligibility of a firm on the basis of present circumstances. The director shall not refuse to certify a firm based solely on historical information indicating a lack of ownership or control of the firm by the economically disadvantaged owners at some time in the past, if the firm currently meets the ownership and control standards of this part.
(19) SBE firms and firms seeking SBE certification shall cooperate fully with the director's requests for information. Failure or refusal to provide such information is a ground for a denial or removal of certification.
(20) An eligible SBE firm must be owned by individuals who are economically disadvantaged. Except as provided in this paragraph, a firm that is not owned by such individuals, but instead is owned by another firm-even an SBE firm-cannot be an eligible SBE.
a. If the economically disadvantaged individuals own and control a firm through a parent or holding company, established for tax, capitalization or other purposes consistent with industry practice, and the parent or holding company in turn owns and controls an operating subsidiary, the director may certify the subsidiary if it otherwise meets all requirements of this section. In this situation, the individual owners and controllers of the parent or holding company are deemed to control the subsidiary through the parent or holding company.
b. The director may certify such a subsidiary only if there is cumulatively fifty-one percent (51%) ownership of the subsidiary by the economically disadvantaged individuals. The following examples illustrate how this cumulative ownership provision works:
Example 1: Economically disadvantaged individuals own one hundred percent (100%) of a holding company, which has a wholly owned subsidiary. The subsidiary may be certified, if it meets all other requirements.
Example 2: Economically disadvantaged individuals own one hundred percent (100%) of the holding company, which owns fifty-one percent (51%) of a subsidiary. The subsidiary may be certified, if all other requirements are met.
Example 3: Economically disadvantaged individuals own eighty percent (80%) of the holding company, which in turn owns seventy percent (70%) of a subsidiary. In this case, the cumulative ownership of the subsidiary by economically disadvantaged individuals is fifty-six (56%) [eighty percent (80%) of the seventy percent (70%)]. This is more than fifty-one percent (51%), so the director may certify the subsidiary, if all other requirements are met.
Example 4: Same as example 2 or 3, but someone other than economically disadvantaged owners of the parent or holding company controls the subsidiary. Even though the subsidiary is owned by economically disadvantaged individuals, through the holding or parent company, the director cannot certify it because it fails to meet control requirements.
Example 5: Economically disadvantaged individuals own sixty percent (60%) of the holding company, which in turn owns fifty-one percent (51%) of a subsidiary. In this case, the cumulative ownership of the subsidiary by economically disadvantaged individuals is about thirty-one percent (31%). This is less than fifty-one percent (51%), so the director cannot certify the subsidiary.
Example 6: The holding company, in addition to the subsidiary seeking certification, owns several other companies. The combined gross receipts of the holding company and its subsidiaries are greater than the size standard for the subsidiary seeking certification and/or the gross receipts cap. Under the rules concerning affiliation, the subsidiary fails to meet the size standard and cannot be certified.
(21) Recognition of a business as a separate entity for tax or corporate purposes is not necessarily sufficient to demonstrate that a firm is an independent business, owned and controlled by economically disadvantaged individuals.
(l) The director is authorized to require SBE firms to submit yearly updates of information including, but not limited to, current licenses and federal, state and local tax returns and schedules (business and personal), and all other forms that are required to be included with or attached to the return at the time of filing. An SBE shall remain certified as an SBE as long as the firm continues to meet the requirements for certification as an SBE and the firm files timely yearly updates.
(m) Once certified, an SBE must notify the department in writing within thirty (30) calendar days of any change(s) in circumstances affecting the firm's ability to meet ownership, control, or size requirements or any material change(s) in the information provided in the certification application process. The statement must include supporting documentation describing in detail the nature of such changes. Change(s) in management responsibility among members of a limited liability company are also covered by this requirement. If the SBE fails to make timely notification of such change(s), it will be deemed to have failed to cooperate and certification may be revoked.
(n) The director shall safeguard information that reasonably may be regarded as confidential business information from disclosure to unauthorized persons consistent with federal, state and local law.
(o) Appeals of denials or revocations of certification.
(1) If the city denies a request for SBE certification from a firm which is not currently certified by the city, then the firm shall be ineligible to reapply for SBE certification for six (6) months from the later of the date of the denial of certification or the final date of any decision on an appeal.
(2) In circumstances where a firm has failed to submit required documentation, failed to demonstrate real and substantial presence, or exceeded business size standards, there will be no administrative re-consideration of a denial or revocation of SBE certification.
(3) Upon the denial or revocation of certification as an SBE or joint venture by the department, the director shall notify the affected party in writing setting forth the reason(s) for the revocation of certification. Except as provided in (2) of this subsection, any firm who has had certification as an SBE or joint venture revoked or denied by the department may request expedited CREO review pursuant to section. 3-451.
(4) The decision of the director shall be considered final and the method for appeal shall be through judicial review as provided by RSMo Chapter 536.
(p) The city manager is authorized to revoke SBE certification for cause. The certification of a person who has been debarred by the city in a debarment proceeding shall be automatically terminated or modified in a manner provided by the debarment ordinance. No individual, corporation, partnership, limited liability company or any other business entity whatsoever shall be certified as an SBE if the economically disadvantaged individuals whose ownership interest would serve as the basis for obtaining certification, or who would control the entity seeking certification, presently owns or previously owned a majority interest in or controlled an SBE whose certification has been revoked for cause within the five (5) year period immediately preceding the submittal of the certification application. No individual, corporation, partnership, limited liability company or any other business entity whatsoever shall be certified as an SBE if the economically disadvantaged individuals whose ownership interest would serve as the basis for obtaining certification, or who would control the entity seeking certification, presently owns or previously owned a majority interest in or controlled an SBE whose certification has been suspended for cause, provided however that this restriction shall last no longer than the term of the suspension.
Sec. 3-462. - Reserved.
Sec. 3-463. - Duties and authority of director.
(a) The director is hereby authorized to establish rules and regulations to implement this division, such rules and regulations shall be submitted to the city council for its approval and shall be in writing and published.
(b) Notwithstanding any other section to the contrary, the director is hereby authorized to establish rules and regulations to implement the city's SBE program requirements into contracts that utilize alternative construction delivery methods pursuant to Chapter 3 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE>, Code of Ordinances, or other alternative procurement or contracting methods if the contract would be subject to SBE goals under this division.
(c) The director shall, in addition to any other duties specified herein:
(1) Administer and enforce this article to ensure that SBEs have equal opportunity to participate in city contracts and subcontracts and work with all city department directors and agency heads to implement the city's SBE program.
(2) Coordinate the establishment of SBE methodologies with all city departments and incentive agencies including establishment of goals as may be appropriate to remedy underutilization of SBEs.
(3) Update the SBE Kansas City MO Online Directory available to all bidders, proposers, the general public, city departments, and incentive agencies no less frequently than every three (3) months.
(4) Assist city departments, incentive agencies, bidders, proposers, contractors, and developers in finding qualified SBEs to participate on contracts.
(5) Identify appropriate participation opportunities for qualified SBEs in contracts.
(6) Publish an annual report for the city's fiscal year which states for each city department and agency:
a. The number of contracts awarded and the total contract dollars awarded pursuant to such contracts; and
b. The number of prime contracts awarded to SBEs and the total dollars awarded and paid pursuant to such contracts; and
c. The number of subcontracts awarded to SBEs as and the total contract dollars awarded and paid pursuant to such contracts; and
d. A summary of total waiver requests submitted that are granted or denied and the reasons for the grant or denial; and
e. The number of SBE firms certified by the department
(7) Provide a compliance report to the city manager within thirty (30) days after the end of each quarter which shall include:
a. The total number of contracts awarded, and the total contract dollar amount awarded pursuant to such contracts; and
b. The number of contracts awarded to qualified SBEs and the total contract dollar amount awarded and paid pursuant to such contracts; and
c. An evaluation of the city's progress toward meeting SBE utilization plans and any actions they intend to take to address any shortfall in meeting the goals established in such plans; and
d. Any other information as may be required by the city manager.
(8) Provide monthly compliance reports to the applicable incentive agency for contracts entered into in connection with section 3-425 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-425APLETAINFITAABEN>(b) and (c) updating the incentive agency as to the project developer's compliance with the SBE goals and work with the applicable incentive agency to assist developers who are not compliant. Failure of the director to furnish these reports does not absolve any incentive agency or developer from complying with the processes outlined by agreement with the incentive agency.
(9) Provide the city council a report outlining the effects of any revisions to this division within eighteen (18) months of their effective date. The purpose of this report is to ensure that such revisions promote increased opportunities for small business enterprise participation on contracts.
(10) Develop and maintain relationships with organizations representing contractors, including small business organizations, and solicit their support for the city's program.
(11)
(12) Implement any federal or state economically disadvantaged business enterprise program required by law or federal or state contract.
Sec. 3-464. - Reserved.
Sec. 3-465. - Penalties for noncompliance; no retaliation.
(a) Whenever a bidder, proposer or contractor has submitted a bid that is not in material compliance with the requirements of this division, the contracting department or agency shall reject the bid or proposal unless the goals are waived pursuant to section 3-437 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-437WAMBWBGO>.
(b) The director is authorized to recommend suspension, revocation, sanction, or debarment of any contract or contractor, as appropriate, for providing false or misleading information to the department, purposefully omitting or refusing to provide information requested by the department, or otherwise violating any provision of this division.
(c) The director is authorized to suspend or revoke the certification of an SBE or joint venture, as appropriate, for providing false or misleading information to the department, purposefully omitting or refusing to provide information requested by the department, or otherwise violating any provision of this division, without having to make a recommendation to any other person or department.
(d) Sanctions shall be imposed in conformity with any applicable federal, state, or local laws. In determining whether to suspend or revoke the certification of an SBE or joint venture, the director shall consider the following factors:
(1) Whether the failure to comply with applicable requirements involved intentional conduct or, alternatively, may be reasonably concluded to have resulted from a misunderstanding on the part of the SBE or joint venture; and
(2) The number of specific incidents of failure by the SBE or joint venture to comply; and
(3) Whether the SBE or joint venture has been previously suspended; and
(4) Whether the SBE or joint venture has failed or refused to provide the director with any information requested by the director or required to be submitted to the director pursuant to law or these procedures; and
(5) Whether the SBE or joint venture has materially misrepresented any applicable facts in any filing or communication to the director; and
(6) Whether any subsequent restructuring of the subject business or other action has been undertaken to cure the deficiencies in meeting applicable requirements.
(e) Suspensions may be for any length of time not to exceed two (2) years. Suspensions in excess of one (1) year and revocations of certification shall be reserved for cases involving intentional or fraudulent misrepresentation or concealment of material facts, multiple acts in contravention of applicable requirements, cases where the SBE or joint venture has been previously suspended, or other similarly egregious conduct.
(f) The making of any false or misleading statements shall be grounds for application of any applicable criminal and/or civil penalties in addition to the grounds for sanction.
(g) No person shall intimidate, threaten, coerce, or discriminate against any individual or business for the purpose of interfering with the implementation or enforcement of any provision of this article because such individual or business filed a complaint or cooperated in the investigation of a complaint.
Sec. 3-466. - Reserved.
Sec. 3-467. - Mediation of disputes.
(a) Any claim or dispute between a contractor, subcontractor, or supplier that remains unresolved after thirty (30) calendar days shall be subject to mandatory mediation conducted in accordance with the rules of the Uniform Mediation Act. The mediation shall be conducted by an impartial mediator appointed by the department, who shall render their services with full regard for each party's interests. If the subject matters of the dispute or the parties to the dispute are such that the assigned mediator would have a conflict of interest or personal interest in the outcome of the mediation, they shall immediately recuse themselves and another mediator shall be appointed.
(b) The procedures for the mediation shall be established by the appointed mediator in conjunction with the parties, who shall attempt to resolve their dispute in good faith.
(c) Except to the extent disclosure is otherwise required by law, the mediation and the terms of any settlement reached by the parties shall remain confidential.
(d) The mediation provided for by this section shall be a condition precedent to the initiation or pursuit of any other lawful means of resolving the dispute, including arbitration and other legal proceedings.
(e) If a third-party mediation service is requested by either party, the requesting party shall be responsible for the expense of the mediator’s fee. Agreements reached in mediation shall be enforceable as settlement agreements in any court having jurisdiction thereof.
(f) Every contractor entering into a contract as defined by section 3-421 <https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-421DE>(a) shall incorporate the provisions of this section into each related agreement with a subcontractor or supplier, but the failure to do so shall not alleviate the obligation of the parties to utilize the mediation provided for herein as a condition precedent to the initiation or pursuit of any other lawful means of resolving the dispute, including arbitration and other legal proceedings. The requirements of this section shall be deemed incorporated into each related agreement by operation of law and shall supplant any term or provision, written or oral, to the contrary.
(g) Notwithstanding the foregoing, for incentive projects any arbitration or mediation between the prime contractor or developer and the SBE firm shall be in accordance with the arbitration or mediation provisions, as applicable, contained in the contract between the prime contractor or developer and the SBE firm. The provision shall not serve to inhibit the director's ability to assist the prime contractor or developer and the SBE firm in reaching a compromise in matters of dispute.
Sec. 3-468. - Reserved.
Sec. 3-469. - Reserved.
Sec. 3-470. - Reserved.
Sec. 3-471. - Reserved.
Sec. 3-472. - Reserved.
Sec. 3-473. - Severability.
The provisions of this division are severable. If any provision or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the remaining provisions, including the application of such provisions to other persons or circumstances, shall continue in full force and effect.
Sec. 3-474 - 3-500. - Reserved.
Section 2. That Chapter 3 of the Code of Ordinances is hereby further amended by repealing Article IV, Division 4, titled “Small Local Business Enterprises (SLBE)”, in its entirety.
Section 3. Authorizing the Director of the Civil Rights and Equal Opportunity Department to promulgate rules and regulations necessary to provide for self-reporting of program compliance by contractors and subcontractors consistent with the requirements of this Ordinance.
end
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Approved as to form:
______________________________
Julian Langenkamp
Associate City Attorney