Florida Senate - 2017 SB 560 By Senator Campbell 38-00902-17 2017560__ 1 A bill to be entitled 2 An act relating to small business participation in 3 state contracting; creating s. 287.0577, F.S.; 4 defining the terms “contract bundling” and “small 5 business”; specifying circumstances under which 6 agencies must avoid contract bundling; requiring 7 agencies to conduct market research and include 8 written summaries and analyses of such research in 9 solicitations for bundled contracts; requiring certain 10 agencies to award a percentage of contracts to small 11 businesses; requiring contract vendors to use small 12 businesses in the state as subcontractors or 13 subvendors; providing requirements with respect to 14 payment of prime contractors and subcontractors; 15 prohibiting agencies, general contractors, and prime 16 contractors from requiring certain bonds or other 17 sureties for certain contracts; requiring the rules 18 ombudsman in the Executive Office of the Governor to 19 establish a system for reporting small business 20 participation in state contracting; requiring agencies 21 to cooperate with such reporting; requiring specified 22 annual reports; providing an effective date. 23 24 Be It Enacted by the Legislature of the State of Florida: 25 26 Section 1. Section 287.0577, Florida Statutes, is created 27 to read: 28 287.0577 Small business participation in state contracting; 29 contract bundling; set-asides for small businesses; bonding and 30 reporting requirements.— 31 (1) DEFINITIONS.—As used in this section, the term: 32 (a) “Contract bundling” means the consolidation of 33 contracts for the procurement of commodities or contractual 34 services, at least part of which may be provided or performed by 35 one or more small businesses, into a single contract that is not 36 appropriate for award to a small business as the prime 37 contractor. 38 (b) “Small business” means a business entity organized for 39 profit which is independently owned and operated, not dominant 40 within the business entity’s industry, and: 41 1. Is currently, and for at least the previous 3 years has 42 been, domiciled in the state. 43 2. Has a workforce of 50 or fewer permanent full-time 44 positions, whether employees, independent contractors, or other 45 contract personnel. 46 3. Has had, for at least the previous 3 years, average 47 annual gross sales that do not exceed the following: 48 a. For a contractor licensed under chapter 489, $5 million 49 per year. 50 b. For a sole proprietorship performing contractual 51 services within the scope of the proprietor’s professional 52 license or certification, $500,000 per year. 53 c. For any other business entity, $1 million per year. 54 4. Currently has, and for at least the previous 3 years has 55 had, together with its affiliates, a net worth that does not 56 exceed $5 million. For a sole proprietorship, the net worth 57 limit of $5 million includes both personal and business 58 investments but does not include the proprietor’s primary 59 residence. 60 61 The term includes any such business entity organized as any form 62 of corporation, partnership, limited liability company, sole 63 proprietorship, joint venture, association, trust, cooperative, 64 or other legal entity. 65 (2) CONTRACT BUNDLING; SOLICITATION.— 66 (a) An agency, to the maximum extent practicable, shall 67 structure agency contracts to facilitate competition by and 68 among small businesses, taking all reasonable steps to eliminate 69 obstacles to participation and avoiding unnecessary contract 70 bundling that may preclude small businesses’ participation as 71 prime contractors. 72 (b) Before issuing a solicitation for a bundled contract, 73 an agency must conduct market research to determine whether 74 contract bundling is necessary. If the agency determines that 75 contract bundling is necessary, the agency must include in the 76 solicitation a written summary of the agency’s market research 77 and a written analysis of the research which explains why 78 contract bundling is necessary. 79 (3) SET-ASIDES FOR SMALL BUSINESSES.— 80 (a) An agency shall annually award to small businesses, 81 either directly or indirectly as subcontractors, at least 35 82 percent of the total dollar amount of contracts awarded. 83 (b) Each contract awarded under s. 287.057 must require the 84 vendor to use small businesses as subcontractors or subvendors. 85 The percentage of funds, in terms of gross contract amount and 86 revenues, which must be expended for subcontracting with small 87 businesses, shall be determined by the agency before the 88 solicitation for the contract is issued; however, the contract 89 may not allow a vendor to expend less than 35 percent of the 90 gross contract amount for subcontracting with small businesses. 91 (c) Each contract must include specific requirements for: 92 1. The timely payment of subcontractors by the prime 93 contractor and specific terms and conditions applicable if a 94 prime contractor does not pay a subcontractor within the time 95 limits specified in the contract. 96 2. The prompt payment by an agency to the prime contractor 97 within 12 calendar days, and payment by a prime contractor of a 98 subcontractor, subvendor, or subconsultant within 2 calendar 99 days, after receipt of a proper pay application or invoice. All 100 contracts must include twice a month billing. Each contract must 101 conform to the requirements of this subparagraph by no later 102 than July 1, 2020. 103 (4) BONDING REQUIREMENTS.—Notwithstanding any other 104 provision of law, an agency, a general contractor, or a prime 105 contractor may not require a vendor to post a bid bond, 106 performance bond, or other surety for a contract that does not 107 exceed $500,000. This subsection does not apply to any 108 requirement for posting a bond pending the protest of a 109 solicitation; the protest of a rejected bid, proposal, or reply; 110 or the protest of a contract award. 111 (5) REPORTING REQUIREMENTS.—The rules ombudsman in the 112 Executive Office of the Governor shall: 113 (a) Establish a system to measure and report the use of 114 small businesses in state contracting. This system must maintain 115 information and statistics on small business participation, 116 awards, dollar volume of expenditures, and other appropriate 117 types of information to analyze progress in small businesses’ 118 access to state contracts and to monitor agency compliance with 119 this section. Such reporting must include, but is not limited 120 to, the identification of all subcontracts in this state 121 contracting by dollar amount and by number of subcontracts and 122 identification of the use of small businesses as prime 123 contractors and subcontractors by dollar amounts of contracts 124 and subcontracts, number of contracts and subcontracts, 125 industry, and any conditions or circumstances that significantly 126 affected the performance of subcontractors. An agency shall 127 report its compliance with the reporting system at least 128 annually and at the request of the rules ombudsman in the 129 Executive Office of the Governor. All agencies shall cooperate 130 with the rules ombudsman in the Executive Office of the Governor 131 in establishing this reporting system. 132 (b) Report agency compliance with paragraph (a) for the 133 preceding fiscal year to the Governor and Cabinet, the President 134 of the Senate, and the Speaker of the House of Representatives 135 by February 1 of each year. The report must contain, at a 136 minimum, the following: 137 1. Total expenditures of each agency by industry. 138 2. The dollar amount and percentage of contracts awarded to 139 small businesses by each agency. 140 3. The dollar amount and percentage of contracts awarded 141 indirectly to small businesses as subcontractors by each agency. 142 4. The total dollar amount and percentage of contracts 143 awarded to small businesses, whether directly or indirectly as 144 subcontractors. 145 Section 2. This act shall take effect July 1, 2017.