Senate Bill sb2338

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    Florida Senate - 2002                                  SB 2338

    By Senator Villalobos





    37-1474-02                                         See HB 1323

  1                      A bill to be entitled

  2         An act relating to the Florida Minority

  3         Business Loan Mobilization Program; creating s.

  4         288.706, F.S.; providing legislative findings

  5         and intent; creating the Florida Minority

  6         Business Loan Mobilization Program for certain

  7         purposes; providing for program administration

  8         by the Department of Management Services;

  9         authorizing state agencies to expend a certain

10         amount of a contract award to minority business

11         enterprises for certain purposes; authorizing

12         professional services vendors to apply for a

13         direct retainer from agencies of a percentage

14         of a base contract amount; specifying

15         procedures for certain minority business

16         enterprise performance contracts; providing for

17         working capital agreements and lines of credit;

18         providing requirements and limitations;

19         providing requirements for prime contractors;

20         providing agency requirements; providing for

21         alternative agency disbursement procedures;

22         authorizing the Department of Management

23         Services to adopt rules; providing an effective

24         date.

25

26  Be It Enacted by the Legislature of the State of Florida:

27

28         Section 1.  Section 288.706, Florida Statutes, is

29  created to read:

30         288.706  Florida Minority Business Loan Mobilization

31  Program.--

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    Florida Senate - 2002                                  SB 2338
    37-1474-02                                         See HB 1323




  1         (1)  The Legislature finds that it is in the interest

  2  of the public welfare to meaningfully assist minority business

  3  enterprises that are vital to the overall economy of the

  4  state. It is the intent of the Legislature to promote

  5  diversity in state contracting by eliminating barriers that

  6  prevent minority business enterprises from providing goods and

  7  services to the state. It is also the intent of the

  8  Legislature to encourage prime contractors to participate in

  9  agency contracts by providing a mechanism to minimize any risk

10  to which the contractor might be exposed as a result of

11  reduction in the amount of allowable subcontract retainage

12  withheld by the prime contractor for vendors participating in

13  this program. The Legislature recognizes the contribution of

14  minority business enterprises to employment opportunities in

15  this state.

16         (2)  The Florida Minority Business Loan Mobilization

17  Program is hereby created to promote the development of

18  minority business enterprises, as defined in s. 288.703(2), in

19  this state, increase the ability of minority business

20  enterprises to compete for state contracting opportunities,

21  and sustain the continued economic growth of minority business

22  enterprises in this state.  The goal of the program is to

23  provide financial assistance for minority business enterprises

24  by facilitating working capital loans to minority business

25  enterprises that serve as vendors on state contracts. The

26  Department of Management Services shall administer the

27  program.

28         (3)  State agencies are authorized to expend up to 10

29  percent of a contract award amount to minority business

30  enterprises as a retainer for the basic services portion of

31  the contract award to firms providing construction,

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    Florida Senate - 2002                                  SB 2338
    37-1474-02                                         See HB 1323




  1  procurement of goods and services, and professional services.

  2  Professional services include, but are not limited to,

  3  architectural, engineering, information technology, legal, and

  4  accounting services.

  5         (4)  Professional services vendors may apply for a

  6  direct retainer from the agency in an amount not to exceed 5

  7  percent of the base contract award amount, or the vendor may

  8  apply for participation in the Florida Minority Business Loan

  9  Mobilization Program and receive up to 10 percent of the base

10  contract award amount pursuant to the terms of such program.

11         (5)  The following procedures apply to contracts

12  performed by minority business enterprises in the areas of

13  construction, procurement of goods and services, and

14  professional services:

15         (a)  Upon receipt of an award of a prime contract or

16  subcontract, a vendor may seek to obtain working capital

17  financing from any participating lending institution approved

18  by the Department of Management Services.  The vendor shall

19  complete all application requirements with any participating

20  lending institution in order to obtain a working capital

21  agreement.  A vendor shall only be entitled to receive a line

22  of credit, to be known as the designated loan mobilization

23  payment, if a working capital agreement is established with a

24  participating lending institution.

25         (b)  Upon the execution of a working capital agreement,

26  the participating lending institutions shall be committed to

27  extending the designated loan mobilization payment to a vendor

28  in the amount of not less that 125 percent and not to exceed a

29  maximum of 200 percent of the collateral described below.

30  Individual loans shall be a minimum of $5,000 and a maximum of

31  $250,000.

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    Florida Senate - 2002                                  SB 2338
    37-1474-02                                         See HB 1323




  1         (c)  Following execution of a working capital agreement

  2  and satisfaction of the department's requirements, a

  3  designated loan mobilization payment shall be issued under the

  4  contract in accordance with:

  5         1.  A minimum of 5 percent and a maximum of 10 percent

  6  of a contract between the prime contract vendor and the

  7  agency; or

  8         2.  A minimum of 5 percent and a maximum of 10 percent

  9  of the subcontract amount between a subcontract vendor and a

10  prime contract vendor.

11         (d)  The designated loan mobilization payment shall be

12  made by the agency directly to the lending institution on

13  behalf of the vendor and shall be pledged as collateral by the

14  vendor.  Upon disbursement, the agency shall retain no

15  interest in the designated loan mobilization payment.

16         (e)  Disbursement of designated loan mobilization

17  payments shall be as follows:

18         1.  The prime contract vendor may request payment of

19  the designated loan mobilization payment in the first

20  application for payment or, in the case of nonconstruction

21  contracts, by letter delivered to the agency after the award

22  of the contract but prior to the date of commencement of the

23  contract. Such application or letter shall be accompanied by a

24  working capital agreement with a participating lending

25  institution. The designated loan mobilization payment shall be

26  released pursuant to the working capital agreement and this

27  subsection.

28         a.  For construction contracts, the release of funds

29  shall occur following the issuance of a notice to proceed from

30  the agency and within 10 working days after the agency's

31  approval of the vendor's initial application for payment.

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    Florida Senate - 2002                                  SB 2338
    37-1474-02                                         See HB 1323




  1         b.  For nonconstruction contracts, the release of funds

  2  shall occur within 10 days after the agency's approval of the

  3  vendor's letter of request for the designated loan

  4  mobilization payment.

  5         c.  The designated loan mobilization payment may be

  6  paid by the agency prior to the commencement of work.  In

  7  order to ensure that the contract time does not commence until

  8  the vendor has adequate working capital, the agency's contract

  9  documents may provide that the contract shall commence at such

10  time as the agency releases the designated loan mobilization

11  payment to the participating lending institution pursuant to

12  the working capital agreement.

13         2.  The term "subcontract vendor," as used in this

14  subparagraph, is limited to second-tier subcontractors and

15  suppliers to prime contractors only.

16         a.  Prior to the release of a designated loan

17  mobilization payment to the subcontract vendor, the vendor

18  shall submit to the agency a letter of request for the payment

19  of the funds also indicating that the prime contractor is on

20  notice of the request and a valid working capital agreement

21  conditioned only on receipt by the participating lending

22  institution of its subcontract or other documentation

23  acceptable to the agency evidencing the subcontract amount.

24         b.  No prime contractor shall retain more than 5

25  percent of the amount earned by a subcontract vendor

26  participating in this program.  If the prime contract vendor

27  is also participating in this program, the amount the prime

28  vendor retains shall be subject to the provisions governing

29  prime contract vendors.

30         (6)  All prime contractors shall be required to

31  incorporate the designated loan mobilization payment

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    Florida Senate - 2002                                  SB 2338
    37-1474-02                                         See HB 1323




  1  procedures in subcontract agreements or purchase orders with

  2  vendors participating in this program and cooperate in the

  3  release of designated loan mobilization payments to achieve

  4  the objective of providing working capital for subcontract

  5  vendors.

  6         (7)  The agency shall encourage prime contractors to

  7  make weekly or biweekly payments to subcontract vendors

  8  participating in this program.

  9         (8)  The agency shall monitor compliance with and

10  effectiveness of the procedures set forth in this section.

11  Nothing contained in this section shall be construed to limit

12  the agency's right to insist upon strict compliance with the

13  requirements of the contract documents.

14         (9)  The agency shall not be a party to the working

15  capital agreement between the participating lending

16  institution and the vendor. The agency shall disburse the

17  designated loan mobilization payment directly to the

18  participating lending institution, as authorized by the

19  working capital agreement. The participating lending

20  institution shall notify the agency head of vendor

21  applications received by such institution from vendors

22  requesting participation in this program.

23         (10)  Nothing contained in this section shall prevent

24  the agency from consenting to a disbursement procedure

25  pursuant to which a minority vendor or nonminority vendor

26  agrees to an assignment of contract proceeds in order to

27  induce a line of credit or other credit facility based upon a

28  prime contract or subcontract for an agency project. However,

29  the designated loan mobilization payment program shall remain

30  exclusive to any such agreements.

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    Florida Senate - 2002                                  SB 2338
    37-1474-02                                         See HB 1323




  1         (11)  The Department of Management Services may adopt

  2  rules to implement the provisions of this section.

  3         Section 2.  This act shall take effect October 1, 2002.

  4

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  6                          HOUSE SUMMARY

  7
      Creates the Florida Minority Business Loan Mobilization
  8    Program to promote the development of minority business
      enterprises in this state, increase the ability of
  9    minority business enterprises to compete for state
      contracting opportunities, and sustain the continued
10    economic growth of minority business enterprises in this
      state by providing financial assistance for minority
11    business enterprises by facilitating working capital
      loans to minority business enterprises that serve as
12    vendors on state contracts.

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CODING: Words stricken are deletions; words underlined are additions.