Florida Senate - 2012 SB 1872 By Senator Gibson 1-01299-12 20121872__ 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”; directing that agencies avoid contract 6 bundling under certain circumstances; requiring 7 agencies to conduct market research and include 8 written summaries and analyses of such research in 9 solicitations for bundled contracts; requiring 10 agencies to award a specified percentage of contracts 11 to small businesses; requiring contract vendors to use 12 small businesses in the state as subcontractors or 13 subvendors; requiring the timely payment of 14 subcontractors; prohibiting agencies from requiring 15 certain bonds or other sureties for certain contracts; 16 requiring the Florida Small Business Advocate to 17 establish a system for reporting small business 18 participation in state contracting; requiring agencies 19 to cooperate with such reporting; requiring specified 20 annual reports; providing an effective date. 21 22 Be It Enacted by the Legislature of the State of Florida: 23 24 Section 1. Section 287.0577, Florida Statutes, is created 25 to read: 26 287.0577 Small business participation in state contracting; 27 contract bundling; set-asides for small businesses; bonding and 28 reporting requirements.— 29 (1) DEFINITIONS.—As used in this section, the term: 30 (a) “Contract bundling” means the consolidation of 31 contracts for the procurement of commodities or contractual 32 services, at least part of which may be provided or performed by 33 one or more small businesses, into a single contract that is not 34 appropriate for award to a small business as the prime 35 contractor. 36 (b) “Small business” means a business entity organized for 37 profit that is independently owned and operated, that is not 38 dominant within the business entity’s industry, and that: 39 1. Currently is, and for at least the previous 3 years has 40 been, domiciled in the state. 41 2. Has a workforce of 25 or fewer permanent full-time 42 positions, whether employees, independent contractors, or other 43 contractual personnel. 44 3. Has had, for at least the previous 3 years, average 45 annual gross sales that do not exceed the following: 46 a. For a contractor licensed under chapter 489, $3 million 47 per year. 48 b. For a sole proprietorship performing contractual 49 services within the scope of the proprietor’s professional 50 license or certification, $500,000 per year. 51 c. For any other business entity, $1 million per year. 52 4. Currently has, and for at least the previous 3 years has 53 had, together with its affiliates, a net worth that does not 54 exceed $5 million. For a sole proprietorship, the net worth 55 limit of $5 million includes both personal and business 56 investments but does not include the proprietor’s primary 57 residence. 58 59 The term includes any such business entity organized as any form 60 of corporation, partnership, limited liability company, sole 61 proprietorship, joint venture, association, trust, cooperative, 62 or other legal entity. 63 (2) CONTRACT BUNDLING; SOLICITATION.— 64 (a) An agency, to the maximum extent practicable, shall 65 structure agency contracts to facilitate competition by and 66 among small businesses in the state, taking all reasonable steps 67 to eliminate obstacles to their participation and avoiding the 68 unnecessary and unjustified contract bundling that may preclude 69 small businesses’ participation as prime contractors. 70 (b) Before issuing a solicitation for a bundled contract, 71 an agency must conduct market research to determine whether 72 contract bundling is necessary and justified. If the agency 73 determines that contract bundling is necessary and justified, 74 the agency must include in the solicitation a written summary of 75 the agency’s market research and a written analysis of the 76 research that explains why contract bundling is necessary and 77 justified. 78 (3) SET-ASIDES FOR SMALL BUSINESSES.— 79 (a) An agency shall annually award to small businesses, 80 either directly or indirectly as subcontractors, at least 25 81 percent of the total dollar amount of contracts awarded. 82 (b) Each contract awarded under s. 287.057 must require the 83 vendor to use small businesses in the state as subcontractors or 84 subvendors. The percentage of funds, in terms of gross contract 85 amount and revenues, that must be expended for subcontracting 86 with small businesses in the state shall be determined by the 87 agency before the solicitation for the contract is issued; 88 however, the contract may not allow a vendor to expend less than 89 10 percent of the gross contract amount for subcontracting with 90 small businesses in the state. 91 (c) Each contract must include specific requirements for 92 the timely payment of subcontractors by the prime contractor and 93 specific terms and conditions applicable if a prime contractor 94 does not pay a subcontractor within the time limits specified in 95 the contract. 96 (4) BONDING REQUIREMENTS.—Notwithstanding any provision of 97 law, an agency may not require a vendor to post a bid bond, 98 performance bond, or other surety for a contract that does not 99 exceed $500,000. This subsection does not apply to any 100 requirement for posting a bond pending the protest of a 101 solicitation; the protest of a rejected bid, proposal, or reply; 102 or the protest of a contract award. 103 (5) REPORTING REQUIREMENTS.—The Florida Small Business 104 Advocate selected under s. 288.7002 shall: 105 (a) Establish a system to measure and report the use of 106 small businesses in state contracting. This system shall 107 maintain information and statistics on small business 108 participation, awards, dollar volume of expenditures, and other 109 appropriate types of information to analyze progress in small 110 businesses’ access to state contracts and to monitor agency 111 compliance with this section. Such reporting must include, but 112 is not limited to, the identification of all subcontracts in 113 state contracting by dollar amount and by number of subcontracts 114 and identification of the use of small businesses as prime 115 contractors and subcontractors by dollar amounts of contracts 116 and subcontracts, number of contracts and subcontracts, 117 industry, and any conditions or circumstances that significantly 118 affected the performance of subcontractors. An agency shall 119 report its compliance with the reporting system at least 120 annually and at the request of the Florida Small Business 121 Advocate. All agencies shall cooperate with the Florida Small 122 Business Advocate in establishing this reporting system. 123 (b) Report agency compliance with paragraph (a) for the 124 preceding fiscal year to the Governor and Cabinet, the President 125 of the Senate, the Speaker of the House of Representatives, and 126 the Small Business Regulatory Advisory Council created under s. 127 288.7001 on or before February 1 of each year. The report must 128 contain, at a minimum, the following: 129 1. Total expenditures of each agency by industry. 130 2. The dollar amount and percentage of contracts awarded to 131 small businesses by each state agency. 132 3. The dollar amount and percentage of contracts awarded 133 indirectly to small businesses as subcontractors by each state 134 agency. 135 4. The total dollar amount and percentage of contracts 136 awarded to small businesses, whether directly or indirectly as 137 subcontractors. 138 Section 2. This act shall take effect July 1, 2012.