Attachment A - Combined Chapter 18-Proposed Changes-2 Columns-Final.pdf
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ARTICLE VI. THE SMALL BUSINESS
ENTERPRISE PARTICIPATION PROGRAM1
18-100 Rationale and adoption of findings.
A. Rationale. In 1993 and 1999, the City
commissioned and completed disparity studies
that revealed underutilization of local minority-
owned and woman-owned business
enterprises (M/WBE) in business opportunities
for goods and general services procurement
and construction subcontracting with the City.
As a result of the 1993 study, the City
established the Minority-owned and Woman-
owned Business Enterprise Program (M/WBE
Program). In response to the 1999 study, the
M/WBE Program was revised to include the
Small Business Enterprise Program (SBE
Program).
In 2005, the City completed a study to review
the M/WBE and SBE Programs (2005 Program
Update Study). The 2005 Program Update
Study documented substantial progress made
by the City in eliminating disparity and
identified the need to continue the M/WBE
Program with significant revisions. The
revisions adopted by the City included, but
were not limited to, the transition of the goods
and general services procurement program to
a race- and gender-neutral small business
enterprise (SBE) program. Further, in response
to evidence in the 2005 Program Update Study
showing that some groups participating in the
construction subcontracting goals program
were near parity, the City increased the
number of construction projects with SBE goals
relative to construction projects with M/WBE
goals as a means to transition to a full race-
and gender-neutral SBE program.
Statistical evidence gathered from M/W/SBE
utilization data from July 1, 2005 through June
30, 2009, does not support the continuation of
a race- and gender-based program:
1. M/W/SBEs earned $53.3 million in 2005-09
on goods and general services contracts, with
M/WBEs earning $48.4 million (91%) of the
total;
2. M/W/SBEs firms earned $79.2 million on
construction subcontracts, with M/WBEs
earning $75.1 million (95%) of the total; and
3. M/WBEs comprised 90% of all certified firms
in the City’s M/W/SBE Program prior to May 1,
2010.
STATISTICAL AND OTHER EVIDENCE
GATHERED FROM JULY 1, 2010 THROUGH
JUNE 30, 2019, SUPPORTS THE
CONTINUATION OF A RACE- AND GENDER-
NEUTRAL SMALL BUSINESS ENTERPRISE
(SBE) PROGRAM:
IN FISCAL YEAR 2018-2019, SBE
BUSINESSES EARNED 7.54% OF ALL
CONSTRUCTION DOLLARS SPENT ON
LOCALLY FUNDED CONTRACTS.
On March 10, March 30, April 21, and April 26,
2010, the City hosted several informational
forums for citizens, advocacy groups and
stakeholders to gather evidence required to
continue with an expanded SBE Program. A
public hearing was held on April 28, 2010. In
addition, the City established an open
comment period from March 30, 2010, through
April 30, 2010.
ON JANUARY 15, JANUARY 21, JANUARY
28, AND FEBRUARY 6, 2020, THE CITY
HOSTED SEVERAL INFORMATIONAL
FORUMS FOR CITIZENS, ADVOCACY
GROUPS AND STAKEHOLDERS TO
GATHER INFORMATION REQUIRED TO
CONTINUE WITH A SBE PROGRAM.
The information gathered at the forums, public
hearing, and from the COMMENTS
SUBMITTED DURING THE COMMENT
PERIOD REVEALED THAT SMALL
BUSINESSES AND PRIME CONTRACTORS
ARE SUPPORTIVE OF THE SBE PROGRAM.
continue to face obstacles to full participation in
Attachment A
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the marketplace. These obstacles include, but
are not limited to, difficulties in obtaining: To be
determined based on public comment.
B. Adoption of Findings. Based on the
statistical evidence compiled by the City and
the anecdotal evidence gathered from the
public through the above mentioned forums,
hearing, and comment period, the City Council
hereby adopts the following findings:
1. The relevant geographic market for
construction services purchased by the City is
Maricopa County, Arizona.
2. The available evidence suggests that small
businesses continue to experience difficulties
competing in the relevant geographic market,
including competing for City construction
contracts.
3. A CONTINUING A race- and gender-neutral
SBE program would further the mission to
increase business opportunities for all small
business enterprises.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
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Editor's note—Ord. No. G-5518, § 1, adopted
May 19, 2010, effective July 1, 2010, amended
the title of said article to read as herein set out.
Formerly said article was entitled Minority-
owned Business Enterprise, Woman-owned
Business Enterprise and Small Business
Enterprise Participation Program and derived
from Ord. No. G-4697, § 1, 5-18-2005, eff. 7-1-
2005.
Cross reference—Public works contracts, § 2-
187 et seq.; prequalification of contractors, ch.
31A.
18-101 Definitions.
For the purposes of this article, the following
terms shall have the following meanings:
A. Bid means: a quotation, bid, statement of
qualifications or proposal by a bidder or
contractor to perform or provide labor or
materials to the City.
B. Bidder means: any person, partnership,
corporation or other business entity that
submits a bid FOR AN ELIGIBLE PROJECT or
has been selected as a construction manager
at risk, design builder or job order contractor.
THE BIDDER CAN BE AN INDIVIDUAL FIRM
OR A JOINT VENTURE.
C. Certified SBE means: an SBE that meets
the requirements of and has been granted
status as a certified small business enterprise
by the City Manager.
D. City means: the City of Phoenix.
E. City Council means: the City Council of the
City of Phoenix.
F. City Manager means: the City Manager of
the City of Phoenix, or a person designated by
THE such City Manager to implement any or all
portions of this article delegated to the City
Manager.
G. Commercially Useful Function means: the
performance of real and actual services in the
discharge of any contractual endeavor, as
stated in Code of Federal Regulations, Title 49,
Part 26. An SBE subcontractor is considered to
perform a commercially useful function when
the subcontractor is responsible for execution
of a distinct element of the work of a contract
and carries out its responsibilities by actually
performing, managing and supervising the
work involved with its own resources. In
determining whether an SBE subcontractor is
performing a commercially useful function,
factors including but not limited to, the following
will be considered:
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1. The amount of work subcontracted;
2. Whether the amount the SBE is to be paid is
commensurate with the work it will actually
perform;
3. Whether the business will perform work in
the trade area where experience and expertise
has been demonstrated and for which it is
seeking to be or has been certified;
4.Whether the business actually performs,
manages and supervises the work for which it
has been contracted to perform;
5. Whether the business purchases goods
and/or services from a non-SBE-certified firm
and simply resells goods to the City, City
contractor, or other person doing business with
the City for the purpose of allowing those
goods to be counted towards fulfillment of SBE
utilization goals; and
6.Standard industry practices. Controlled, for
purposes of determining whether a business is
an SBE means: the small business owner(s)
shall possess and exercise the legal authority
and power to manage business assets, good
will and daily operations in the primary trade
area for which certification is sought and apart
from administrative functions and they shall
actively and continuously exercise this
managerial authority and power in determining
the policies of and directing the day-to-day
operations of the business.
H. Eligible project means: any construction
contract undertaken by the City unless
otherwise precluded by law.
I. Good faith efforts or good faith participation
means: the bidder/ OR PRIME CONTRACTOR
must show that the bidder OR PRIME
CONTRACTOR took all necessary and
reasonable steps to achieve an SBE goal or
other requirement of this article which steps, by
their scope, intensity, and appropriateness to
the objective, could reasonably be expected to
obtain sufficient SBE participation, even if such
steps were not fully successful. A list of the
types of steps that the City may consider as
part of the bidder’s OR PRIME
CONTRACTOR’S good faith efforts to obtain
SBE participation may be found in the
administrative rules published by the City
Manager and the instructions to bidders for the
respective project.
J. Joint Venture means: an association of two
or more persons, or business organization or
any combination of these entities, established
to carry on a single business activity limited in
scope and duration to a specific contract with
the City.
K. Local SBE means: an SBE whose principal
place of business is located in Maricopa
County, Arizona.
L. Owned for purposes of determining whether
a business is an SBE means that:
1. The small business owner(s) as the context
requires, shall possess 100% ownership
interest in the applicant firm.;
2. This ownership shall be real and continuing,
and shall go beyond mere indicia of ownership
of the business reflected in ownership
documents; and
3. The small business owner(s) shall enjoy the
customary incidents of ownership and shall
share in the risks and profits commensurate
with their ownership interests, as demonstrated
by an examination of the substance, rather
than the form, of ownership arrangements.
M. Personal Net Worth means: the net value
of the assets of an individual remaining after
total liabilities are deducted. An individual’s
personal net worth does not include: tThe
individual’s ownership interest in an applicant
or participating SBE firm; or the individual’s
equity in his or her primary place of residence.
An individual’s personal net worth includes only
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his or her own share of assets held jointly or as
community property with the individual’s
spouse.
N. PRIME CONTRACTOR: SELECTED
BIDDER THAT ENTERS INTO A
CONSTRUCTION CONTRACT WITH THE
CITY AND HAS THE FULL RESPONSIBILITY
FOR ELIGIBLE PROJECT COMPLETION
AND DELIVERY OR A SELECTED BIDDER
THAT UNDERTAKES TO PERFORM AN
ELIGIBLE PROJECT AND MAY EMPLOY OR
MANAGE ONE OR MORE
SUBCONTRACTORS TO CARRY OUT
SPECIFIC PARTS OF THE CONTRACT. THE
PRIME CONTRACTOR CAN BE AN
INDIVIDUAL FIRM OR A JOINT VENTURE.
O. Small Business Size means: the size
standard as defined in the Small Business
Administration Size Regulations 13 CFR Part
121.
P. Small Business Enterprise (SBE) means: a
small business that is an independent and
continuing enterprise for profit; performing
THAT PERFORMS a Commercially Useful
Function; IS owned and controlled by one or
more persons each of whose Personal Net
Worth does not exceed LIMITS IDENTIFIED
BY U.S. DOT REGULATIONS-49 CFR,
PARTS 23 AND 26 seven hundred fifty
thousand dollars; and meets the current Small
Business Size standard in its primary industry
or trade area.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-102 Statement of policy.
The City is determined:
A. To expand opportunities for SBE
subcontractors on eligible contracts
PROJECTS awarded by the City; and
B. To promote full and equal business
opportunity for all persons doing business with
the City.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-103 Duties of the City Manager for the
implementation of SBE Participation
Program in City construction contracting.
The City Manager shall have the following
authority and duties:
A. The administration and enforcement of this
article.
B. The establishment of written procedures to
effectuate this article.
C. The development of a database of certified
SBEs across all construction categories to be
maintained as a public record.
D. The establishment and review of applicable
SBE goals on a project-by-project basis.
E. The investigation of alleged violations of this
article including a party’s failure to act in good
faith, and the issuance of written
determinations following these investigations
stating the reasons for each determination, and
which may include the imposition of sanctions.
F. The review of cases where PRIME
contractors fail to implement previously made
SBE commitments to determine whether there
should be further efforts or alternative
approaches, including but not limited to,
contact with industry, associations, or any
pertinent federal agency, for information
concerning the availability of qualified SBEs.
G. The investigation and determination of
whether, in the case of a PRIME contractor’s
failure to act in good faith any of the penalties
set forth in Section 18-110 (Failure to meet
SBE participation goals) are appropriate.
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H. The certification of contractors,
subcontractors or bidders as bona fide SBEs,
in accordance with the standards set forth in
Article VIII.
I. The notification to an affected party that the
party has the right to appeal a determination of
noncompliance with this article.
J. The maintenance of annual statistical
databases on availability and utilization of
certified SBEs and non-SBEs including:
1. The level of SBE participation achieved in
contracts subject to this article; and
2. The estimated availability of certified SBEs
and non-SBE subcontractors ready, able and
willing to perform work on City projects.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-104 Project SBE participation goals.
To determine SBE subcontracting participation
goals on eligible projects, the City Manager
may consider:
A. The availability of certified SBEs in various
industry classifications who are qualified,
willing, and able to provide labor and materials
on the ELIGIBLE PROJECT particular contract;
B. The level of participation by such firms in
past contracts awarded by the City;
C. The design plans and contract
specifications;
D. The annual SBE participation goals; and
E. Any other relevant factors.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-105 Bidder’s requirements regarding
submission of an SBE Utilization Plan.
A. Notwithstanding a bidder’s compliance with
any other requirement of City ordinances, if
SBE participation goals have been set for an
eligible project, no bidder shall be awarded a
contract for the project unless the City
Manager has approved the bidder’s SBE
Utilization Plan or granted the bidder a waiver
on the project. The bidder’s SBE Utilization
Plan shall demonstrate how the bidder will
meet the applicable SBE participation goals set
for the project and shall be incorporated into
the contract.
B. Each bidder shall submit a completed SBE
plan or fully documented waiver request with
the bid submission. The plan shall contain, at a
minimum, the names, addresses, and contact
persons of the SBEs to be used in the contract,
the type of work or service each business will
perform, and the dollar value of the SBE
subcontract. These requirements may be
changed by the City Manager from time to
time. PRIME CONTRACTORS/Bidders may
meet the applicable SBE project goals through
a variety of methods, as follows:
1. Subcontractor participation. Where a prime
contractor utilizes one or more subcontractors
to satisfy its SBE participation commitment, the
prime contractor may claim only expenditures
to certified SBE subcontractors performing a
commercially useful function in the work of the
contract and performing work in the trade area
where SBE certification has been granted.
2. Non-SBE firms not counted. Work
subcontracted BY SBE SUBCONTRACTORS
to non-SBE firms will not be counted towards
achieving the SBE utilization goal established
for the project.
3. Supplier participation. Where a prime
contractor utilizes one or more SBE suppliers
to satisfy its SBE commitment, in whole or in
part, the SBE supplier participation may be
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credited towards the applicable SBE
participation goal as follows:
a. If SBE suppliers manufacture the goods
supplied, then one hundred percent of the
contract amount is credited towards the
applicable SBE participation goal.
b. If the SBE suppliers are wholesalers
warehousing the goods supplied, then one
hundred percent of the contract amount is
credited towards the applicable SBE
participation goal; but only twenty-five percent
of the applicable SBE goal may be attained by
non-manufacturing supplier contracts to SBEs.
4. Joint ventures and mentor-protege
programs.
a. The City Manager shall encourage, where
economically feasible, establishment of joint
ventures and mentor-protege programs to
promote prime contracting opportunities for
SBEs on all eligible projects.
b. Where a PRIME contractor/BIDDER
engages in a joint venture to satisfy its SBE
commitment, the City Manager shall review
and approve all joint venture agreements. On
the basis of these agreements, the City
Manager shall determine the degree of SBE
joint venture participation that may be credited
towards applicable SBE project goals.
c. The PRIME CONTRACTOR/bidder shall
permit the City Manager to review all records
pertaining to joint venture agreements before
and after the contract award, to the extent
reasonably necessary to assess compliance
with this article.
d. The degree to which a joint venture may
satisfy relevant SBE participation goals cannot
exceed the proportionate interest held by the
SBE as a member of the joint venture as
demonstrated in the written agreement
establishing the joint venture. Further, SBE
economic interest in the joint venture shall be
based on sharing of real economic interest in
the joint venture and shall include
proportionate control over management,
interest in capital acquired by the joint venture,
and participation in the joint venture’s profit or
loss.
e. The City Manager shall also encourage
mentor-protege programs to assist SBEs on
financing, bonding, construction management,
and technical matters. The City Manager shall
review and approve the following terms of each
mentor-protege agreement:
i. Type of technical assistance to be provided
by mentor;
ii. Rights and responsibilities of each mentor
and protege for each contracting activity;
ii. The specific duration of the agreement,
which shall not exceed three years; AND
iv. The amount of the protege participation that
may be credited toward the applicable SBE
goal.
C. After the City executes the project contract,
the successful PRIME CONTRACTOR/bidder
may not alter the SBE utilization plan as
submitted at the time of the bid without prior
written consent of the City Manager.
D. Subcontractor goals packet SBE Plan.
1. The City will publish its SBE subcontracting
goals in the project specifications and the
instructions to bidders. All bidders shall submit
at the time of bid a subcontractor goals packet
containing their proposed SBE utilization plan
and Letter(s) of Intent for the project, a
complete list of SBE subcontractors, and the
dollar value and participation percentage of
each SBE proposed subcontract, a complete
list of subcontractors/suppliers contacted in
preparation for bid, or a good-faith request for
waiver or both as applicable.
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2. Each bidder shall certify on the
subcontractor goals packet that the bidder has
met the established SBE project participation
goals; or notwithstanding good-faith efforts to
meet the goals, the bidder has been unable to
do so and therefore is entitled to a waiver. If
this certification is not included as part of the
bid for any reason, the bid shall not be read. In
addition, the bid shall not be read or as
applicable, deemed non-responsive unless it
includes either the complete subcontractor
goals packet if the bidder has met the
established SBE project participation goals; or
a fully documented waiver request if,
notwithstanding good-faith efforts, the bidder
has failed to meet the goals. All bids that
include the certification and either the complete
subcontractor goals packet or a fully
documented waiver request shall be read,
unless otherwise deemed nonresponsive.
E. Waiver.
1. All waiver requests shall indicate whether a
complete or partial waiver is sought and shall
indicate the scope of any partial-waiver
request. The waiver request shall provide
evidence of the PRIME
CONTRACTOR’S/bidder’s efforts to meet the
project goals, and the waiver will be resolved in
the manner described below.
2. The PRIME CONTRACTOR’S/bidder’s
application for waiver of the project goals shall
include full documentary evidence of the
PRIME CONTRACTOR’S/bidder’s good-faith
efforts to meet the project goals, and the
application shall state why the request for
waiver should be granted. The application shall
be in writing and shall include a narrative,
affidavits and/or exhibits that explain in detail
and verify the actions taken by the PRIME
CONTRACTOR/bidder to meet the goals. The
fact that other PRIME
CONTRACTORS/bidders could meet, or claim
to meet, the project goals shall not by itself
constitute grounds for denying a waiver
request. All requests for waivers shall be
evaluated on the basis of the objective criteria
set forth below.
3. The PRIME CONTRACTOR/bidder shall
provide as part of the waiver request the
following evidence of its good-faith efforts, and
the request will be evaluated on these items:
a. Copies of written notifications to SBEs that
their interest in the subcontract is solicited;
b. Evidence of the efforts made to divide the
work into small, economically feasible units in
order to increase the likelihood of achieving the
stated PROJECT goals;
c. Evidence of efforts made to negotiate with
SBEs including at a minimum:
i. The names, addresses and telephone
numbers of SBEs that were contacted;
ii. A description of the information provided to
SBEs regarding the plans and specifications
for portions of the work to be performed;
iii. A statement of the reasons why additional
agreements with SBEs if needed to meet the
stated goals, were not reached;
d. Evidence of efforts made to help SBEs
contacted that need assistance in obtaining
bonds and insurance required by the PRIME
CONTRACTOR/bidder;
e. As to each contacted SBE, the PRIME
CONTRACTOR/bidder considered unqualified,
a written statement of the reasons for the
PRIME CONTRACTOR’S/bidder’s conclusion;
f. Written quotes or records of verbal quotes
solicited from all SBEs seeking subcontract
work with the PRIME CONTRACTOR/bidder.
4. The City shall waive a project goal, at least
in part, if the quotes or proposals received by
the PRIME CONTRACTOR/bidder requesting
a waiver from all SBEs in one trade exceed the
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quote or proposal of the lowest non-SBE
competing for the same work by the lesser of
twenty percent or one hundred thousand
dollars. The City shall adopt administrative
rules, with input from the Small Business
Enterprise Subcontracting Goals Oversight
Committee, to implement the waiver criteria
specified above.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-106 Small Business Enterprise
Subcontracting Goals Oversight Committee
A. THE CITY MANAGER SHALL APPOINT A
SMALL BUSINESS ENTERPRISE
SUBCONTRACTING GOALS OVERSIGHT
COMMITTEE (OVERSIGHT COMMITTEE) TO
MONITOR IMPLEMENTATION OF THE SBE
PARTICIPATION PROGRAM ESTABLISHED
BY THIS ARTICLE VI. THE OVERSIGHT
COMMITTEE SHALL REVIEW AND
COMMENT ON THE CITY MANAGER’S
ADMINISTRATIVE RULES DESIGNED TO
IMPLEMENT THIS ORDINANCE AND
PERIODICALLY REVIEW AND COMMENT
ON THE CITY’S PROGRESS IN MEETING
THE OBJECTIVES OF THE SBE
SUBCONTRACTING GOALS PROGRAM.
SBE OVERSIGHT COMMITTEE
MEMBERSHIP SHALL CONSIST OF UP TO
EIGHT PERSONS AND WILL BE COMPOSED
OF STANDING AND AD HOC MEMBERS.
THERE WILL BE FOUR STANDING
MEMBERS WHO ARE PERMANENT
REPRESENTATIVES AND WILL INCLUDE:
THE CITY ENGINEER; THE EQUAL
OPPORTUNITY DEPARTMENT DIRECTOR;
A MANAGEMENT/BOARD
REPRESENTATIVE OF THE ARIZONA
CHAPTER, ASSOCIATED GENERAL
CONTRACTORS OF AMERICA (AZAGC),
AND ASSOCIATED MINORITY
CONTRACTORS OF ARIZONA (AMCA).
THERE WILL BE UP TO FOUR AD HOC
MEMBERS WILL CONSIST OF UP TO TWO
REPRESENTATIVES EACH FROM THE
AZAGC AND THE AMCA.
A. The City Manager shall appoint a Small
Business Enterprise Subcontracting Goals
Oversight Committee (Oversight Committee) to
monitor implementation of the SBE
Participation Program established by this
Article VI. The Oversight Committee shall
review and comment on the City Manager’s
administrative rules designed to implement this
ordinance and periodically review and
comment on the City’s progress in meeting the
objectives of the SBE Subcontracting Goals
Program. The Oversight Committee shall be
comprised of up to eight persons. A minimum
of two members shall be appointed from City
departments that participate in the program
and a minimum of three members shall be
appointed from the following organizations or
their successors in interest: the Associated
General Contractors of America, Arizona
Chapter; and established
minority/woman/small business construction
contractor or subcontractor organizations.
Committee members shall serve without
compensation.
B. The revisions herein to Article VI shall not
apply to any contract publicly advertised before
the effective date of this ordinance or to any
contract executed before the effective date of
this ordinance.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-107 Review of bid submission and SBE
Plan.
A. Bid submission.
1. The City Manager shall review each
subcontractor goals packet submitted with the
bid to determine if the bidder included in its
submission a completed and signed SBE plan
that meets the SBE goals for the contract. The
City Manager shall approve or reject the plan.
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2. The City Manager may declare the bid
nonresponsive if the City Manager determines
a bidder failed:
a. To provide a completed SBE Plan;
b. To identify all SBEs by name, scope of work
and value of work sufficient to meet the
applicable SBE goals for that project;
c. To achieve the dollar value of creditable
participation by certified SBEs necessary to
meet the SBE project goals; or
d. To act in good faith; or
e. To meet all requirements for a good-faith
waiver of the SBE goals all as determined by
the City Manager.
3. The City Manager may declare the bid
nonresponsive if the City Manager determines
that a PRIME CONTRACTOR/bidder furnished
false, fraudulent, misleading or materially
inaccurate, incomplete information in the plan,
or as part of a bid submission, proposal, or
statement of qualifications.
4. If, after consulting with the appropriate City
departments, the City Manager determines that
the SBE plan submitted by a PRIME
CONTRACTOR/bidder has been altered
without prior written consent or is false or
fraudulent, the City Manager shall be
authorized to reject the bid, or, if the
determination is made after an award, the City
Manager may declare the contract null and
void or may cancel it.
B. Waivers.
1. If a PRIME CONTRACTOR/bidder requests
a waiver of project SBE goals, the City
Manager shall determine whether the PRIME
CONTRACTOR/bidder has made a good-faith
effort to meet the project goals and whether a
waiver of the goals should be granted in whole
or in part.
2. In cases where a waiver is requested
because SBEs are unavailable to deliver the
specified labor and materials, the City Manager
shall determine whether SBEs are not in fact
available to provide the needed labor and
materials at competitive prices.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-108 SBE Participation Clause.
Every contract with the City on an eligible
project shall include an SBE clause. The SBE
clause shall read as follows:
The contractor agrees to meet the goals of this
Agreement by making available opportunities
for Small Business Enterprises (SBEs), as
defined in Chapter 18, Article VI of the Phoenix
City Code, for utilization in the work set forth
within this Agreement. For this purpose, the
PRIME contractor, at minimum, shall undertake
the following:
A. Notify SBEs that the PRIME contractor has
subcontracting opportunities available and
maintain records of all SBE and all non-SBE
subcontractor responses.
B. Maintain a file of names and addresses of
each SBE and non-SBE subcontractor
contacted and action taken with respect to
each such contact.
C. Disseminate the PRIME contractor’s SBE
participation policy within the contractor’s
management and externally communicate this
policy to all subcontractors and suppliers.
D. Undertake and continue specific and
personal recruitment efforts (both written and
oral) directed at SBEs as well as SBE
contractor trade and assistance organizations.
E. Subdivide the contract into economically
feasible segments to facilitate SBE
participation.
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F. Adopt and comply with the SBE participation
plan submitted with its response to the
Invitation for Bids, Request for Qualifications or
Request for Proposals, as approved by the City
Manager.
G. The PRIME contractor further agrees that
any breach of the SBE provisions of this
Agreement shall be material and shall entitle
the City to any or all of the following remedies,
in addition to all other remedies allowed by law:
1. In addition to the applicable retention or
securities-in-lieu of retention authorized by
statute, to withhold up to ten percent more of
all future payments on the involved eligible
project until it is determined that the PRIME
contractor is in compliance;
2. To withhold all future payments on the
project until it is determined that the PRIME
contractor is in compliance;
3. To reject all future bids for all projects or
other procurements with the City of Phoenix
until such time that the PRIME contractor has
cured its breaches and demonstrates that it
has adopted and faithfully performed its
approved SBE Plan and all other provisions
contained in the Agreement; or
4. If any breach of the SBE provisions is
discovered or has not been cured by
substantial completion of the project, to reject
all of THE PRIME contractor’s future bids,
CONTRACTS AWAITING ISSUANCE OF A
NOTICE TO PROCEED (NTP), OR BID
OPENINGS for all projects or other
procurements with the City of Phoenix for a
period of NOT TO EXCEED one year from the
date of substantial completion of the project.
THIS REMEDY WOULD BE AT THE
DISCRETION OF THE CITY MANAGER.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-109 Maintenance of SBE records and
reports by contractors.
PRIME Contractors/BIDDERS THAT ARE
awarded contracts on eligible projects
incorporating SBE requirements must submit
monthly updated participation reports,
designed by the City Manager, which
summarize the number and dollar amounts of
subcontract awards made during the contract
term and the actual participation of SBE firms
that occurred during the report period. These
reports shall be submitted to the City Manager
with the monthly pay request.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-110 Failure to meet SBE participation
goals.
If the City Manager determines that the PRIME
contractor has failed to comply with any
provision of this article, the City Manager may
take any or all of the following actions, IN
ADDITION TO ALL OTHER REMEDIES
ALLOWED BY LAW:
A. In addition to the applicable retention or
securities-in-lieu of retention as authorized by
statute, to withhold from the contractor up to
ten percent more of all future payments on the
involved eligible project until it is determined
that the PRIME contractor is in compliance;
B. To withhold from the contractor all future
payments on the involved project until it is
determined that the PRIME contractor is in
compliance;
C. To reject all future bids or offers for all
projects or other procurements with the City
until such time that the PRIME contractor has
cured its breaches and demonstrates that it
has faithfully performed its approved SBE plan
and all other provisions of this article; or
11
D. If any breach of the SBE provisions is
discovered or has not been cured by
substantial completion of the project, to reject
all of THE PRIME contractor’s future bids,
CONTRACTS AWAITING ISSUANCE OF A
NOTICE TO PROCEED (NTP), OR BID
OPENINGS for all projects or other
procurements with the City of Phoenix for a
period of NOT TO EXCEED one year from the
date of substantial completion of the project.
THIS REMEDY WOULD BE AT THE
DISCRETION OF THE CITY MANAGER.;
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
Sec. 18-111 – PRIME CONTRACTOR
CORRECTIVE ACTION AND APPEALS.
A. IF THE CITY MANAGER DETERMINES
THAT A PRIME CONTRACTOR’S OR
BIDDER’S BREACH OF THE SBE
PROVISIONS CANNOT BE REMEDIED TO
ACHIEVE COMPLIANCE, THE CITY
MANAGER SHALL NOTIFY THE PRIME
CONTRACTOR/BIDDER IN WRITING BY
CERTIFIED MAIL OF THE CORRECTIVE
ACTION AS SET FORTH IN EITHER
SECTION 18-108(G)(4) OR SECTION 18-
110(D) AND THE REASONS FOR THE
CORRECTIVE ACTION.
B. ANY PRIME CONTRACTOR/BIDDER
WHO HAS BEEN DEEMED IN BREACH OF
THE SBE PROVISIONS AND WHO HAS
RECEIVED NOTICE OF CORRECTIVE
ACTION IDENTIFIED IN EITHER SECTION
18-108(G)(4) OR SECTION 18-110(D) MAY
APPEAL THE DECISION BY FILING A
WRITTEN NOTICE OF APPEAL WITH THE
CITY MANAGER WITHIN FOURTEEN (14)
CALENDAR DAYS OF RECEIPT OF THE
NOTICE OF CORRECTIVE ACTION. THE
WRITTEN NOTICE MUST STATE THE
REASONS FOR THE APPEAL. IMPOSITION
OF THE CORRECTIVE ACTION SET FORTH
IN SECTIONS 18-108(G)(1)-(3) AND
SECTIONS 18-110(A)-(C) IS NOT SUBJECT
TO THIS APPEAL PROCESS.
C. WITHIN FIVE (5) CALENDAR DAYS OF
RECEIPT OF THE NOTICE OF APPEAL
FROM THE PRIME CONTRACTOR/BIDDER,
THE NOTICE OF APPEAL SHALL BE
FORWARDED TO THE PERSON
DELEGATED BY THE CITY MANAGER’S
OFFICE, TO SERVE AS HEARING OFFICER
FOR THE APPEAL. THE HEARING OFFICER
SHALL NOT BE A MEMBER OF THE SBE
OVERSIGHT COMMITTEE.
D. THE HEARING OFFICER SHALL:
1. SET A HEARING DATE NOT MORE THAN
FOURTEEN (14) CALENDAR DAYS FROM
THE DATE OF RECEIPT OF THE NOTICE.
2. CAUSE A NOTICE OF THE HEARING,
WHICH SHALL INCLUDE THE HEARING
DATE, TIME AND PLACE, TO BE SERVED
UPON ALL PARTIES BY CERTIFIED MAIL.
SUCH NOTICE SHALL SET FORTH WITH
PARTICULARITY THE REASONS FOR THE
APPEAL.
3. CONDUCT A HEARING CONCERNING
THE DETERMINATION OF
NONCOMPLIANCE AND IMPOSITION OF
THE CORRECTIVE ACTION SET FORTH IN
EITHER SECTION 18-108(G)(4) OR SECTION
18-110(D). ALL PARTIES SHALL BE
PROVIDED A FAIR AND IMPARTIAL
HEARING AND SHALL BE ALLOWED TO
PRODUCE ALL RELEVANT EVIDENCE IN
EITHER PARTY'S POSSESSION
CONCERNING THE DETERMINATION OF
NONCOMPLIANCE WITH THE
REQUIREMENTS OF THIS ARTICLE AND
THE ISSUANCE OF CORRECTIVE ACTION.
FOR THE APPEAL, THE BURDEN OF
PROOF RESTS ON THE PRIME
CONTRACTOR/BIDDER TO SHOW THAT
ESTABLISHED CRITERIA FOR SBE
PROVISIONS HAVE BEEN MET; THAT IT
CAN BRING THE CONTRACT INTO SBE
UTILIZATION COMPLIANCE; OR THAT
MORE THAN ADEQUATE CORRECTIVE
12
ACTION HAS BEEN TAKEN TO ACHIEVE
SBE UTILIZATION COMPLIANCE.
4. ISSUE A WRITTEN REPORT ON THE
APPEAL TO ALL PARTIES THAT SHALL
AFFIRM, ALTER, OR REVERSE THE
CORRECTIVE ACTION. THE WRITTEN
REPORT SHALL BE SENT TO ALL PARTIES
BY CERTIFIED MAIL WITHIN FOURTEEN
(14) CALENDAR DAYS OF THE HEARING
AND SHALL SET FORTH THE REASONS
FOR THE DECISION.
E. THE HEARING OFFICER’S
DETERMINATION IS FINAL AND MAY NOT
BE APPEALED.
18-111 112 Failure of SBE to comply with
program requirements.
If the City Manager determines that an SBE
has: failed to comply with any provision of this
article; improperly altered bid documents; or
submitted false, fraudulent, misleading or
materially inaccurate information, the City
Manager may take any or all of the following
actions with regard to such THE SBE:
A. With the City Manager’s prior written
consent, allow the contractor PRIME
CONTRACTOR/BIDDER to substitute another
SBE on the ELIGIBLE project;
B. Suspend the SBE’s certification until such
time that the SBE has cured its breaches and
demonstrates that it has complied with this
article; AND
C. To Decertify the SBE for a period of one
year from the date the City Manager discovers
the improper conduct.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-112113 Repeal; exemptions; Sunset;
severability.
A. Repeal. All resolutions or ordinances and
parts of resolutions or ordinances in conflict
with this article VI are hereby repealed.
B. Exemptions. This article shall not apply to
any of the following:
1. Any contract publicly advertised prior to the
effective date of this article; or
2. Any contract executed prior to the effective
date of this article.
C. Sunset rule. Article VI shall expire on June
30, 2020 2025, unless the City Council finds
that the purposes identified in Section 18-102
of this article have not yet been achieved in
which case this article may be extended for up
to an additional five-year period.
D. Severability. If any provisions of this article
or any application thereof to any person or
circumstance is held invalid, the invalidity shall
not affect other provisions or applications of
this article that can be given effect without the
invalid provisions or applications, and to this
end the provisions of this article are declared to
be severable.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
18-113114—18-199 Reserved.
13
Article VII. THE SMALL BUSINESS
ENTERPRISE PROCUREMENT PROGRAM*
18-200 Rationale and adoption of findings.
A. Rationale. In 1993 and 1999, the City
commissioned and completed disparity studies
that revealed underutilization of local minority-
owned and woman-owned business
enterprises (M/WBE) in business opportunities
for goods and general services procurement
and construction subcontracting with the City.
As a result of the 1993 study, the City
established the Minority-owned and Woman-
owned Business Enterprise Program (M/WBE
Program). In response to the 1999 study, the
M/WBE Program was revised to include the
Small Business Enterprise Program (SBE
Program).
In 2005, the City completed a study to review
the M/WBE and SBE Programs (2005 Program
Update Study). The 2005 Program Update
Study documented substantial progress made
by the City in eliminating disparity, and
identified the need to continue the M/WBE
Program with significant revisions. The
revisions adopted by the City included, but
were not limited to, the transition of the goods
and general services procurement program to
a race- and gender-neutral small business
enterprise (SBE) program. Further, in response
to evidence in the 2005 Program Update Study
showing that some groups participating in the
construction subcontracting goals program
were near parity, the City increased the
number of construction projects with SBE goals
relative to construction projects with M/WBE
goals as a means to transition to a full race-
and gender-neutral SBE program.
Statistical evidence gathered from M/W/SBE
utilization data from July 1, 2005 through June
30, 2009, does not support the continuation of
a race- and gender-based program:
1. M/W/SBEs earned $53.3 million in 2005-09
on goods and general services contracts, with
M/WBEs earning $48.4 million (91%) of the
total;
2. M/W/SBEs firms earned $79.2 million on
construction subcontracts, with M/WBEs
earning $75.1 million (95%) of the total; and
3. M/WBEs comprised 90% of all certified firms
in the City’s M/W/SBE Program prior to May 1,
2010.
STATISTICAL AND OHER EVIDENCE
GATHERED FROM JULY 1, 2010 THROUGH
JUNE 30, 2019, SUPPORTS THE
CONTINUATION OF A RACE- AND GENDER-
NEUTRAL SMALL BUSINESS ENTERPRISE
(SBE) PROGRAM:
IN FISCAL YEAR 2018-2019, SBE
BUSINESSES EARNED 7.54% OF ALL
CONSTRUCTION DOLLARS SPENT ON
LOCALLY FUNDED CONTRACTS.
On March 10, March 30, April 21, and April 26,
2010, the City hosted several informational
forums for citizens, advocacy groups and
stakeholders to gather evidence required to
continue with an expanded SBE Program. A
public hearing was held on April 28, 2010. In
addition, the City established an open
comment period from March 30, 2010, through
April 30, 2010.
ON JANUARY 15, JANUARY 21, JANUARY
28, AND FEBRUARY 6, 2020, THE CITY
HOSTED SEVERAL INFORMATIONAL
FORUMS FOR CITIZENS, ADVOCACY
GROUPS AND STAKEHOLDERS TO
GATHER INFORMATION REQUIRED TO
CONTINUE WITH AN EXPANDED SBE
PROGRAM.
The information gathered at the forums, public
hearing, and from the comments submitted
during the comment period revealed that small
businesses continue to face obstacles to full
participation in the marketplace. These
obstacles include, but are not limited to,
14
difficulties in obtaining: These obstacles
include, but are not limited to, difficulties in
obtaining: 1) credit and financing; 2) similar
pricing for supplies and services; 3)
participation in informal networks through
which business opportunities are established;
4) notification of business opportunities; and 5)
participation in the bidding process.
B. Adoption of Findings.
Based on the statistical evidence compiled by
the City and the anecdotal evidence gathered
from the public through the above mentioned
forums, hearing, and comment period, the City
Council hereby adopts the following findings:
1. The relevant geographic market for
construction services purchased by the City is
Maricopa County, Arizona.
2. The available evidence suggests that small
businesses continue to experience difficulties
competing in the relevant geographic market,
including competing for City construction
contracts.
3. CONTINUING A race- and gender-neutral
SBE program would further the mission to
increase business opportunities for all small
business enterprises.
(Ord. No. G-5518, § 1, adopted 5-19-2010, eff.
7-1-2010)
Sec. 18-201. – Definitions.
For the purposes of this article, the following
terms shall have the following meanings:
A. Bid means: a quotation, bid, statement of
qualifications or proposal by a bidder or
contractor to perform or provide labor or
materials to the City.
B. Bidder means: any person, partnership,
corporation or other business entity that
submits a bid FOR AN ELIGIBLE PROJECT or
has been selected as a construction manager
at risk, design builder or job order contractor.
THE BIDDER CAN BE AN INDIVIDUAL FIRM
OR A JOINT VENTURE.
C. Certified SBE means: an SBE that meets
the requirements of and has been granted
status as a certified small business enterprise
by the City Manager.
D. City means: the City of Phoenix.
E. City Council means: the City Council of the
City of Phoenix.
F. City Manager means: the City Manager of
the City of Phoenix, or a person designated by
THE such City Manager to implement any or all
portions of this article delegated to the City
Manager.
G. Commercially Useful Function means: the
performance of real and actual services in the
discharge of any contractual endeavor, as
stated in Code of Federal Regulations, Title 49,
Part 26. An SBE subcontractor is considered to
perform a commercially useful function when
the subcontractor is responsible for execution
of a distinct element of the work of a contract
and carries out its responsibilities by actually
performing, managing and supervising the
work involved with its own resources. In
determining whether an SBE subcontractor is
performing a commercially useful function,
factors including but not limited to, the following
will be considered:
1. The amount of work subcontracted;
2. Whether the amount the SBE is to be paid is
commensurate with the work it will actually
perform;
3. Whether the business will perform work in
the trade area where experience and expertise
has been demonstrated and for which it is
seeking to be or has been certified;
15
4. Whether the business actually performs,
manages and supervises the work for which it
has been contracted to perform;
5. Whether the business purchases goods
and/or services from a non-SBE-certified firm
and simply resells goods to the City, City
contractor, or other person doing business with
the City for the purpose of allowing those
goods to be counted towards fulfillment of SBE
utilization goals; and
6. Standard industry practices. Controlled, for
purposes of determining whether a business is
an SBE means: the small business owner(s)
shall possess and exercise the legal authority
and power to manage business assets, good
will and daily operations in the primary trade
area for which certification is sought and apart
from administrative functions and they shall
actively and continuously exercise this
managerial authority and power in determining
the policies of and directing the day-to-day
operations of the business.
H. Eligible contract means: any contract for
goods, supplies or general services for use in
City operations unless otherwise precluded by
law. Eligible contract does not include sole
source contracts, petty cash purchases,
emergency purchases as defined by the City
Manager in the City's administrative
regulations, contracts for professional services,
contracts for architectural and engineering
services or contracts for the following items:
City utility payments, phone payments, rent,
professional association fees, magazine
subscriptions, payments to other governmental
entities, and bank transfers. Professional
services, which are not affected by this article,
refer to infrequent technical or unique services
or functions performed by independent
contractors whose profession or occupation is
the rendering of these services.
I. General service means: the furnishing of
labor, time or effort by a vendor which does not
involve the delivery of a specific end product
other than any requested report or
documentation as required by the service
agreement. General service also includes the
installation of personal property only; and to
maintenance and repair functions for all City
facilities, equipment, property and
improvements, including the replacement of
parts and the providing of materials
incorporated into City property as a function of
the maintenance or repair service.
J. Good faith efforts or good faith participation
means: the bidder must show that the bidder
took all necessary and reasonable steps to
achieve an SBE goal or other requirement of
this article which steps, by their scope,
intensity, and appropriateness to the objective,
could reasonably be expected to obtain
sufficient SBE participation, even if such steps
were not fully successful. A list of the types of
steps that the City may consider as part of the
bidder's good faith efforts to obtain SBE
participation may be found in the administrative
rules published by the City Manager and the
instructions to bidders for the respective
project.
K. Goods or supplies means: equipment,
products, commodities, or operating supplies
purchased by the City for its operations in the
ordinary course of business.
L. Joint Venture means: an association of two
or more persons, or business organization or
any combination of these entities, established
to carry on a single business activity limited in
scope and duration to a specific contract with
the City.
M. Local SBE means: an SBE whose principal
place of business is located in Maricopa
County, Arizona.
N. Owned for purposes of determining
whether a business is an SBE means that:
16
1. The small business owner(s) as the context
requires, shall possess 100% ownership
interest in the applicant firm.;
2. This ownership shall be real and continuing,
and shall go beyond mere indicia of ownership
of the business reflected in ownership
documents; and
3. The small business owner(s) shall enjoy the
customary incidents of ownership and shall
share in the risks and profits commensurate
with their ownership interests, as demonstrated
by an examination of the substance, rather
than the form, of ownership arrangements.
O. Personal Net Worth means: the net value
of the assets of an individual remaining after
total liabilities are deducted. An individual’s
personal net worth does not include: tThe
individual’s ownership interest in an applicant
or participating SBE firm; or the individual’s
equity in his or her primary place of residence.
An individual’s personal net worth includes only
his or her own share of assets held jointly or as
community property with the individual’s
spouse.
P. Procurement means: buying, purchasing,
renting, leasing or otherwise acquiring goods,
supplies or general services. It also includes all
functions that pertain to the obtaining of any
good, supply or general service, including
description of requirements, selection and
solicitation of sources, preparation and award
of contract, and all phases of contract
administration.
Q. Request for proposals (RFP) means: all
documents, whether attached or incorporated
by reference, utilized for soliciting proposals for
goods, supplies and general services.
R. Small Business Enterprise (SBE) means: a
small business that is an independent and
continuing enterprise for profit; performing
THAT PERFORMS a Commercially Useful
Function; IS owned and controlled by one or
more persons each of whose Personal Net
Worth does not exceed seven hundred fifty
thousand dollars 1.32 MILLION DOLLARS;
and meets the current Small Business Size
standard in its primary industry or trade area.
S. Small Business Size means: the size
standard as defined in the Small Business
Administration Size Regulations 13 CFR Part
121.
T. Sole source means: a procurement for
which clear and convincing evidence exists
that there is only one source from which the
City may obtain goods, supplies or general
services suitable for the City's intended
purpose.
U. Vendors means: suppliers, firms, entities,
or individuals furnishing goods, supplies or
general services directly to the City.
Sec. 18-202. – Statement of policy.
The City is determined:
A. To expand opportunities for eligible
goods, supplies and general services
contracts with SBEs awarded by the
City; and
B. To promote full and equal business
opportunity for all persons doing
business with the City.
Sec. 18-203. – Duties of City Manager to
SBE Procurement Program.
The City Manager shall have the following
authority and duties:
A. The administration and enforcement of
this article.
B. The establishment of written procedures
to effectuate this article.
C. The development of a database of
SBEs, non-SBE vendors and non-SBE
17
suppliers that provide goods, supplies
and general services to be maintained
as a public record.
D. The notification to an affected party that
it has the right to appeal the
determination of noncompliance with
this article.
E. The investigation of alleged violations of
this article, and the issuance of written
determinations following these
investigations, stating the reasons for
each determination.
F. The coordination of expanded SBE
procurement efforts.
G. The maintenance of annual statistical
databases on availability and utilization
of SBEs including:
1. The level of SBE participation
achieved in the contracts subject
to this article; and
2. The estimated availability of
SBEs and non-SBE vendors to
perform contracts.
H. The assistance and encouragement of
City departments in the use of SBEs for
requirements contracts.
I. The requirement of City departments to
use good faith efforts to include SBEs in
their contracting practices. In keeping
with this objective, contract awarding
authorities, including the Finance
Department, shall use good faith efforts
to solicit and obtain bids from SBEs on
all solicitations or document their
unavailability,
Sec. 18-204. – SBE Reserve Contract
Program for goods, supplies and general
services.
A. The City Manager shall promptly
implement, continue and expand as
appropriate an SBE participation
program for procurement of goods,
supplies and general services in
accordance with this section.
B. The City Manager may reserve up to ten
percent of the solicitation of all goods,
supplies and general services
procurements for competition
exclusively among certified SBEs.
Before the City Manager may reserve
goods, supplies and general services
procurements for competition
exclusively among certified SBEs, the
City Manager shall consider the
availability of certified SBEs who are
qualified, willing and able to provide
materials or services in connection with
the particular procurement.
Sec. 18-205. – Conflicts; exemptions;
Sunset; severability;.
A. Conflicts. All resolutions or ordinances
and parts of resolutions or ordinances in
conflict with this article are repealed.
B. Exemptions. This article shall not apply
to any of the following:
1. Any invitation for bid or request
for proposal publicly advertised
before the effective date of this
article; or
2. Any contract executed before the
effective date of this article.
C. Sunset Rule. Article VII shall expire on
June 30, 2015 2025, unless the City
Council finds that the purposes
identified in Section 18-202 of this article
have not yet been achieved in which
case this article may be extended for up
to an additional five-year period.
18
D. Severability. If any provisions of this
article or any application thereof to any
person or circumstance is held invalid,
the invalidity shall not affect other
provisions or applications of this article
that can be given effect without the
invalid provisions or applications, and to
this end the provisions of this article are
declared to be severable.
Secs. 18-206. – 18-299. Reserved.
19
ARTICLE VIII. CERTIFICATION OF SMALL
BUSINESS ENTERPRISES
Sec. 18-300. – Definitions.
All definitions in Articles VI and VII of
this chapter shall be incorporated into this
article, unless the context otherwise requires.
Sec. 18-301. – City Manager Authority.
The City Manager shall have the following
authority and duties for the certification of small
business enterprises (SBEs):
A. The administration and enforcement of
this article.
B. The establishment of written procedures
to effectuate this article.
C. The certification of contractors,
subcontractors, vendors, and suppliers
as bona fide SBEs, in accordance with
the standards set forth in this article.
D. The notification to an affected party by
certified mail that it has the right to
appeal to the City Manager a denial of
certification or decertification as an SBE,
as provided in section 18-303.
E. The notification to the Public Works
STREET TRANSPORTATION
Department or Finance Department of
any denial of certification as an SBE and
any appeal of such refusal to certify.
F. The development of a database of
certified SBEs to be maintained as a
public record.
G. The maintenance of statistical data on
the availability of SBEs, non-SBE
construction subcontractors and non-
SBE vendors and suppliers.
Sec. 18-302. – Small Business Enterprise
Certification.
A. The burden of proof rests on the
applicant to establish that the standards
and criteria have been met to obtain
SBE certification. The City Manager
shall certify SBEs for the SBE
participation programs consistent with
the standards set forth in 49 CFR Parts
23 and 26 as established by the U.S.
Department of Transportation for the
Federal Disadvantaged Business
Enterprise Program as follows:
1. An eligible SBE under this
program shall be an independent
and continuing operation for
profit, performing a commercially
useful function, and which is
owned and controlled by one or
more eligible small business
owners respectively. The
ownership and control by a small
business owner shall be real and
substantial, and shall be
indicated by customary incidents
of ownership, as demonstrated
by an examination of the
substance rather than the form of
ownership and operating
arrangements.
2. A small business owner must
possess the authority to direct or
cause the direction of the
management and policies of the
firm critical to the operation of the
primary business of the firm and
the trade areas in which the firm
is certified and apart from
administrative duties and
functions, and to make day-to-
day decisions, on such matters of
management, policy and
operations. The firm shall not be
subject to any formal or informal
restrictions that limit the
20
customary discretion of a small
business owner. There shall be
no restrictions by partnership
agreements, charter
requirements or other
arrangements that prevent a
small business owner from
making a business decision of
the firm without the cooperation
or vote of any owner or other
party who is not a small business
owner.
3. An SBE applicant shall satisfy
business size standards
commensurate with small
business status. Except as
required otherwise by law, to
determine small business status
for each trade, the City Manager
shall adopt the annual gross
receipt limitation for each trade
as established by the United
States Small Business
Administration ("SBA") 13 CFR
Part 121, Small Business Size
Regulations, Subpart A, Size
Eligibility Provisions and
Standards for participation in
SBA Programs, as such SBA
limitations are amended from
time to time.
4. An SBE applicant shall satisfy an
individual personal net worth
standard $750,000 NOT
EXCEEDING LIMITS
IDENTIFIED BY U.S. DOT
REGULATIONS-49 CFR, PARTS
23 AND 26 which is
commensurate with small
business status. The City
Manager shall adopt the personal
net worth limitation for each
individual owner(s) as
established by the 49 CFR, Parts
23 and 26, Participation by
Disadvantaged Business
Enterprises in DOT Financial
Assistance programs, as such
limitations are amended from
time to time. To determine
personal net worth, each SBE
applicant shall submit to the City,
and the City Manager will
examine, a personal net worth
financial statement including
supportive documentation and
evidence.
5. For purposes of this program, the
applicant must be actively
involved in the day-to-day
management of the firm. If the
actual management of an SBE
firm is contracted out to
individuals other than the owner,
those persons who have the
ultimate authority to hire and fire
the managers or who can
obligate the firm in financial and
contractual matters will for the
purpose of this article, be
considered as controlling the
business.
6. To determine the ownership or
control of a business, all
securities or other interests that
constitute ownership or control of
a business for purposes of
establishing it as an SBE must be
held directly by a small business
owner. No securities or other
ownership interests held in trust
or by any guardian for a minor
shall be considered held by a
small business owner.
7. Ownership and control shall be
measured as though not subject
to the community property
interest of a spouse.
8. A business will be declared
ineligible for certification when a
reasonable and prudent
determination cannot be made as
to ownership and control for a
21
family-owned enterprise where
the members of the family
actively involved in the business
are not the qualifying individuals
for certification.
B. The City Manager shall investigate SBE
applications for certification. Failure to
cooperate and provide all information
and documentation required to make a
determination of eligibility under this
article will disqualify the applicant for
certification. The investigation of
ownership arrangements may exceed
the review of formal documents
submitted by each entity if:
1. The firm is applying for
certification with the City for the
first time;
2. The firm is newly formed or it has
small business ownership of less
than one hundred percent;
3. There is a previous or continuing
employer-employee relationship
between or among present
owners;
4. A business which is not an SBE
has an interest in the firm;
5. The ownership of the firm has
changed since documents have
been submitted to the City
Manager;
6. A review of the documents
submitted with the application
raises serious objective concerns
regarding either ownership or
control of the firm; or
7. Information provided in the
application process is found to be
false, fraudulent, misleading or
materially inaccurate.
C. The City Manager shall grant
certification to an approved SBE for a
period of five years with annual updates
of the applicable information A
BUSINESS THAT CONTINUES TO
MEET CERTIFICATION ELIGIBILITY
REQUIREMENTS WHICH INCLUDES
AN ANNUAL REVIEW OF
APPLICABLE INFORMATION. If an
SBE A BUSINESS is denied
certification, the business cannot
reapply for certification for a period of
twelve months from the date of the
notice of denial; but the business shall
have the right to appeal the denial and
to be certified if the appeal is decided in
its favor.
D. To remain certified, all SBEs appearing
in the certification database will be
required to submit a new affidavit with
required DOCUMENTATION every five
years ON AN ANNUAL BASIS on an
annual basis to the City Manager as
follows:
1. All documentation required as
part of the annual update process
or five-year recertification will be
evaluated for completeness and
accuracy to determine whether
any changes have occurred that
affect the status of the business
as a bona fide SBE. An
investigation may be conducted
to evaluate an applicant for
continuing certification or
recertification as deemed
appropriate by the City Manager.
2. All certified SBEs are subject to
monitoring by the City Manager
to assure that the required
ownership and control shall
continue.
E. The City Manager may immediately
remove or decertify a business that the
City Manager finds is no longer a bona
fide SBE. Any of the following reasons,
which are not intended to be all-
22
inclusive, are sufficient grounds for
decertification:
1. The business no longer satisfies
the ownership, control, or size
requirements.
2. The SBE fails to submit, within a
reasonable time period,
information requested by the City
Manager.
3. The business defaults and is
terminated for cause on two or
more City contracts within a one-
year period.
4. The SBE is found to have
provided false, fraudulent,
misleading or materially
inaccurate information to obtain
certification that affects the
eligibility status of the firm for
certification.
F. Businesses decertified for reasons other
than the business's voluntary request
may not apply for recertification for one
year from the date of notice of
decertification or removal. A business
that is decertified may file an appeal
under section 18-303.
Sec. 18-303. – Appeals.
A. Upon a denial of certification or
decertification as an SBE by the City
Manager, the City Manager shall notify
the BUSINESS affected party in writing
by certified mail, setting forth the
reasons for the denial of certification or
decertification.
B. Any contractor, subcontractor, vendor,
or supplier who BUSINESS THAT has
been denied certification as an SBE or
who has been decertified by the City
Manager may appeal the decision by
filing a written notice of appeal as
designated by the City Manager within
seven working days of receipt of the
notice of the denial of certification or
decertification. This written notice must
state the reasons for the appeal.
C. Within three working days of receipt of
the notice of appeal from the affected
party, the City Manager shall forward
the notice to a hearing officer.
D. The hearing officer shall:
1. Set a hearing date not more than
seven working FOURTEEN
BUSINESS DAYS from the date
of receipt of the notice from the
City Manager.
2. Cause a notice of the hearing,
which shall include the hearing
date, time and place, to be
served upon all parties by
certified mail. Such notice shall
set forth with particularity the
REASON FOR THE APPEAL
charges filed by the affected
business.
3. Conduct a hearing concerning
the determination of
noncompliance. At the hearing,
all parties shall be provided a fair
and impartial hearing and shall
be allowed to produce any and all
relevant evidence in either party's
possession concerning the
determination of noncompliance
with the requirements of this
article or the denial of certification
as an SBE. For the appeal, the
burden of proof rests on the
affected party BUSINESS to
show that established criteria for
SBE certification have been met.
4. Issue written notice of the
decision on the appeal to all
parties and shall affirm, alter, or
reverse the denial of certification
by the City. The notice of
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decision shall be sent to all
parties by certified mail within
seven working TWENTY
BUSINESS days of the hearing
and shall set forth the reasons for
the decision.
E. If the decision on appeal reverses the
denial of certification or alters the denial
of certification in favor of the BUSINESS
affected party, the affected party’s
business shall be certified as an SBE
and added to the certification database
maintained by the City. The decision of
the hearing officer is final and shall be
binding on all parties, subject to the right
of appeal as provided by law.
PASSED by the Council of the City of Phoenix this -------day of May, 2020.
M A Y O R
ATTEST:
_________________________ City Clerk
APPROVED AS TO FORM:
_________________________ Acting City Attorney
REVIEWED BY:
_________________________ City Manager
HG:tru:860164:CM 85, Item 32