SB0029

SENATE BILL 29

54th legislature - STATE OF NEW MEXICO - first session, 2019

INTRODUCED BY

Michael Padilla

AN ACT

RELATING TO PROCUREMENT; ENACTING THE RESIDENT BUSINESS SET-ASIDE ACT; REQUIRING THAT THIRTY-THREE PERCENT OF STATE GOVERNMENT CONTRACTS BE AWARDED TO RESIDENT BUSINESSES; PROVIDING FOR RULEMAKING; REQUIRING REPORTING; INCLUDING BUSINESSES OWNED BY AN INDIAN NATION, TRIBE OR PUEBLO AS RESIDENT BUSINESSES; PROVIDING PENALTIES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 6 of this act may be cited as the "Resident Business Set-Aside Act".

SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Resident Business Set-Aside Act:

A. "contracting agency" means a department, commission, council, board, committee, institution, agency, government corporation or official of the executive, legislative or judicial branch of state government;

B. "department" means the general services department;

C. "executive branch contracting agency" means a department, commission, council, board, committee, institution, agency, government corporation or official of the executive branch of state government;

D. "resident business" means a business or contractor that has a valid resident business or resident contractor certificate issued by the taxation and revenue department pursuant to Section 13-1-22 NMSA 1978;

E. "set-aside contract" means:

(1) a contract for items of tangible personal property, equipment, construction, services or professional services that is designated as a contract for which bids or proposals are solicited only from a resident business; or

(2) a portion of a contract that is designated as a portion for which bids or proposals are solicited and accepted only from a resident business; and

F. "tangible personal property" means tangible property other than real property that has a physical existence, including supplies, equipment, materials and printed materials.

SECTION 3. [NEW MATERIAL] CONTRACTING AGENCIES-- REQUIREMENTS--DESIGNATION OF SET-ASIDE CONTRACTS.--

A. A contracting agency shall award at least thirty-three percent of the total number of its contracts, regardless of whether those contracts were awarded pursuant to a competitive process, to resident businesses. A contract pursuant to the State Use Act that is awarded to a resident business shall be included in the contracting agency's calculation pursuant to this subsection.

B. A contracting agency shall develop an annual plan for how it will achieve the purpose and requirements of the Resident Business Set-Aside Act.

C. A contracting agency may designate a contract, or a portion thereof, as a resident business set-aside contract pursuant to the Resident Business Set-Aside Act if there is a reasonable expectation that bids or proposals may be obtained from at least three qualified resident businesses that are capable of furnishing the desired items of tangible personal property, equipment, construction, services or professional services at a fair and reasonable price. The designation of the contract shall be made before the contracting agency solicits bids or proposals.

D. If the department and an executive branch contracting agency disagree as to the designation of a resident business set-aside contract or the requirement that a resident business subcontractor perform work on a portion of a contract, the dispute shall be submitted to the state auditor for a final determination within twenty-one days of receipt of written notice of the disagreement.

E. If the implementation of the purpose or provisions of the Resident Business Set-Aside Act would jeopardize the state's participation in a program from which the state receives federal funds or other benefits, a contracting agency may withdraw the affected contracts from consideration or calculation of a contracting agency's resident business contract awards.

F. In carrying out the provisions of this section, an executive branch contracting agency shall consult with the department.

SECTION 4. [NEW MATERIAL] ANNUAL REPORT.--

A. An executive branch contracting agency shall submit an annual report to the department on or before the deadline established by the department. On or before July 1 of every year:

(1) the legislative branch of state government shall publish an annual report on the New Mexico legislature website and the sunshine portal; and

(2) the judicial branch of state government shall publish an annual report on the New Mexico courts website and the sunshine portal.

B. An annual report shall include:

(1) the total number of contracts awarded to a resident business and the total dollar value of those contracts;

(2) the total number of contracts for which a portion of the contract work was performed by a resident business and the total dollar value of the work performed pursuant to those contracts;

(3) the total number of resident business set-aside contracts designated and awarded and the total dollar value of those contracts;

(4) the percentage of total procurement that was awarded to a resident business; and

(5) the efforts made to publicize and promote procurement pursuant to the Resident Business Set-Aside Act.

C. The department shall analyze the reports submitted or published pursuant to this section and, using the report data, shall prepare and submit an annual report to the governor and to the legislature and for publication on the sunshine portal by November 1 of each year, beginning in 2020, to show whether the purpose and the directives of the Resident Business Set-Aside Act were met during the preceding fiscal year.

SECTION 5. [NEW MATERIAL] CONSULTATION WITH INDUSTRY.--The department shall consult at least every six months with representatives from industries affected by the Resident Business Set-Aside Act to ensure effective implementation of that act.

SECTION 6. [NEW MATERIAL] RULES.--The department shall promulgate rules necessary to implement the provisions of the Resident Business Set-Aside Act.

SECTION 7. Section 13-1-22 NMSA 1978 (being Laws 1969, Chapter 184, Section 1, as amended) is amended to read:

"13-1-22. RESIDENT BUSINESS, RESIDENT VETERAN BUSINESS, RESIDENT CONTRACTOR AND RESIDENT VETERAN CONTRACTOR CERTIFICATION.--

A. To receive a resident business or resident veteran business preference pursuant to Section 13-1-21 NMSA 1978 or a resident contractor or resident veteran contractor preference pursuant to Section 13-4-2 NMSA 1978, a business or contractor shall submit with its bid or proposal a copy of a valid resident business certificate, valid resident veteran business certificate, valid resident contractor certificate or valid resident veteran contractor certificate issued by the taxation and revenue department.

B. An application for a resident business certificate shall include an affidavit from a certified public accountant setting forth that the business is licensed to do business in this state and that:

(1) the business has paid property taxes or rent on real property in the state and paid at least one other tax administered by the state in each of the three years immediately preceding the submission of the affidavit;

(2) if the business is a new business, the owner or majority of owners has paid property taxes or rent on real property in the state and has paid at least one other tax administered by the state in each of the three years immediately preceding the submission of the affidavit and has not applied for a resident business or resident contractor certificate pursuant to this section during that time period;

(3) if the business is a relocated business, at least eighty percent of the total personnel of the business in the year immediately preceding the submission of the affidavit were residents of the state and that, prior to the submission of the affidavit, the business either leased real property for ten years or purchased real property greater than one hundred thousand dollars ($100,000) in value in the state; [or]

(4) if the business is a previously certified business or was eligible for certification, the business has changed its name, has reorganized into one or more different legal entities, was purchased by another legal entity but operates in the state as substantially the same commercial enterprise or has merged with a different legal entity but operates in the state as substantially the same commercial enterprise; or

(5) if the business is owned by an Indian nation, tribe or pueblo, located wholly or partially in New Mexico, or any of its governmental entities or subdivisions, the business's principal place of business is in the state and at least eighty percent of the total personnel of the business in the year immediately preceding the submission of the affidavit were residents of the state.

C. An application for a resident veteran business certificate shall include the affidavit required by Subsection B of this section, an affidavit from a certified public accountant providing the previous year's annual revenues of the resident veteran business and:

(1) verification by the federal department of veterans affairs as being either a veteran-owned small business or a service-disabled veteran-owned small business; or

(2) verification of veteran status as indicated by the United States department of defense DD form 214 of release or discharge from active duty with an honorable discharge or of service-disabled veteran status by the department of veterans affairs and proof that a veteran or veterans own a majority of the business.

D. An application for a resident contractor certificate shall include an affidavit from a certified public accountant setting forth that the contractor is currently licensed as a contractor in this state and that:

(1) the contractor has:

(a) registered with the state at least one vehicle; and

(b) in each of the five years immediately preceding the submission of the affidavit: 1) paid property taxes or rent on real property in the state and paid at least one other tax administered by the state; and 2) paid unemployment insurance on at least three full-time employees who are residents of the state; provided that if a contractor is a legacy contractor, the requirement of at least three full-time employees who are residents of the state is waived;

(2) if the contractor is a new contractor, the owner or majority of owners has paid property taxes or rent on real property in the state and has paid at least one other tax administered by the state in each of the five years immediately preceding the submission of the affidavit and has not applied for a resident business or resident contractor certificate pursuant to this section during that time period;

(3) if the contractor is a relocated business, at least eighty percent of the total personnel of the business in the year immediately preceding the submission of the affidavit were residents of the state and that, prior to the submission of the affidavit, the contractor either leased real property for ten years or purchased real property greater than one hundred thousand dollars ($100,000) in value in the state; [or]

(4) if the contractor is a previously certified contractor or was eligible for certification, the contractor has changed its name, has reorganized into one or more different legal entities, was purchased by another legal entity but operates in the state as substantially the same enterprise or has merged with a different legal entity but operates in the state as substantially the same commercial enterprise; or

(5) if the contractor is a business owned by an Indian nation, tribe or pueblo, located wholly or partially in New Mexico, or any of its governmental entities or subdivisions, the business's principal place of business is in the state and at least eighty percent of the total personnel of the business in the year immediately preceding the submission of the affidavit were residents of the state.

E. An application for a resident veteran contractor certificate shall include the affidavit required by Subsection D of this section, an affidavit from a certified public accountant providing the previous year's annual revenues for the resident veteran contractor and:

(1) verification by the federal department of veterans affairs as being either a veteran-owned small business or a service-disabled veteran-owned small business; or

F. The taxation and revenue department shall prescribe the form and content of an application for certification and required affidavit. The taxation and revenue department shall examine the application and affidavit and, if necessary, may seek additional information to ensure that the business or contractor is eligible to receive the certificate pursuant to the provisions of this section. If the taxation and revenue department determines that an applicant is eligible, the department shall issue a certificate pursuant to the provisions of this section. If the taxation and revenue department determines that the applicant is not eligible, the department shall issue notification within thirty days. If no notification is provided by the department, the certificate is deemed approved. A certificate is valid for three years from the date of its issuance; provided that if there is a change of ownership of more than fifty percent, a resident business, resident veteran business, resident contractor or resident veteran contractor shall reapply for a certificate.

G. A business or contractor whose application for a certificate is denied has fifteen days from the date of the taxation and revenue department's decision to file an objection with the taxation and revenue department. The person filing the objection shall submit evidence to support the objection. The taxation and revenue department shall review the evidence and issue a decision within fifteen days of the filing of the objection.

H. If, following a hearing and an opportunity to be heard, the administrative hearings office finds that a business or contractor provided false information to the taxation and revenue department in order to obtain a certificate or that a business or contractor used a certificate to obtain a resident business, resident veteran business, resident contractor or resident veteran contractor preference for a bid or proposal and the resident business, resident veteran business, resident contractor or resident veteran contractor did not perform the percentage of the contract specified in the bid or proposal, the business or contractor:

(1) is not eligible to receive a certificate or a preference pursuant to Section 13-1-21 or 13-4-2 NMSA 1978 for a period of five years from the date on which the taxation and revenue department became aware of the submission of the false information or the failure to perform the contract as specified in the bid or proposal; and

(2) is subject to an administrative penalty of up to fifty thousand dollars ($50,000) for each violation.

I. In a decision issued pursuant to Subsection G or H of this section, the taxation and revenue department or administrative hearings office shall state the reasons for the action taken and inform an aggrieved business or contractor of the right to judicial review of the determination pursuant to the provisions of Section 39-3-1.1 NMSA 1978.

J. The taxation and revenue department may assess a reasonable fee for the issuance of a certificate not to exceed the actual cost of administering the taxation and revenue department's duties pursuant to this section.

K. The state auditor may audit or review the issuance or validity of certificates.

L. For purposes of this section:

(1) "legacy contractor" means a construction business that has been licensed in this state for ten consecutive years;

[(1)] (2) "new business" means a person that did not exist as a business in any form and that has been in existence for less than three years;

[(2)] (3) "new contractor" means a person that did not exist as a business in any form and that has been in existence for less than five years;

[(3) "legacy contractor" means a construction business that has been licensed in this state for ten consecutive years] and

(4) "relocated business" means a business that moved eighty percent of its total domestic personnel from another state to New Mexico in the past five years."

SECTION 8. That version of Section 13-1-22 NMSA 1978 (being Laws 2012, Chapter 56, Section 4, as amended) that is to become effective July 1, 2022 is amended to read:

"13-1-22. RESIDENT BUSINESS AND RESIDENT CONTRACTOR CERTIFICATION.--

A. To receive a resident business preference pursuant to Section 13-1-21 NMSA 1978 or a resident contractor preference pursuant to Section 13-4-2 NMSA 1978, a business or contractor shall submit with its bid or proposal a copy of a valid resident business certificate or valid resident contractor certificate issued by the taxation and revenue department.

B. An application for a resident business certificate shall include an affidavit from a certified public accountant setting forth that the business is licensed to do business in this state and that:

C. An application for a resident contractor certificate shall include an affidavit from a certified public accountant setting forth that the contractor is currently licensed as a contractor in this state and that:

(1) the contractor has:

(a) registered with the state at least one vehicle; and

D. The taxation and revenue department shall prescribe the form and content of the application and required affidavit. The taxation and revenue department shall examine the application and affidavit and, if necessary, may seek additional information to ensure that the business or contractor is eligible to receive the certificate pursuant to the provisions of this section. If the taxation and revenue department determines that an applicant is eligible, the department shall issue a certificate pursuant to the provisions of this section. If the taxation and revenue department determines that the applicant is not eligible, the department shall issue notification within thirty days. If no notification is provided by the department, the certificate is deemed approved. A certificate is valid for three years from the date of its issuance; provided that if there is a change of ownership of more than fifty percent, a resident business or resident contractor shall reapply for a certificate.

E. A business or contractor whose application for a certificate is denied has fifteen days from the date of the taxation and revenue department's decision to file an objection with the taxation and revenue department. The person filing the objection shall submit evidence to support the objection. The taxation and revenue department shall review the evidence and issue a decision within fifteen days of the filing of the objection.

F. If, following a hearing and an opportunity to be heard, the administrative hearings office finds that a business or contractor provided false information to the taxation and revenue department in order to obtain a certificate or that a business or contractor used a certificate to obtain a resident business or resident contractor preference for a bid or proposal and the resident business or contractor did not perform the percentage of the contract specified in the bid or proposal, the business or contractor:

(2) is subject to an administrative penalty of up to fifty thousand dollars ($50,000) for each violation.

G. In a decision issued pursuant to Subsection E or F of this section, the taxation and revenue department or the administrative hearings office shall state the reasons for the action taken and inform an aggrieved business or contractor of the right to judicial review of the determination pursuant to the provisions of Section 39-3-1.1 NMSA 1978.

H. The taxation and revenue department may assess a reasonable fee for the issuance of a certificate not to exceed the actual cost of administering the taxation and revenue department's duties pursuant to this section.

I. The state auditor may audit or review the issuance or validity of certificates.

J. For purposes of this section:

(1) "legacy contractor" means a construction business that has been licensed in this state for ten consecutive years;

[(1)] (2) "new business" means a person that did not exist as a business in any form and that has been in existence for less than three years;

[(2)] (3) "new contractor" means a person that did not exist as a business in any form and that has been in existence for less than five years;

[(3) "legacy contractor" means a construction business that has been licensed in this state for ten consecutive years] and

(4) "relocated business" means a business that moved eighty percent of its total domestic personnel from another state to New Mexico in the past five years."

SECTION 9. EFFECTIVE DATE.--

A. The effective date of the provisions of Sections 1 through 7 of this act is July 1, 2019.

B. The effective date of the provisions of Section 8 of this act is July 1, 2022.

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