SB0019CT1S

SENATE CORPORATIONS AND TRANSPORTATION COMMITTEE SUBSTITUTE FOR

SENATE BILL 19

50th legislature - STATE OF NEW MEXICO - first session, 2011

AN ACT

RELATING TO PROCUREMENT; MODIFYING THE PREFERENCE ADVANTAGE FOR IN-STATE BUSINESS; CHANGING THE DEFINITIONS OF "RESIDENT BUSINESS" AND "RESIDENT CONTRACTOR"; CHANGING THE PROCESS FOR OBTAINING CERTIFICATION AS A RESIDENT BUSINESS OR RESIDENT CONTRACTOR; ELIMINATING PREFERENCES FOR RESIDENT MANUFACTURERS AND NEW YORK STATE BUSINESSES; PROVIDING PENALTIES; REPEALING SECTION 13-1-21.2 NMSA 1978 (BEING LAWS 1997, CHAPTER 1, SECTION 1 AND LAWS 1997, CHAPTER 2, SECTION 1).

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

SECTION 1. Section 13-1-21 NMSA 1978 (being Laws 1979, Chapter 72, Section 1, as amended) is amended to read:

"13-1-21. APPLICATION OF PREFERENCES.--

A. For the purposes of this section:

(1) "business" means a commercial enterprise carried on for the purpose of selling goods or services, including growing, producing, processing or distributing agricultural products for profit;

(2) "public body" means the executive, legislative and judicial branches of state and local governments, the New Mexico hospital equipment loan council, entities on state-owned land and all agencies or entities created by the constitution of New Mexico or any branch of government that receives public funding, including political subdivisions, home rule municipalities, special taxing districts, school districts and institutions of higher education;

(3) "resident business" means a [New Mexico resident business or a New York state business enterprise] business that has a valid resident business certificate issued by the taxation and revenue department pursuant to Section

13-1-22 NMSA 1978; and

[(2) "New Mexico resident business" means a business that is authorized to do and is doing business under the laws of this state and:

(a) that maintains its principal place of business in the state;

(b) has staffed an office and has paid applicable state taxes for two years prior to the awarding of the bid and has five or more employees who are residents of the state; or

(c) is an affiliate of a business that meets the requirements of Subparagraph (a) or (b) of this paragraph. As used in this section, "affiliate" means an entity that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the qualifying business through ownership of voting securities representing a majority of the total voting power of the entity;

(3) "New York state business enterprise" means a business enterprise, including a sole proprietorship, partnership or corporation, that offers for sale or lease or other form of exchange, goods or commodities that are substantially manufactured, produced or assembled in New York state, or services, other than construction services, that are substantially performed within New York state. For purposes of construction services, a "New York state business enterprise" means a business enterprise, including a sole proprietorship, partnership or corporation, that has its principal place of business in New York state;

(4) "resident manufacturer" means a person who offers materials grown, produced, processed or manufactured wholly in the state; provided, however, that a New York state business enterprise shall be deemed to be a resident manufacturer solely for the purpose of evaluating the New York state business enterprise's bid against the bid of a resident manufacturer that is not a New York state business enterprise; (5)] (4) "recycled content goods" means supplies and materials composed [in whole or in part] twenty-five percent or more of recycled materials; provided that the recycled materials content meets or exceeds the minimum content standards required by bid specifications. [and

(6) "virgin content goods" means supplies and materials that are wholly composed of nonrecycled materials or do not meet minimum recycled content standards required by bid specification.

B. When bids are received only from nonresident businesses and resident businesses and the lowest responsible bid is from a nonresident business, the contract shall be awarded to the resident business whose bid is nearest to the bid price of the otherwise low nonresident business bidder if the bid price of the resident bidder is made lower than the bid price of the nonresident business when multiplied by a factor of .95.

C. When bids are received only from nonresident businesses and resident manufacturers and the lowest responsible bid is from a nonresident business, the contract shall be awarded to the resident manufacturer whose bid is nearest to the bid price of the otherwise low nonresident business bidder if the bid price of the resident manufacturer is made lower than the bid price of the nonresident business when multiplied by a factor of .95.

D. When bids are received only from resident businesses and resident manufacturers and the lowest responsible bid is from a resident business, the contract shall be awarded to the resident manufacturer whose bid is nearest to the bid price of the otherwise low resident business bidder if the bid price of the resident manufacturer is made lower than the bid price of the resident business when multiplied by a factor of .95.

E. When bids are received from resident manufacturers, resident businesses and nonresident businesses and the lowest responsible bid is from a resident business, the contract shall be awarded to the resident manufacturer whose bid is nearest to the bid price of the otherwise low resident business bidder if the bid price of the resident manufacturer is made lower than the bid price of the resident business when multiplied by a factor of .95.

F. When bids are received from resident manufacturers, resident businesses and nonresident businesses and the lowest responsible bid is from a nonresident business, the contract shall be awarded to the resident manufacturer whose bid is nearest to the bid price of the otherwise low nonresident business bidder if the bid price of the resident manufacturer is evaluated as lower than the bid price of the nonresident business when multiplied by a factor of .95. If there is no resident manufacturer eligible for award under this provision, then the contract shall be awarded to the resident business whose bid is nearest to the bid price of the otherwise low nonresident business bidder if the bid price of the resident business is made lower than the bid price of the nonresident business when multiplied by a factor of .95.

G. When bids are received for virgin content goods only or for recycled content goods only, Subsections B through F of this section shall apply.

H. When bids are received for both recycled content goods and virgin content goods and the lowest responsible bid is for virgin content goods, the contract shall be awarded to:

(1) a resident manufacturer offering the lowest bid on recycled content goods of equal quality if the bid price of the resident manufacturer when multiplied by a factor of .90 is made lower than the otherwise low virgin content goods bid price;

(2) a resident business offering a bid on recycled content goods of equal quality if:

(a) the bid price of no resident manufacturer following application of the preference allowed in Paragraph (1) of this subsection can be made sufficiently low; and

(b) the lowest bid price of the resident business when multiplied by a factor of .90 is made lower than the otherwise low virgin content goods bid price; or

(3) a nonresident business or nonresident manufacturer offering recycled content goods of equal quality if:

(a) the bid price of no resident business or resident manufacturer following application of the preference allowed in Paragraph (1) or (2) of this subsection can be made sufficiently low; and

(b) the lowest bid price of a nonresident offering recycled content goods when multiplied by a factor of .95 is made lower than the otherwise low virgin content bid price.

I. When bids are received for both recycled content goods and virgin content goods and the lowest responsible bid is for recycled content goods offered by a nonresident business or nonresident manufacturer, the contract shall be awarded to:

(1) a resident manufacturer offering the lowest bid on recycled content goods of equal quality if the bid price of the resident manufacturer when multiplied by a factor of .95 is made lower than the otherwise low recycled content goods bid price; or

(2) a resident business offering a bid on recycled content goods of equal quality if:

(a) the bid price of no resident manufacturer following application of the preference allowed in Paragraph (1) of this subsection can be made sufficiently low; and

(b) the lowest bid price of the resident business when multiplied by a factor of .95 is made lower than the otherwise low recycled content goods bid price offered by a nonresident business or manufacturer.

J. When bids are received for both recycled content goods and virgin content goods and the lowest responsible bid is for recycled content goods offered by a resident business, the contract shall be awarded to a resident manufacturer offering the lowest bid on recycled content goods of equal quality if the bid price of the resident manufacturer when multiplied by a factor of .95 is made lower than the otherwise low recycled content goods bid price.]

B. When a public body makes a purchase using a formal bid process, the public body shall deem the bids submitted by resident businesses to be five percent lower than the bids actually submitted.

C. When a public body makes a purchase using a formal request for proposals process:

(1) five percent of the relative weight of all the factors used in evaluating the proposals shall be based on whether the proposal was submitted by a resident business; or

(2) if the contract is awarded based on a point-based system, resident businesses shall be awarded the equivalent of five percent of the total possible points to be awarded.

D. When a joint bid or joint proposal is submitted by both resident and nonresident businesses, the resident business preference provided pursuant to Subsection B or C of this section shall be reduced in proportion to the percentage of the contract, based on the dollar amount of the goods or services provided under the contract, that will be performed by a nonresident business as specified in the joint bid or proposal.

E. When bids are received for both recycled content goods and nonrecycled content goods, the public body shall deem the bids submitted for recycled content goods of equal quality to be five percent lower than the bids actually submitted. A bid calculation pursuant to this subsection for a resident business shall not also receive the bid calculation preference pursuant to Subsection B of this section.

F. The procedures provided in Sections 13-1-172 through 13-1-183 NMSA 1978 apply to a protest to a public body concerning the awarding of a contract in violation of this section.

[K.] G. This section shall not apply when the expenditure [of] includes federal funds [designated] for a specific purchase. [is involved or for any bid price greater than five million dollars ($5,000,000).

L. The provisions of this section shall not apply to the purchase of buses from a resident manufacturer or a New Mexico resident business that manufactures buses in New Mexico. It is the purpose of this subsection to:

(1) allow any bus manufacturer or business that manufactures buses to compete openly for public procurement contracts in New Mexico without giving preference to a business based on the location of the place of manufacture of the buses;

(2) give resident manufacturers and New Mexico resident businesses that manufacture buses an equal opportunity to sell their buses in states that have reciprocal preference laws; and

(3) eliminate all different treatment of any kind under New Mexico law and by all political jurisdictions in the state between New Mexico resident businesses and manufacturers that manufacture buses and businesses in other states that manufacture and sell buses.]"

SECTION 2. Section 13-1-22 NMSA 1978 (being Laws 1969, Chapter 184, Section 1, as amended) is amended to read:

"13-1-22. RESIDENT BUSINESS AND [MANUFACTURER] RESIDENT CONTRACTOR CERTIFICATION [APPLICATION--INFORMATION].--[No resident business or resident manufacturer, as those terms are defined in Subsection A of Section 13-1-21 NMSA 1978, shall be given any preference in the awarding of contracts for furnishing materials or services to a state agency unless the resident business or resident manufacturer shall have qualified with the state purchasing agent as a resident business or resident manufacturer or both by making application to the state purchasing agent and receiving from him a certification number. The procedure for application and certification shall be as follows:

A. the state purchasing agent shall prepare an application form for certification as a resident business or manufacturer, requesting such information and proof as he deems necessary to qualify the applicant under the terms of Section 13-1-21 NMSA 1978;

B. the resident business or resident manufacturer shall complete the application form and submit it to the state purchasing agent prior to the awarding of any contract in which the resident business or manufacturer desires to be given a preference; and

C. the state purchasing agent shall examine the application and if necessary may seek additional information or proof to assure himself that the prospective business or manufacturer is indeed entitled to the statutory preference. If all is in order, he shall issue the supplier a distinctive certification number, which shall be valid until revoked, and which, when used on bids and other purchasing documents, shall entitle the business or manufacturer to the statutory preference.]

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 authorized to do and is doing business under the laws of this state and that:

(1) the business has paid property taxes or rent on real property in New Mexico and paid at least one other tax administered by the taxation and revenue department in each of the five years immediately preceding the submission of the affidavit;

(2) if the business is an entrepreneur's business, the entrepreneur owns a majority of the business and has resided in New Mexico during the five-year period 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 New Mexico and that, prior to the submission of the affidavit, the business either leased property for ten years or purchased property greater than one hundred thousand dollars ($100,000) in value in New Mexico; or

(4) if the business has changed its name from that of a previously certified business, the business is identical in every way to the previously certified business that meets all criteria.

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 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 New Mexico and paid at least one other tax administered by the taxation and revenue department; and 2) unless the contractor is a legacy contractor, paid unemployment compensation on at least three full-time employees who are residents of the state;

(2) if the contractor is an entrepreneur, the entrepreneur owns a majority of the business and has resided in New Mexico during the five-year period 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 New Mexico and that, prior to the submission of the affidavit, the contractor either leased property for ten years or purchased property greater than one hundred thousand dollars ($100,000) in value in New Mexico;

(4) if the contractor has changed its name from that of a previously certified contractor, the contractor is identical in every way to the previously certified contractor that meets all criteria; or

(5) if the contractor is a legacy contractor, the requirement of at least three full-time employees who are residents of the state is waived.

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 all is in order, the taxation and revenue department shall issue a certificate within thirty days of the submission of an application. 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 taxation and revenue department 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:

(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.

G. The taxation and revenue department may assess a reasonable fee for the issuance of a certificate to cover the costs of administering the taxation and revenue department's duties pursuant to this section.

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

I. For purposes of this section:

(1) "entrepreneur" means a person who is an owner and operator of an entirely new business that did not exist in any form and that has been in existence for less than five years;

(2) "legacy contractor" means a business that has been licensed in this state and owned by a resident for ten consecutive years; and

(3) "relocated business" means a business that moved its principal place of business from another state to New Mexico in the past five years."

SECTION 3. Section 13-1-103 NMSA 1978 (being Laws 1984, Chapter 65, Section 76, as amended) is amended to read:

"13-1-103. INVITATION FOR BIDS.--

A. An invitation for bids shall be issued and shall include the specifications for the services, construction or items of tangible personal property to be procured, all contractual terms and conditions applicable to the procurement, the location where bids are to be received, [and] the date, time and place of the bid opening and the requirements for complying with any applicable in-state preference provisions as provided by law.

B. If the procurement is to be by sealed bid without electronic submission, the invitation for bids shall include the location where bids are to be received and the date, time and place of the bid opening.

C. If the procurement is to be by sealed bid with part or all of the bid to be submitted electronically, the invitation for bids shall comply with the requirements of Section 13-1-95.1 NMSA 1978."

SECTION 4. Section 13-1-112 NMSA 1978 (being Laws 1984, Chapter 65, Section 85, as amended) is amended to read:

"13-1-112. COMPETITIVE SEALED PROPOSALS--REQUEST FOR PROPOSALS.--

A. Competitive sealed proposals, including competitive qualifications-based proposals, shall be solicited through a request for proposals that shall be issued and shall include:

(1) the specifications for the services or items of tangible personal property to be procured;

(2) all contractual terms and conditions applicable to the procurement;

(3) the form for disclosure of campaign contributions given by prospective contractors to applicable public officials pursuant to Section 13-1-191.1 NMSA 1978; [and]

(4) the location where proposals are to be received and the date, time and place where proposals are to be received and reviewed; and

(5) the requirements for complying with any applicable in-state preference provisions as provided by law.

B. A request for proposals may, pursuant to Section 13-1-95.1 NMSA 1978, require that all or a portion of a responsive proposal be submitted electronically.

C. In the case of requests for competitive qualifications-based proposals, price shall be determined by formal negotiations related to scope of work."

SECTION 5. Section 13-4-2 NMSA 1978 (being Laws 1984, Chapter 66, Section 2, as amended) is amended to read:

"13-4-2. RESIDENT CONTRACTOR DEFINED--APPLICATION OF PREFERENCE.--

[A. "Resident contractor" means a New Mexico resident contractor or a New York state business enterprise.

B. "New Mexico resident contractor" means any person, firm, corporation or other legal entity if, at the time the contract is advertised for bids and at the time bids are opened, it has all required licenses and meets the following requirements:

(1) if the bidder is a corporation, it shall be incorporated in New Mexico and maintain its principal office and place of business in New Mexico;

(2) if the bidder is a partnership, general or limited, or other legal entity, it shall maintain its principal office and place of business in New Mexico;

(3) if the bidder is an individual, he shall maintain his principal office and place of business in New Mexico; or

(4) if a bidder who is a telecommunications company as defined by Subsection M of Section 63-9A-3 NMSA 1978 or an affiliate of a telecommunications company has paid unemployment compensation to the employment security division of the labor department at the applicable experience rate for that employer pursuant to the Unemployment Compensation Law on no fewer than ten employees who have performed services subject to contributions for the two-year period prior to issuance of notice to bid, the bidder will be considered to have fulfilled the requirements of Paragraph (1), (2) or (3) of this subsection. A successor to a previously qualified New Mexico contractor or resident contractor, where the creation of the bidder resulted from a court order, is entitled to credit for qualifying contributions paid by the previously qualified New Mexico contractor or resident contractor.

C. "New York state business enterprise" means a business enterprise, including a sole proprietorship, partnership or corporation, that offers for sale or lease or other form of exchange, goods or commodities that are substantially manufactured, produced or assembled in New York state, or services, other than construction services, that are substantially performed within New York state. For purposes of construction services, a New York state business enterprise means a business enterprise, including a sole proprietorship, partnership or corporation, that has its principal place of business in New York state.

D. For purposes of this section, "affiliate" means an entity that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with a telecommunications company through ownership of voting securities representing a majority of the total voting power of that entity.

E. When bids are received only from nonresident contractors and resident contractors and the lowest responsible bid is from a nonresident contractor, the contract shall be awarded to the resident contractor whose bid is nearest to the bid price of the otherwise low nonresident contractor if the bid price of the resident contractor is made lower than the bid price of the nonresident contractor when multiplied by a factor of .95.

F. No contractor shall be treated as a resident contractor in the awarding of public works contracts by a state agency or a local public body unless the contractor has qualified with the state purchasing agent as a resident contractor pursuant to this section by making application to the state purchasing agent and receiving from him a certification number. The procedure for application and certification is as follows:

(1) the state purchasing agent shall prepare an application form for certification as a resident contractor, requiring such information and proof as he deems necessary to qualify the applicant under the terms of this section;

(2) the contractor seeking to qualify as a resident contractor shall complete the application form and submit it to the state purchasing agent prior to the submission of a bid on which the contractor desires to be given a preference;

(3) the state purchasing agent shall examine the application and if necessary may seek additional information or proof so as to be assured that the prospective contractor is indeed entitled to certification as a resident contractor. If the application is in proper form, the state purchasing agent shall issue the contractor a distinctive certification number which is valid until revoked and which when used on bids and other purchasing documents for state agencies or local public bodies, entitles the contractor to treatment as a resident contractor under Subsection E of this section; and

(4) the certification number issued pursuant to Paragraph (3) of this subsection shall be revoked by the state purchasing agent upon making a determination that the contractor no longer meets the requirements of a resident contractor as defined in this section.]

A. For the purposes of this section:

(1) "public body" means the executive, legislative and judicial branches of state and local governments, the New Mexico hospital equipment loan council, entities on state-owned land and all agencies or entities created by the constitution of New Mexico or any branch of government that receives public funding, including political subdivisions, home rule municipalities, special taxing districts, school districts and institutions of higher education;

(2) "public works contract" means a contract for construction, construction management, architectural, landscape architectural, engineering, surveying or interior design services; and

(3) "resident contractor" means any person, firm, corporation or other legal entity that has a valid resident contractor certificate issued by the taxation and revenue department pursuant to Section 13-1-22 NMSA 1978.

B. For the purpose of awarding a public works contract, a public body shall deem the bids submitted by resident contractors to be five percent lower than the bids actually submitted.

C. When a public body awards a contract using a formal request for proposals process:

(1) five percent of the relative weight of all the factors used in evaluating the proposals shall be based on whether the proposal was submitted by a resident contractor; or

(2) if the contract is awarded based on a point-based system, resident contractors shall be awarded the equivalent of five percent of the total possible points to be awarded.

D. When a joint bid or joint proposal is submitted by both resident and nonresident contractors, the resident contractor preference provided pursuant to Subsection B or C of this section shall be reduced in proportion to the percentage of the contract, based on the dollar amount of the goods or services provided under the contract, that will be performed by a nonresident contractor as specified in the joint bid or joint proposal.

E. The procedures provided in Sections 13-1-172 through 13-1-183 NMSA 1978 apply to a protest to a public body concerning the awarding of a contract in violation of this section."

SECTION 6. Section 13-4-5 NMSA 1978 (being Laws 1933, Chapter 19, Section 1, as amended by Laws 1997, Chapter 1, Section 4 and also by Laws 1997, Chapter 2, Section 4) is amended to read:

"13-4-5. USE OF NEW MEXICO MATERIALS.--[A.] In all public works within New Mexico, whether constructed or maintained by the state or by a department, [a] board [a] or commission of the state or by any political subdivision [thereof] of the state, or in any construction or maintenance to which the state or any political subdivision [thereof] of the state has granted aid, preference shall be given to materials produced, grown, processed or manufactured in New Mexico by citizens or residents of New Mexico [or provided or offered by a New York state business enterprise, and such materials shall be used where they are deemed satisfactory for the intended use]. In any case where, in the judgment of the different officers, boards, commissions or other [authority] authorities in this state [now or hereafter] vested with the power of contracting for material used in the construction or maintenance of public works referred to in this section, it appears that an attempt is being made by producers, growers, processors or manufacturers in the state to form a trust or combination of any kind for the purpose of fixing or regulating the price of materials to be used in any public works to the detriment of or loss to the state, [then] the provisions of this section shall not apply.

[B. As used in this section, "New York state business enterprise" means a business enterprise, including a sole proprietorship, partnership or corporation, that offers for sale or lease or other form of exchange, goods or commodities that are substantially manufactured, produced or assembled in New York state, or services, other than construction services, that are substantially performed within New York state. For purposes of construction services, a New York state business enterprise means a business enterprise, including a sole proprietorship, partnership or corporation, that has its principal place of business in New York state.]"

SECTION 7. TEMPORARY PROVISION.--A certification as a resident business or resident manufacturer by the general services department that is in effect on June 30, 2011 is valid until January 1, 2012 for the purpose of obtaining a resident business preference pursuant to Section 13-1-21 NMSA 1978. A certification as a resident contractor by the general services department that is in effect on June 30, 2011 is valid until January 1, 2012 for the purpose of obtaining a resident contractor preference pursuant to Section 13-4-2 NMSA 1978. After January 1, 2012, a certification as a resident business or resident contractor by the taxation and revenue department for the purpose of obtaining a resident business preference or a resident contractor preference is required for all new bids and proposals.

SECTION 8. REPEAL.--Section 13-1-21.2 NMSA 1978 (being Laws 1997, Chapter 1, Section 1 and Laws 1997, Chapter 2, Section 1) is repealed.

SECTION 9. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.

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