Leaders Applaud McAuliffe for Executive Order Expanding Opportunity for Small, Women, and Minority Owned Businesses

McAuliffe (Photo credit: mou-ikkai)

Governor McAuliffe signed Executive Order 20: Advancing Equity for Small, Women, and Minority Owned Businesses (SWaM), which expands contracting opportunities for small businesses in the Commonwealth. The executive order sets the highest contracting goal in Virginia history of state expenditures to SWaM-certified businesses at 42%. It also creates a new “micro business” designation for small businesses with no more than 25 employees and no more than $3 million in revenue. Currently, over 80% of SWaM certified companies fall under this micro business category but often have to compete with companies over ten times their size for contracting opportunities.

This executive order is designed to ensure a more transparent, equitable, and inclusive procurement process for Virginia’s small, women, and minority-owned businesses, and has received praise from leaders across the Commonwealth:

Michael Zajur, President and CEO of the Virginia Hispanic Chamber of Commerce:

“The Virginia Hispanic Chamber of Commerce welcomes Governor McAuliffe's plans to encourage and maximize the participation of small, women, and minority owned businesses in state procurement. Not only will our chamber members benefit from increased contracting opportunities, but Virginia itself will benefit from the diversification of its economy through greater minority participation.”

Senator Don  McEachin, Henrico:

“I want to take this opportunity to thank Governor McAuliffe for his leadership in issuing this executive order. Today’s order will enable women and minority small business owners to compete on a level playing field. It will help ensure that small businesses are chosen for the quality of their work, and it will help give women and minority owners a fair shot at success.

I have repeatedly introduced a bill to address unfair contracting disparities, but have not been able to get it passed. Now, thanks to Governor McAuliffe, at least for the next three-and-a-half years, the problem is finally being fairly addressed.”

Senator Louise Lucas, Portsmouth:

“Nearly two decades ago, I introduced a resolution (SJ12) to ease the process of state procurement for minority owned businesses. Today, I am proud to say that Governor McAuliffe has taken executive action to ensure an equitable and inclusive procurement process. I am glad to have a governor who recognizes the achievements of all hard working Virginians.”

Delegate Ron Villanueva, Virginia Beach:

“Governor McAuliffe’s small, women, and minority owned business Executive Order was designed to remove unnecessary barriers and promote equity in the procurement process. By taking the initiative to ensure equality, the Governor is providing exactly the kind of leadership that Virginia needs.”

Delegate Rosalyn Dance, Petersburg:

“I am delighted with the leadership our Governor is showing today through his bold new initiatives that directly address the major obstacles and impediments that have deterred and at times prevented small women and minority businesses (SWAM) from being able to actively and successfully do business with state and local governments. This is in alignment with the legislation I have introduced this year and for the last several years along with my colleagues in the Virginia Legislative Black Caucus.”

Senator Mamie Locke, Hampton:

“The Virginia Legislative Black Caucus is pleased that Governor McAuliffe is issuing an Executive Order that focuses on small, women, and minority owned businesses.   This is a necessary step to ensure fairness, transparency, and equity for these businesses that are often left out of the procurement process.   I am especially excited about the opportunities for minority owned businesses for which the Caucus has been a strong voice and advocate.”

Delegate Charniele Herring, Alexandria:

"I am proud to stand with Governor McAuliffe today as he announces a step forward for small business – and for the fair inclusion of women and minorities in our Commonwealth's procurement process. We have been working toward more accountability and transparency for years – and this is positive action in the direction toward inclusiveness, which can only translate to strengthening our economy overall."

Delegate Jennifer McClellan, Richmond City:

“Today, I commend Governor McAuliffe for ensuring that our Commonwealth continues to take the lead on being the friendliest state in which to do business. It is important that we encourage SWaM businesses to come and invest their time and resources in Virginia. We must continue to level the playing field and be the standard to which other states craft their own compliance measures.”

Delegate Michael Futrell, Prince William:

“The value of this executive order cannot go understated, and I thank Governor McAuliffe for allowing SWaM businesses out there to have a fair chance at succeeding. The Governor’s vast knowledge in the business arena gives Virginia the advantage in continuing to be the friendliest state in which to do business. This administration’s continuous efforts to level the playing field for women and minorities speak to the changing landscape here in the Commonwealth.”

Delegate Matthew James, Portsmouth:

“When Governor McAuliffe signed the small, women, and minority owned business executive order, he reminded us once again of his commitment to equality. This Executive Order sets a high bar for compliance, and failure to meet the SWaM plan requirements will be detrimental to the contractor’s future projects. The Governor is taking a stand and demanding inclusiveness, and I applaud him for that.”

Delegate Alfonso Lopez, Arlington:

"Virginians have always been pioneers when it comes to creating an environment that attracts businesses to generate new jobs and grow our economy. With the signing of today’s executive order, Governor Terry McAuliffe undeniably sets the Commonwealth apart in being one of the most marketable places for women and minority owned businesses in the country. Creating positive steps forward in compliance regulations and allowing businesses to compete on a level playing field is something we must always promote and excel at here in Virginia. I applaud Governor McAuliffe for taking such a significant and important step to guarantee that all of our communities win."  

Delegate Delores McQuinn, Richmond City:

“I applaud Governor McAuliffe for timely addressing the issue of SWAM businesses receiving contracts through the state's procurement process. This is an issue on which I have tirelessly worked for several years with my colleagues in the Virginia Legislative Black Caucus. We are hopeful that the Governor's Executive order will eliminate the disparity minority and women owned businesses have faced for years in doing business with the Commonwealth.”

Senator Kenny Alexander, Norfolk:

“Governor McAuliffe's commitment to improving Virginia’s business climate includes providing small, women and minority owned business with the needed resources for success.  We should all applaud his inclusive approach.  These enterprises are the future of Virginia’s economy and their success is critical to long term job growth."

Delegate Lionel Spurill, Chesapeake:

“Today, Governor McAuliffe announced his plan to maximize the participation of small, women, and minority owned businesses in state procurement. This deliberate step towards creating an inclusive process is indicative of his devotion to equality for all Virginians.”

Governor McAuliffe Signs Executive Order Expanding Opportunities for Small, Women-Owned, and Minority-Owned Businesses

 (Photo credit: Wikipedia)

Governor McAuliffe visited Astyra Corporation in Richmond to sign Executive Order 20: Advancing Equity for Small, Women, and Minority Owned Businesses. The executive order is designed to expand contracting opportunities to small, women-owned and minority-owned (SWaM) businesses in the Commonwealth and set a higher bar for SWaM contracting in Virginia state government.

The full text of the executive order is below:

ADVANCING EQUITY FOR SMALL, WOMEN, AND

MINORITY OWNED BUSINESSES

Executive Order Number  20 (2014)

Importance of the Issue

            It is imperative for the Commonwealth of Virginia to maximize the participation of small businesses in state contractual work. For Virginia to remain competitive and continue to advance its small business goals, significant work still must be done for a more transparent, equitable, and inclusive process. Therefore, I am establishing a micro business designation within the small business certification and vital new state procurement initiatives.

            For purposes of this Executive Order: 1) “executive branch agency” shall include all entities in the executive branch, including agencies, authorities, commissions, departments, and all institutions of higher education; 2) “small businesses” shall include, but not be limited to, small, women-owned or minority-owned businesses; and, 3) “micro businesses” shall be defined as those certified small businesses that have no more than twenty-five (25) employees and no more than $3 million in average annual revenue over the three-year period prior to their certification.

            I am directing the following executive branch agencies that have statutory authority for procurement, in conjunction with the Department of Small Business and Supplier Diversity (DSBSD) as provided in Code of Virginia § 2.2-1605(A)(6), to implement the requirements herein within their respective areas of procurement authority: Department of General Services (DGS), Virginia Information Technologies Agency (VITA), Virginia Department of Transportation (VDOT), those institutions of higher education that have autonomy in procurement granted under the Restructured Higher Education Financial and Administrative Operations Act (Code of Virginia § 23-38.88, et seq.), and other executive branch agencies that have statutory authority for procurement. 

Initiatives

            With a continuing rational basis for small business enhancement, and pursuant to the authority vested in me as Governor under Article V of the Constitution of Virginia, the Code of Virginia, including Code of Virginia § 2.2-4310(C), and applicable Memoranda of Understanding and Management Agreements entered into pursuant to Code of Virginia § 23-38.88, et seq., I hereby direct my Cabinet Secretaries and all executive branch agencies to continue and advance the following on a race-neutral and gender-neutral basis:

1.       Exceed a target goal of 42%, which is the highest percentage of expenditures spent since FY 2004 for executive branch agencies with small businesses certified by DSBSD. This percentage applies to discretionary spending in categories from which the Commonwealth derives procurement orders, prime contracts, and subcontracts. DSBSD, in consultation with executive branch entities and institutions with procurement responsibilities, shall advance race-neutral and gender-neutral goals via annual agency Small, Women-owned, and Minority-owned (SWaM) procurement plans. Each executive branch agency shall review and update its benchmarks, policies, and procedures to conform with this Executive Order and the implementing regulations adopted pursuant to Code of Virginia § 2.2-1605(A)(6) and thereby ensure that a greater percentage of purchases is made from certified small businesses, in goods and services categories from which the Commonwealth makes its purchases.

2.       Create the micro business designation, which shall include those certified small businesses that have no more than twenty-five (25) employees and no more than $3 million in average annual revenue over the three-year period prior to their certification. DSBSD shall develop a best practices method for identifying those small businesses that are eligible for the micro business designation. DSBSD shall also evaluate and offer recommendations for the implementation of the micro business designation by October 1, 2014.

3.       Expand the set-aside for competition among all certified small businesses to include purchases up to $100,000 for goods and nonprofessional services and up to $50,000 for professional services when the price quoted is fair and reasonable. In the procurement selection process for these set-asides, at least one of the proposals/bids shall be obtained from a micro business unless upon due diligence no micro business in a particular category exists or was willing to submit a proposal/bid. Purchases under $10,000, however, shall be set aside for micro businesses when the price quoted is fair and reasonable. Executive branch agencies that have statutory authority for procurement shall include these set-asides in their purchasing regulations, policies, and processes by no later than September 1, 2014. Current contracts will continue in accordance with their terms. The DSBSD will prepare a progress report describing executive branch agencies’ compliance with this requirement and deliver its report to the Governor’s Chief of Staff no later than October 1, 2014.

4.       Provide support to DSBSD in developing a uniform, statewide method for evaluating and monitoring small business (SWaM) procurement plans. Executive branch agencies shall require each prime contractor to include in its proposal(s)/bid(s) a SWaM procurement plan.

Before final payment is made, the purchasing agency shall confirm that the contractor has certified compliance with the contract’s SWaM procurement plan. If there are any variances between the contractor’s required SWaM procurement plan and the actual participation, the contractor shall provide a written explanation. The written explanation shall be kept with the contract file and made available upon request.

Contracts and renewals may include a provision allowing final payment to be withheld until the contractor is in compliance with its SWaM procurement plan. Prior to entering into a new contract or renewing a contract with a contractor, an agency shall review a contractor’s record of compliance with SWaM procurement plan requirements. A contractor’s failure to satisfactorily meet designated SWaM procurement plan requirements shall be considered in the prospective award or renewal of any future contracts with the contractor.

5.       Implement processes for producing SWaM subcontracting data as established by DSBSD in consultation with DGS and VITA. This subcontracting data must also include information on non-SWaM subcontractors performing on contracts over $200,000.

            These initiatives will spur creativity, promote economic justice and development, and encourage procurement participation by small businesses. In support of the initiatives set out above, I further direct the following actions to be taken by Cabinet Secretaries and executive branch agencies:

1.       DSBSD, in conjunction with DGS, VITA, VDOT, and higher education institutions with procurement autonomy, shall implement initiatives to enhance the development of small businesses in Virginia. Such initiatives shall include, but not be limited to:

·          Information on access to capital, including contract financing and bonding support and other opportunities for economic development;

·          Management and technical assistance programs;

·          Partnerships and outreach with local business groups, chambers of commerce, and other organizations to develop a diverse vendor base; and,

·          Statewide mentor/protégé and/or joint venture programs.

2.       DSBSD, with assistance from DGS, shall conduct a vendor outreach training program for each congressional district in the Commonwealth. Training shall include instructions on how to obtain certification, register with and research through the Commonwealth’s e-procurement system (eVA), respond to business opportunities with the Commonwealth, encourage SWaM participation, and overcome identified barriers.

3.       Executive branch agencies shall review the efficacy of implementing other small business enhancement tools and processes, such as:

·          Unbundling contracts;

·          Relaxing the requirement for mandatory attendance at pre-bid meetings;

·          Expanding time to respond to small purchase solicitations;

·          Alerting businesses to current and future procurement as well as subcontracting opportunities; and,

·          Streamlining the paperwork required of small businesses.

4.       The purchasing manuals, regulations and guidelines of all executive branch entities and institutions shall include updated SWaM purchasing regulations and/or guidelines to reflect the changes made in this Executive Order.

5.       Executive branch agencies shall actively recruit small businesses to seek certification from DSBSD, to register on eVA, and to compete for state procurement contracts. DGS and VITA shall develop guidelines that promote greater representation of SWaM businesses on such contracts.

6.       VDOT, for road and bridge construction, and DGS, for construction, shall develop guidelines to be used by executive branch agencies in making construction mobilization payments to businesses when reasonable and necessary to facilitate contract initiation.

7.       The Virginia Economic Development Partnership (VEDP) shall send DSBSD its regular report to the Secretary of Commerce and Trade on new economic development announcements of business activity in the Commonwealth, inclusive of those announcements in which a VEDP administered economic incentive is provided. Such report will enable DSBSD to ascertain in a timely manner what opportunities the activity may bring for Virginia’s small businesses.

8.       Every executive branch agency shall utilize the Commonwealth’s central electronic procurement system (“eVA”) as its purchasing and/or posting system beginning at the point of requisitioning for all procurement actions, including but not limited to technology, transportation, and construction, for the purpose of identifying available small businesses, and for tracking purchase requisition details from those businesses. DGS, in consultation with VDOT, shall develop guidelines pertaining to the content of requisitions, in order for data to be captured in a timely, accurate, and consistent manner.

9.       Each executive branch agency shall designate a SWaM equity champion to ensure equity in the solicitation of procurement proposals/bids and awarding of contracts. 

10.   Agency heads, senior managers with procurement responsibility, procurement personnel, and end users with purchasing charge cards shall be evaluated on small business purchasing goals as part of their employee evaluations.

11. DSBSD shall coordinate with the Virginia Association of Counties, the Virginia Municipal            League, and the Virginia Association of Governmental Purchasing to identify opportunities                                           for state and local government entities to collaborate in order to maximize procurement      equity for small businesses.

Reporting Requirements

1.       The Secretary of Commerce and Trade shall study the potential advantages of providing start-up incentives, including federally-funded grants, to certified small businesses. This shall include a review of the economic impact of providing the incentives and whether such incentives would promote the profitability and sustainability of such businesses. The Secretary of Commerce and Trade shall provide a report to the Governor’s Chief of Staff by no later than December 1, 2014.

2.       Cabinet Secretaries shall monitor their agencies’ spending with all certified small businesses, and report on the results quarterly. DSBSD shall develop a standard reporting format for such purposes. The report shall include information on purchases made from all certified small businesses. In addition, the Secretary of Commerce and Trade will assess overall state performance, and report quarterly to the Governor.

           

           Each Cabinet Secretary shall evaluate the performance of their agencies in implementing     these directives. DSBSD, in cooperation with each Cabinet Secretary, shall provide quarterly          reports to the Secretary of Commerce and Trade regarding the Commonwealth’s progress in    enhancing opportunities for SWaM businesses. The reports shall delineate the            Commonwealth’s spending in detail by SWaM category and agency.

3.       The Secretary of Commerce and Trade shall conduct a study on a new small business designation, with prospective set-aside opportunities, that would be between twenty-five (25) and one hundred (100) employees and between $3 and $10 million. The study shall be delivered to the Governor’s Chief of Staff no later than December 1, 2014.

4.       Executive branch entities and institutions with procurement responsibilities shall review practices, procedures, and proposal evaluations criteria to identify and remove barriers or limitations to SWaM participation. A section on “barriers or limitations” shall be included in annual agency SWaM plans. SWaM plans shall be developed and submitted to the Secretary of Commerce and Trade on September 1 of each fiscal year.

5.       The Secretary of Commerce and Trade will prepare and deliver a report to the Governor no later than October 1, 2015, detailing compliance with this Executive Order and providing spend performance metrics from the prior fiscal year.

          

Effective Date of this Order

            This Executive Order replaces Executive Order 33 (2006), issued by Governor Timothy M. Kaine, and shall be effective upon its signing and shall remain in full force and effect unless amended or rescinded by further executive order.

            Given under my hand and under the Seal of the Commonwealth of Virginia this 22nd day of July, 2014.

                       

________________________________

Terence R. McAuliffe, Governor

Attest: 

_______________________________

Levar M. Stoney, Secretary of the Commonwealth