Contractors and vendors performing public works projects for the City of Indianapolis have long been required to make a good-faith effort to comply with the City’s requirements to utilize at least 24% of project funding from the City or from Marion County toward procurement of goods and services provided by minority-owned (MBE), women-owned (WBE), and disabled-owned (DOBE) business enterprises (collectively referred to as “XBE”). However, from a practical standpoint these requirements were often treated more as “suggestions,” as the City lacked any legal authority to enforce them.
In his annual State of the City address on August 10, 2020, Mayor Joe Hogsett called on the Indianapolis-Marion County City-County Council to adopt a new ordinance strengthening the City’s requirements for XBE utilization on public works projects and providing the City’s Office of Minority and Women Business Development (“OMWBD”)[1] with authority to impose monetary penalties on contractors and vendors that fail to comply with those strengthened requirements. These penalties may also include debarment from bidding on or otherwise procuring any contract with the City for a specified period of time.
On September 14, 2020, the City-County Council approved Proposal 231, adopted a new General Ordinance amending the City’s Code of Ordinances to implement the changes requested by Mayor Hogsett. The new changes, which apply to Article IV of Chapter 202 of the City’s Code of Ordinances, include the following significant provisions:
- A new requirement to utilize at least 3% of project funding from the City or from Marion County toward procurement of goods and services provided by veteran-owned business enterprises (VOBE), bringing the total XBE utilization requirement to 24% (Section 202-402(4));
- Specific criteria to be used in determining whether a contractor has made a good faith effort to reach the City’s XBE goals (Section 202-403(1)(e)), including:
- The bidder’s attendance at the pre-bid conference;
- Advertisement in general circulation media, trade publications, and minority-focused media for at least ten (10) working days before bids or proposals are due;
- Mailings to MBE/WBE/VBE/DOBE firms notifying them of contracting opportunities;
- Efforts made to select portions of the work proposed to be performed by MBE/WBE/VBE/DOBE firms in order to increase the likelihood of achieving the stated goal(s);
- Efforts to negotiate with MBE/WBE/VBE/DOBE firms for specific sub-bids, including at a minimum: the names, addresses and telephone numbers of MBE/WBE/VBE/DOBE firms that were contacted; a description of the information provided to MBE/WBE/VBE/DOBE firms regarding the plans and specifications for portions of the work to be performed; and/or a statement of why additional agreements with MBE/WBE/VBE/DOBE firms were not reached;
- Documented reasons for rejecting any MBE/WBE/VBE/DOBE firm(s) as unqualified;
- Documented efforts to provide technical assistance to any MBE/WBE/VBE/DOBE firms in obtaining bonding or insurance required by the City of Indianapolis;
- Documentation that interested MBE/WBE/VBE/DOBE firms were provided with prompt access to the plans, specifications, scope of work, and requirements of the contract;
- Documented follow-up to initial solicitations, including a copy of any call logs;
- Any joint venture agreements with an MBE/WBE/VBE/DOBE firm relating to the contract; and
- Any mentor-protégé agreements with an MBE/WBE/VBE/DOBE firm relating to the contract.
- A new requirement that the OMWBD cooperate with the Office of Finance and Management – Purchasing Division to ensure subcontractors are paid within 15 days of the date in which the prime contractor has been paid by the City and to ensure that no coercive exclusive teaming practices have been utilized that decrease contracting opportunities for subcontractors;
- A new requirement that the OMWBD conduct disparity studies to determine whether inequities exist in public procurement, and use those studies to create an MBE/WBE/VBE/DOBE Business Utilization Plan proposing policies to be presented to the Mayor for approval; and
- A new process to address a contractor or vendor’s failure to comply with the requirements of the Utilization Plan, to include:
- A meeting between the contracting department or agency and the OMWBD to discuss the contract and options for correcting the deficiencies;
- A written notice of deficiencies to be served on the vendor or contractor by OMWBD;
- A meeting between the vendor or contractor and OMWBD; and
- If the vendor or contractor fails to correct the deficiencies, a requirement that OMWBD impose one of the following penalties:[2]
- Withholding 10% of all future payments for the eligible project until the OMWBD has determined that the vendor is in compliance;
- Withholding all future payment under the eligible project until it is determined by the OMWBD that the vendor is in compliance with the Utilization Plan;
- Placing the vendor on the City’s debarred vendor list preventing them from bidding or otherwise procuring any contract with the City or County for a designated period of time; or
- Terminating the City’s agreement with the contractor or vendor.
While these new changes may seem intimidating and cause some concern among contractors and vendors doing business with the City of Indianapolis, the risk of incurring penalties or other legal consequences can be minimized by careful preparation and compliance with the City’s recommended good-faith procurement practices. If you need assistance navigating this process or have questions about what this means for your company, contact your DSV attorney or Alex Trueblood at atrueblood@dsvlaw.com.
***The information contained on this website is for informational purposes and is not intended as formal legal advice and cannot be relied upon as such. No attorney client relationship is established or intended as a result of the information contained on this website.*** [1] Formerly known as the Office of Minority-Owned and Women-Owned Business Enterprises. [2] These penalties are in addition to any remedies the City may have under its prime contract. Where appropriate, the City is also required to refer the matter to the appropriate authorities for potential criminal investigation or prosecution.