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Legislation #: 030287 Introduction Date: 3/6/2003
Type: Ordinance Effective Date: 8/10/2003
Sponsor: COUNCILMEMBER BROOKS
Title: Amending Article II, Chapter 38, Code of Ordinances, by repealing Sections 38-84, 38-85, 38-88, 38-92, 38-93, 38-97 through 38-100 and 38-100.2 and enacting in lieu thereof new Sections 38-84, 38-85, 38-93, 38-97 through 38-100, 38-100.2 and 38-100.5, to be known as Minority and Women Business Enterprise Program of Kansas City, Missouri.

Legislation History
DateMinutesDescription
3/6/2003

Prepare to Introduce

3/6/2003

Referred Finance and Audit Committee

3/12/2003

Hold On Agenda

3/19/2003

Hold On Agenda

4/2/2003

Hold On Agenda

4/23/2003

Hold On Agenda

5/7/2003

Hold On Agenda

5/21/2003

Hold On Agenda

6/4/2003

Hold On Agenda

6/18/2003

Hold On Agenda

7/2/2003

Do Pass

7/10/2003

Assigned to Third Read Calendar

7/17/2003

Held on Docket

7/24/2003

Held on Docket

7/31/2003

Passed


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COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 030287

 

Amending Article II, Chapter 38, Code of Ordinances, by repealing Sections 38-84, 38-85, 38-88, 38-92, 38-93, 38-97 through 38-100 and 38-100.2 and enacting in lieu thereof new Sections 38-84, 38-85, 38-93, 38-97 through 38-100, 38-100.2 and 38-100.5, to be known as Minority and Womens Business Enterprise Program of Kansas City, Missouri.

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

 

Section 1. That Article II, Chapter 38, Code of Ordinances of the City of Kansas City, Missouri, is hereby amended, by repealing Sections 38-84, 38-85, 38-88, 38-92, 38-93, 38-97 through 38-100 and 38-100.2 and enacting in lieu thereof new Sections 38-84, 38-85, 38-88, 38-93, 38-97 through 38-100, 38-100.2 and 38-100.5, to read as follows:

 

Sec. 38-84. Definitions.

 

The following definitions apply to Article II.

 

(1) Affidavit of intended utilization: The affidavit that must be submitted with a construction bid stating the Bidders intent to meet the MBE/WBE goals or to timely request a waiver of MBE/WBE goals.

 

(2) Agency: Any public or private entity that receives sixty-six percent (66%) of its funding from the City of Kansas City, Missouri.

 

(3) Agency Head: Person authorized to act on behalf of an Agency as defined in Section 38-84(2).

 

(4) Award of Contract: Execution of a Contract and, if necessary, City Council or Park Board authorization.

 

(5) Bid: An offer to enter into a Contract submitted pursuant to an Invitation for Bid.

(6) Bidder: Any Person who submits a Bid to the City or an Agency in response to an Invitation for Bid.

 

(7) Bid Opening: The event whereby bids are opened and read aloud at the place, date and time specified in the Invitation for Bid and any subsequent amendment thereto.

(8) Certified MBE: A business enterprise certified by the Human Relations Department pursuant to this Article II as a minority-owned business enterprise. Except as provided in 38-90(3), such business shall be deemed certified for a particular contract if it is certified or if it is listed on the most current MBE/WBE Directory or addendum thereto on the date the contractor utilization plan is submitted.


(9) Certified WBE: A business enterprise certified by the Human Relations Department pursuant to this Article II as a woman-owned business enterprise. Except as provided in 38-90(3), such business shall be deemed certified for a particular contract if it is certified or if it is listed on the most current MBE/WBE Directory or addendum thereto on the date the contractor utilization plan is submitted.

 

(10) City: City of Kansas City, Missouri.

 

(11) City Department: Department of the City of Kansas City, Missouri or the Division of Purchases and Supplies when acting on behalf of a Department Director.

 

(12) Commercially useful function: A certified MBE or WBE is providing a commercially useful function when it is performing real and actual services that are a distinct and verifiable element of the contracted work based upon private sector trade or industry standards. In determining whether a certified MBE/WBE is performing a commercially useful function, factors including but not limited to the following will be considered:

 

(a) Whether the MBE or WBE has the skill and expertise to perform work for which it is being utilized;

 

(b) Whether the cost of materials is an ordinary and necessary part of the subcontractors responsibility;

 

(c) Whether the MBE or WBE is in the business of performing, managing or supervising the work for which it has been certified and is being utilized;

 

(d) Whether the MBE or WBE is participating in the Contract as a middle person or broker in the normal course of that business or trade by purchasing the goods and/or services from another business, thereby qualifying expenditures for such goods and/or services to be counted toward utilization requirements for certified MBEs and WBEs;

 

(e) Whether the MBE or WBE is responsible for the purchase and quality of, and payment for, materials used to perform its work under the contract.

 

There shall be a rebuttable presumption that, when the MBE or WBE subcontracts a greater portion of the contract work than normal industry practice, the MBE or WBE is not performing a commercially useful function.

 

(13) Construction Contract shall mean a contract for the construction, reconstruction, improvement, enlargement or alteration of any fixed work the majority of which is paid for out of city or agency funds, and which fixed work shall include any building, road, street, public utility or other public facility owned by the city.

(14) Contract: Any construction contract more than $300,000.00 and all other contracts more than $50,000.00 the majority of which is paid for out of city funds or in which an Agency is a party, except the following:

 

(a) Personal services contracts;

 

(b) Emergency contracts;

 

(c) Imprest accounts in the nature of petty cash funds.

 

(15) Contractor: Any person who enters into a contract with the City or an Agency.

 

(16) Contractor Utilization Plan: The statement that must be submitted by a bidder or proposer pursuant to Section 38-89 that states its plan to utilize qualified, certified MBEs and/or WBEs in the performance of a contract.

 

(17) Day: A calendar day, except as otherwise indicated.

 

(18) Department: The Human Relations Department (HRD).

 

(19) Department Director: Person appointed by the City Manager to be responsible for a City Department or the Commissioner of Purchases and Supplies when acting on behalf of a Department Director or the City.

 

(20) Director: The Director of the Human Relations Department or his authorized representative.

 

(21) Goal: A numerical objective stated as a percentage of contract dollars for participation by qualified, certified MBEs and WBEs in contracts.

 

(22) Invitation for Bid: A request or invitation for submission of an offer to enter into a contract pursuant to a competitive bidding process.

 

(23) Kansas City Metropolitan Area: The Missouri counties of Cass, Clay, Jackson and Platte and the Kansas counties of Johnson, Leavenworth and Wyandotte.

 

(24) MBE/WBE Directory: A source list compiled by the Department containing names and addresses of certified MBEs and WBEs in the business of providing construction, professional services and other services and goods from whom bids and proposals can be solicited. The directory is to facilitate identifying MBEs and WBEs with capabilities relevant to general contracting requirements and to particular solicitations.

 

(25) Mentor/Protg: A relationship between a Minority or Women*s Business Enterprise (Protg) certified by the Human Relations Department for a minimum of one (1) year and a person (Mentor) in the same trade or industry as the Protg. The Mentor/Protg relationship is not to exceed three (3) years and is to provide technical, financial, bonding, equipment and personnel assistance. The purpose of the relationship is to increase the capacity of certified MBE/WBEs to perform contracts. A person is limited to one Mentor/Protg relationship per lifetime.

 

(26) Minority: A person who is a citizen or lawful permanent resident of the United States and who is:

 

(a) Black, a person having origins in any of the Black racial groups of Africa;

 

(b) Hispanic, a person having origins of Mexican, Puerto Rican, Cuban, Central or South American regardless of race;

 

(c) Asian, a person having origins in any of the original peoples of the Far East, Southeast Asia, the Indian subcontinent or Pacific Islands; or

 

(d) American Indian, Eskimo, Aleut, or those who maintain cultural identification through tribal affiliation or community recognition; or those who demonstrate at least one-quarter descent from such groups.

 

(27) Minority business enterprise (MBE) means a for-profit small business concern that is:

 

(a) at least 51 percent owned and independently controlled by one or more minorities; and

 

(b) either has its principal place of business in the Kansas City Metropolitan Area or has made substantial efforts to become a market participant in Kansas City, Missouri; and

 

(c) who meets the size standards imposed by 13 CFR 121.201.

 

(28) Person: One or more individuals, corporations, partnerships, associations, labor organizations, legal representatives, mutual companies, joint stock companies, trusts, unincorporated organizations, trustees, trustees in bankruptcy, receivers, fiduciaries and other organizations; except Person does not include any local, state or federal governmental entity.

 

(29) Personal Services Contract: A contract or agreement of employment with an individual who is not acting as an independent contractor and who is not part of the Citys classified or unclassified service.

 

(30) Principal place of business: The location at which the business records of the MBE/WBE applicant concern are maintained and the location at which the individual who manages the concerns day-to-day operations spends the majority of his/her working hours.

 

(31) Proposal: Any offer or list of qualifications submitted to the City in response to a Request for Proposal.

 

(32) Proposer: Any person who submits a proposal to enter into a contract, either in response to a Request for Proposals, Request for Qualifications or otherwise, but not pursuant to an Invitation for Bid.

 

(33) Qualified: The demonstrated ability to perform the contracted task.

 

(34) Request for Proposals: An invitation for submission of an offer to enter into a contract pursuant to a negotiated process and not a competitive bid, including requests for qualifications.

 

(35) Woman: A person who is a citizen or lawful permanent resident of the United States and who is a female.

 

(36) Women's business enterprise (WBE) means a for-profit small business concern that is:

 

(a) at least 51 percent owned and independently controlled by one or more women; and

 

(b) either has its principal place of business in the Kansas City Metropolitan Area or has made substantial efforts to become a market participant in Kansas City, Missouri; and

 

(c) who meets the size standards imposed by 13 CFR 121.201.

 

Sec. 38-85. Application of ordinance.

 

(1) The provisions of this Article II shall apply to all Contracts, as defined in Section 38-84(14), entered into by the City or an Agency. Federal or state requirements for minority or women business enterprise participation or disadvantaged business enterprise participation shall supercede this Article when required by law or federal or state contract.

 

(2) Each Department Director and Agency Head is responsible for using best efforts to achieve the City-wide MBE and WBE goals set forth in Section 38-86.

 

(3) Each person with whom the City or an Agency enters into a contract for which goals have been set shall either:

 

(a) Meet or exceed the goals set for that contract; or

 

(b) Make and provide evidence of best faith efforts to achieve the goals and request a waiver of the contract goals.

 

Sec. 38-88. Setting goals for individual contracts.

 

(1) Goals shall be established for individual contracts when deemed practical by the Director, as determined pursuant to this section.

 

(2) Individual contract goals shall be flexible and are to be determined on a contract-by-contract basis. In determining whether goals should be established for an individual contract or in setting the specific goal for an individual contract, the following shall be considered:

 

(a) The scope of work;

 

(b) The number and types of qualified, certified MBEs and WBEs available to perform such work, or portions of it;

 

(c) Whether the contract can be structured to create potential opportunities for qualified, certified MBEs and WBEs to participate as subcontractors, service providers and/or suppliers;

 

(d) The level of participation of qualified, certified MBEs and WBEs in similar contracts awarded by other City Departments and Agencies, and on local projects awarded by the state and federal governments in the previous and current fiscal years;

 

(e) The City Departments or Agencys progress toward meeting its annual MBE/WBE goals and its expectations as to how future contracts will be used toward meeting such goals;

 

(f) The potential dollar amount of the contract;

 

(3) When goals for individual City contracts are set, they shall be set as follows:

 

(a) For City construction contracts with an estimated cost of more than $300,000.00, by the Fairness in Construction Board upon recommendation of the director;

 

(b) For City construction contracts with an estimated cost over $300,000.00 but less than $500,000.01, by the director if no MBE/WBE goal is set for the project;

 

(c) For all other City contracts, by the director.

 

(4) When goals are established for a contract, such goals shall be stated in any Invitation for Bid or Request for Proposals.

 

(5) For contracts other than construction contracts, the director is authorized to require a bidder or proposer to make best faith efforts to achieve MBE/WBE participation without setting a numerical MBE/WBE goal on the solicitation as long as the director could have set an MBE/WBE goal based on the factors in section 38-88(2).

 

Sec. 38-92. Reserved.

 

Sec. 38-93. Standards to determine best faith efforts.

 

(1) Best faith efforts are efforts that, given all relevant circumstances, a bidder or proposer actively and aggressively seeking to meet the goals can reasonably be expected to make. In evaluating best faith efforts made toward achieving the goals, the Director may consider whether the bidder or proposer has performed the following, along with any other relevant factors:

 

(a) Advertised opportunities to participate in the contract in general circulation media, trade and professional association publications, small and minority business media, and publications of minority and women*s business organizations in sufficient time to allow MBE and WBE firms to participate effectively;

 

(b) Provided notice to a reasonable number of minority and womens business organizations of specific opportunities to participate in the contract in sufficient time to allow MBE and WBE firms to participate effectively;

 

(c) Sent written notices, by certified mail, e-mail or facsimile, to qualified, certified MBEs and WBEs soliciting their participation in the contract in sufficient time to allow them to participate effectively;

 

(d) Attempted to identify portions of the work for qualified, certified MBE and/or WBE participation in order to increase the likelihood of meeting the goals, including breaking down contracts into economically feasible units;

 

(e) Requested assistance in achieving the goal from the Director and acted on the Directors recommendations;

(f) Conferred with qualified, certified MBEs and WBEs and explained the scope and requirements of the work for which their bids or proposals were solicited;

 

(g) Attempted to negotiate in good faith with qualified, certified MBEs and WBEs to perform specific subcontracts; not rejecting them as unqualified without sound reasons based on a thorough investigation of their capabilities.

 

(2) Additional standards for construction contracts: Within five (5) working days after drawing the bid specifications, bidder sent certified letters, e-mails or facsimiles to qualified, certified MBEs and WBEs listed by the MBE/WBE Directory.

 

(3) A bidder or proposer shall submit documentation of its best faith efforts when requested by the City or Agency.

 

(4) Best faith efforts shall be made prior to submission of the contractor utilization plan.

Sec. 38-97. Fairness in City Contracts Board.

 

There is hereby established a fairness in city contracts board, consisting of seven members, including a chairperson, appointed by the mayor. Members of the city council and employees of the city are ineligible for appointment. The board may make recommendations to the director on methodology to increase the utilization of MBEs/WBEs in professional services contracts, other services contracts, goods, materials and supplies contracts. The board is hereby authorized to establish its own rules and regulations to implement this charge.

 

Sec. 38-98. Fairness in Construction Board.

 

(1) There is hereby established the Kansas City Fairness in Construction Board. The Boards jurisdiction is limited to City construction bids, proposals and contracts in which the estimated cost thereof is more than $300,000.00. The Boards authority is limited to setting goals for each such City contract and hearing and investigating appeals set forth in section 38-99 hereof arising from bids, proposals and contracts under its jurisdiction.

 

(2) Board Composition: The Board shall be composed of seven members and six alternates appointed by the Mayor, as follows:

 

(a) One member and one alternate recommended by the Builders Association,

 

(b) One member and one alternate recommended by the Heavy Constructors Association,

 

(c) One member and one alternate recommended by the Minority Contractors Association of Kansas City,

(d) One member and one alternate recommended by the Kansas City Hispanic Association Contractors Enterprise, Inc.,

 

(e) One member and one alternate recommended jointly by the Women Construction Owners and Executives and National Association of Women in Construction,

 

(f) One member and one alternate recommended by Allied Professional Specialty Contractors Association,

 

(g) Chairperson appointed by the Mayor and submitted to the entities named in Section 38-98(2)(a) - (2)(f) for approval. Any one of the named entities can veto the Mayors submission and require another submission.

 

(3) Board members who were serving on the Fairness in Construction Board as it was constituted prior to March 1, 1998, shall remain members and shall have new terms which expire as follows: For Board members recommended pursuant to subsection (2)(a), (c) and (f), their initial term shall expire on March 1, 2000; for all other Board members, March 1, 2002. The terms of all subsequent Board members shall be for a period of four (4) years.

 

(4) Alternates. In the event a Board member is unable to attend a meeting of the Board or has a conflict of interest with regard to a particular contract or issue, the alternate shall temporarily serve in such members stead. The term of an alternate shall expire at the expiration of the term of the Board member.

 

(5) Ineligible for appointment. The following are ineligible to serve on the Fairness in Construction Board:

 

(a) Staff or board members of the entities named in Section 38-98(2)(a)-(2)(f);

 

(b) Members of City of Kansas City Council;

 

(c) Employees of City of Kansas City.

 

(6) Conflict of interest. In the event a Board member has a conflict of interest in a contract or issue that comes before the Board, the elected member shall be temporarily replaced by the alternate. In the event an alternate has a conflict of interest in a bid, contract or issue that comes before the Board, the alternate shall recuse himself.

 

(7) In the event the Chairperson is not in attendance at any Board meeting, a majority of Board members shall select a member to act as chairman for that meeting.

 

(8) Quorum. Four members of the Board shall constitute a minimum quorum unless otherwise increased by Board rules.

 

Sec. 38-99. Responsibilities of the Fairness in Construction Board.

 

(1) Goal setting. Prior to release for bid, the Department and appropriate City staff shall present to the Board recommended MBE/WBE goals for each proposed construction contract. The Board shall determine whether any goals are appropriate and, if so, shall set the goals in conformance with section 38-88 hereof. The goals shall be included in the bid specifications.

 

(2) Any bidder or proposer on a City construction project that has an estimated cost of over $300,000.00 may appeal to the Board any recommendations by the Director concerning the following issues:

 

(a) Waiver of bid informalities with respect to this Article II;

 

(b) Waiver of the individual contract goals pursuant to section 38-91(1);

 

(c) Substitution for an MBE/WBE listed on a contractor utilization plan prior to bid award pursuant to section 38-94;

 

(d) Modification of the percentage of the participation on a contractor utilization plan prior to bid award pursuant to section 38-94;

 

(e) Award of a contract to or continued performance by a person who has violated this Article II.

 

(3) Any contractor on a City construction contract over $300,000.00 may appeal to the Board from determinations or recommendations of the Director concerning the following issues:

 

(a) Determinations of MBE/WBE contract credit towards meeting the percentage of MBE/WBE participation in the contractor utilization plan;

 

(b) Recommendations to assess liquidated damages;

 

(c) Determinations to approve or deny a substitution for an MBE/WBE listed on a contractor utilization plan pursuant to section 38-94;

 

(d) Determinations to approve or deny modifications of the percentage of the participation on a contractor utilization plan pursuant to section 38-94.

 

(4) Appeals shall be made to the Fairness in Construction Board by filing with the Director within ten (10) working days after notice of the Directors determination or recommendation appealed from, a written request for review by the Board, stating the grounds of such appeal with specificity. The Director shall promptly forward to the Chairperson and members of the Board a copy of any appeal.

 

(5) Failure to file a timely appeal shall constitute a waiver of the right of a bidder, proposer or contractor to appeal the Directors recommendation or determination and such person shall be estopped to deny the validity of any order, recommendation, determination or action which could have been timely appealed.

 

(6) Authority of Board. The Board shall hold a hearing within ten (10) working days of the date of filing of the appeal. The Board shall have authority to investigate appeals, rejecting those it determines to be frivolous and without merit. The Board shall have the power to inquire into all the facts and circumstances of appeals within its jurisdiction and may hold investigative hearings for such purpose. The Board shall have the authority to issue advisory opinions concerning appeals of the Directors recommendations to the appropriate committee of the City Council, including making recommendation that the City reverse, affirm or modify recommendations of the Director concerning the issues set forth in subsections (2) and (3) hereof. The Board may reverse, affirm or modify determinations of the Director set forth in subsections (2) and (3) hereof. The Board shall issue a written report of its opinion or determination within ten (10) days of the start of the hearing. The report will be filed with the appropriate committee of the City Council. The Boards decisions on recommendations of the Director are advisory and are not binding on the City Council.

 

(7) Intervention. A bidder who has been declared an apparent successful bidder shall have the right to intervene in any appeal filed on that project. Any bidder, proposer or contractor whose interests will be affected by any appeal may be permitted by the Board to intervene in the appeal.

 

(8) For purposes of this section only, bidder shall mean any person who submits to the City or an Agency in response to a Invitation for Bid, a competitive bid that is opened and read aloud.

 

(9) Notwithstanding any other provision of this Article II, a bidder shall have the right to seek and the Board shall have the authority to issue advisory opinions as set forth in subsection (6) to the City Council even when the City rejects any and all bids and regardless of whether the contract is awarded.

 

(10) In the event an appeal is pending before the Fairness in Construction Board and the project is presented to the City Council for consideration prior to the Boards issuance of an advisory opinion, the City Council shall be notified by including in the fact sheet that there is an appeal pending before the Board and that the Board requests the City Council to delay award of the project until after the Board issues its advisory opinion.

 

(11) Any bidder, proposer or contractor may notify the Board of the Directors failure to make a determination or recommendation or take action within the time required by this Ordinance and the Board has the authority to inquire into the circumstances of the matter.

 

Sec. 38-100. Procedures for construction contracts.

 

(1) The following shall apply to construction contracts in which the estimated cost thereof is more than $300,000.00:

 

(a) Bid Submissions. Bidders shall submit an affidavit of intended utilization at bid opening.

 

(b) Forty- Eight (48) Hours Submission. All Bidders shall submit the following within forty-eight (48) hours after bid opening:

 

1. A notarized contractor utilization plan in conformance with Section 38-89 hereof, except the requirements of Section 38-89(3) shall be submitted when requested by the City or the Agency;

 

2. A request for waiver of the contract goals pursuant to Section 38-91(1) if the bidder failed to meet or exceed the goals,

 

(c) The apparent successful bidder shall submit documentation of best faith efforts made prior to 48 hours after bid opening when requested by the City or the Agency.

 

(d) A notarized affidavit certifying actual MBE/WBE participation in the contract, including the names of such MBE/WBEs and the participation amount, must be submitted by the contractor prior to final payment under the contract.

 

(2) No increase in MBE/WBE participation. Any increase in the amount of MBE/WBE participation after submission of the contractor utilization plan shall not count toward meeting the contract goals, unless otherwise permitted under Section 38-94 hereof.

Sec. 38-100.2 Certification of eligibility of minority and women business enterprises.

 

(1) To ensure that this Article II benefits only MBEs and WBEs that are owned and controlled by bona fide MBE/WBEs, the Director shall certify MBEs and WBEs and Mentor/ Protgs who wish to participate in the program.

(2) Each person that seeks certification as an MBE/WBE, must demonstrate by written documentation or affidavit that it has suffered from past race or gender discrimination in the City of Kansas City and in the applicable trade or industry. A Unified Certification Process (UCP) certificate, a Missouri Highway and Transportation Department certification or a Kansas Department of Transportation certification along with the documentation stated in this subsection, is sufficient for certification as an MBE/WBE so long as the firm is in the construction business, has never been denied certification by any federal, state or local authority at any time and meets the definitions of section 38-84(27) and 38-84(36). In addition, each person that seeks certification must either:

 

(a) have its principal place of business in the Kansas City Metropolitan Area; or

(b) prove by a preponderance of the evidence it has made substantial efforts to become a market participant in Kansas City, Missouri. Such evidence may include, but is not limited to: contracts with entities located in Kansas City, Missouri; attempts to bid on or respond to solicitations from entities in Kansas City Missouri; advertising the firms goods or services in Kansas City, Missouri; or any other activity designed to continually seek business opportunities in Kansas City, Missouri, such that the firm would likely be subject to the discrimination sought to be remedied by this Article II.

 

(3) Burdens of proof in the certification process.

 

(a) The firm seeking certification has the burden of demonstrating to the Director, by a preponderance of the evidence, that it meets all the requirements for certification.

 

(b) The Director shall make determinations concerning whether individuals and firms have met their burden of demonstrating minority and woman status, business size, ownership and control by considering all the facts in the record, viewed as a whole.

 

(4) Determination of minority and woman status.

 

(a) If the Director has reason to question whether an individual is a minority or woman, the Director shall require the individual to demonstrate, by a preponderance of the evidence, that he or she is a minority or woman.

 

(b) In making such a determination, the Director must consider whether the person has held himself or herself out to be a minority or woman over a long period of time prior to application for certification and whether the person is regarded as such by the relevant community. The Director may require the applicant to produce appropriate documentation.

(5) Business size determinations.

 

(a) To be an eligible MBE/WBE, a firm (including its affiliates) must be an existing small business. The Director shall apply current SBA business size standard(s) found in 13 CFR part 121.201 appropriate to the type(s) of work the firm seeks to perform.

 

(6) Determination of Ownership

 

(a) In determining whether the minority or women participants in a firm own the firm, the Director shall consider all the facts in the record, viewed as a whole.

 

(b) To be an eligible MBE/WBE, a firm must be at least 51 percent owned by minority and women individuals.

 

1. In the case of a corporation, such individuals must own at least 51 percent of each class of voting stock outstanding and 51 percent of the aggregate of all stock outstanding.

 

2. In the case of a partnership, 51 percent of each class of partnership interest must be owned by minority and women. Such ownership must be reflected in the firm's partnership agreement.

 

3. In the case of a limited liability company, at least 51 percent of each class of member interest must be owned by the minority and women individuals.

 

(c) The firm's ownership by minority or women must be real, substantial, and continuing, going beyond pro forma ownership of the firm as reflected in ownership documents. The minority or women owners must enjoy the customary incidents of ownership, and share in the risks and profits commensurate with their ownership interests, as demonstrated by the substance, not merely the form, of arrangements.

 

(d) All securities that constitute ownership of a firm shall be held directly by the minorities or women. Except as provided in this subsection (d), no securities or assets held in trust, or by any guardian for a minor, are considered as held by minority or women individuals in determining the ownership of a firm. However, securities or assets held in trust are regarded as held by a minority or woman for purposes of determining ownership of the firm, if

 

1. The beneficial owner of securities or assets held in trust is a minority or woman, and the trustee is the same or another such individual; or

 

2. The beneficial owner of a trust is a minority or woman who, rather than the trustee, exercises effective control over the management, policy-making, and daily operational activities of the firm. Assets held in a revocable living trust may be counted only in the situation where the same minority or woman is the sole grantor, beneficiary, and trustee.

 

(e) The contributions of capital or expertise by the minority or women owners to acquire their ownership interests must be real and substantial. Examples of insufficient contributions include a promise to contribute capital, an unsecured note payable to the firm or an owner who is not a disadvantaged individual, or mere participation in a firm's activities as an employee. Debt instruments from financial institutions or other organizations that lend funds in the normal course of their business do not render a firm ineligible, even if the debtor's ownership interest is security for the loan.

 

(f) The following requirements apply to situations in which expertise is relied upon as part of a minority or woman owner's contribution to acquire ownership:

 

1. The owner's expertise must be

 

(i) In a specialized field;

 

(ii) Of outstanding quality;

 

(iii) In areas critical to the firm's operations;

 

(iv) Indispensable to the firm's potential success;

 

(v) Specific to the type of work the firm performs; and

 

(vi) Documented in the records of the firm. These records must clearly show the contribution of expertise and its value to the firm.

 

2. The individual whose expertise is relied upon must have a significant financial investment in the firm.

 

(g) The Director shall always deem as held by a minority or woman individual, for purposes of determining ownership, all interests in a business or other assets obtained by the individual

 

1. As the result of a final property settlement or court order in a divorce or legal separation, provided that no term or condition of the agreement or divorce decree is inconsistent with this section; or

 

2. Through inheritance, or otherwise because of the death of the former owner.

 

(h) 1. The Director shall presume as not being held by a minority or woman individuals, for purposes of determining ownership, all interests in a business or other assets obtained by the individual as the result of a gift, or transfer without adequate consideration, from any non-minority or male individual or non-MBE/WBE firm who is

 

(i) Involved in the same firm for which the individual is seeking certification, or an affiliate of that firm;

 

(ii) Involved in the same or a similar line of business; or

 

(iii) Engaged in an ongoing business relationship with the firm, or an affiliate of the firm, for which the individual is seeking certification.

 

2. To overcome this presumption and permit the interests or assets to be counted, the minority or woman individual must demonstrate to the Director, by clear and convincing evidence, that

 

(i) The gift or transfer to the disadvantaged individual was made for reasons other than obtaining certification as a MBE/WBE; and

 

(ii) The minority or woman individual actually controls the management, policy, and operations of the firm, notwithstanding the continuing participation of non-minority or male individual or non-MBE/WBE firm who provided the gift or transfer.

 

(i) The Director shall apply the following rules in situations in which marital assets form a basis for ownership of a firm:

 

1. When marital assets (other than the assets of the business in question), held jointly or as community property by both spouses, are used to acquire the ownership interest asserted by one spouse, the Director shall deem the ownership interest in the firm to have been acquired by that spouse with his or her own individual resources, provided that the other spouse irrevocably renounces and transfers all rights in the ownership interest in the manner sanctioned by the laws of the state in which either spouse or the firm is domiciled. The Director shall not count a greater portion of joint or community property assets toward ownership than state law would recognize as belonging to the minority or woman owner of the applicant firm.

 

2. A copy of the document legally transferring and renouncing the other spouse's rights in the jointly owned or community assets used to acquire an ownership interest in the firm must be included as part of the firm's application for MBE/WBE certification.

 

(j) The Director may consider the following factors in determining the ownership of a firm. However, the Director must not regard a contribution of capital as failing to be real and substantial, or find a firm ineligible, solely because

 

1. A minority or woman individual acquired his or her ownership interest as the result of a gift, or transfer without adequate consideration, other than the types set forth in subsection (h) of this section;

 

2. There is a provision for the co-signature of a spouse who is not a minority or woman individual on financing agreements, contracts for the purchase or sale of real or personal property, bank signature cards, or other documents; or

 

3. Ownership of the firm in question or its assets is transferred for adequate consideration from a spouse who is not a minority or woman to a spouse who is such an individual. In this case, the Director must give particularly close and careful scrutiny to the ownership and control of a firm to ensure that it is owned and controlled, in substance as well as in form, by a minority or woman individual.

 

(7) Determinations concerning control.

 

(a) In determining whether the minority or women owners control a firm, the Director must consider all the facts in the record, viewed as a whole.

 

(b) Only an independent business may be certified as a MBE/WBE. An independent business is one the viability of which does not depend on its relationship with another firm or firms.

 

1. In determining whether a potential MBE/WBE is an independent business, the Director must scrutinize relationships with non-MBE/WBE firms, in such areas as personnel, facilities, equipment, financial and/or bonding support, and other resources.

 

2. The Director must consider whether present or recent employer/employee relationships between the minority or woman owner(s) of the potential MBE/WBE and non-MBE/WBE firms or persons associated with non-MBE/WBE firms compromise the independence of the potential MBE/WBE firm.

 

3. The Director must examine the firm's relationships with prime contractors to determine whether a pattern of exclusive or primary dealings with a prime contractor compromises the independence of the potential MBE/WBE firm.

 

4. In considering factors related to the independence of a potential MBE/WBE firm, the Director must consider the consistency of relationships between the potential MBE/WBE and non-MBE/WBE firms with normal industry practice.

 

(c) A MBE/WBE firm must not be subject to any formal or informal restrictions which limit the customary discretion of the minority or women owners. There can be no restrictions through corporate charter provisions, by-law provisions, contracts or any other formal or informal devices (e.g., cumulative voting rights, voting powers attached to different classes of stock, employment contracts, requirements for concurrence by non-disadvantaged partners, conditions precedent or subsequent, executory agreements, voting trusts, restrictions on or assignments of voting rights) that prevent the minority or women owners, without the cooperation or vote of any non-minority or male, from making any business decision of the firm. This paragraph does not preclude a spousal co-signature on documents as provided for in subsection (j)(2).

(d) The minority and women owners must possess the power to direct or cause the direction of the management and policies of the firm and to make day-to-day as well as long-term decisions on matters of management, policy and operations.

 

1. A minority or women owner must hold the highest officer position in the company (e.g., chief executive officer or president).

 

2. In a corporation, minority or women owners must control the board of directors.

 

3. In a partnership, one or more minorities or women owners must serve as general partners, with control over all partnership decisions.

 

(e) Individuals who are not minorities or women may be involved in a MBE/WBE firm as owners, managers, employees, stockholders, officers, and/or directors. Such individuals must not, however, possess or exercise the power to control the firm, or be disproportionately responsible for the operation of the firm.

 

(f) The minority and women owners of the firm may delegate various areas of the management, policymaking, or daily operations of the firm to other participants in the firm, regardless of whether these participants are minority or women. Such delegations of authority must be revocable, and the minority and women owners must retain the power to hire and fire any person to whom such authority is delegated. The managerial role of the minority and women owners in the firm's overall affairs must be such that the recipient can reasonably conclude that the minority and women owners actually exercise control over the firm's operations, management, and policy.

 

(g) The minority and women owners must have an overall understanding of, and managerial and technical competence and experience directly related to, the type of business in which the firm is engaged and the firm's operations. The minority and women owners are not required to have experience or expertise in every critical area of the firm's operations, or to have greater experience or expertise in a given field than managers or key employees. The minority and women owners must have the ability to intelligently and critically evaluate information presented by other participants in the firm's activities and to use this information to make independent decisions concerning the firm's daily operations, management, and policymaking. Generally, expertise limited to office management, administration, or bookkeeping functions unrelated to the principal business activities of the firm is insufficient to demonstrate control.

(h) If state or local law requires the persons to have a particular license or other credential in order to own and/or control a certain type of firm, then the minority or women persons who own and control a potential MBE/WBE firm of that type must possess the required license or credential. If state or local law does not require such a person to have such a license or credential to own and/or control a firm, the Director must not deny certification solely on the ground that the person lacks the license or credential. However, the Director may take into account the absence of the license or credential as one factor in determining whether the minority or women owners actually control the firm.

 

(i) 1. The Director may consider differences in remuneration between the minority and women owners and other participants in the firm in determining whether to certify a firm as a MBE/WBE. Such consideration shall be in the context of the duties of the persons involved, normal industry practices, the firm's policy and practice concerning reinvestment of income, and any other explanations for the differences proffered by the firm. The Director may determine that a firm is controlled by its minority or woman owner although that owner's remuneration is lower than that of some other participants in the firm.

 

2. In a case where a non-minority or non-woman individual formerly controlled the firm, and a minority or women individual now controls it, the Director may consider a difference between the remuneration of the former and current controller of the firm as a factor in determining who controls the firm, particularly when the non-minority or non-woman individual remains involved with the firm and continues to receive greater compensation than the minority or woman individual.

 

(j) In order to be viewed as controlling a firm, a minority or woman owner cannot engage in outside employment or other business interests that conflict with the management of the firm or prevent the individual from devoting sufficient time and attention to the affairs of the firm to control its activities. For example, absentee ownership of a business and part-time work in a full-time firm are not viewed as constituting control. However, an individual could be viewed as controlling a part-time business that operates only on evenings and/or weekends, if the individual controls it all the time it is operating.

 

(k) 1. A minority or woman individual may control a firm even though one or more of the individual's immediate family members (who themselves are not minorities or women) participate in the firm as a manager, employee, owner, or in another capacity. Except as otherwise provided in this paragraph, the Director must make a judgment about the control the minority or woman owner exercises vis-a-vis other persons involved in the business as in other situations, without regard to whether or not the other persons are immediate family members.

 

2. If the Director cannot determine that the minority or woman owners--as distinct from the family as a whole--control the firm, then the minority or woman owners have failed to carry their burden of proof concerning control, even though they may participate significantly in the firm's activities.

(l) Where a firm was formerly owned and/or controlled by a non-minority or non-woman individual (whether or not an immediate family member), ownership and/or control were transferred to a minority or woman individual, and the non-minority or non-woman individual remains involved with the firm in any capacity, the minority or woman individual now owning the firm must demonstrate to the Director, by clear and convincing evidence, that:

 

1. The transfer of ownership and/or control to the minority or woman individual was made for reasons other than obtaining certification as a MBE/WBE; and

 

2. The minority or woman individual actually controls the management, policy, and operations of the firm, notwithstanding the continuing participation of a non-minority or non-woman individual who formerly owned and/or controlled the firm.

 

(m) In determining whether a firm is controlled by its minority or women owners, the Director shall consider whether the firm owns equipment necessary to perform its work. However, the Director must not determine that a firm is not controlled by minority or women individuals solely because the firm leases, rather than owns, such equipment, where leasing equipment is a normal industry practice and the lease does not involve a relationship with a prime contractor or other party that compromises the independence of the firm.

 

(n) The Director shall grant certification to a firm only for specific types of work in which the minority or women owners have the ability to control the firm. To become certified in an additional type of work, the firm need demonstrate to the Director only that its minority or women owners are able to control the firm with respect to that type of work. The Director may not, in this situation, require that the firm be recertified or submit a new application for certification, but must verify the minority or women owner's control of the firm in the additional type of work.

 

(o) A business operating under a franchise or license agreement may be certified if it meets the standards in this subpart and the franchiser or licenser is not affiliated with the franchisee or licensee. In determining whether affiliation exists, the Director should generally not consider the restraints relating to standardized quality, advertising, accounting format, and other provisions imposed on the franchisee or licensee by the franchise agreement or license, provided that the franchisee or licensee has the right to profit from its efforts and bears the risk of loss commensurate with ownership. Alternatively, even though a franchisee or licensee may not be controlled by virtue of such provisions in the franchise agreement or license, affiliation could arise through other means, such as common management or excessive restrictions on the sale or transfer of the franchise interest or license.

(p) In order for a partnership to be controlled by minority or women individuals, any non-minority or non-women partners must not have the power, without the specific written concurrence of the minority or women partner(s), to contractually bind the partnership or subject the partnership to contract or tort liability.

 

(q) The minority or women individuals controlling a firm may use an employee leasing company. The use of such a company does not preclude the minority or woman individuals from controlling their firm if they continue to maintain an employer-employee relationship with the leased employees. This includes being responsible for hiring, firing, training, assigning, and otherwise controlling the on-the-job activities of the employees, as well as ultimate responsibility for wage and tax obligations related to the employees.

 

(r) The Director may consider, in making certification decisions, whether a firm has exhibited a pattern of conduct indicating its involvement in attempts to evade or subvert the intent or requirements of the MBE/WBE program.

 

(s) The Director shall evaluate the eligibility of a firm on the basis of present circumstances. The Director shall not refuse to certify a firm based solely on historical information indicating a lack of ownership or control of the firm by the minorities or women at some time in the past, if the firm currently meets the ownership and control standards of this part. The Director shall not refuse to certify a firm solely on the basis that it is a newly formed firm.

 

(t) MBE/WBE firms and firms seeking MBE/WBE certification shall cooperate fully with the Directors requests (and DOT requests) for information relevant to the certification process. Failure or refusal to provide such information is a ground for a denial or removal of certification.

(u) An eligible MBE/WBE firm must be owned by individuals who are minorities and women. Except as provided in this paragraph, a firm that is not owned by such individuals, but instead is owned by another firm -- even an MBE/WBE firm -- cannot be an eligible MBE/WBE.

 

1. If the minorities or women own and control a firm through a parent or holding company, established for tax, capitalization or other purposes consistent with industry practice, and the parent or holding company in turn owns and controls an operating subsidiary, the Director may certify the subsidiary if it otherwise meets all requirements of this section. In this situation, the individual owners and controllers of the parent or holding company are deemed to control the subsidiary through the parent or holding company.

 

2. The Director may certify such a subsidiary only if there is cumulatively 51 percent ownership of the subsidiary by the minority and women individuals. The following examples illustrate how this cumulative ownership provision works:

 

Example 1: Minority and women individuals own 100 percent of a holding company, which has a wholly-owned subsidiary. The subsidiary may be certified, if it meets all other requirements.

 

Example 2: Minority and women individuals own 100 percent of the holding company, which owns 51 percent of a subsidiary. The subsidiary may be certified, if all other requirements are met.

 

Example 3: Minority and women individuals own 80 percent of the holding company, which in turn owns 70 percent of a subsidiary. In this case, the cumulative ownership of the subsidiary by minority and women individuals is 56 percent (80 percent of the 70 percent). This is more than 51 percent, so the Director may certify the subsidiary, if all other requirements are met.

 

Example 4: Same as Example 2 or 3, but someone other than minorities or women owners of the parent or holding company controls the subsidiary. Even though the subsidiary is owned by minority or women individuals, through the holding or parent company, the Director cannot certify it because it fails to meet control requirements.

 

Example 5: Minority or women individuals own 60 percent of the holding company, which in turn owns 51 percent of a subsidiary. In this case, the cumulative ownership of the subsidiary by minority or women individuals is about 31 percent. This is less than 51 percent, so the Director cannot certify the subsidiary.

 

Example 6: The holding company, in addition to the subsidiary seeking certification, owns several other companies. The combined gross receipts of the holding companies and its subsidiaries are greater than the size standard for the subsidiary seeking certification and/or the gross receipts cap. Under the rules concerning affiliation, the subsidiary fails to meet the size standard and cannot be certified.

 

(v) Recognition of a business as a separate entity for tax or corporate purposes is not necessarily sufficient to demonstrate that a firm is an independent business, owned and controlled by minority and women individuals.

(8) An MBE/WBEs certification shall expire three years from the date of certification effective immediately. An application for renewal shall be submitted on forms provided by the Director. The Director is authorized to require MBE/WBEs firms to submit yearly updates of information.

 

(9) If there is a change in ownership or control of the MBE/WBE firm, the MBE/WBE shall notify the Department within a reasonable time thereafter.

 

(10) The Director shall safeguard information that reasonably may be regarded as confidential business information from disclosure to unauthorized persons consistent with federal, state and local law.

 

(11) If the United States Department of Transportation changes the requirements for certifications, the City Council shall re-examine the certification requirements imposed by this Section.

 

(12) If the City denies a request for MBE/WBE certification from a firm which is not currently certified by the City, there shall be no right to appeal and the firm shall be ineligible to reapply for two years from the later of the date of the denial of certification or the final date of any court decision. Persons who have been denied MBE/WBE recertification or who have had their MBE/WBE certification revoked by the City, shall be reinstated if they successfully appeal their DBE certification and they have their principal place of business in the Kansas City Metropolitan Area or are a market participant in Kansas City, Missouri.

 

(13) The director is authorized to revoke MBE and WBE certification for cause. The certification of a person who has been debarred by the city in a debarment proceeding shall be automatically terminated or modified in a manner provided by the debarment ordinance. If an MBE/WBE has its DBE or MBE/WBE certification revoked by another governmental entity after a hearing, its MBE/WBE certification shall automatically be terminated with the City unless the MBE/WBEs certification was revoked for violating a certification requirement that is not a violation of the Citys MBE/WBE certification requirements.

 

Sec. 38-100.5. Escalation of dollar limits.

 

At the beginning of each city fiscal year, the monetary amounts specified in Code sections 38-84(14), 38-88, 38-98, 38-99 and 38-100 shall automatically be adjusted and shall be announced by the city manager to reflect an increase equal to an increase in the consumer price index (all items/all urban consumers/Kansas City, Missouri-Kansas) published by the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index for all urban consumers to eliminate the effects of inflation on purchasing power. Such monetary amount, as adjusted, shall be rounded upwards to the nearest $1,000.00.

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Approved as to form and legality:

 

 

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Assistant City Attorney