A1720

An Act establishing the “Minority and Women-Owned Businesses State Contractor Remedies Act”; amending various parts of the statutory law, and supplementing Title 52 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) Sections 1 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be known and may be cited as the “Minority and Women-Owned Businesses State Contractor Remedies Act.”

2. (New section) The Legislature finds and declares that:

a. In 1985, the Legislature passed the “Set-Aside Act for Small Businesses, Female Businesses, and Minority Businesses,” P.L.1983, c.482 (C.52:32-17 et seq.) (Set-Aside Act), requiring that 15 percent of contracts be awarded to small businesses, seven percent to minority businesses, and three percent to women-owned businesses.

b. In 1989, the United States Supreme Court held in City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989), that the City of Richmond’s subcontractor set-aside program for minority businesses violated the Equal Protection Clause of the Constitution because it did not meet the Court’s strict scrutiny standard.

c. Following the Croson decision, Governor Kean suspended portions of the Set-Aside Act because the State had not undertaken a thorough investigation confirming the existence of race and gender discrimination in State procurement.

d. In August 1989, Governor Kean issued Executive Order No. 213 establishing the Governor’s Study Commission on Discrimination in Public Works Procurement and Construction Contracts and directed the commission to “investigate the nature and scope of any discriminatory practices” and “prepare an analysis of this information in order to develop probative evidence of any prior to present discrimination.”

e. The commission released the State’s first disparity study in 1993, with the statistical findings showing a disparity between contract dollars awarded and the availability of minority and women-owned firms available to provide goods and services, and anecdotal findings showing a history of far-reaching discrimination in which the State passively participated.

f. Governor Florio issued Executive Order No. 84 in 1993 reinstituting the goals in the Set-Aside Act, requiring all State contracting agencies to adopt a set-aside program wherein they would be required to make a good faith effort to award seven percent of public procurement and construction contracts to minority-owned businesses and three percent to women-owned businesses.

g. In 2003, the Set-Aside Act was permanently enjoined in a Consent Decree entered by the federal district court in the matter of GEOD v. State of New Jersey, Civil Action No. 01-2656 (SRC) (D.N.J.), and following entry of the Consent Decree, Governor McGreevey issued Executive Order No. 71 (2003) eliminating set-aside goals for minority and women-owned businesses and instead instituting a race-neutral and gender-neutral small business set-aside program.

h. In 2005, the State released an updated disparity study, and in 2006, Governor Corzine issued Executive Order No. 34, creating the Division of Minority and Women Business Development, tasking it with developing minority and women business utilization goals, based on the 1993 and 2005 disparity studies, and developing and implementing policies and programs aimed at meeting those goals through race-neutral and gender-neutral means.

i. On January 23, 2024, the State released a comprehensive statewide disparity study examining public contracting opportunities for minority and women-owned businesses between 2015 and 2020.

j. Despite decades of a race-neutral and gender-neutral small business set-aside program and other remedial measures, the study found statistically significant disparities in public contracting with minority and women-owned business enterprises, including specifically in contracting with businesses owned by Black Americans, Asian Americans, Hispanic Americans, and nonminority women for construction, professional services, and goods and services.

k. The State has a compelling interest in promoting markets free of discrimination, to engage contractors and subcontractors for State contracts of all types, and thus to promote contracting with minority owned and women-owned businesses that are available and qualified to be State contractors and subcontractors.

l. It is the policy of the State to promote markets for all State contracts and subcontracts that are free from discrimination against women and minorities, and to encourage participation of minority and women-owned businesses as well as small businesses in all areas of State contracting.

m. In an effort to reduce barriers to participation by minority and women-owned businesses in State contracting, State agencies, State contracting units, and prime contractors should be subject to defined criteria evidencing a good faith effort to increase participation by such businesses.

n. The contracting goals set forth in P.L. , c. (C. ) (pending before the Legislature as this bill) are established consistent with the findings of the New Jersey disparity study released in January of 2024 and are narrowly tailored to address the report’s findings of significant statistical disparities in the State’s contract awards.

3. (New section) As used in this act, P.L. , c. (C. ) (pending before the Legislature as this bill):

“Chief” means the Chief Supplier Development Officer of the Office of Supplier Development and Business Opportunities established in the Department of the Treasury, or a successor.

“Department” means the Department of the Treasury.

“Disparity study” means the 2024 State of New Jersey Study on the Availability and Utilization of Small, Minority, Women, and Service-Disabled Veteran-Owned Businesses.

“Construction contract” means a contract for erection, reconstruction, demolition, alteration, custom fabrication, repair work, or maintenance work, including painting and decorating, subject to the New Jersey Prevailing Wage Act, done under contract and funded in whole or in part with public funds or on the property or premises owned by the government entity.

“Electronic database” means the database in which the department maintains a listing of certified businesses in the business categories set forth in this act.

“Goods and services contract” means a contract for commodities or services not otherwise defined as professional, architectural, or engineering.

“Minority” means a person as defined in section 2 of P.L.1986, c.195 (C.52:27H-21.18).

“Minority business” means a business as defined in section 2 of P.L.1986, c.195 (C.52:27H-21.18).

“Nonminority” means a person who identifies themselves as White, not of Hispanic or Latino origin, and not of any other race.

“Office” means the Office of Supplier Development and Business Opportunities established in the Department of the Treasury, or its successor.

“Professional services contract” means a contract for services performed by a person authorized and regulated by law to practice a recognized profession that requires advanced knowledge in a field of learning acquired by a prolonged formal course of specialized instruction and study, including architects and engineers providing design consultant services related to construction projects. Professional services are rendered in: the provision of goods, original and creative in a recognized field of artistic endeavor, and extraordinary, non-specifiable services if, after evaluation and assessment, it is determined cannot reasonably be described by written specifications.

“State agency” means any of the principal departments in the Executive Branch of State Government, and any division, board, bureau, office, commission, or other instrumentality within or created by such department, and any independent State authority, commission, instrumentality, or agency which is authorized by State law to award contracts.

“State contracting unit” means a government entity that contracts for the procurement of goods, services, professional services, or the construction of public works, either pursuant to chapter 32, 33, or 34 of Title 52 of the Revised Statutes, the “State College Contracts Law,” P.L.1986, c.43 (C.18A:64-52 et seq.), P.L.2007, c.137 (C.52:18A-235 et seq.), or any other applicable law.

“Woman” or “women” means a female or females as defined in section 2 of P.L.1986, c.195 (C.52:27H-21.18).

“Women’s business” means a business as defined in section 2 of P.L.1986, c.195 (C.52:27H-21.18).

4. (New section) a. (1) All State agencies and State contracting units shall establish programs consistent with P.L. , c. (C. ) (pending before the Legislature as this bill) to facilitate the participation of minority businesses, including Black-owned businesses, Asian American-owned businesses, Hispanic-owned businesses, and nonminority women-owned businesses. All State agencies and State contracting units shall develop a plan for the fiscal year next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and for each fiscal year thereafter to encourage Black-owned businesses, Asian American-owned businesses, Hispanic-owned businesses, and nonminority women-owned businesses to submit proposals for, and be awarded, contracts in accordance with P.L. , c. (C. ) (pending before the Legislature as this bill) and rules adopted by the State Treasurer pursuant thereto. Annually, within 180 calendar days of the end of each State fiscal year, State agencies and State contracting units shall file with the office a report containing information requested by the chief. The office shall receive and analyze the State agency and State contracting unit reports and provide feedback to the submitting State agencies and State contracting units, as it deems necessary.

(2) (a) Beginning on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the goals established by all State agencies and State contracting units for contract utilization in a State Fiscal Year shall be as follows; provided, however, that the chief may interpret the disparity study and further tailor the goals to specific contract price ranges on a bid-by-bid basis:

(i) at least 9.19 percent of their construction prime contracts for Black-owned businesses, of which 1.98 percent shall be for Black women-owned businesses and 7.20 percent shall be for Black male-owned businesses;

(ii) at least 10.72 percent of their construction subcontracts for Black-owned businesses, of which 3.28 percent shall be for Black women-owned businesses and 7.44 percent shall be for Black male-owned businesses;

(iii) at least 10.08 percent of their goods and services contracts for Black-owned businesses, of which 3.31 percent shall be for Black women-owned businesses and 6.77 percent shall be for Black male-owned businesses;

(iv) at least 12.01 percent of their professional services prime contracts for Black-owned businesses, of which 4.26 percent shall be for Black women-owned businesses and 7.75 percent shall be for Black male-owned businesses;

(v) at least 11.38 percent of their professional services subcontracts for Black-owned businesses, of which 3.57 percent shall be for Black women-owned businesses and 7.81 percent shall be for Black male-owned businesses;

(vi) at least 6.43 percent of their construction prime contracts for Asian American-owned businesses, of which 1.07 percent shall be for Asian American women-owned businesses and 5.37 percent shall be for Asian American male-owned businesses;

(vii) at least 9.32 percent of their construction subcontracts for Asian American-owned businesses, of which 2.45 percent shall be for Asian American women-owned businesses and 6.87 percent shall be for Asian American male-owned businesses;

(viii) at least 5.24 percent of their goods and services contracts for Asian American-owned businesses, of which 1.29 percent shall be for Asian American women-owned businesses and 3.95 percent shall be for Asian American male-owned businesses;

(ix) at least 11.65 percent of their construction prime contracts for Hispanic-owned businesses, of which 1.51 percent shall be for Hispanic women-owned businesses and 10.14 percent shall be for Hispanic male-owned businesses;

(x) at least 7.98 percent of their goods and services contracts for Hispanic-owned businesses, of which 1.98 percent shall be for Hispanic women-owned businesses and 6.00 percent shall be for Hispanic male-owned businesses;

(xi) at least 5.77 percent of their professional services prime contracts for Hispanic-owned businesses, of which 1.71 percent shall be for Hispanic women-owned businesses and 4.05 percent shall be for Hispanic male-owned businesses;

(xii) at least 9.38 percent of their professional services subcontracts for Hispanic-owned businesses, of which 2.06 percent shall be for Hispanic women-owned businesses and 7.31 percent shall be for Hispanic male-owned businesses; and

(xiii) at least 19.70 percent of total construction prime contracts for nonminority women-owned businesses, at least 22.34 percent of total goods and services contracts for nonminority women-owned businesses, at least 27.66 percent of total professional services contracts for nonminority women-owned businesses, and at least 22.70 percent of total professional services subcontracts for nonminority women-owned businesses.

(b) State agencies and State contracting units shall implement appropriate adjustments determined by subsequent statistical analyses of the disparities between the availability of and the utilization of contracts held by minority businesses and nonminority women-owned businesses, and additions or adjustments to the goals set forth in subparagraph (a) of this paragraph to implement remedial measures consistent with prevailing law, as appropriate, and encourage the elimination of disparities between the award of contracts to minority and nonminority women-owned businesses and the availability of minority and nonminority women-owned businesses to perform such contracts.

(3) (a) Each State agency or State contracting unit shall make a good faith effort to attain the goals established pursuant to this section. Each State agency or State contracting unit that substantially fails to make a good faith effort to achieve the goals set forth in this subsection in such State agency’s or State contracting unit’s contracting shall be required to submit to the chief, for approval, a remedial action plan to remedy such failure. If it is determined by the chief that any State agency or State contracting unit has failed to act in good faith to implement the remedial action plan within one year, the chief shall provide written notice of such a finding, which shall be made publicly available, and shall compel direct implementation of remedial actions, which may include, but shall not be limited to:

(i) assuring that sufficient and effective solicitation efforts to minority and women-owned businesses are being made by the State agency or State contracting unit;

(ii) dividing contract requirements, when economically feasible, into quantities that will expand the participation of minority and women-owned businesses;

(iii) eliminating extended experience or capitalization requirements, when programmatically and economically feasible, to expand participation by minority and women-owned businesses; and

(iv) other remedial actions determined appropriate by the chief and in accordance with any applicable rules adopted by the State Treasurer pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.).

(b) Upon a finding by the chief that a State agency or State contracting unit has failed to take affirmative measures to implement the remedial plan and to follow any of the remedial actions set forth by the chief, and in the absence of any objective progress towards the State agency’s or State contracting unit’s goals, the chief may require some or all the State agency’s or State contracting unit’s procurement, for a specified period of time, be placed under the direction and control of another agency or agencies.

(4) A State agency’s or State contracting unit’s good faith effort to achieve the goals set forth in this section shall be evidenced by documentation showing that the State agency or State contracting unit:

(a) considered structuring contracts in a manner to allow underutilized bidders to be able to compete for the State agency’s or State contracting unit’s contracts;

(b) offered periodic opportunities for minority and women-owned businesses to learn of the State agency’s or State contracting unit’s general anticipated contract needs prior to advertisement, independent of a published bid solicitation, and to learn about the State agency’s or State contracting unit’s contracting practices and requirements;

(c) conducted periodic outreach to business associations representing minority and women-owned businesses to publicize the State agency’s or State contracting unit’s contracting opportunities;

(d) used the State’s central certification registry or a similar dataset to identify and notify all listed minority and women-owned businesses in the relevant market of the opportunity to submit a bid for a contract subject to goals for which the respective businesses qualify; and

(e) took other actions determined appropriate by the chief and in accordance with any applicable rules adopted by the State Treasurer pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.).

b. For purposes of attaining the goals set forth in this section, State agencies and State contracting units may establish bid criteria for contracts or portions of contracts that result in a preference being afforded to minority businesses or women-owned businesses, though the State agency or State contracting unit may still award the contract to a bidder that is not a minority business or women-owned business. The goals established in subsection a. of this section shall not be required to be attained independently and may be attained through contracts awarded to businesses that qualify as minority businesses and women-owned businesses that may count towards more than one goal.

c. In setting and achieving the goals set forth in this section, State agencies and State contracting units shall:

(1) consult the findings contained within the disparity study evidencing relevant industry-specific disparities in the utilization of minority and women-owned businesses relative to their availability or, with written notice to the chief, conduct another disparity study and consult the findings therein;

(2) implement a program that will enable the State agency or State contracting unit to evaluate each contract to determine the appropriate goal for participation by minority and women-owned businesses;

(3) consider, where practicable, the severability of construction projects and other bundled contracts;

(4) consider compliance with the requirements of any federal law concerning opportunities for minority and women-owned businesses which effectuate the purposes of this section. The State agency or State contracting unit shall determine whether the imposition of the requirements of any such law duplicates or conflicts with the provisions hereof and, if such duplication or conflict exists, the State agency or State contracting unit shall waive the applicability of this section to the extent of such duplication or conflict;

(5) submit a report to the chief upon contract completion, which shall indicate the contract goals, the means by which the contractor in its bid initially proposed to meet the goals for subcontracting of the contract or the good faith efforts the contractor undertook to do so, and the contractor’s performance in continuing to meet the goals for subcontracting during the term of the contract. The report shall also note any significant issues that arose during the contract that may have resulted in decreased participation as subcontractors by Black-owned businesses, Black male-owned businesses, Black women-owned businesses, Asian American-owned businesses, Asian American male-owned businesses, Asian American women-owned businesses, Hispanic-owned businesses, Hispanic male-owned businesses, Hispanic women-owned businesses, and nonminority women-owned businesses. The State agency or State contracting unit shall review all reports with the chief to continually refine its contract terms to promote successful implementation of the policy of the State to promote markets for all State contracts and subcontracts that are free from discrimination against women and minorities, and to encourage participation of minority and nonminority women-owned businesses, as well as small businesses in all areas of State contracting; and

(6) take any other action that the chief determines to be appropriate to effectuate rules adopted by the State Treasurer. This may include, but shall not be limited to, a provision providing for appropriate relief should any contractor knowingly and willfully fail to comply with the goal requirements of this section.

d. (1) Each prime contractor shall make a good faith effort to attain the subcontractor goals established in this section. For purposes of determining a contractor’s good faith effort to comply with the subcontracting requirements of this section, the State agency or State contracting unit shall consider:

(a) whether the contractor has promoted the subcontracting opportunity to, or otherwise made minority businesses and nonminority women-owned business aware of the opportunity, in such event, (i) whether minority businesses and nonminority women-owned businesses exhibited interest in working with the contractor on a particular project by attending, or having attended, a pre-bid conference, if any, scheduled by the State agency or State contracting unit awarding the contract; and (ii) minority businesses and nonminority women-owned businesses, which have been solicited by the contractor, have responded in a timely fashion to the contractor’s request to engage minority businesses and nonminority women-owned businesses prior to the State agency’s or State contracting unit’s bid submission deadline;

(b) whether the contractor provided timely written notification of subcontracting opportunities on the contract to appropriate minority businesses and nonminority women-owned businesses that appear in the State’s electronic database;

(c) whether the contractor can reasonably structure the amount of work to be performed under subcontracts to increase the likelihood of participation by minority businesses and nonminority women-owned businesses; and

(d) whether other actions determined appropriate by the chief through rules adopted by the State Treasurer pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), were taken.

(2) Failure on the part of a contractor to demonstrate a good faith effort may be grounds for the rejection of bids made by that contractor on the contract for which the contractor is required to make a good faith effort to comply with the subcontracting requirements of this section.

(3) Contractors shall comply with the goal requirements of this section for the duration of the contract. If the contractor removes, adds, or changes a subcontractor, the contractor is required to comply with the goal requirements of this section to the same as its original bid or demonstrate that good faith efforts were taken to comply with the requirements of this section. Failure on the part of a contractor to comply or demonstrate a good faith effort during the term of the contract, and any extensions thereto, will result in the State agency or State contracting unit advising the chief of the contractor’s noncompliance in the report required pursuant to paragraph (5) of subsection c. of this section.

(4) Upon receiving any such report from a State agency or State contracting unit alleging that a contractor failed to meet the requirements of this section or did not make good faith efforts to comply with those requirements, the chief shall conduct a mandatory plenary review of the contractor’s efforts to comply with the requirements of this section and shall determine if any action should be taken against the contractor. The State agency or State contracting unit and the contractor shall comply with the chief’s requests for documents and information to support the plenary review. Upon completion of the plenary review, if the chief determines that the contractor failed to meet or failed to make a good faith effort to meet the goal requirements of this section, the chief may issue an order taking appropriate action against the contractor, which may include one or more of the following: (a) order the contractor to complete mandatory training at the contractor’s own expense prior to bidding on any State contract; (b) bypass the future award of one or more pending contract awards; (c) debar the contractor from State contracting for a period of time of up to five years; and (d) mandate such other relief as the chief deems appropriate.

5. Section 3 of P.L.1987, c.318 (C.5:10-21.1a) is amended to read as follows:

3. The [authority] office is authorized and directed to establish, prior to initiating any project on or after the effective date of [this 1987 amendatory and supplementary act] P.L.1987, c.318 (C.5:10-5 et al.), small business [, minority business and women's business] set-aside contract goals and procedures in accordance with the provisions of the “Set-Aside Act for Small Businesses [, Female Businesses, and Minority Businesses],” P.L.1983, c. 482 (C.52:32-17 et seq.).

(cf: P.L.1987, c.318, s.3)

6. Section 1 of P.L.1983, c.482 (C.52:32-17) is amended to read as follows:

1. [This act] P.L.1983, c.482 (C.52:32-17 et seq.) shall be known and may be cited as the "Set-Aside Act for Small Businesses [, Female Businesses, and Minority Businesses]."

(cf: P.L.1985, c.384, s.2)

7. Section 2 of P.L.1983, c.482 (C.52:32-18) is amended to read as follows:

2. The Legislature declares that the existence of a strong and healthy free enterprise system is directly related to the well-being and competitive strength of small business [, female business and minority business] concerns and to the opportunity for a small business [, female business and minority business] to have free entry into business, to grow and to expand; and finds that the State must ensure that a fair proportion of the State's total purchases and contracts for construction, property and services is placed with small business [, female business and minority business] concerns.

(cf: P.L.1985, c.384, s.3)

8. Section 3 of P.L.1983, c.482 (C.52:32-19) is amended to read as follows:

3. As used in [this act] P.L.1983, c.482 (C.52:32-17 et seq.):

a. "[Contracting] State agency" means [the] any of the principal departments in the Executive Branch of State [or] Government, and any division, bureau, office, board, commission, [committee,] or other instrumentality within or created by such department, and any independent State authority, commission, instrumentality, or agency [of the State] which is authorized by law to award State contracts.

b. "Chief" means the Chief [of the Office of Small Business Assistance when used in conjunction with the small business and female business set-aside programs, or the Chief of the Office of Minority Business Enterprise when used in conjunction with the minority business set-aside program] Supplier Development Officer of the Office of Supplier Development and Business Opportunities established in the Department of the Treasury, or a successor.

c. "Department" means the Department of [Commerce and Economic Development] the Treasury.

d. "Office" means the Office of [Small Business Assistance in the Department of Commerce and Economic Development when used in conjunction with the small business and female business set-aside programs, or the Office of Minority Business Enterprise when used in conjunction with the minority business set-aside program] Supplier Development and Business Opportunities established in the Department of the Treasury, or its successor.

e. "Small business" means a business which has its principal place of business in the State, is independently owned and operated and meets all other qualifications as may be established in accordance with [P.L.1981, c.283 (C.52:27H-21.1 et seq.)] P.L.1987, c.55 (C.52:27H-21.8).

f. "Small business set-aside contract" means (1) a contract for goods, equipment, construction or services which is designated as a contract with respect to which bids are invited and accepted only from small businesses, or (2) a portion of a contract when that portion has been so designated.

g. ["Minority business" means a business which has its principal place of business in the State, is independently owned and operated and at least 51% of which is owned and controlled by persons who are black, Hispanic, Portuguese, Asian-American, American Indian or Alaskan natives.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

h. ["Minority business set-aside contract" means (1) a contract for goods, equipment, construction or services which is designated as a contract with respect to which bids are invited and accepted only from minority businesses; or (2) a portion of a contract when that portion is so designated.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

i. ["Female business" means a business which has its principal place of business in the State, is independently owned and operated and at least 51% of which is owned and controlled by women.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

j. ["Female business set-aside contract" means (1) a contract for goods, equipment, construction or services which is designated as a contract with respect to which bids are invited and accepted only from female businesses; or (2) a portion of a contract when that portion is so designated.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill).

k. “State contracting unit” means a government entity that contracts for the procurement of goods, services, professional services, or the construction of public works, either pursuant to chapter 32, 33, or 34 of Title 52 of the Revised Statutes, the "State College Contracts Law," P.L.1986, c.43 (C.18A:64-52 et seq.), P.L.2007, c.137 (C.52:18A-235 et seq.), or any other applicable law.

(cf: P.L.1985, c.384, s.4)

9. Section 4 of P.L.1983, c.482 (C.52:32-20) is amended to read as follows:

4. a. Notwithstanding the provisions of any State bidding or public contracts laws to the contrary, but subject to any supervening federal statutes or rules, [contracting] State agencies and State contracting units, in consultation with the [department] chief, may designate a contract, or a portion thereof, for goods, equipment, construction or services to be awarded by a [contracting] State agency or a State contracting unit as a small business [, female business or minority business] set-aside contract pursuant to the goals and procedures established by [this 1985 amendatory act] P.L.1983, c.482 (C.52:32-17 et seq.), whenever there is a reasonable expectation that bids may be obtained from at least three qualified small businesses [, female businesses or minority businesses] capable of furnishing the desired goods, equipment, construction or services at a fair and reasonable price. The designation shall be made prior to the advertisement for bids.

b. Where application of the goals and procedures established under [this act] P.L.1983, c.482 (C.52:32-17 et seq.) would jeopardize the State's participation in a program from which the State receives federal funds or other benefits, the [contracting] State agency or State contracting unit may, in consultation with the [department] chief, withdraw the affected [contracts] contract from consideration or calculation.

(cf: P.L.1985, c.384, s.5)

10. Section 5 of P.L.1983, c.482 (C.52:32-21) is amended to read as follows:

5. a. There [are] is established the [goals] goal that [contracting] State agencies and State contracting units award at least [15%] 25 percent of their contracts for small businesses [, at least 7% of their contracts for minority businesses and at least 3% of their contracts for female businesses]. [These goals] This goal may, where appropriate, be attained by the direct designation of prime contracts for a small business [, minority business or female business] or, in the case of a prime contract not directly designated for a small business [, minority business or female business], by requiring that a portion of such a prime contract be subcontracted to a small business [, minority business or female business]. Each [contracting] State agency and State contracting unit shall make a good faith effort to attain the goals established in this section.

b. [The goals established in subsection a. of this section shall be attained independently of each other, and any given contract may be counted for purposes of attaining the small business goal, the minority business goal, or the female business goal, but not towards more than one goal. Pursuant to the goals established by this act, a total of at least 25% of the State's procurement contracts shall be awarded to small businesses, minority businesses, and female businesses.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

c. For purposes of attaining [these goals] this goal, [contracting] State agencies and State contracting units shall, when necessary, specifically set aside contracts or portions of contracts for which only small businesses [, minority businesses or female businesses] may bid.

(cf: P.L.1985, c.384, s.6)

11. Section 6 of P.L.1983, c.482 (C.52:32-22) is amended to read as follows:

6. If the [department] chief and the [contracting] State agency or State contracting unit disagree as to whether a small business set-aside is appropriate for a contract or a portion of a contract, the dispute shall, within seven days, be submitted to the State Treasurer, or [his] the State Treasurer’s designee, for final determination.

(cf: P.L.1985, c.384, s.7)

12. Section 7 of P.L.1983, c.482 (C.52:32-23) is amended to read as follows:

7. The advertisement for bids on a set-aside contract shall indicate the invitation to bid as a set-aside. The advertisement shall be made in such [newspaper or newspapers as will best give notice thereof] manner to best give notice to appropriate bidders and shall be sufficiently in advance of the purchase or contract to promote competitive bidding among those businesses for whom the contract is being set aside. The [newspaper or newspapers] manner in which the advertisement shall appear shall be selected by the [contracting] State agency or State contracting unit in consultation with the office. The advertisement shall designate the time and place at which sealed proposals shall be received and publicly opened and read, the amount of the cash or certified check, if any, which shall accompany each bid and such other items as the [contracting] State agency or State contracting unit may deem proper. The advertisement shall be made by that [contracting] State agency or State contracting unit pursuant to the procedure set forth in the law governing State contracts, where this act is inconsistent with that law.

(cf: P.L.1985, c.384, s.8)

13. Section 8 of P.L.1983, c.482 (C.52:32-24) is amended to read as follows:

8. a. The department shall establish reasonable regulations appropriate for controlling the designation of prospective small business bidders [, minority business bidders and female business bidders] and shall maintain lists of designated businesses.

b. The department shall establish a procedure whereby businesses may request inclusion on appropriate lists for small businesses [, minority businesses and female businesses].

c. The department shall establish a procedure for annually reviewing the lists and determining whether the businesses on the lists shall continue to be designated as small businesses [, minority businesses and female businesses].

d. The department shall establish a procedure whereby the designation of a business as a small business [, minority business or female business] may be challenged by a third party.

e. Any procedures established pursuant to subsections b., c., and d. of this section shall include notice to the business whose designation is at issue and an opportunity for a hearing at the department. The hearing shall not be considered a contested case under the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

(cf: P.L.1985, c.384, s.9)

14. Section 9 of P.L.1983, c.482 (C.52:32-25) is amended to read as follows:

9. When a contract or portion thereof has been designated as a set-aside, invitations for bids shall be confined to businesses designated by the department as appropriate for the set-aside and bids from other bidders shall be rejected; provided, however, if no bids are received from businesses designated by the department as appropriate for the set-aside, then the contract may be awarded to another business. The purchase, contract or expenditure of funds shall be awarded among the businesses, considering formality with specifications and terms, in accordance with the statutes and rules governing purchases by the [contracting] State agency or State contracting unit. The award shall be made with reasonable promptness by the [contracting] State agency or State contracting unit with written notice to the department.

(cf: P.L.1985, c.384, s.10)

15. Section 10 of P.L.1983, c.482 (C.52:32-26) is amended to read as follows:

10. If the [contracting] State agency or State contracting unit determines that the acceptance of the lowest responsible bid on a set-aside contract will result either in the payment of an unreasonable price or in a contract otherwise unacceptable pursuant to the statutes and rules governing purchases by that State agency [, the] or State contracting [agency] unit, the State agency or the State contracting unit shall reject all bids and withdraw the designation of the set-aside contract. Bidders shall be notified of the set-aside cancellation, the reasons for the rejection and the State's intent to resolicit bids on an unrestricted basis. The canceled solicitation shall not be counted as a set-aside for the purpose of attaining established set-aside goals. Except in cases of emergency, prior to the final award of the contract, the [contracting] State agency or State contracting unit shall provide an opportunity for a hearing on the reasons for the rejection of the set-aside designation. Such hearing may be in-person, by video conference, or on the written record at the discretion of the State agency or State contracting unit. This hearing shall not be considered a contested case under the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

(cf: P.L.1985, c.384, s.11)

16. Section 11 of P.L.1983, c.482 (C.52:32-27) is amended to read as follows:

11. Each [contracting] State agency and State contracting unit shall submit an annual report to the [department] office according to a schedule announced by the [department] chief. This report shall include the following information:

a. The total dollar value and number of contracts awarded to small businesses, [minority businesses and female businesses,] including a separate accounting of any set-aside contracts, and the percentage of the total State procurements by the [contracting] State agency or State contracting unit, and the figure of total dollar value and the number of set-asides reflect;

b. The types and sizes of businesses receiving set-aside awards and the nature of the purchases and contracts; and

c. The efforts made to publicize and promote the program.

The [department] office shall receive and analyze the reports submitted by the [contracting] State agencies and State contracting units and, utilizing these data, submit an annual report to the Governor and the Legislature showing the progress being made toward the objectives and goals of [this act] P.L.1983, c.482 (C.52:32-17 et seq.) during the preceding fiscal year.

(cf: P.L.1985, c.384, s.12)

17. Section 12 of P.L.1983, c.482 (C.52:32-28) is amended to read as follows:

12. Each [contracting] State agency and State contracting unit shall annually develop, in consultation with the [department] office, a plan for achieving its small business [, minority business and female business goals] goal.

(cf: P.L.1985, c.384, s.13)

18. Section 14 of P.L.1983, c.482 (C.52:32-30) is amended to read as follows:

14. Where the [department] office determines that a business has been classified as a small business [, minority business or female business] on the basis of false information knowingly supplied by the business and has been awarded a contract to which it would not otherwise have been entitled under [this act] P.L.1983, c.482 (C.52:32-17 et seq.), the [department] office shall:

a. Assess the business any difference between the contract amount and what the State's cost would have been if the contract had not been awarded in accordance with the provisions of [this act] P.L.1983, c.482 (C.52:32-17 et seq.);

b. In addition to the amount due under subsection a., assess the business a penalty in an amount of not more than [10%] 10 percent of the amount of the contract involved;

c. Order the business ineligible to transact any business with the State for a period of not less than three months and not more than 24 months; and

d. Prior to any final determination, assessment or order under this section, afford the business an opportunity for a contested case hearing pursuant to P.L.1968, c.410 (C.52:14B-1 et seq.).

All payments to the State pursuant to subsection a. of this section shall be deposited in the fund out of which the contract involved was awarded. All payments to the State pursuant to subsection b. of this section shall be deposited in the General State Fund.

(cf: P.L.1985, c.384, s.14)

19. (New section) Notwithstanding the provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the State Treasurer may adopt, immediately, upon filing with the Office of Administrative Law, such rules and regulations as the State Treasurer deems necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), which rules and regulations shall be effective for a period not to exceed 365 days after the date of the filing. Before the expiration of the rules and regulations, the State Treasurer shall amend, adopt, or readopt the rules and regulations in accordance with the requirements of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.).

20. (New section) The provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be severable, and if any of its provisions shall be held to be unconstitutional, the decision of the court shall not affect the validity of the remaining provisions of this act.

21. Section 1 of P.L.1995, c.39 (C.52:32-22.1) and section 4 of P.L.2011, c.147 (C.52:32-52) are repealed.

22. This act shall take effect immediately and shall apply to contracts awarded on and after the 181st day next following the date of enactment.

STATEMENT

This bill establishes the “Minority and Women-Owned Businesses State Contractor Remedies Act,” amends the “Set-Aside Act for Small Businesses, Female Businesses, and Minority Businesses,” and repeals various sections of the statutory law.

The “Minority and Women-Owned Businesses State Contractor Remedies Act” establishes a new process for determining preference in awarding State agency and State contracting unit contracts. State agencies and State contracting units are required to develop a plan for the fiscal year following the effective date of the bill, and each fiscal year thereafter, to encourage minority businesses and nonminority women-owned businesses to submit proposals and encourage the awarding of contracts to those businesses.

The bill establishes minimum contract utilization goals for all State agencies and State contracting units based on the New Jersey Disparity Study on the Availability and Utilization of Small, Minority, Women, and Service-Disabled Veteran-Owned Businesses, which was published in January of 2024. Each State agency and State contracting unit is required to implement appropriate adjustments determined by subsequent statistical analyses of the disparities between the availability and utilization of contracts held by minority businesses and nonminority women-owned businesses. In an effort to achieve the goals, the agency or contracting unit may establish bid criteria for contracts that result in a preference being afforded to minority businesses and nonminority women-owned businesses.

State agencies and State contracting units are required to make a good faith effort to attain the goals set forth in the bill. If the agency or contracting unit fails to make a good faith effort, a remedial action plan will be submitted to the Chief Supplier Development Officer of the Office of Supplier Development and Business Opportunities. If it is determined by the chief that the agency or contracting unit did not act in good faith to implement the remedial action plan within one year, the chief may make the remedial action plan public to encourage implementation, and order further remedial measures. If implementation still does not occur, the chief may require that some or all of the agency’s or contracting unit’s procurement be placed under the direction and control of another agency. Prime contractors are also required to make a good faith effort to attain the subcontractor goals set forth in the bill. Failure by a prime contractor to demonstrate a good faith effort may result in the rejection of bids made by the prime contractor.

The bill shifts chief, office, and departmental duties from the Chief of the Office of Small Business Assistance, the Office of Small Business Assistance, and the Department of Commerce and Economic Development to the Chief Supplier Development Officer, the Office of Supplier Development and Business Opportunities, and the Department of the Treasury.

The bill also amends the “Set-Aside Act for Small Businesses, Female Businesses, and Minority Businesses” to only be applicable to small businesses by removing mentions of female and minority-owned businesses. The bill changes the set-aside goal for small businesses from 15 percent to 25 percent, and removes goals for minority and women-owned businesses.

The bill repeals the law establishing compliance calculations for contracting agencies awarding contracts to minority or women-owned businesses, P.L.1995, c.39 (C.52:32-22.1), and repeals the law establishing the goal of giving due consideration to veteran-owned businesses and the requirement that strategies be identified to expand the number of veteran-owned businesses interested in and eligible to benefit from State procurement, P.L.2011, c.147 (C.52:32-52).