Participation by Locally Based Enterprises in Construction Contracts Awarded by the City of New York

RCNY tit. 66, ch. 11, subch. A

in effect

66 RCNY § 11-01 Applicability.

§ 11-01 Applicability. These regulations apply to all construction contracts let by contracting agencies except (a) those contracts funded in whole or in part by the federal or state government which are subject to different and conflicting small business or other requirements, such as minority business enterprise and woman business enterprise requirements, and (b) contracts which include a contractor utilization plan for participation of certified minority-owned business enterprises and/or woman-owned business enterprises pursuant to Subchapter C of this Chapter.

66 RCNY § 11-02 Definitions.

§ 11-02 Definitions. As used in these regulations, the listed terms are defined as follows: Agency head. "Agency head" means the commissioner, chair or director of any contracting agency. Building construction. "Building construction" means work, other than heavy construction, consisting of construction activities normally located in or on buildings including work directly supporting these activities and landscaping around these buildings. Certification documents. "Certification documents" means documents which must be filed by a business seeking certification as a locally based enterprise ("LBE") including but not limited to: sworn affidavits by an authorized official of the business; financial and management disclosure forms for the business; financial disclosure forms for any employees it claims are economically disadvantaged; economic development area profiles indicating where construction work was performed and the dollar amount of such work; verification of gross receipts by a certified public accountant or a licensed professional accountant; and signed release forms granting the City the right to request financial information from any government agency. Commissioner. "Commissioner" means the Commissioner of the New York City Department of Business Services. Compliance. "Compliance" means a contractor or subcontractor has acted in accordance with the requirements of Administrative Code, § 6-108.1 and these regulations. Construction business. "Construction business" means a firm that performs heavy or building construction work. Construction project. "Construction project" means any construction, reconstruction, rehabilitation, alteration, conversion, extension, improvement, repair or demolition of real property contracted by a contracting agency. Contract. "Contract" means any written agreement whereby the City is committed to expend or does expend funds in connection with any construction project, except the term "contract" shall not include: (1) contracts for financial or other assistance between the City and a government or governmental agency; (2) contracts, resolutions, indentures, declarations of trust, or the instruments authorizing or relating to the authorization, issuance, award, and sale of bonds, certificates of indebtedness, notes, or other fiscal obligations of the City; (3) contracts for architectural, engineering or drafting services; (4) emergency contracts; or (5) contracts funded by the state or federal government which are subject to small business or other requirements which differ and conflict with the requirements of Administrative Code, § 6-108.1 and these regulations. Contracting agency. "Contracting agency" means a city, county, borough, or other office, position, administration, department, division, bureau, board or commission, or a corporation, institution or agency of government, the expenses of which are paid in whole or in part from the city treasury. Contractor. "Contractor" means a person who is a party or a proposed party to a construction contract with a contracting agency. Department. "Department" means the Department of Business Services. Division. "Division" means the Division of Economic and Financial Opportunity. Economic development area. "Economic development area" means those areas of the City designated as eligible for participation in the Community Development Block Grant Program of the United States Department of Housing and Urban Development. See Appendices A and B for a listing of areas and maps of areas which meet this definition. Economically disadvantaged person. "Economically disadvantaged person" means a person who, at the time of hiring by a locally based enterprise if such hiring occurred not more than three tax years prior to the time of such business' application for certification or at the time of such application is a self-employed owner of such business, is: (1) a resident in a single person household who receives (i) wages not in excess of seventy percent of the lower-level "urban family budget" for the City as determined by the United States Department of Labor, Bureau of Labor Statistics (See Appendix C); or (ii) cash welfare payments under a federal, state or local welfare program; or (2) a member of a family which (i) has a family income less than seventy percent of the lower-level "urban family budget" for the City as determined by the United States Department of Labor, Bureau of Labor Statistics (See Appendix C), or (ii) receives cash welfare payments under a federal, state or local welfare program; or (3) a Vietnam era veteran as defined by applicable federal law who has been unable to obtain non-government subsidized employment since discharge from the armed services; or (4) a displaced homemaker who has not been in the labor force for five years but has during those years worked in the home providing unpaid services for family members and (i) was dependent on public assistance or the income of another family member but is no longer supported by that income, or (ii) is receiving public assistance for dependent children in the home which will soon be terminated. Gross receipts. "Gross receipts" means the total gross income received by an LBE from any source during the applicable period. Heavy construction. "Heavy construction" means work, on other than a building superstructure, consisting of construction activities located on or below the earth's surface including excavation, building foundation, construction projects requiring the use of earth moving machinery or equipment (power shovels, bulldozers, scrapers), and any work associated with bridges. Locally based enterprise or LBE. "Locally based enterprise" or "LBE" means a business which: (1) At the time of application for certification, has been in the building or heavy construction business and: (i) has received gross receipts in the last three or fewer tax years averaging $2 million or less on an annual basis; or (ii) has been in business for less than one tax year and has received gross receipts equal to or less than $2 million; and (2) in the tax year preceding the date of application has: (i) earned at least 25 percent of its gross receipts from work performed on construction projects located in economic development areas; or (ii) employed a work force of which at least 25 percent were economically disadvantaged persons. Minority business enterprise. "Minority business enterprise" or "MBE" means an enterprise approved pursuant to federal or state law for participation in contracts subject to a minority business enterprise requirement. Minority business enterprise requirement. "Minority business enterprise requirement" means any provision of federal or state law requiring public contractors to employ subcontractors owned by minorities, women or disadvantaged persons. Noncompliance. "Noncompliance" means a contractor or subcontractor has failed to act in accordance with Administrative Code, § 6-108.1 and these regulations. Person. "Person" means any natural person, corporation, partnership, sole proprietorship or unincorporated association. Subcontractor. "Subcontractor" means any person having an agreement or arrangement or proposed agreement or arrangement with a contractor (where the parties do not stand in the relationship of an employer and employee) in which any portion of the contractor's duty to perform work is undertaken or assumed by such person. Woman business enterprise. "Woman business enterprise" or "WBE" means an enterprise approved pursuant to federal or state law for participation in contracts subject to a woman business enterprise requirement. Woman business enterprise requirement. "Woman business enterprise requirement" means any provision of federal or state law requiring public contractors to hire subcontractors owned by women.

66 RCNY § 11-03 Certification of LBE's.

§ 11-03 Certification of LBE's. (a) Application for certification. (1) A contractor or subcontractor seeking certification as an LBE is responsible for submission of true and accurate certification documents demonstrating that it meets all eligibility criteria. Falsification of any documents submitted in connection with the LBE program may lead to the imposition of civil and criminal penalties as provided by law and contract and disqualification from the LBE program. (2) A contractor or subcontractor seeking certification as an LBE when no contract is pending shall submit its certification documents directly to the Division. (3) A contractor seeking certification as an LBE when bidding on a particular contract shall submit its certification documents to the contracting agency with its bid. (4) A subcontractor which has been proposed as an LBE subcontractor by a contractor bidding on a contract but has not been certified as an LBE shall have its certification documents submitted by the bidder in the sealed envelope to the contracting agency within 10 days after notification of low bid. (5) A subcontractor which has been proposed as an LBE subcontractor by a contractor subsequent to contract award but has not been certified as an LBE shall have its certification documents submitted by the contractor in a sealed envelope to the contracting agency within 10 business days from the date that the proposed LBE subcontractor is identified. (6) The contracting agency shall immediately transmit certification documents it receives to OEFO. (7) A contractor or subcontractor shall submit such additional information as may be required by OEFO in connection with its certifications as an LBE. Failure to submit such information within 10 business days of the date of a written request may result in the denial or revocation of certification as an LBE. (8) Consistent with the requirements of Federal, State and City law, neither OEFO nor any contracting agency shall disclose to unauthorized persons confidential business information submitted by contractors and subcontractors. (b) Eligibility requirements. (1) A contractor or subcontractor shall be certified as an LBE upon a determination by OEFO that it has met the eligibility requirements set forth in the Administrative Code, § 6-108.1 and these regulations. The initial certification shall be effective for three years and shall expire at the end of such period, except as provided in 66 RCNY § 11-03(b)(2) and (b)(9). An LBE may apply to have certification renewed after this three year period, as set forth in 66 RCNY § 11-03(b)(4). (2) A business which has been in existence for less than one year prior to the date of application for certification and which would otherwise qualify as an LBE except that it does not meet the criteria set forth in 66 RCNY § 11-02 "Locally based enterprise" (2), may nevertheless be certified as an LBE, provided that such certification shall expire one year after it is granted unless the business meets the criteria set forth in such paragraph within one year of the date of its certification. (3) An LBE seeking continuance of certification granted according to subdivision (b)(2) of this section must submit certification documents before two months prior to the one year anniversary of such certification. If after this one year period, the business meets all the criteria for LBE eligibility as set forth in 66 RCNY § 11-02 "Locally based enterprise," certification shall be granted for two more years. This business may apply to have certification renewed after this two year period as set forth in 66 RCNY § 11-03(b)(4). (4) An LBE may seek to have its certification renewed for successive one year periods by submitting certification documents before two months prior to the expiration date of its certification demonstrating that it continues to meet the eligibility requirements set forth in Administrative Code, § 6-108.1 and these regulations. (5) Failure to submit certification documents before two months prior to the applicable certification anniversary date, as set forth in 66 RCNY § 11-03(b)(3) or (b)(4), may result in the expiration of the LBE certification on the anniversary date. (6) If the certification of an LBE expires or if the LBE is determined to be ineligible for re-certification, the LBE may submit another set of certification documents six months after the date its original certification expired or six months after the date it was determined to be ineligible for re-certification. (7) If an LBE submits certification documents before two months prior to the applicable certification anniversary date, as set forth in 66 RCNY § 11-03(b)(3) or (b)(4), and the Division is unable to make a determination before the anniversary date, the LBE will be notified that certification will continue until the Division makes a determination as to the LBE's status. If an LBE submits certification documents within the second month prior to the anniversary date, the Division may not be able to review the documents to determine their completeness and the LBE's certification will expire. If the Division is able to review the documents, it may notify the LBE that its certification will continue beyond the anniversary date. If an LBE submits certification documents within the month prior to the anniversary date, its certification will expire on the anniversary date unless it is re-certified. (8) A business which was certified as an LBE prior to the effective date of these regulations shall be deemed to have been certified as an LBE on the date of such certification, provided however that any business which was less than one year old at the time of such certification and did not meet all the criteria of eligibility set forth in 66 RCNY § 11-03 "Locally based enterprise" of these regulations, shall be deemed to have been certified according to 66 RCNY § 11-03(b)(2) and such certification shall expire on the one year anniversary of the certification date. Such business may seek continuance of its certification as provided in 66 RCNY § 11-03(b)(3). (9) Any LBE which has been certified prior to the effective date of these regulations, for a period longer than specified in 66 RCNY § 11-03(b)(1) and (b)(2), must submit certification documents within two months after the effective date of these regulations, unless re-certification has been granted prior to the effective date of these regulations. (10) It is the intent of these regulations to qualify businesses as LBEs only if the ownership, management and operations of the business are conducted by persons who do not own, manage or operate other similar businesses which would otherwise be ineligible. Any business applying for LBE certification that does not conform to this intent shall be deemed ineligible as an LBE. (11) An LBE must be an independent business. A business that is a separate entity for tax or corporate purposes shall not necessarily be deemed to be an independent business. In determining whether a business is an independent business, the Division shall consider all relevant factors, including but not limited to the date the business was established, the identity of the principals, the sources of financing and the major shareholders, if any, of the business. (12) The owner of an LBE must possess the ability to manage the business and to make necessary management and policy decisions. The business must not be subject to any extraordinary formal or informal restrictions which limit the discretion of the owners. (13) The following types of ownership, control, or circumstances concerning a business seeking certification as an LBE shall render it ineligible for participation in the program: (i) ownership of the business by a non-LBE construction business; (ii) whole or partial ownership of the business by a person who is an owner in whole or in part of another construction business when the sum of the gross receipts of these businesses exceeds the limits as provided for in 66 RCNY § 11-22 "Locally based enterprise"; (iii) whole or partial ownership of a business, formed within three years of application, by a person who is an owner in whole or in part of another construction business not eligible for the program; (iv) control of the business by another construction business through substantial funding arrangements or; (v) organization of a firm in existence for less than one year whose officers, directors, principal stockholders, or employees serve as the officers, directors, principal stockholders, or employees, of another construction business and one concern is furnishing, or will furnish the other concern with subcontracts, financial or technical assistance, or other facilities, whether for a fee or otherwise. (14) If, after submitting certification documents, a business is found to not meet the requirements for LBE certification as set forth in 66 RCNY § 11-02 "Locally based enterprise" is otherwise ineligible, it may submit other certification documents for certification six months after the date it was declared ineligible. (15) A joint venture consisting of an LBE and a non-LBE business may participate in the LBE program as a contractor or subcontractor if both joint venturers' contract work is defined clearly. However, only the LBE's share of the contract work shall be credited towards the LBE goal. (16) An LBE shall notify the Division within 30 days after any change in its ownership or control. In addition, each LBE shall submit a report to the Division by December 30 of each year describing its present ownership and control. The Division shall review any changes made since an LBE's certification to determine whether it remains eligible as an LBE. (17) A business certified prior to the effective date of these regulations, whose ownership or control has changed shall notify the Division within 30 days of the effective date of these regulations of such change. (18) Newly formed businesses and businesses whose ownership or control has changed since the date of issuance of these regulations shall be scrutinized by the Division to determine the reasons for the formation, change in the ownership or control of the business. (19) Once a business is certified as an LBE, it must satisfactorily complete any contracts it is awarded. If an LBE does not satisfactorily complete a contract, it will be required to participate in and successfully complete a technical assistance program through the Department. If the LBE fails to successfully complete or does not participate in the technical assistance program it will be de-certified as an LBE. An LBE will be given an opportunity to respond to any allegations that it has not performed satisfactorily on a contract or that it has not successfully completed or participated in the technical assistance program pursuant to the procedure in 66 RCNY § 11-03(c)(8). If an LBE is de-certified, such business may re-apply for certification after six months from the date of de-certification. It must demonstrate at that time that it has improved its work performance. (c) Certification responsibilities of the Division. (1) Division shall have the power to certify, re-certify and de-certify a contractor or a subcontractor as an LBE upon a determination that the contractor or subcontractor has met or failed to meet the eligibility requirements and conditions set forth in Administrative Code § 6-108.1 and these regulations. (2) The determination by the Division as to a contractor's or subcontractor's eligibility for certification as an LBE shall be final. (3) the Division shall be the central repository for all documentation filed by contractors and subcontractors involving their status as an LBE. (4) the Division shall maintain and provide to all contracting agencies a list of all certified LBEs. the Division shall maintain and provide to all contracting agencies a list by borough of all contractors and subcontractors who perform work in such borough to qualify as LBEs. (5) When there is a contract pending award and a contractor has submitted incomplete certification documents, the Division shall notify the contractor either by telephone or letter within five business days of actual receipt of the documents that they are incomplete. The contractor shall have 10 business days from the date of the telephone call or from the date of the letter to complete the certification documents. If the contractor fails to submit the additional information within the time allowed, the contractor shall be so notified by the Division by letter on the next business day following the 10 day response period. Copies of this notification letter shall be sent to the prime contractor and the agency. (6) If complete certification documents have been submitted by a proposed LBE subcontractor for a particular contract waiting award, the Division within one business day after determining that the documents are complete, shall notify the contracting agency that the contract may be awarded. (7) The Division shall notify the proposed LBE contractor (and the prime contractor and the contracting agency where applicable) of its certification determination within 15 business days of the receipt of complete certification documents. (8) If the Division has reason to believe that an LBE is in violation of Administrative Code § 6-108.1 or these regulations, the Division shall provide notice to the LBE by certified mail, return receipt requested, of the alleged violation. Within twenty-five calendar days of the receipt of such notice the LBE may respond to the allegation in writing or request an opportunity to appear before the Commissioner or the Commissioner's designee to respond to the allegation. The Commissioner or the designee, after considering the evidence of the alleged violation and any material submitted by the LBE, shall determine whether the LBE shall be de-certified. The Commissioner or the designee may determine that a contractor or subcontractor who has been de-certified shall be ineligible for certification for a period of up to three years after such de-certification. (9) If at any time the Division has reason to believe that a contractor or subcontractor has willfully and knowingly provided incorrect information or made false statements, it shall refer the matter to its Inspector General for investigation. The Inspector General shall investigate the matter in accordance with applicable rules and procedures, and, where appropriate, refer or report the matter to the Department of Investigation. Falsification of any document by a contractor or subcontractor may lead to the imposition of civil and criminal penalties as provided by law and contract, disqualification from the LBE program and debarment from City contracts. (10) The Division shall conduct audits of LBEs to verify information provided by them. (11) The Division shall determine the effectiveness of Administrative Code § 6-108.1 by conducting surveys or other studies it deems appropriate.

66 RCNY § 11-04 Responsibilities of Contracting Agencies.

§ 11-04 Responsibilities of Contracting Agencies. (a) Overall goals. (1) Each agency head shall, consistent with the requirements of applicable Federal, State and City law, including applicable competitive bidding requirements, seek to ensure that not less than 10 percent of the total dollar amount of all contracts awarded for construction projects during each fiscal year are awarded to LBEs. (2) Each agency head shall, consistent with the requirements for applicable Federal, State and City law, require that if any portion of a construction contract is subcontracted, not less than 10 percent of the total dollar amount of the contract shall be awarded to LBEs; except that where less than ten percent of the total dollar amount of the contract is subcontracted, such lesser percentage shall be so awarded. (b) Contract language. Each contracting agency shall incorporate into each construction contract subject to these regulations to which it becomes a party the following language: Locally Based Enterprise Program (1) This contract is subject to the requirements of Administrative Code § 6-108.1 and the regulations promulgated thereunder. No contract shall be awarded unless and until these requirements have been complied with in their entirety. (2) Unless specifically waived by the agency head with the approval of the Division, if any portion of the contract is subcontracted, not less than 10 percent of the total dollar amount of the contract shall be awarded to locally based enterprise ("LBEs"); except that where less than ten percent of the total dollar amount of the contract is subcontracted, such lesser percentage shall be so awarded. (3) The prime contractor shall not require performance and payment bonds from LBE subcontractors. (4) If the contractor has indicated prior to award that no work will be subcontracted, no work shall be subcontracted without the prior approval of the agency head, which shall be granted only if the contractor makes a good faith effort beginning at least six weeks before the work is to be performed to obtain LBE subcontractors to perform the work. (5) If the contractor has not identified sufficient LBE subcontractors prior to award, it shall sign a letter of compliance stating that it complies with Administrative Code § 6-108.1, recognizes that achieving the LBE requirement is a condition of its contract, and shall submit documentation demonstrating its good faith efforts to obtain LBEs. After award, the contractor shall begin to solicit LBEs to perform subcontracted work at least six weeks before the date such work is to be performed and shall demonstrate that a good faith effort has been made to obtain LBEs on each subcontract until it meets the required percentage. (6) Failure of the contractor to comply with the requirements of Administrative Code § 6-108.1 and the regulations promulgated thereunder shall constitute a material breach of contract. Remedy for such breach of contract may include the imposition of any or all of the following sanctions: (i) reducing a contractor's compensation by an amount equal to the dollar value of the percentage of the LBE subcontracting requirement not complied with; (ii) declaring the contractor in default; (iii) where non-compliance is by an LBE, de-certifying and declaring the LBE ineligible to participate in the LBE program for a period of up to three years." (c) Information to bidders. Each contracting agency shall incorporate into all information provided to bidders on construction contracts subject to these regulations the following language: "This contract is subject to the requirements of Administrative Code § 6-108.1 and the regulations promulgated thereunder. No construction contract will be awarded unless and until these requirements have been complied with in their entirety. Be advised that: (1) If any portion of the contract is subcontracted, not less than 10 percent of the total dollar amount of the contract shall be awarded to locally based enterprises ("LBEs"); except, where less than 10 percent of the total dollar amount of the contract is subcontracted, such lesser percentage shall be so awarded. (2) No contractor shall require performance and payment bonds from LBE subcontractors. (3) No contract shall be awarded unless the contractor first identifies in its bid: (i) the percentage, dollar amount and type of work to be subcontracted; and (ii) the percentage, dollar amount and type of work to be subcontracted to LBEs. (4) Within 10 calendar days after notification of low bid, the apparent low bidder shall submit an "LBE Participation Schedule" to the contracting agency. If such schedule does not identify sufficient LBE subcontractors to meet the requirements of Administrative Code § 6-108.1, the apparent low bidder shall submit documentation of its good faith efforts to meet such requirements. (i) The "LBE Participation Schedule" shall include: (A) the name and address of each LBE that will be given a subcontract, (B) the percentage, dollar amount and type of work to be subcontracted to LBE, and (C) the dates when the LBE subcontract work will commence and end. (ii) The following documents shall be attached to the "LBE Participation Schedule": (A) verification letters from each subcontractor listed in the "LBE Participation Schedule" stating that the LBE will enter into a formal agreement for work, (B) certification documents of any proposed LBE subcontractor which is not on the LBE certified list, and (C) copies of the certification letter of any proposed subcontractor which is an LBE. (iii) Documentation of good faith efforts to achieve the required LBE percentage shall include as appropriate but not be limited to the following: (A) attendance at pre-bid meetings, when scheduled by the agency, to advise bidders of contract requirements; (B) advertisement where appropriate in general circulation media, trade association publications, and small business media of the specific subcontracts that would be at least equal to the percentage goal for LBE utilization specified by the contractor; (C) written notification to associations of small, minority and women contractors soliciting specific subcontracts; (D) written notification by certified mail to LBE firms that their interest in the contract is solicited for specific work items and their estimated values; (E) demonstration of efforts made to select portions of the work for performance by LBE firms in order to increase the likelihood of achieving the stated goals; (F) documented efforts to negotiate with LBE firms for specific subcontracts including at a minimum: (a) The names, addresses and telephone numbers of LBE firms that were contacted, (b) A description of the information provided to LBE firms regarding the plans and specifications for portions of the work to be performed, (c) Documentation showing that no reasonable price can be obtained from LBE firms, (d) A statement of why agreements with LBE firms were not reached; (G) a statement of the reason for rejecting any LBE firm which the contractor deemed to be unqualified; and (H) documentation of efforts made to assist the LBE firms contacted that needed assistance in obtaining required insurance. (5) Unless otherwise waived by the agency head with the approval of the Division, failure of a proposed contractor to provide the information required by paragraphs (3) and (4) above may render the bid non-responsive and the contract may not be awarded to the bidder. If the contractor states that it will subcontract a specific portion of the work, but can demonstrate that despite good faith efforts it cannot achieve its required LBE percentage for subcontracted work until after award of contract, the contract may be awarded subject to a letter of compliance from the contractor stating that it will comply with Administrative Code § 6-108.1 and subject to approval by the agency head. If the contractor has not met its required LBE percentage prior to award, the contractor shall demonstrate that a good faith effort has been made subsequent to award to obtain LBEs on each subcontract until it meets the required percentage. (6) When a bidder indicates prior to award that no work will be subcontracted, no work may be subcontracted without the prior approval of the agency head, which shall be granted only if the contractor in good faith seeks LBE subcontractors at least six weeks prior to the start of work. (7) The contractor may not substitute or change any LBE which was identified prior to award of the contract without the permission of the agency head. The contractor shall make a written application to the contracting agency head for permission to make such substitution or change, explaining why the contractor needs to change its LBE subcontractor and how the contractor will meet its LBE subcontracting requirement. Copies of such application must be served on the originally identified LBE by certified mail return receipt requested as well as the proposed substitute LBE. The agency head shall determine whether or not to grant the contractor's request for substitution." (d) Implementation – general. (1) Each contracting agency shall seek to reach its overall ten percent LBE goal by vigorously encouraging LBE prime participation and enforcing the ten percent (or less if applicable) LBE subcontracting requirement on all contracts where subcontracting will occur. The contracting agencies shall follow the activities outlined below to implement this requirement. (2) Each agency head shall designate one experienced contract manager to be its LBE liaison officer whose duties shall include directing, coordinating and overseeing agency staff with regard to implementing the procedures set forth in these regulations on a day-to-day basis. The officer's responsibilities shall include: (i) Examining projects to determine which invitations to bid are to be designated for the LBE prime contractor outreach procedure set forth in 66 RCNY § 11-04(e); (ii) Preparing and forwarding bid notices of potential LBE prime contracts and subcontracts to LBEs; (iii) Verifying a bidder's LBE Participation Schedule and indicating, in writing, whether the contract can be awarded; (iv) Aiding contractors to locate potential LBE subcontractors for various contract services; (v) Assisting LBEs in complying with procedures for bidding on agency contracts; (vi) Coordinating and overseeing investigations of contractor compliance; (vii) Preparing and submitting the required status reports to the Division. (3) Each contracting agency shall utilize the list of certified LBEs provided by the Division to identify potential LBE contractors and subcontractors. (4) LBE participation shall be determined and applied toward meeting the requirements of Administrative Code § 6-108.1 on the basis of work actually performed in the following manner: (i) the total dollar value of a contract awarded to an LBE contractor shall be applied toward the LBE goal of the contracting agency; (ii) the total dollar value of a subcontract let to an LBE subcontractor and performed by the LBE subcontractor shall be applied toward the contractor's LBE requirement and the LBE goal of the contracting agency (work further subcontracted by an LBE subcontractor to a non-LBE subcontractor shall not be so applied); and (iii) the portion of the total dollar value of a contract with a joint venture of an LBE and non-LBE business eligible under these regulations equal to the percentage of the contract work of the LBE partner in the joint venture shall be applied toward the contractor's LBE requirement and the LBE goal of the contracting agency. (5) When an LBE contractor or subcontractor is used, it must perform the actual work and may not subcontract the work to another firm without agency approval. Credit may be denied to a prime contractor for an LBE subcontractor's participation where an LBE does none of the actual subcontracted work. (6) The contracting agency shall transmit to the Division certification documents submitted to it within two business days after their receipt. (7) If at any time a contracting agency has reason to believe that a contractor or subcontractor has willfully and knowingly provided incorrect information or made false statements, it shall refer the matter to both its Inspector General and to the Division. Falsification of any document by a contractor or subcontractor may lead to the imposition of civil and criminal penalties as provided by law and contract, disqualification from the LBE program and debarment. (8) Each contracting agency shall submit quarterly reports, on or before the fifteenth day of January, April, July and October of each year to the Director describing activities undertaken during the previous quarter toward meeting the requirements of Administrative Code § 6-108.1 and these regulations. Quarterly reports of each contracting agency shall contain the following information: (i) The name and telephone number of the agency's LBE liaison officer; (ii) A summary report including but not limited to: (A) the total number of contracts subject to LBE requirements which are registered during the quarter and during the fiscal year to date, (B) the total value of such contracts, (C) the total number and dollar value of LBE prime contracts registered, (D) the total number and dollar value of LBE subcontracts, (E) the total number and dollar value of contracts registered which are subject to MBE/WBE requirements; (iii) A list of LBEs receiving prime contracts or subcontracts including: (A) the nature of their work, and (B) the number and dollar value of prime contracts and subcontracts committed; (iv) A list of all contracts registered during the quarter including: (A) a description of each contract, its budget line and registration date, (B) the dollar amount of the contract, (C) whether the contract is subject to an MBE/WBE requirement, (D) the contractor awarded the contract, (E) whether the contract was awarded to an LBE or MBE/WBE, (F) whether any part of the contract was subcontracted, and (G) if the answer to (F) above, is yes, then: (a) the subcontractor's name, (b) the subcontractor's LBE or MBE/WBE status, (c) a description of each subcontract (i.e., type of work), (d) the dollar amount of each subcontract, and (e) waivers that have been granted during the quarter, if any; (v) The status of any default hearings or other actions the agency is taking with regard to failure of a contractor or LBE to comply with Administrative Code § 6-108.1 and these regulations; and (vi) A list of all prime contractors who have submitted letters of compliance during the quarter. (e) Implementation – LBE prime contractor participation. (1) Contracting agencies shall identify all possible opportunities for LBE prime contractors. They shall divide projects wherever possible into work suitable for bidding by LBE contractors. (2) The contracting agency shall, on the basis of contract size, type of work, and LBE technical and capitalization capabilities, identify classes of contracts which are attractive for bidding by LBE prime contractors. The following procedures shall apply when the agency is letting such contracts: (i) The contracting agency shall notify LBEs in a timely fashion when suitable prime contracts will be bid; (ii) The contracting agency shall monitor the requests for bid documents and conduct further solicitation for LBE bidders, if LBEs have not requested the documents. The agency shall maintain a log of LBE solicitations; (iii) The contracting agency shall prepare upon request by the Division an analysis of the number of LBE bidders per project and the number of LBE low bidders. (3) Whenever possible, the contracting agency shall invite LBEs to bid on open market orders (OMOs). (4) Whenever a contracting agency seeks bidders for an OMO by mailing bid documents to the potential bidders the agency shall when needed: (i) telephone any LBEs to which the package has been sent to notify them of such fact; and (ii) contact LBEs which fail to respond to the request for bids. (5) Wherever an LBE which has not previously contracted with the agency is the low bidder, the contracting agency shall discuss insurance needs, contract requirements, references, and provide other appropriate assistance to the LBE. (f) Implementation – LBE subcontractor participation. (1) The contracting agency shall design contracts to maximize opportunities for LBE subcontracting. (2) For each contract it bids, the contracting agency shall determine the percentage of work suitable for subcontracting. (3) Contract specifications shall identify which items of the contract, if any, are suitable for LBE subcontracting, and the estimated value of each such item. (4) Contracting agencies shall include in the Information to Bidders and the contract provisions for LBE subcontracting as set forth in 66 RCNY § 11-04(b) and (c). (5) When a contracting agency advertises a contract which contains items suitable for subcontracting, it shall apply the following procedures: (i) The agency shall prepare a bid notice, to be published in the City Record and sent to LBEs and business development organizations, indicating that the project contains items suitable for subcontracting; (ii) The agency may telephone LBEs in the appropriate work category to inform them that the bid notice has been sent and to recommend that they purchase or review the plans and specifications; (iii) The agency shall post, at the location where bid materials are available, all bid notices currently advertised. Such bid notices shall include a list of items suitable for performance by subcontractors and their estimated value; (iv) The agency shall supply with all bid documents a list of certified LBEs; (v) Upon request, the agency shall provide LBEs a list of names, addresses and telephone numbers of prime contractors who pick up bid documents for projects containing items suitable for subcontracting; (vi) The agency shall emphasize the LBE program in its agenda for pre-bid and pre-construction conferences. (g) Requirements for contract award. No construction contract subject to LBE requirements shall be awarded unless and until the following requirements have been complied with in their entirety: (1) If any portion of the contract is subcontracted, not less than ten percent of the total dollar amount of the contract shall be awarded to LBEs, except where less than ten percent of the total dollar amount is subcontracted, such lesser percentage shall be so awarded. (2) No contractor shall require performance and payment bonds from LBE subcontractors. (3) The bidder shall identify in the bid proposal: (i) the percentage, dollar amount and type of work to be subcontracted; and (ii) the percentage, dollar amount and type of work to be subcontracted to LBEs. (4) Within 10 calendar days after notification of low bid, the apparent low bidder shall submit an "LBE Participation Schedule". If such schedule does not identify enough LBE subcontractors to meet the requirements of Administrative Code § 6-108.1 the apparent low bidder shall also submit documentation of its good faith efforts to meet such requirements. (i) The "LBE Participation Schedule" shall include: (A) the name and address of each LBE that will be given a subcontract, (B) the percentage, dollar amount and type of work to be subcontracted to the LBE, and (C) the dates when the LBE subcontract work will commence and end. (ii) The following documents shall be attached to the "LBE Participation Schedule": (A) verification letters from each subcontractor listed in the "LBE Participation Schedule" stating that the LBE will enter into a formal agreement for work, (B) certification documents of any proposed LBE subcontractor which is not on the LBE certified lists, and (C) copies of the certification letter of any proposed subcontractor which is an LBE. (iii) Documentation of good faith efforts to achieve the required LBE percentage shall include but not be limited to the following: (A) attendance at pre-bid meetings, when scheduled by the agency, to advise bidders of contract requirements; (B) advertisement where appropriate in general circulation media, trade association publications, and small business media for specific subcontracts that would be at least equal to the percentage goal for LBE utilization specified by the contractor; (C) notification to small, minority and woman contractor associations in writing, for solicitation of specific subcontracts; (D) written notification by certified mail to LBE firms that their interest in the contract is solicited; (E) demonstration of efforts made to select portions of the work proposed to be performed by LBE firms in order to increase the likelihood of achieving the stated goals; (F) documented efforts to negotiate with LBE firms for specific subcontracts including at a minimum: (a) The names, addresses and telephone numbers of LBE firms that were contacted; (b) A description of the information provided to LBE firms regarding the plans and specifications for portions of the work to be performed; (c) Documentation that no reasonable price can be obtained from LBE firms; (d) A statement of why agreements with LBE firms were not reached; (G) a statement of the reason for rejecting any LBE firm which the contractor deemed to be unqualified; and (H) documentation of efforts made to assist the LBE firms contacted that needed assistance in obtaining required insurance. (5) Failure of the apparent low bidder to provide the information required in 66 RCNY § 11-04(g)(3) and (g)(4) of this section within the allotted time may render the bid non-responsive and the contract may not be awarded to the bidder, except: If the contractor states that it will subcontract a specific portion of the work, but can demonstrate that despite good faith efforts it cannot achieve its required LBE percentage for subcontracted work until after award of contract, the contract may be awarded subject to a letter of compliance from the contractor stating that it will comply with Administrative Code § 6-108.1 and subject to approval by the agency head. (6) If the contractor has not met its required LBE percentage prior to award, the contractor shall demonstrate that a good faith effort has been made subsequent to award to obtain LBEs on each subcontract until it meets the required percentage. (7) If a contractor submits certification documents for a subcontractor it wishes to use towards its LBE required percentage, the contracting agency may not award the contract until the Division has notified it that such certification documents are complete. After the Division has notified the agency that the proposed subcontractor's certification documents are complete, the contract may be awarded. However, no firm may be counted toward the contractor's LBE obligation unless it has been certified as an LBE. The Division shall notify the prime contractor that the certification documents of its proposed subcontractor are complete and that its certification is pending and is subject to review. It shall inform the prime contractor that if the proposed subcontractor is denied certification, the prime contractor must propose another LBE. (8) If a contractor states prior to award that it will not subcontract work under the contract, the contractor may not subcontract any work without prior approval by the contracting agency. Such a contractor shall notify the agency at least six weeks prior to the start of work by any subcontractor that subcontracting is proposed. During such six-week period the contractor shall seek LBEs to do the work. No subcontracting by such a contractor shall be approved unless the required percentage of subcontracting work is awarded to an LBE, or unless the agency grants a waiver from such requirement upon a finding that a good faith effort has been made to find an LBE. (9) The contractor may not substitute or change any LBE which was identified prior to award of the contract without the permission of the agency head. The contractor shall make a written application to the contracting agency head for permission to make such substitution or change, explaining why the contractor needs to change its LBE subcontractor and how the contractor will meet its LBE subcontracting requirement. Copies of such application must be served on the originally identified LBE by certified mail return receipt requested as well as the proposed substitute LBE. The agency head shall determine whether or not to grant the contractor's request for substitution. (10) If the contractor contends that the LBE requirement cannot be met either before or after contract award and can demonstrate a good faith effort to obtain an LBE, a waiver may be granted by the agency head upon approval by the Division. (h) Subcontractor waivers. (1) Subject to approval by the Division, an agency head may waive the subcontracting requirements of Administrative Code § 6-108.1 and these regulations upon a finding that: (i) there is no identifiable LBE subcontractor reasonably available, willing and qualified to perform subcontracted work, provided that (A) the contractor has been unable to identify an LBE subcontractor after good faith efforts as set forth in 66 RCNY § 11-04(g)(4)(iii) and (B) the contracting agency has been unable to locate an LBE after a search of the LBE list; or (ii) the contract involves an emergency requiring immediate attention because the public health, safety, or welfare is threatened; or (iii) for other good cause. Such finding shall be made in writing, state the reasons therefore, and be submitted to the Division if a waiver is requested. (2) The Division may direct an agency head to submit further evidence concerning the necessity for a waiver. (3) Upon the approval of an agency head's waiver decision, the Division shall send written notification of such waiver to the Vice Chairman of the City Council. (i) Verification of contractor compliance. The contracting agency shall perform the following procedures with regard to auditing contractor compliance: (1) The LBE liaison officer described in 66 RCNY § 11-04(d)(2) shall distribute to the resident engineer a list of LBE subcontractors that have been identified by the prime contractor for use on the project. The resident engineer shall notify the LBE liaison officer of all subcontractors working on the site. (2) As the work progresses, the LBE liaison officer shall periodically telephone all LBEs identified by the prime contractor to verify that they are on the site and performing specified LBE work. (3) Each contracting agency shall conduct on-site reviews of the contractor's compliance with the LBE requirements. Such review may include interviews, visits to the actual construction site, and an inspection of any records relevant to the contractor's performance. (4) The contractor shall cooperate fully with these reviews. Failure or refusal to furnish information or to cooperate may be deemed a breach of contract and a violation of these regulations which may result in the imposition of sanctions as provided in 66 RCNY § 11-04(j). (5) The LBE liaison officer shall audit contractor payments to LBE subcontractors by obtaining payment compliance reports every month from both the contractor and the LBE subcontractor. The agency shall investigate all significant report variances. (6) The LBE liaison officer shall review total payments of prime contractors to LBE subcontractors to insure that the amount equals the LBE percentage required by the contract. If the sum of LBE subcontractor payments is less than the required amount, the contractor may be found in breach of contract and sanctions may be applied in an amount commensurate with the magnitude of noncompliance. (7) The LBE liaison officer shall maintain an LBE file for each project whether or not it is subject to LBE requirements. When the contracting agency determines that the program does not apply to a project or any part of it, the reasons for that decision shall be placed in the file. (8) After review of the contractor's performance, the contracting agency shall make one of the following determinations with respect to the contractor's compliance with the LBE requirements: (i) the contractor is in compliance; or (ii) there is reasonable cause to believe that the contractor is in noncompliance. (9) Whenever a contracting agency has reasonable cause to believe that a contractor is in noncompliance, it shall send a notice promptly by certified mail, return receipt requested, to the contractor describing the noncompliance and requiring the contractor to show cause within five days why it should not be found in noncompliance. If the agency determines that there is noncompliance, it shall offer the contractor a 15-day period from the date of notification of the determination an opportunity to conciliate. (i) If conciliation is successful, a conciliation agreement shall be signed by the agency and the contractor and filed with the Division. (ii) If conciliation is not successful, the agency shall determine whether sanctions should be imposed. (10) The contracting agency shall notify the Division of any determination of noncompliance and the imposition of any sanctions. The Division shall notify all other contracting agencies of the determination and the sanctions imposed. (j) Sanctions. (1) When a contracting agency determines that a prime contractor has failed to comply with the requirements of Administrative Code § 6-108.1 or these regulations, the agency may impose any or all of the following sanctions: (i) Reducing of a contractor's compensation by an amount equal to the dollar value of the LBE required percentage not complied with; (ii) Declaring the contractor in default. (2) In addition, where the prime contractor is an LBE, the agency shall refer the matter to the Division for further action including the review of the LBE's continued eligibility for certification.

66 RCNY § 11-05 Complaints.

§ 11-05 Complaints. (a) Any person who believes a violation of Administrative Code § 6-108.1 and these regulations has occurred may file a complaint, in writing, signed and dated, with the contracting agency when a contract is involved or, if no specific contract is involved, with OEFO. (b) A prompt investigation shall be made by the contracting agency's LBE liaison officer if the agency receives the complaint, or by the Division if it receives the complaint. (c) Any complaint alleging fraud, or other criminal behavior, concerning the requirements of Administrative Code § 6-108.1 and these regulations on the part of a contractor or subcontractor shall be referred by the contracting agency or the Division to their respective Inspector Generals. (d) The contractor or subcontractor involved shall cooperate fully with any investigation. Failure or refusal to furnish information or to cooperate in the investigation is a violation of Administrative Code § 6-108.1 and these regulations and may result in the imposition of sanctions as provided in 66 RCNY § 11-04(j). (e) Upon completion of the investigation, the complaining party and the contractor or subcontractor involved shall be informed of the results of the investigation in writing. If the contracting agency or the Division has reasonable cause to believe that the contractor or subcontractor is in noncompliance with Administrative Code § 6-108.1 or these regulations, then the procedures set forth in 66 RCNY § 11-04(i)(9) and (10) shall be commenced. (f) No contractor, subcontractor, or other person shall intimidate, threaten, coerce, or discriminate against any individual or business for the purpose of interfering with any right or privilege secured by Administrative Code § 6-108.1 and these regulations or because a complaint was filed, or a person testified, assisted or participated in any manner in an investigation, proceeding, or hearing under these regulations. (g) The identity of the complaining party shall be kept confidential only on request. If such confidentiality hinders the investigation, the complaining party shall be so advised for the purpose of obtaining a waiver of confidentiality. The complaining party shall be further advised that failure to waive confidentiality may result in a determination based upon information already provided.

66 RCNY § 11-06 Responsibilities of the Division of Economic and Financial Opportunity.

§ 11-06 Responsibilities of the Division of Economic and Financial Opportunity. Implementation. (a) The Division shall enforce and audit the compliance with and the administration of Administrative Code § 6-108.1 and these rules and regulations. (b) The Division may amend these rules and regulations when necessary to ensure the implementation of Administrative Code § 6-108.1. (c) The Division shall develop such forms and documents as may be necessary for the administration of Administrative Code § 6-108.1 and these regulations. (d) The Division shall adjust as necessary the lower-level "urban family budget" for the City, as most recently defined by the U.S. Department of Labor, Bureau of Labor Statistics by reflecting the variation in the "Urban Wage Earners and Clerical Workers Consumer Price Index." (e) The Division shall submit on or before April 1 of each year an annual report to the City Council, concerning the administration of the program.

66 RCNY § 11-07 Separability and Applicability.

§ 11-07 Separability and Applicability. (a) Separability. If any provision of these regulations, or the application thereof is held invalid, the remainder of these rules and regulations, and the application thereof to other persons or circumstances shall not be affected by such holding and shall remain in full force and effect. (b) Contracts covered. All contracts being advertised on or after the effective date of these regulations must comply therewith.

Source: City of New York, Charter, Administrative Code and Rules (American Legal Publishing XML export, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/newyorkcity/latest/NYCrules/0-0-0-92831Fetched: 10/24/2026