Conn. Gen. Stat. § 4a-60g: (Formerly Sec. 32-9e). Spending allocation program for small contractors and minority business enterprises.

(a) Definitions. As used in this section and sections 4a-60h to 4a-60j, inclusive, the following terms have the following meanings:

(1) “Small contractor” means (A) any contractor, subcontractor, manufacturer, service company or corporation that (i) maintains its principal place of business in the state, and (ii) is registered as a small business in the federal database maintained by the United States General Services Administration, as required to do business with the federal government, or (B) any nonprofit corporation that (i) maintains its principal place of business in the state, (ii) had gross revenues not exceeding twenty million dollars in the most recently completed fiscal year prior to such application, and (iii) is independent.

(2) “Independent” means the viability of the enterprise of the small contractor does not depend upon another person, as determined by an analysis of the small contractor's relationship with any other person in regards to the provision of personnel, facilities, equipment, other resources and financial support, including bonding.

(3) “State agency” means each state board, commission, department, office, institution, council or other agency with the power to contract for goods or services itself or through its head.

(4) “Minority business enterprise” means any small contractor (A) fifty-one per cent or more of the capital stock, if any, or assets of which are owned by a person or persons who (i) exercise operational authority over the daily affairs of the enterprise, (ii) have the power to direct the management and policies and receive the beneficial interest of the enterprise, (iii) possess managerial and technical competence and experience directly related to the principal business activities of the enterprise, and (iv) are members of a minority, as defined in subsection (a) of section 32-9n, or are individuals with a disability, or (B) which is a nonprofit corporation in which fifty-one per cent or more of the persons who exercise operational authority over the enterprise, (i) possess managerial and technical competence and experience directly related to the principal business activities of the enterprise, (ii) have the power to direct the management and policies of the enterprise, and (iii) are members of a minority, as defined in this subsection, or are individuals with a disability.

(5) “Affiliated” means the relationship in which a person directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, another person.

(6) “Control” means the power to direct or cause the direction of the management and policies of any person, whether through the ownership of voting securities, by contract or through any other direct or indirect means. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, twenty per cent or more of any voting securities of another person.

(7) “Person” means any individual, corporation, limited liability company, partnership, association, joint stock company, business trust, unincorporated organization or other entity.

(8) “Individual with a disability” means an individual (A) having a physical or mental impairment that substantially limits one or more of the major life activities of the individual, which mental impairment may include, but is not limited to, having one or more mental disorders, as defined in the most recent edition of the American Psychiatric Association's “Diagnostic and Statistical Manual of Mental Disorders”, or (B) having a record of such an impairment.

(9) “Nonprofit corporation” means a nonstock corporation incorporated pursuant to chapter 602 or any predecessor statutes thereto, which is exempt from taxation under any provision of section 501 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.

(10) “Municipality” means any town, city, borough, consolidated town and city or consolidated town and borough.

(11) “Quasi-public agency” has the same meaning as provided in section 1-120.

(12) “Awarding agency” means a state agency or political subdivision of the state, including a municipality or quasi-public agency.

(13) “Public works contract” has the same meaning as provided in section 46a-68b.

(b) Disparity studies and agency spending allocation goals. (1) (A) It is found and determined, based on the findings of a state-wide disparity study, that there is a serious need to help small contractors, minority business enterprises, nonprofit organizations and individuals with disabilities to be considered for and awarded state contracts for the purchase of goods and services and public works contracts. Accordingly, the necessity of awarding such contracts in compliance with the provisions of this section, sections 4a-60h to 4a-60j, inclusive, and sections 32-9i to 32-9p, inclusive, for advancement of the public benefit and good, is declared as a matter of legislative determination and with regard to the remedial measures set forth in this chapter that are necessary to address the effects of discrimination on the participation of minority business enterprises in state-funded contracting, such measures shall continue until such time as a subsequent state-validated disparity study finds that such measures are no longer necessary to correct the effects of discrimination that were found in the previous disparity study.

(B) Not later than January 1, 2030, and every five years thereafter, the Commission on Human Rights and Opportunities, in collaboration with the Office of Policy and Management, the Department of Administrative Services and office of the Attorney General, shall develop and issue a request for proposals to conduct a disparity study to make determinations, including, but not limited to: (i) Whether a statistically significant level of disparity exists in state-funded contracts between the percentage of minority business enterprises certified pursuant to subsection (j) of this section that are available in each industry category and the percentage of total dollars spent that goes to such minority business enterprises as contractors or subcontractors on such contracts, (ii) if the study finds strong evidence that such a statistically significant disparity does exist, whether factors other than race and gender can be ruled out as the cause of that disparity, (iii) whether such disparity can be adequately remedied with race and gender neutral measures, (iv) if it is determined that such disparity cannot be remedied solely using race and gender neutral measures, what narrowly tailored remedies might address any statistically significant disparities identified, and (v) whether there are any changes needed to provisions of the general statutes, regulations of Connecticut state agencies, policies or procedures to implement narrowly tailored remedies that would address any statistically significant disparities identified or bring the state into conformance with federal law.

(2) (A) Not later than January 1, 2026, the Chief Data Officer or a designee of the Chief Data Officer, in consultation with the Commissioner of Administrative Services and the Commission on Human Rights and Opportunities, shall create a database of available contractors in each industry category. Such database shall indicate (i) which contractors are certified as small contractors and minority business enterprises pursuant to subsection (f) of this section, (ii) the industry and geographic location of each contractor, and (iii) any other information concerning the availability of such contractors. The Chief Data Officer shall post such database on the Internet web site of the Office of Policy and Management and shall update such database, in consultation with the commissioner and commission, not less than annually thereafter.

(B) Prior to July 1, 2026, awarding agencies shall make good faith efforts toward the annual goals established during the prior fiscal year, for purposes of the spending allocation program.

(C) On and after July 1, 2026, (i) state agencies shall establish annual spending allocation goals for goods and services by industry category pursuant to subsection (k) of this section, and (ii) awarding agencies shall establish contract-specific spending allocation goals for public works contracts that reflect and are consistent with the percentage of available businesses in the relevant industry and geographic market area that are identified as small contractors and minority business enterprises in the database established pursuant to subparagraph (A) of this subdivision. Awarding agencies setting spending allocation goals and contractors awarded public works contracts shall make good faith efforts, as defined in section 4a-60, and consistent with state and federal law, to achieve the spending allocation goals established pursuant to this subparagraph.

(3) Notwithstanding any provision of the general statutes, and except as provided in this section, on and after July 1, 2026, each awarding agency awarding a public works contract shall state in its notice of solicitation for competitive bids or request for proposals or qualifications for such contract the agency spending allocation goals relevant to the contract and that the general or trade contractor shall be required to comply with the provisions of this section and the requirements concerning nondiscrimination and affirmative action under section 4a-60. Awarding agencies and contractors shall exclude any contract from the requirements of this subdivision and subdivision (2) of this subsection that may not be subject to spending allocation goals due to a conflict with a federal law or regulation.

(c) Notification of spending allocation goals. The head of each awarding agency shall notify the Commission on Human Rights and Opportunities of its spending allocation goals for public works contracts established pursuant to subparagraph (C) of subdivision (2) of subsection (b) of this section at the time that bid documents for such contracts are made available to potential contractors.

(d) Use of subcontractors. Prior to the award of a public works contract, a contractor shall submit to the awarding agency a signed statement from each subcontractor listed on the bid form stating that such contractor has communicated directly with each subcontractor about the work to be performed on such contract. The awarding agency may require that a contractor or subcontractor awarded a public works contract or a portion of such a contract perform not less than thirty per cent of the work with the workforces of such contractor or subcontractor, except such requirements shall not apply to construction managers, as described in section 46a-68d. A contractor awarded a contract or a portion of a contract under this section shall not subcontract with any person with whom the contractor is affiliated. No person who is affiliated with another person shall be counted towards an agency's spending allocation goal under this section if both affiliated persons considered together would not qualify as a small contractor or a minority business enterprise under subsection (a) of this section.

(e) Contractor and subcontractor documentation requirements. The awarding agency may require that a contractor or subcontractor awarded a public works contract or a portion of such a contract under this section furnish the following documentation: (1) A copy of the certificate of incorporation, certificate of limited partnership, partnership agreement or other organizational documents of the contractor or subcontractor; (2) a copy of federal income tax returns filed by the contractor or subcontractor for the previous year; (3) evidence of payment of fair market value for the purchase or lease by the contractor or subcontractor of property or equipment from another contractor who is not eligible to be counted towards an agency's spending allocation goals under this section; (4) evidence that the principal place of business of the contractor or subcontractor is located in the state; and (5) for any contractor or subcontractor certified under subsection (j) of this section on or after October 1, 2021, evidence of registration as a small business in the federal database maintained by the United States General Services Administration, as required to do business with the federal government.

(f) Audits. The Commission on Human Rights and Opportunities may conduct an audit of the financial, corporate and business records and conduct an investigation of any contractor that is awarded a public works contract for the purpose of determining compliance with the requirements established under this section and section 4a-60. The commission shall publish the results of any such audit on the commission's Internet web site.

(g) Exemption. The provisions of this section shall not apply to any awarding agency for which the total value of all contracts is anticipated to be equal to ten thousand dollars or less, or any public works contract of a municipality or a quasi-public agency for which the total value of the contract is anticipated to be equal to fifty thousand dollars or less.

(h) Letter of credit. In lieu of a performance, bid, labor and materials or other required bond, a small contractor or minority business enterprise awarded a public works contract under this section may provide to the awarding agency, and the awarding agency shall accept, a letter of credit. Any such letter of credit shall be in an amount equal to ten per cent of the contract for any contract that is less than one hundred thousand dollars and in an amount equal to twenty-five per cent of the contract for any contract that exceeds one hundred thousand dollars.

(i) Violations. (1) Whenever the awarding agency has reason to believe that any contractor or subcontractor awarded a state contract has wilfully violated any provision of this section or section 4a-60, the awarding agency shall send a notice to such contractor or subcontractor. Such notice shall include: (A) A reference to the provision alleged to be violated; (B) a short and plain statement of the matter asserted; (C) the maximum civil penalty that may be imposed for such violation; and (D) the time and place for the hearing. Such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed. The awarding agency shall send a copy of such notice to the Commission on Human Rights and Opportunities.

(2) The awarding agency shall hold a hearing on the violation asserted unless such contractor or subcontractor fails to appear. The hearing shall be held in accordance with the provisions of chapter 54. If, after the hearing, the awarding agency finds that the contractor or subcontractor has wilfully violated any provision of this section or section 4a-60, the awarding agency shall suspend all contract payments to the contractor or subcontractor and may, in its discretion, order that a civil penalty not exceeding ten thousand dollars per violation be imposed on the contractor or subcontractor. If such contractor or subcontractor fails to appear for the hearing, the awarding agency may, as the facts require, order that a civil penalty not exceeding ten thousand dollars per violation be imposed on the contractor or subcontractor. The awarding agency shall send a copy of any order issued pursuant to this subsection by certified mail, return receipt requested, to the contractor or subcontractor named in such order. The awarding agency may cause proceedings to be instituted by the Attorney General for the enforcement of any order imposing a civil penalty issued under this subsection.

(j) Certification of eligible small contractors and minority business enterprises. (1) The Commissioner of Administrative Services shall establish a process for certification of small contractors and minority business enterprises as eligible for contracts under the spending allocation program in accordance with the requirements of this section and available for state contracts. Each certification shall be valid for a period not to exceed two years, unless the Commissioner of Administrative Services determines that an extension of such certification is warranted, provided any such extension shall not exceed a period of six months from such certification's original expiration date. Any certification issued prior to October 1, 2021, shall remain valid for the term listed on such certification unless revoked pursuant to subdivision (2) of this subsection. The Department of Administrative Services shall maintain on its Internet web site an updated directory of small contractors and minority business enterprises certified under this section.

(2) The Commissioner of Administrative Services may deny an application for the initial issuance or renewal of such certification after issuing a written decision to the applicant setting forth the basis for such denial. The commissioner may revoke such certification for cause after notice and an opportunity for a hearing in accordance with the provisions of chapter 54. Any person aggrieved by the commissioner's decision to deny the issuance or renewal of or to revoke such certification may appeal such decision to the Superior Court, in accordance with the provisions of section 4-183.

(3) Whenever the Commissioner of Administrative Services has reason to believe that a small contractor or minority business enterprise who has applied for or received certification under this section has included a materially false statement in his or her application, the commissioner may impose a penalty not exceeding ten thousand dollars after notice and a hearing held in accordance with chapter 54. Such notice shall include (A) a reference to the statement or statements contained in the application alleged to be false, (B) the maximum civil penalty that may be imposed for such misrepresentation, and (C) the time and place of the hearing. Such hearing shall be fixed for a date not later than fourteen days from the date such notice is sent. The commissioner shall send a copy of such notice to the Commission on Human Rights and Opportunities.

(4) The commissioner shall hold a hearing prior to such revocation or denial or the imposition of a penalty, unless such contractor or subcontractor fails to appear. If, after the hearing, the commissioner finds that the contractor or subcontractor has wilfully included a materially false statement in his or her application for certification under this subsection, the commissioner shall revoke or deny the certification and may order that a civil penalty not exceeding ten thousand dollars be imposed on the contractor or subcontractor. If such contractor or subcontractor fails to appear for the hearing, the commissioner may, as the facts require, revoke or deny the certification and order that a civil penalty not exceeding ten thousand dollars be imposed on the contractor or subcontractor. The commissioner shall send a copy of any order issued pursuant to this subsection to the contractor or subcontractor named in such order. The commissioner may cause proceedings to be instituted by the Attorney General for the enforcement of any order imposing a civil penalty issued under this subsection.

(k) Preliminary and final report of agency spending allocation goals. On or before June thirtieth of each year, the Commissioner of Administrative Services shall provide each state agency establishing annual spending allocation goals for goods and services under subdivision (2) of subsection (b) of this section a preliminary report establishing small contractor and minority business enterprise goals by industry based on the database established pursuant to subdivision (2) of subsection (b) of this section for the twelve-month period beginning July first in the same year. On or before September thirtieth of each year, each such state agency shall submit a final version of such report to the Commissioner of Administrative Services, the Commission on Human Rights and Opportunities and the cochairpersons and ranking members of the joint standing committees of the General Assembly having cognizance of matters relating to planning and development and government administration.

(l) Reports on agency goal achievement. On or before November first of each year and on a quarterly basis thereafter, each state agency setting annual and contract-specific spending allocation goals under subdivision (2) of subsection (b) of this section shall prepare a status report on the progress made towards achieving its small contractor and minority business enterprise goals during the three-month period ending one month before the due date for the report. Each report shall be submitted to the Commissioner of Administrative Services and the Commission on Human Rights and Opportunities. Any state agency that achieves less than fifty per cent of its small contractor and minority business enterprise goals by the end of the second reporting period in any twelve-month period beginning on July first shall provide a written explanation to the Commissioner of Administrative Services and the Commission on Human Rights and Opportunities reporting the good faith efforts it will employ towards achieving its goals in the final reporting period. The Commission on Human Rights and Opportunities shall: (1) Monitor the achievement of the annual and contract-specific goals established by each state agency; and (2) prepare a quarterly report concerning such goal achievement. The report shall be submitted to each state agency that submitted a report, the Commissioner of Economic and Community Development, the Commissioner of Administrative Services and the cochairpersons and ranking members of the joint standing committees of the General Assembly having cognizance of matters relating to planning and development and government administration. Failure by any awarding agency to submit any reports required by this section shall be a violation of section 46a-77.

(m) Exemption for janitorial or service contracts. Nothing in this section shall be construed to apply to the janitorial or service contracts awarded pursuant to subsections (b) to (d), inclusive, of section 4a-82.

(n) Regulations. The Commissioner of Administrative Services may adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of this section.