GO Item 2
January 22, 2015
Worksession
MEMORANDUM
TO:
FROM:
Government Operations and Fiscal Policy commiA\
Robert H. Drummer, Senior Legislative Attorney
fwt':J
SUBJECT:
Worksession: Bill 29-14, Contracts and Procurement - Wage Requirements ­
Reporting
Expected Attendees:
David Dise, Department of General Services Director
Bonnie Kirkland, Assistant CAO
Grace Denno, DGS
Bill 29-14, Contracts and Procurement - Wage Requirements - Reporting, sponsored by
the Council President at the request of the County Executive, was introduced on May 6. A
public hearing was held on July
8.
Bill 29-14 would require a County contactor subject to the Wage Requirements Law to
report summary wage data, including data by gender and race, paid to their employees who work
on County contracts. It would also prohibit a County contractor from retaliating against an
employee who discloses salary information to another person or employee under certain
circumstances.
Background
President Obama recently recognized the lack of equality in pay between men and
women in the workforce, with women consistently receiving less
than
men. Without current and
accurate data to trace compensation based upon race and gender, the root that causes this
disparity is difficult to trace. Employees, in some circumstances, may face discrimination or
retaliation for discussing their compensation with one another, impeding efforts by individuals to
assert their right to equal pay.
In
an effort to encourage equal pay, this Bill adds wage reporting
requirements for County contractors who perform services for the County. Contractors must
report, by race and gender, the annual wages paid to employees that performed direct,
measurable work under a County contract. Additionally, the Bill prohibits discrimination or
retaliation against a Contractor's employees discussing their compensation. The Bill requires
each contract to include a liquidated damages clause for a violation. The Director of General
Services would be authorized to perform audits to verify compliance and to refer matters to the
Office of Human Rights under Chapter 27 for investigation.
The County Attorney's bill review memorandum pointed out that the Bill, as requested
by the Executive, would not apply to subcontractors and does not include the same sanctions for
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a violation of these reporting requirements that the law provides for a violation of the wage
requirements. See ©8-9.
Public Hearing
The lone speaker at the public hearing, DGS Director David Dise, testified in support of
the Bill on behalf of the Executive. (©14). Mr. Dise explained that the Bill would promote
wage equity among County service contractor's employees by requiring each contractor to
submit regular reports summarizing wages paid to covered employees broken down by race and
gender. DGS would review the reports and refer cases to the County Office of Human Rights for
investigation for a possible violation of the equal employment laws in appropriate cases.
Issues
1.
What is the fiscal impact of the Bill?
OMB and Finance originally estimated that the Bill would require two new positions in
the Department of General Services - a full-time Program Manager II (Grade 25) with fmancial,
accounting, and auditing experience to respond
to
complaints, investigate issues, initiate and
monitor audits, and educate vendors and a full-time Procurement Specialist (Grade 27) to
analyze bids and proposals.
(©1O-13)
The Program Manager position has an estimated
recurring cost of $90,000 and a first year cost for office equipment of $2734. The Procurement
Specialist position has an estimated recurring cost of $102,000 and a first year cost for office
equipment of $2734. OMB submitted a revised fiscal impact statement on September 17,2014
changi:qg the estimated staff time to two half-time positions for a total recurring annual personnel
cost of $101,468. (©17-19) OMB revised this estimate based upon a conclusion that DGS staff
would only review a random sample of contract payroll records instead of reviewing each payroll
record. The estimated office equipment costs for each position remain the same.
Although OMB could not estimate the number of audits required, each audit was
estimated to cost between $40,000 and $80,000. Finally, the Fiscal Impact Statement points out
that potential vendors may need to hire additional personnel to create the required wage reports.
If so, these additional costs are likely to be reflected in higher bid prices.
2. Should the Bill apply to subcontractors?
As the County Attorney's Office pointed out, the reporting requirements do not apply to
subcontractors. See ©9. The equal pay goal would apply equally to an employee of a
subcontractor who performs work on the contract. However, the contractor would be responsible
under the contract to ensure that each subcontractor supplies a wage report to the County.
Whether this additional administrative burden on the contractor is worth the potential additional
cost is a policy question that goes to the ultimate value ofthe reporting requirement itself.
If the Committee decides to extend the wage reporting requirement to subcontractors, it
can
be accomplished by:
Replace the word "contractor
"with
the term "covered employer" in lines
6, 12,
30, and 48.
2
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3. Should the enforcement provisions be the same for a violation of the reporting
requirement?
As the County Attorney's Office pointed out, a violation of the wage requirements is
treated the same as a violation of the nondiscrimination requirements, but the wage reporting
requirement is not. See ©8. The Bill provides for liquidated damages for a violation of the wage
reporting requirement. However, if the wage reporting requirement leads to a violation of the
equal employment law, then the sanction for the race or gender discrimination would be the
same. A contractor would violate the wage reporting requirement by not filing a required report.
Failure to file a report does not prove an equal pay violation. Liquidated damages under the
contract may be a sufficient remedy for a failure to file a required report.
If the Committee decides to extend the same sanctions to a violation of the wage
reporting requirements, it could be done by amending §11B-33A(h)(4) as follows:
(4)
The sanctions of Section IIB-33(b) which apply to noncompliance with
nondiscrimination requirements apply with equal force and scope to
noncompliance with the wage and wage reporting requirements of this
Section.
4. How does this
Bill
relate to Bill 51-14?
The substance of Bill 51-14 is similar to the prohibition against retaliation for wage
disclosure contained in Bill 29-14. However, Bill 51-14 would add this prohibition to the
County's anti-discrimination laws and would therefore apply to any employer who employs one
or more persons in the County. Bill 29-14 would limit the prohibition to an employer who
obtains a service contract with the County. On January 15, the HHS Committee recommended
approval of Bill 51-14. If Bill 51-14 is enacted, it would cover all County service contractors.
5. Should the Council enact a wage reporting requirement?
County procurement often struggles with competing purposes. First, the County
has
an
obligation to County residents to obtain the best goods and services from contractors for the best
possible price. This is normally served by establishing an open competitive process for the
award of a County contract. The County sometimes attempts to use its contracting dollars
to
serve a different public purpose.
For example, the County has a Local Small Business Reserve Program that reserves
certain contracts for local small businesses. The County Procurement Law also,
has
a Minority
Owned Business Program. Bill 48-14, currently pending before the Council, would extend the
Minority Owned Business Program to certain contracts awarded through a request for proposals.
The County enacted a Prevailing Wage Law that requires a County construction contractor to
pay at least the prevailing wage set by the State. The Wage Requirements Law that Bill 29-14
would amend already requires most service contractors to pay all employees working on a
County service contract at least a living wage, currently set at $14.15 per hour. The GO
Committee is also considering a bill to increase the number of employees with health insurance
who work on a County service contract under the Wage Requirements Law (Bil114-14). Bill 61­
3
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14, recently introduced at the request of the Executive would create a new local business
subcontracting program for high dollar value contracts.
Each of these procurement laws supports a strong public policy, but also runs counter to
the County's overall obligation to obtain the best goods and services for the best price. The
resulting procurement system is complicated and sometimes slow.
It
can be difficult to navigate.
Each new procurement requirement adds an incremental layer of complexity. The Council
recently established a citizen task force to study the County procurement system and make
recommendations on how to make it less complex and faster.
A costlbenefit analysis of Bill 29-14 raises some interesting issues. The fiscal impact
statement acknowledges that the Bill would require the County to create and fill
2
new half-time
professional positions in Procurement at an estimated annual recurring cost of $101,468.
In
addition, the fiscal impact statement estimates that each audit would cost between $40,000 and
$80,000. Finally, OMB points out that the added administrative burden on contractors is likely
to increase bid prices. What does the County receive in return? The County would receive wage
reports from each contractor showing the wages paid to each employee who performs
measurable work on the contract broken down by race and gender. Would this lead to evidence
of discrimination? Possibly. Would it help reduce wage discrimination on the basis of race or
gender? Possibly. Wage discrimination on the basis of race or gender is already a violation of
Federal, State, and County law. At best, Bill 29-14 may lead to evidence of unlawful wage
discrimination. A more comprehensive anti-retaliation provision for wage disclosure is already
part of Bill 51-14.
The Federal government requires a contractor, as a condition of having a Federal
contract, to engage in a self-analysis for the purpose of discovering any barriers to equal
employment opportunity. The U.S. Department of Labor's Office of Federal Contract
Compliance Programs (OFCCP) enforces these requirements through 6 Regional Offices. Each
Regional Office has District and Area Offices in major metropolitan centers. A Department of
Labor description of the OFCCP is at ©15-16. Although Federal contract requirements in this
area go much further than the wage reporting that would be required by Bill 29-14, the Bill
would begin the County on a similar path. Any effort to eliminate unlawful employment
discrimination is a worthy goal, and some would argue that no cost is too great to work toward
that end. Absent any evidence that the wage reporting in Bill 29-14 would make a significant
difference in reducing unlawful employment discrimination, the cost may be too great for the
potential benefit.
Council
staff
recommendation:
do not enact the Bill without evidence that
the wage reporting is likely to significantly reduce unlawful employment discrimination.
This packet contains:
Bill 29-14
Legislative Request Report
Memo from County Executive
County Attorney Bill Review Memorandum
Fiscal and Economic Impact Statement
Testimony of David Dise
US Department of Labor - OFCCP Description
Revised Fiscal Impact Statement
F:\LAW\BILLS\1429 Contracts And Procurement - Wage Requirements-Reporting\GO Memo.Doc
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5
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Bill No.
29-14
Conceming: Contracts and Procurement
- Wage Requirements - Reporting
Revised: April 30, 2014 Draft NO.3
Introduced:
May 6.2014
Enacted:
November 6. 2015
Ex~uwe:
__________________
Effectwe: ____________________
Sunset Date:
--l..%.No~nC!!:e~
___________
Ch. _ ._, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the request of the County Executive
AN
ACT to:
(1)
(2)
(3)
require certain County contractors to report summary
~
including
data
by gender
and race, paid to their employees who work on County contracts;
prohibit certain County contractors from retaliating against certain employees that
disclose salary information to another person or employee; and
generally amend County wage requirements law for contractors.
By amending
Montgomery County Code
Chapter lIB, Contracts and Procurement
Article VI, Contract Administration
Section IIB-33A Wage Requirements
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
. . .
Heading or defined term.
Added to existing law
by
original
bill.
Deletedfrom existing law
by
original
bill.
Added
by
amendment.
Deletedfrom existing law or the
bill by
amendment.
Existing law unqffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No. 29-14
1
2
Sec. 1. Section llB-33A is amended as follows:
llB-33A. Wage requirements.
3
4
5
*
(g)
Wage reporting.
*
*
ill
The Director must insert into each contract subject to this
Section
~
provision that requires the contractor to submit to the
Director
showing
~
~
6
7
report (on
~
schedule determined
Qy
the Director)
8
summary of the wages paid to its employees, who
9
10
11
12
13
performed direct, measurable work under the contract,
Qy
gender and race.
ill
Prohibition against retaliation.
paragraph
Except as provided in
m
~
contractor must not discharge or in any other
manner discriminate or retaliate against an employee, who
performed direct, measurable work under the contract, because
the employee:
(A)
has inquired about, discussed, or disclosed the wages of
14
15
16
17
18
the employee or another employee;
.c.ru
asserts any right under this subsection; or
19
(Q)
files any complaint for violation of this subsection.
20
21
ill
The prohibition against retaliation under paragraph
ill
does not
apply to an employee who has access to wage information of
other employees or applicants as part of the employee's
essential job functions and discloses the wages of other
employees or applicants to individuals who do not otherwise
have access to the information, unless the disclosure is in
response to:
22
23
24
25
26
27
®
f!
formal complaint or charge;
~
~
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BILL NO. 29-14
28
an
©
ill
in furtherance of an investigation. proceeding, hearing, or
action. including an investigation conducted
Qy
the
contractor; or
is consistent with the contractor's legal duty to furnish
information.
29
30
31
32
33
34
35
36
The Director may refer
f!
report to the Office of Human Rights
for investigation of
f!
possible violation of Chapter 27. Human
Rights and Civil Liberties.
(hl
Conflicting requirements.
If any federal, state, or County law or
regulati~n
37
38
regulation requires payment of a higher wage, that law or
controls. If any applicable collective bargaining agreement requires
payment of a higher wage, that agreement controls.
[(hl]
ill
Enforcement
39
40
41
*
(5)
*
*
42
43
44
45
46
47
Each contract may specify that liquidated damages for any
noncompliance with this Section includes the amount of any
unpaid wages, with interest, and that the contractor is jointly
and severally liable for any noncompliance by a subcontractor.
In
addition, each contract must
specify~
CAl
that liquidated damages may be imposed in the event that
f!
contractor violates the wage reporting requirement in
48
49
50
51
subsection
{gt
and
an
that an aggrieved employee, as a third-party beneficiary,
may by civil action enforce the payment of wages due
under this Section and recover any unpaid wages with
interest, a reasonable attorney's fee, and damages for any
retaliation for asserting any right under this Section.
52
53
54
~
~
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Contracts And
Procurement· Wage Requirements-Reportmg\BiII 3.Doc
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BILL
No. 29-14
55
56
[ill]
ill
Report
*
*
*
57
58
59
Sec. 2.
Transition.
This Act applies to a contract awarded after October 1,
2014, but does not apply to an amendment or extension of a contract originally
awarded before October 1,2014.
Approved:
60
61
62
Craig Rice, President, County Council
Date
63
64
Approved:
Isiah Leggett, County Executive
Date
65
66
This is a correct copy o/Council action.
Linda M. Lauer, Clerk ofthe Council
Date
Q
~
W\B1LLS\1429 Contracts And Procurement· Wage Requirements·Reporting\BiII 3.Doc
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LEGISLATIVE REQUEST REPORT
Bill 29-14
Contracts and Procurement -Wage Requirements
-
Reporting
DESCRIPTION:
Bill 29-14 would require a County contactor subject to the Wage
Requirements Law to report summary wage data, including date, by
gender and race, paid to their employees who work on County
contracts.
It
would also prohibit a County contractor from retaliating
against an employee who discloses salary information to another
person or employee under certain circumstances.
President Obama recently recognized the lack of equality in pay
between men and women in the workforce, with women consistently
receiving less than men. Without current and accurate data to trace
compensation based upon race and gender, the root that causes this
disparity is difficult to trace. Employees, in some circumstances,
may face discrimination or retaliation for discussing their
compensation with one another, impeding efforts by individuals to
assert their right to equal pay.
In
an effort to encourage equal pay,
this Bill adds wage reporting requirements for County contractors to
Chapter 11 B of the County Code. Contractors must report, by race
and gender, the annual wages paid to employees that performed
direct, measurable work under a County contract. Additionally, the
Bill prohibits discrimination or retaliation against a Contractor's
employees discussing their compensation.
The Bill requires
liquidated damages provisions in contracts for violations, empowers
the Director of General Services to perform audits to verify
compliance and to refer matters to the Office of Human Rights under
Chapter 27 for investigation.
Wage equality.
Department of General Services.
To be requested.
To be requested.
To be requested.
Not applicable.
David E. Dise, Director
2407776191
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
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APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Not applicable.
Contractual liquidated damages.
F:\LAW\BILLS\l429 Contracts And Procurement - Wage Requirements-Reporting\LRR.Doc
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".:
••
M',
OFFICE OF
mE
COUNTY EXECUTIVE
ROCKVILLE. MARYLAND 201150
Isiah Leggett
County Executive
MEMORANDUM
April 24, 2014
TO:
Craig
L.
Rice, President
Montgomery County Council
lsiah
Leggett,
County Executive
FROM:
SUBJECT:
-P
~"':;f---
)
/~
Legislation to Add to Chapter lIB, Contracts and Procurement - Equal Wage
I am attaching for the Council's consideration a bill
that
would amend the County's
Contract and Procurement law to
require
certain
County contractors to report wages paid by race and
gender and to prohibit discrimination against employees who discuss wage information.
President Obama recently recognized the lack of equality in pay betweel1 men and
women in the workforce, with women consistently receiving less than men. Without current and accurate
data
to trace compensation based upon race and gender, the root that causes
this
disparity
is
difficult to
trace. Employees, in some circumstances, may face discrimination or retaliation for discussing their
compensation
with
one another, impeding efforts
by
individuals to assert their right to equal pay.
In
an
effort to encourage equal pay, this Bill adds wage reporting requirements for County contractors to
Chapter lIB ofthe County Code. Contractors must report, by race and gender, the annual wages. paid to
employees that performed direct, measurable work under a County contract. Additionally, the Bill
prohibits discrimination or retaliation against a Contractor's employees discuSsing their compensation.
The Bill requires liquidated damages provisions in contracts for violations, empowers the Director of
General Services to perform audits
to
verify compliance and to refer matters
to
the Office ofHuman
Rights under Chapter 27 for investigation. The amendment exempts the same contractors presently
exempt from the wage provisions of Code
§
llB-33A.
Thank you for your consideration of
this
matter.
IL:lh
Attachments:
Draft
legislation
Legislative Request Report
cc:
David Dise, Director, DGS
Jennifer A. Hughes, Director, OMB
Joseph Adler, Director,
OHR
Marc
Hansen, County Attorney
Joseph F. Beach, Director, DOF
montgomerycountymd.gov/311 - . . . . . 240-773-3556 TTY
..r~
(j)
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Isiah.
Leggett
County Executiv.e
Marc
p,
Hansen
COWlty
.4ttorney
OFFICE OF THE COUNIT ATIORNEY
MEMORANDUM
TO:
Greg Ossont, Deputy Director
Department ofGeneral Services
Erin
J.
Ashbarry
Associate County Attorney
FROM:
VIA:
DATE:
RE:
Marc
P.
Hansen,
CountyArtomey
May 16,2014
Bm 29-14, Contracts and Procurement- Wage Requirements - Reporting
Bill 29,.14 amends the County's "Wage Requirements" law, found at County Code
§
11 B 33A,
which mandates minimum hoUrly rates for employees working on County contracts.
Bill 29-14 will require County contractors
to
report,
by race and gender, the wages paid to
employees who perfonn direct, measurable work on the County's contract. Additionally, Bill
29-14 protects from retaliation the employees of a County contractor who inquire about or
discuss
wages
paid
to other employees.
w
County
contracts
subject to Bill 29-14 must state that liquidated
damages
may
be
imposed in the event a contractor violates the wage reporting requirements. Further, the Director
may refer a report to the Office ofHuman Rights for investigation of a possible violation of
County Code Chapter 27,
Human
Rights
and
Civil
Liberti~.
Contracts exempt from the Wage Requirements law
will
also be exempt from the wage
reporting requirements
and
anti-retaliation provisions of
Bill
29~
14.
See
Montgomery County
Code
§
I1B-33A(b)(1) - (9)
(listing
exempt
contracts).
Bill 29-14 does not extend the sanctions· for noncompliance with the Wage Requirements
to the wage reporting provisions.
See
Montgomery County Code
§
11 B-33A(h)(4) (stating
"[t]he
sanctions of Section
IlB-33(b)
which apply
to
noncompliance with nondiscrimination
requirements apply with
equal
force and scope
to
noncompliance with the
wage requiremen.ts
of
this Section." (emphasis added»).
101 Monroe Street, Third Floor. RockVille;
Maryllmd
2085{)"2580
(240) 777-6744 -lTD (240) 777·2545 • FAX (240)777-6705 • erin.ashbany@montgomerycountyrild..gov
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GregOssont
May 16.2014
Page 2
Additionally. Bill 29-14'sw:age reporting requirements
and·
its
protection~ainst
retaliation do not apply to .subcontractors. BiU29-14 uses the tenn"contractor!toot a"oovered
employer:'
See
Bi1l29-14, Lines 6, 12. Section I IB-33Adefinesa"oovered employefas
including subcontractors.
See
Code
§
11B-33(A)(a) (defining"oovered employer'to incIudc"any
contractor
or subcontractor
that
is
subject to
this
Sectiori'(emphasis added)).
A
court would
interpret use ofthe tenn'tontractor;'in Lines 6 and 12 ofBill 29-14, in$tead
of
'covered employer:'
to exclude subcontractors.
This omission of subcontractors differs from
the
wage requirements generally in Code
§
IlB-33A, which include subcontractors. This omission of subcontractors also differs from the
Count}'s equal benefits and prevailing wage laws, which both apply
to
contractors and
subcontractors.
See generallyCode
Code
§§
IlB';33C(d)(2) (requiring
a
contractor and
a
subcontractor to pay a prevailing wage rate); 11 B-33C(h)(1) (requiring each contrac.tor and
subcontractor to submit quarterly payroll records) ;
11 B-33D(b)
·(requiring a contractor and a
subcontractor to provide equal benefits),
11B~33D(d)(2)
(prohibiting retaliation
by
a contractor
or
a
subcontractor
in
violation of the. equal benefits provisions).
Section
IlB-33A's
statement that
a
contract
may
hold a contractor liable
for
subcontractoisnoncompliance,
see
Code
§
1IB-33A(h)(5). will not provide incentive fora
contractor comply with Bill
29-14~
as
BiIl29-14
does not extend
the wage
reporting and
anti~
retaliation provisions to subcontractors.
.
.
Enclosure
(hili)
cc:
Assistant CAQ
Robert H. Drummer,. Senior Legislative Attorney
Bonnie A.
Kirkland~
(j)
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ROCKVIllE, MARYlAND
MEMORANDUM
May 27, 2014
TO:
FROM:
SUBJECT:
Craig Rice, President, County Council
Management and Budget
Jennifer A. Hughes,
Joseph F.
Beach,
Director,
D o '
Finance
Council Bill
29~
14, Contracts
Reporting
Directo~cf6r
Please find attached the fiscal and economic impact statements for the
above~
referenced legislation.
JAH:fz
co:
Bonnie
Kirkland, Assistant Chief Administrative Oflicer
Lisa Austin,
Offic~s
of the County Executive
Joy Nurmi, Special Assistant to the County Executive
Patrick Lacefield, Director, Public Information Office
Joseph F. Beach, Director, Department of Finance
David Platt, Department of Finance
Robert Hagedoom, Department of Finance
David Dise. Director, Department of General Services
Erika
Lopez~Finn,
Office ofManagement and Budget
Alex
Espinosa, Office of Management and Budget
Felicia Zhang, Office of Management and Budget
Naeem Mia. Office of Management and Budget
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Fiscal Impact Statement
Council Bill 29-14 & Contracts and Procurement­
Wage Requirements
*
Pay
Equity, Wage Reporting
1. Legislative Summary.
'Ibe legislation requires a County contractor subject to the Wage Requirements law report
to summarize wage data, including
data
by gender and race, paid
to
their employees who
work on County contrdcts. It would also prohibit a County contractor from retaliating
against
an employee who discloses salary infonnation to another person or employee
under certain circumstances.
2. An estimate of changes in County revenues and expenditures regardless ofwhether the
revenues or expenditures are
assumed
in the recommended or approved budget. Includes
source of infonnation. assumptions, and methodologies used.
No revenues are
affected
by this legislation.
In order to comply with the legislation, vendors may need to
hire
extra administrative
support to manually input gender and race infonnation which is not standard on payroll
reports. In order to offset this increased cost, there is the potential for bidders or offerors
to increase their bid or rate proposals to the County
ac;
a result of adding specific
infonnation, such
as
gender and race, into their payroll report. The exact cost percentage
increase to the County is hard to estimate.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
See the answer to item 2.
4. An actuarial analysis through the entire amorti7.ation period for each bill that would affect
retiree pension or group insurance costs.
.
The legislation does not affect retiree pension or group
insurance
costs.
5. Later actions that may affect future revenue and expenditures
if
the bill authorizes future
spending.
Tne legislation does not authori.7..e
future
spending.
6. An estimate of the staff time needed to implement the bill.
One FTE (Program Manager II grade 25) with a financial and aUditing background is
needed
to
respond to complaints, investigate issues. initiate and monitor audits, process
memos and reports, provide outreach, and educate vendors and contract administrators..
One FTE
(Procurement
Specialist grade
27)
is needed to
analyi'..e
bid
and
proposal
submissions as it relates to financial responsibility and qualifications, cost and price,
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of adequate resources f'Or the MFD program. Adding the requirements of Bill 29-14
to
this position would negatively impact the functions ofthe MFD program.
8.
An
estimate of costs when an additional appropriation
is
needed.
DGS would need one FTE Program Manager
II
(grade
25),
with
financia1~
accounting
and auditing background. DGS estimates total personnel
costs
at $90,000 and $2,734
of
associated operating expenses (desktop, furniture, phone)
in
the first year of
implementation.
DGS would require one
FTE
Procurement Specialist (grade
27)
and estimates total
personnel costs at $102,000 and
$2,734
of associated operating expenscs(desktop,
furniture, phone) ) in the
first
year
of implementation.
Complaints or issues during compliance validation may trigger investigations and
possible audits. Each audit
is
estimated at $40,000-$80,000 based on recent actual audit
costs, and e!l1imates from the Office of fnternal Audit.
9.
A desL'ription of any variable that could affect revenue and cost estimates.
The munber of workers under each contract Can affect the cost to the County since costs
to vendors would likely be included in bid proposals.
10.
Ranges of revenue or expenditures that
are
uncertain or difficult to project
See the answer to item 2. Direct costs to vendors are difficult to estimate.
11. If a bill is likely to have no
fiscal
impact, why that is
th.e case.
Not applicable.
12. Other fiscal impacts or comment'i.
None.
13. The following contributed
to
and concurred with this analysis:
Pam Jones, Chief, Oflice of Procurement, DOS
Grace Denno, Office of Business Relations and Compliance, DGS
Erika Lopez-Finn, Office of Management and Budget
'$~fi~-
rid'
W$-
Jenmfer A. Hughes, DIrect
omce
of Management and Budget
12
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Economic Impact Statement
Bill 29-14, Contracts and Procurement - Wage Requirements - Reporting
Background:
This legislation would require a
CoWlty
contractor subject to the Wage Requirements Law to
report
summary wage
data,including
data by gender and race, paid to theiremployt,'Cs who work
on County contracts. It would also prohibit a County contractor from retaliating against an
employee who discloses salary information to another person or employee under certain
circumstances.
1.
The sources of information, assumptions, and methodologies used.
The Department of General Services
The economic impact, as opposed to the fiscal impact, would depend on whether County
contractors, i.e., Bidders or Offerors, incur costs such as hiring additional administrative
staff
in
order to comply
with
Bill 29-14. and if they increase their rates when bidding on contracts
to
reflect the higher cost.
2. A
description of any
variable
that could
affect
the economic impact estimates.
The variable that could affect the economic impact is whether a contractor incurs additional
administrative costs and whether contractors can increase their rates to cover those additional
costs.
3.
The
BiO's
positive or negative effect,
if
any ott employment, spending, saving,
investment,
incomes~
and property values in the County.
It is uncertain whether Bill 29-14 would have a positive or negative impact on business
income, employment, spending, incomes, and property values. The reason for the
uncertainty is: 1) whether a contractor, Le., Bidder or Offeror, would
incur
additional costs,
2) whether such additional costs would result in an increase in the proposed rates, and
if
so,
those costs would be borne by Montgomery County and no economic impact, and 3) if the
Bidder
or
Ofteror
could
pass the
additional
costs through higher rates,
would
the Bidder or
Offeror do so given the likely competition for County contracts.
4.
If
a Bill is likely to have no economic impact, why is that the case?
As noted in #3,
it
is uncertain whether BiIl29-14 would have an economic impact.
5.
The following contributed to and concurred with this analysis:
David Platt
and
Rob
l:Iagedoorn, Department of Finance; Grace Denno, Department of General Services.
Jose
, lrector
Departmen of Finance
~=zA~::::;;;:::::;::r.::~;S::::::-----~-------
Page 1 ofl
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TESTIMONY ON BEHALF OF THE COUNTY EXECUTIVE ISIAH LEGGETT
ON BILL 29-14, CONTRACTS AND PROCUREMENT-WAGE
REQUIREMENTS-REPORTING
(pAY EQUITY BILL)
July 8, 2014
I am David Dise, Director of Montgomery County's Department of General
Services and I am here on behalf of County Executive Isiah Leggett to urge the Council's
favorable consideration of Bill 29-14 to require County contractors that are under the
Living Wage Law to report gender and race infomlation in their payroll reports.
Montgomery County is home to a diverse, vibrant, majority-minority population.
The County's vendor base reflects this diversity. The County has always been a leader
among local governments in promulgating responsible and inclusive laws such as the
Local Small Business Reserve Program, the Minority, Female, Disabled-owned Business
Program, as well as the Living and Prevailing Wage laws. Passage of this Bill will
continue that distinction by establishing certain pay equity requirements for its
contractors. Underscoring this, the County models its commitment to pay equity. Female
County employees are consistently paid at a rate equitable to their male counterparts.
Montgomery County's current Living Wage Law requires contractors to pay all
employees, at a minimum, a "living" wage rate. While it is always hoped that employers
treat all employees equally, this is not always the case. This Bill requires contractors to
submit regular reports to the Department of General Services summarizing wages paid to
all employees performing direct, measurable work under the County contract, specifically
by gender and race. The Bill further prohibits a County contractor from discriminating or
retaliating against an employee if the employee inquires about, discusses or discloses
wage infomlation or asserts aright under or files a complaint for a violation of the Bill's
provisions. The Bill will apply to a contract awarded after October 1,2014.
Under current law DGS has enforcement authority to investigate complaints and
conduct audits. If the audit findings warrant further investigation, DGS will report to the
Office of Human Rights for investigation of a possible violation of Chapter 27, Human
Rights and Civil Liberties. County Executive Leggett believes that women and minority
employees who work on County contracts deserve to make the same pay as their
colleagues, and passing this Bill is the right thing to do.
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116114
U.S. Department of labor - OffICe
of
Federal Contract Compliance Programs (0 FCCP) - A bout 0 FCCP
United States Department of Labor
Office of Federal Contract Compliance Programs
Office of Federal Contract Compliance Programs (OFCCP)
AboutOFCCP
Mission Statement
The purpose of the Offi:e of Federal Contract Complance Programs (OFCCP) is to enforce, for the beneft of job
seekers and wage earners, the contractual promise of affrmative actbn and equal empbyment opportunity
required of those who do busness with the Federal government.
DOL's Reorganization
On November, 8, 2009, the Empbyment Standards Aclmnistratbn (ESA) was abolished and the four major
program components of ESA-Offi:e of Federal Contract Compliance Programs, Offi:e of Labor Management
Standards, Offi:e of Workers' Compensatbn Programs and the Wage and Hour Divisbn-became stand-abne
programs reporting drectly to the Secretary of Labor. The Offi:e of the Assistant Secretary and the Offi:e of
Management, Admnistratbn and Planning (OMAP) were efiminated with administrative functbns in OMAP
transferred to the four programs or departmental administrative programs. '
The purpose of the reorganizatbn was to mprove the effi:iency of al four programs by eliminatng a layer of
review and decisbn-makng, whth al:>ws DOL eadership to more qutkly attend to poi::y matters in each
program without having an added organizatbn component review between the program heads and senbr
leadership. .
OFCCP's ENFORCEMENT PROCEDURES
In
carrying out its responsibilies, the OFCCP uses the fol:>wng enforcement procedures:
• Offers techntal assistance to federal contractors and subcontractors to help them understand the regulatory
requrements and review process.
• Conducts comprence evakJatbns and complaint investgatbns of federal contractors and subcontractors
personnel poi:ies and procedures.
• Obtans Conciatbn Agreements from contractors and subcontractors who are in vblatbn of regulatory
requirements.
• Monitors contractors and subcontractors progress in fulffng the terms of their agreements through perbdt
comprence reports.
• Forms tlkage agreements between contractors and Labor Department job training programs to help
empbyers k:lentify and recruit qualified workers.
• Recommends enforcement actbns to the Soi::itor of Labor.
• The utrnate sanctbn for vblatbns is debarment - the bss of a company's federal contracts. Other forms of
relief to vttims of discriminatbn may also be avalable, inckJding back pay for bst wages.
The OFCCP has cbse workng relatbnships with other Departmental agencies, such as: the Department of
IWW
.dol.gov /ofccpjaboutof.html
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116/14
U.S. Department of Labor - OffICe of Federal Contract Compliance Programs (0 FCCP) - A bout 0 FCCP
Justte, the Equal Empbyment Opportunty Commisson and the DOL, the OffK:e of the Soltitor, whth advises
on ethtal, legal and enforcement issues; the Women's Bureau, whth emphasizes the needs of working women;
the Bureau of Apprentteship and Training, whth estabrlShes polties to promote equal opportunities in the
recruitment and selecton of apprenttes; and, the Empbyment and Training Administratbn, whth administers
Labor Department job training programs for current workforce needs.
OFCCP has a natbnal network of sil< RegonaIOffK:es, each with Distrd and Area OffK:es in Major Metropolitan
Centers. OFCCP focuses
its
resources on finding and resolving systemt discrininatbn. The agency has adopted
this strategy to: (1) prbritize enforcement resources by focusing on the worst offenders; (2) encourage
empbyers to engage in self audits of their empbyment practK::es; and (3) achieve maxinum leverage of
resources to protect the greatest number of workers from discrininatiOn.
OFCCP Leadership
Patrtia A. Shiu
Director
Vacant
Deputy Director
Tom Dowd
Deputy Director
OFCCP Office Directory
• Key
Personnel Natbnal OffK:e
• Reg kJnal OffK:es
• Distrd
&
Area OffK:es
OrganizatkJn Chart
'WW
.dol.gov /ofcx:p/aboutof.html
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Revised Fiscal Impact Statement
Council
BiU 29-14
&
Contracts
and
Procurement­
Wage Requirements - Pay Equity, Wage Reporting
1. .Legislative Summary
The legislation requires a County contractor subject to the Wage Requirements law report
certain wage
data
(including data by gender and race) paid to their employees who work
on County contracts.
It
would also prohibit a County contractor from retaliating against
an
employee \vho discloses
salary
information to another person or employee under
certain circumstances.
2. An estimate of changes
in
County revenues and expenditures regardless of whether
the revenues or expenditures are assumed in the recommended or approved budget.
Includes source of information, assumptions, and methodologies used.
No revenues are affected by this legislation.
In order to comply with the legislation, vendors may need to hire extra administrative
support to manually input gender and race information which is not standard on payroll
reports. In order to offset this increased cost, there is the potential for bidders or offerors
to increase their bid or rate proposals to the County as a result of adding specific
infbrmation (such as gender and race) into their payroll report.
The exact cost passed onto the County
is
hard to estimate at this time arid
,\\111
vary
by
vendor and contract.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
See item #2.
4. An actuarial analysis through the entire. amortization period for each bill tbat would
affect retiree pension or group insurance costs.
The legislation does not affect retiree pension or group insurance costs.
5. Later al'tions that may affect future revenue and expenditures if the bill authorizes
future spending.
'I11e legislation does not authorize future spending.
6. An estimate of the staff time needed to implement the bilL
Additional staff hours required under the proposed legislation are difiicult to estimate;
however, DGS estimates
at least
one (1,0) PTE for the Offices of Business Relations and
Compliance (OBRC) and Procurement, as follows:
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• One half (0.5) PTE for
a
Program Manager II (grade 25) with a financial and
auditing background is needed to respond to complaints, investigate issues,
initiate and monitor audits, process memos and reports, provide outreach, and
educate vendors and contract administrators.
I
• One-half (0.5) FTE for a Procurement Specialist (grade 27) is needed to analyze
bid and proposal submissions as it relates to
fmancial
responsibility and
q~lifi.cations.
cost and
price~
evaluation and award impacts
for
any equity
dIspanty as part of the County's procurement process.­
7. An explanation of how the addition of new staff responsibilities would affect other
duties.
In order
to
implement the proposed legislation, other key aspects ofthe· above-mentioned
laws would have to be re-prioritizedagainst the new responsibilities which the OBRC
currently cannot absorb within existing resources.
The proposed legislation also requires additional direct guidance to vendors which will
result in
Jess
time spent on other actions.
Procurement Specialists are expected address issues with cures or terminations resulting
from failure
to
comply
with
the OBRC program. The requirements ofthis legislation add
further procurement delays which
",ill
increase solicitation and contract processing .
delays. For example, procurement specialists would have to cancel the contract and
conduct the appropriate paperwork
a..~gociated
to re-issue the contract in case of non­
compliarIce.
Currently, DGS estimates that the present Procurement office staff of 19 FTEs spends
a
total of 77 hours on each compliance action, with 44 actions per year on average. This
results in staff
~;pending
a total of 3,388 hours (on top of other duties) at the current level
of compliance work.
3
These compliance actions are in addition to other procurement
duties currently assigned.
8. An
estimate
of costs when
an additional appropriation is
needed.
DGS estimates that an appropriation of
at least
$101,468 is required. for one FIE in the
first year of implementation. based on:
FTE estimate assumes that only a random sample ofpayroll records is reviewed
and
instead of every
individual pajToll record.
1
This
- The position would review a random sample of solicitation and award action to detennine compliance with laws
and regulations, and manage procurement actions and issues to minimize delays, coordinate and communicate with
Office of Businesses Relations and CompJiance (OBRC), contract administrators, and offerors.
77 hours per cmnpllance ac{jon times 44 compliance actions per year
=
3,388 hours per year to address
compliance actions
3
?
.
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• One-half of an :rtE tor a Program Manager II (g.rade 25)
with
a fmancial) accounting.
and auditing background. DGS estimates total personnel costs
at
$45,000 and $2.734
of associated operating expenses (desktop, furniture, phone. etc.) in the tirst full year
of implementation.
• One-halfofan liTE for a Procurement Specialist (grade 27) and
e~'iimates
total
personnel costs at $51,000 and $2,734 of associated operating expenses (desktop,
furniture, phone) in the first year of implementation.
Furiliennore, complaints or issues during. compliance validation may trigger
investigations and possible audits. Each audit
is
estimated
at
$40,000·$80,000 based on
recent actual audit costs and estimates from the Office of Internal Audit. The exact
number ofaudits is
unknO\Vll
at tlris time.
9. A
description
of
any
variable that could affect revenue and cost estimates.
The number of workers under each contract that is required to comply with the data
reporting can affect the cost to the County since the vendors' increased administrative
costs would likely be included in bid proposals.
10.
Ranges
of
revenue or expenditures
that
are uncertain or difficult to project.
See #item
2 -
direct costs to vendors are difficult to estimate
as
it
is unknO\VIl at
this time
the precise impact on vendors and the increased costs, ifany, that
~ill
be
passed on to the
County_
11.
If
a bill is
likely
to
have
no fiscal impact,
why
that is the case.
Not applicable
12. Other fiscal impacts or comments.
None
13. The following contributed to and concurred with this analysis:
Pam Jones,
Chief, Office of Procurement,
DGS
Grace Denno, Office of Business Relations and Compliance, DOS
Erika Lopez-Finn, Office of Management and Budget
Naeem
Mia,
Office ofManagement and Budget