Agenda Item 8
June 16,2015
Public Hearing
MEMORANDUM
TO:
County Council
FROM:
Robert
H.
Drummer, Senior Legislative Attorney
~
Business Reserve Program-
r
SUBJECT:
Public Hearing:
Bill 23-15, Contracts - Local
Amendments
Sm~ll
Bill 23-15, Contracts - Local Small Business Reserve Program Amendments, sponsored
by Lead Sponsor Council President at the request ofthe County Executive, was introduced on May
21. A Government Operations and Fiscal Policy Committee worksession is tentatively scheduled
for July 23 at 9:30 a.m.
The Bill would:
(1) modify the types of contracts subject to the Local Small Business Reserve
Program;
(2) amend the definition of a local small business under the Local Small Business
Reserve Program; and
(3) change the reporting dates.
Background
The Local Small Business Reserve Program (LSBRP) was established by Bill 23-04,
Contracts and Procurement Local Small Business Reserve Program, effective January 1, 2006.
The legislative intent of the program was to enhance the competitiveness of County-based small
businesses by creating a separate defined market in which small businesses will compete against
each other, not against larger firms, for County contracts; broaden the pool oflocal small vendors
doing business with the County; and encourage the County's economic growth by enhancing the
business climate for local small businesses.
Bill 23-15 would require that a local small business have its principal place of business in
the County instead of generating a significant amount of economic activity in the County in order
to participate in the program. The Bill would also eliminate a contract awarded through an
emergency procurement, a bridge contract, or a cooperative procurement from the types of
contracts eligible for the LSBRP. Finally, the Bill would change the annual reporting date from
September 30 to October 30.
This packet contains:
BiIl23-15
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
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Bill No.
23-15
Conceming: Contracts - Local Small
Business
Reserve
Program
Amendments
Revised: May 19, 2015 Draft No.
~
Introduced:
May 21, 2015
Expires:
November 21, 2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ __
Sunset Date: --U.No=n=e'--___- - - -
Ch, _ _, Laws of Mont
Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the request of the County Executive
AN
ACT to:
(1)
(2)
(3)
(4)
to modify the types of contracts subject to the Local Small Business Reserve
Program;
amend the defInition of a local small business under the Local Small Business
Reserve Program;
change the reporting dates; and
generally amend the law regarding the Local Small Business Reserve Program.
By amending
Montgomery County Code
Chapter 11 B, Contracts and Procurement
Sections 11B-65, 11B-66, 11B-67, and 11B-69
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Addedto existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No. 23-15
1
Sec. 1. Sections IIB-65, IIB-66, IIB-67, and IIB-69 are amended as
follows:
Article XV. Local Small Business Reserve Program
IIB-65. Definitions.
In
this Article the following words have the meanings indicated.
(a)
2
3
4
5
6
7
Local Small Business
means a for-profit business, other than a broker,
that:
(1)
[generates a significant amount of economic activity] has its
principal place of business in the County;
(2)
(3)
(4)
is independently owned and operated;
is not a subsidiary of another business; and
meets criteria, size limits, and gross sales amounts established by
method 2 regulations.
8
9
10
11
12
13
14
15
*
*
(c)
include:
*
*
*
*
IIB-66. Local Small Business Reserve Program.
16
17
18
19
The total dollar value of procurements by a using department does not
*
(4)
(5)
*
*
20
21
a public entity [or emergency] procurement;
an emergency procurement;
f!
bridge contract;
f!
cooperative procurement;
22
23
24
25
®
ill
®
any waiver made under Section IIB-67(f);
any procurement where no local small business is qualified
[(6)]
{2}
26
or able to perform the contract; or
ill
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BILL No. 23-15
27
28
[(7)].QQ)
any single procurement that is estimated to exceed $10
million.
29
30
*
IIB-67. Procedures.
*
*
*
*
31
32
*
(e)
A local small business is no longer eligible for a procurement under this
Article if the business has been awarded $10 million in the aggregate in
County contracts and at least 10 separate contracts, as either a prime
contractor or a subcontractor, [since] beginning January 1, 2006. The
Director must provide written notice to the business when it is no longer
eligible.
33
34
35
36
37
38
39
40
*
IIB-69. Reports.
*
*
(a)
By [September] October 30 each year, each using department must
submit to the Director a report on the number, type, and dollar amount
of contracts issued under this Article.
41
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(b)
By November 30 each year, the Director must report to the Council on
the Local Small Business Reserve Program. This report must include
the number, type, and dollar amount of contracts awarded under this
Article during the preceding fiscal year, the number, type, and dollar
amount of each waiver, information about how these numbers have
changed from the preceding fiscal year, and the extent of outreach
efforts.
47
48
49
50
(j)
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LEGISLATIVE REQUEST REPORT
Bi1l23-15
Contracts
-
Local Small Business Reserve Program
-
Amendments
DESCRIPTION:
The Bill would:
(1)
modify the types ofcontracts subject to the Local Small
Business Reserve Program;
(2)
amend the definition of a local small business under the
Local Small Business Reserve Program; and
(3)
change the reporting dates.
The definition of a local business under the Local Small Business
Reserve Program is difficult to apply and certain types of contracts
should be removed from the Program.
These amendments will update the Local Small Business Reserve
Program to modify the requirements to be a local business and
minimize confusion from the vendors
CEX, DGS,
DCA,
DED
To be detennined
To be detennined
N/A
N/A
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIP ALITIES:
PENALTIES:
Grace Denno and Pam Jones, DGS
Karen Fedennan-Henry and Richard Melnick,
DCA
N/A
Not changed:
Violations may constitute a material
breach of the
contract. Accordingly the County may then exercise any available
remedy, including, tenninating the contract for default.
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·
/;
«"<
:~-t
OFFICE OF THE COUNTY EXECUTIVE
ROCKVlILB, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
April 15, 2015
TO:
George Leventhal, President
Montgomery County Council
Isiah Leggett, County
ExecutiVl'!llOlo~.
Local Small Business Reserve Program Legislation amendments
FROM:
SUBJECT:
In accordance with Section 313 ofthe County Charter and Section lIB of the
Montgomery County Code, I am forwarding the attached Local Small Business Reserve Program
Legislation amendments. The purpose of these amendments is to:
(1)
(2)
(3)
(4)
clarify the scope ofthe Local Small Business Reserve Program;
modify the factors for evaluating whether a business meets the criteria to
participate in the Local Small Business Reserve Program;
change the reporting dates; and
generally amend the law regarding the Local Small Business Reserve Program.
I recommend prompt passage ofthis legislation so the local businesses
will
benefit from
this
program.
Attachments
c:
David Dise, Director, Department of General Service
Beryl
L.
Feinberg, Deputy Director, Department of General Services
Bonnie Kirkland, Assistant Chief Administrative Officer
PamJones, Chief, Office of Procurement
Grace Denno. Manager, Office of Business Relations and Compliance
montgomerycountymd.gov/311 . . . . . . . 240-773-3556 TTY
..af~
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ROCKVIUE
1
MARYLAND
MEMORANDUM
June 11.2015
TO:
FROM:
SUBJECT:
George
Leventha~
President. County Council
Jennifer A. Hughes, Director, Office ofManj[gGl!D
Joseph F. Beach, Director,
Department
of
HnDt!e
d
Budgeter-
PElS
fOT
Bill 23-15, Contracts - Local Small Business Reserve Program ­
Amendments
Please find attached the fiscal and economic impact statements for the above­
referenced legislation.
JAH:fz
cc:
Bonnie Kirkland, Assistant
Chief
Administrative
Otllcer
Lisa Austin, Offices ofthe County Executive
Joy
Nunni, Special Assistant to the County Executive
Patrick Lacefield, Director. Public Information Office
Joseph F. Beach, Director, Department ofFinance
Flltiba Kassiri, Acting Director, Office of Procurement
David Platt, Department of Finance
Erika
Lopez-Fin~
Office of Management and Budget
Alex Espinosa, Office of Management and Budget
Naeem Mia,. Office of Management and Budget
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Fiscal Impact Statement
Council
Bill 23-15,
Local Small Business
ResenreProgram-
Amendments
1. Legislative Summary.
The proposed legislation would modifY the types of contracts subject to the Local Small
Business Reserve Program; amend the definition ofa local small business to a business
which, "'has its principal place ofbusiness in the County"; and change reporting dates
from
September 30 to October 30.
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.
There would be no changes in expenditures or revenues.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
Not applicable.
4.
An
actuarial analysis through the entire amortization period for each
bill
that v.'Ould affect
retiree pension or group insurance costs.
'the proposed legislation does
110t
affect retiree pensions or group insurance.
5.
An
estimate
()f
expenditures related to County's infonnation technology (IT) systems.
including Enterprise Resource Planning (ERP) systems.
.
The proposed legislation does not affect IT systems,
6. Later actions that may affect future revenue and expenditures ifthe hill authorizes future
spending.
The proposed legislation does not authorize future spending.
7. An estimate
of the staff time needed to implement the
bilL
Additional staiftime is not needed to implement the bill.
8. An explanation of how the addition of new staff responsibilities would affect other duties.
Not applicable.
9. An estimate of costs when an additional appropriation is nc:-'Crled.
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No additional appropriation
is
needed.
10. A description of
any
variable that could affect revenue and cost estimates.
Not applicable.
II.
Ranges
of revenue
or
expenditures
that
are uncertain
or difficult
to
project.
Not applicable.
12. If a bill is likely to have no fiscal impact,
why
that is the case.
The change in the
definition
ofa local
small business
clarifies a
smaJl
bm.,iness and the
change in reporting dates allows the Office of Procurement
more
time
after
the
conclusion of (he fiscal
to
compile and analyze the data for reporting
13.
Other fiscal impacts
or comments.
14. The
following contributed
to
and concurred with this anal}"Sis:
Erika Lopez-Finn,. Office of Management and Budget
Pam Jones, Office ofProcurement
Grace Denno, Office of Procurement
~QjJ~
. . _._ __.. .
.
Date
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Economic Impact
Statement
Bill 23-15, Contracts - Local Small BusineSs Reserve Program - Amendments
Background:
This legislation would amend the Local Small Business Reserve Program (LSBRP) to:
• modifY the types ofcontracts subject to the Local Small
Bllsiness
Reserve
Program,
• amend
the definition ofa local small business tmder the Local Sman Business
Resc.rve Progrc:lJll, and
• change the reporting
dates.
The intent of Bill
23~
15 is
to
update the LSBRP with new size requirements and
minimize any confusion among
the
vendors. Bill 23-15 increases the threshold ofthe
services category vendor size from
50
to
100
employees and from the cmrent
$5
million
annual
revenue to $10
million
annual revenue.
Specifically,
Bill 23-15 defines a Local Small Business as a for-protit business, other
than a broker,
that
has its principal place of business in Montgomery County. The
legislation deletes the language regarding "significant amotmt ofeconomic activity
in
the
County"
generated by
the
Local
Small Business. Bil123-15 also amend<;
Section
I1B-66
of
the
COtmty Code to delete '·or emergency" from the
"a
public entity
or emergency
procurement" language and adds
that
phrase as a separate line in the Code. The
legislation
also
adds
"a
bridge contract" and
'''a
cooperative procurement" to Section
11B­
66.
1.
The sources of information, assumptions, and methodologies used.
Sources of information include the Office
ofProcurement
and the
Department
of
Economic
Development.
Bill 23-15 would increase the size of vendors eligible under the LSBRP in the
st.'TVices
category and,
therefore~ increa..~e
the LSBRP pool of
vendors
tbat
wiU
bid on
County
contracts. Based
on
data
provided
by
the Department of Economic
Development, the number of businesses with employees from 51
to
100 is 806
establislmlents.
Ofth05e
e~iablishments
with at least 51 employees, 61 percent are
in
the retail trade; professional, scientific, and technical services; educational
services;
and
arts~
entertainment, and recreation.
2. A description of any variable that could affect the economic impact estimates.
The variable that could affect the econumic impact is the number ofservice..category
vendors that employ between 51 and
100
t.'Illployees and have revenues between $5
million
and $10 million
that
could
now
become eligible for LSBRP contract awards.
3. The Bill's positive or negative effed,
if
any on employment, spending, savings,
investment, incomes, and property values in the County.
Page 1 of2
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Economic Impact Statement
BiJl23-1S, Contracts - Local
Small
Business Reserve Program - Amendments
The
legislation
is likely to have
a
positive economic effect on employment, personal
income, and business revenues for those companies that currently employ between 51
and 100 employees and have annual income between $5 million and $10 million.
Without detailed data on the number of service,..category vendors, a specific economic
impact cannot be determined, however an order ofmagnitude estimate ofthe
potential increased local small business revenues is provided in the table
below
under
different
scenarios.
Assuming that LSBRP Expenditures rt.'main at approximately 25% of Procurement
Expenditures Eligible for LSBRP Procurement (this ratio has been maintained since
FYII),
with
an assumed
increase
of LSBRP Eligib1e
Procurement Expenditures
in the
range of25% to 50% as shown in the table below, LSBRP revenue cou1d increase by
$18.4 million to $36.9 million per year as a result of this legislation. Of course, these
are only
order
of magnitude estimates that are dependent on several variables
including the number of
affected
local small bu.<;inesses. the change in procurement
related expenditures. and other factors.
I
IExemp~ion Cat~gories
.
.
..............
1!,cre~clLSBf{p' EI~~ibl~
FY14
%
25%
. $980.77
30.50%
$373,96
$92.14
24.60%
25%
$18.43
33%
50%
MiII
ion$
Total
Procun~rTI~.T1t.I:l()I!ars .~~80.
77
~ligible
for
l.SB~P
Procuremf::flt
$299.17
$73.71
Procurement
~pE::nditl:l~ t<?LSB,~P
.
LSBRP Exp/Eligibte
25%
Potential Increase LSBRP Expenditure
co
red to
FY14
$~:77
..
$980.77.
$448.76
$3~7:90
:
$98.03
$11Q:57
25%
25%
$24.32
$36.86
4.
If
a Bill
is
likely
to
have no economic impact,
why
is that the case?
Bil123-15 is likely to have a positive economic impact.
5. The
following
contributed
to or concurred with this analysis: David Platt,
Mary
Casciotti, and Rob Hagedoo.IT4 Finance; Grace
Denno, Office
of
Procurement.
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