1.100.4

ASSISTANCE TO MINORITY BUSINESS

1. The OSMBA has developed and distributed to all state agencies a directory of all certified minorities (Minority Business Directory of South Carolina, September 1984). Additions, deletions and/or updates are furnished as needed by the OSMBA and distribution made by the Materials Management Office Operations Section. To keep the directories current, designees in State Procurement and Information Technology Management are responsible for administering these changes.

Procurement of goods or services will be solicited in such a manner as to afford certified minority businesses the opportunity to fully participate in the procurement process. To this end, the following procedures are in effect:

When the original purchase order is issued, a quarterly reporting form is submitted to the prime contractor. This report should be completed and submitted to the MBE Coordinator no later than 2 days after the last day of each fiscal quarter. These reports are compiled and submitted to the Office of Small and Minority Business Assistance no later than 15 days after the last day of the fiscal quarter. Annual reports are submitted to the Office of Small and Minority Business Assistance no later than 15 days after the end of the fiscal year.

The Medical University of South Carolina in compliance with the South Carolina Consolidated Procurement Code, Chapter 35, Article 21, Subarticle 3 Section 11-35-5210, wishes to ensure that minority subcontractors be given equal consideration in all bid solicitations made by this department. The following statement is included in all Invitation for Bids and Request for Proposals. solicitations.

"Firms with state contracts which subcontract a portion of the work to certified minority firms will be eligible for an income tax credit equal to 4% of the total payment made to minority subcontractors for work performed on state contracts. To be eligible for the 4% income tax credit, subcontracting firms must be certified by the Office of Small and Minority Business Assistance as a minority firm. Information pertaining to the income tax credit can be obtained from the South Carolina Tax Commission or the Office of Small and Minority Business Assistance."

MBE UTILIZATION PLAN - A MBE utilization plan to be signed by the President of MUSC will be formulated by the Mniority Business Liaison showing goals and the MUSC plan to utilize minorities. This plan must be sent to the Office of Small and Minority Business Assistance at the beginning of each fiscal year to be received by July 30.

South Carolina Consolidated Procurement Code Governing Minority Business Enterprise

§ 11-35-5210. Statement of Policy and its Implementation.
(l) Statement of Policy. The South Carolina General Assembly declares that business firms owned and operated by minority persons have been historically restricted from full participation in our free enterprise system to a degree disproportionate to other businesses. The General Assembly believes that it is in the state's best interest to assist minority-owned businesses to develop fully as a part of the state's policies and programs which are designed to promote balanced economic and community growth throughout the State. The General Assembly, therefore, wishes to ensure that those businesses owned and operated by minorities are afforded the opportunity to fully participate in the overall procurement process of the State. The General Assembly, therefore, takes this leadership role in setting procedures that will result in awarding contracts and subcontracts to minority business firms in order to enhance minority capital ownership, overall state economic development and reduce dependency on the part of minorities.
(2) Implementation. Chief procurement officers shall implement the policy set forth in subsection (l) of this section in accordance with the provisions of Section 11-35-5220.

§ 11-35-5220. Duties of the Chief Procurement Officers.
(l) Assistance from the Chief Procurement Officers. The chief procurement officers shall provide appropriate staffs to assist minority businesses with the procurement procedures developed pursuant to this code.
(2) Special Publications. The chief procurement officers in cooperation with other appropriate private and state agencies may issue supplementary instructions designed to assist minority businesses with the state procurement procedures.
(3) Source Lists. Chief procurement officers shall maintain special source lists of minority business firms detailing the products and services which they provide. These lists shall be made available to agency purchasing personnel.
(4) Solicitation Mailing Lists. The chief procurement officers shall include and identify minority business on the state's bidders' list and shall ensure that these firms are solicited on an equal basis within non-minority firms.
(5) Training Programs. The chief procurement officers shall work with appropriate state offices and minority groups in conducting seminars to assist minority business owners in learning how to do business with the State.

§ 11-35-5230. Regulations for Negotiation with State Minority Firms.
(A) The board shall promulgate regulations that designate such procurement contracts as it may deem appropriate for negotiation with certified, South Carolina-based minority firms, as defined by this sub-article. Among the criteria that shall be used to determine such designations are:
(l) The total dollar value of procurement in South Carolina.
(2) The availability of South Carolina-based minority firms
(3) The potential for breaking the contracts into smaller units, where necessary, to accommodate such firms.
(4) Insuring that the State shall not be required to sacrifice quality of goods or services.
(5) Insuring that the price shall have been determined to be fair and reasonable, and competitive both to the State and to the contractor and results in no loss to the State.
(B) (l) Firms with state contracts that subcontract with minority firms shall be eligible for an income tax credit equal to four percent of the payments to minority subcontractors for work pursuant to a state contract. Such subcontractors must be certified as to the criteria of a minority firm as defined in Section 11-35-5010 of this code and any regulations which may be promulgated thereunder.
(2) The tax credit is limited to a maximum of twenty-five thousand dollars annually. A firm shall be eligible to claim a tax credit for a period of five years from the date the first income tax credit is claimed.
(3) Any firm desiring to be certified as a minority firm shall make application to the Small and Minority Business Assistance Office (SMBAO) as defined by Section 11-35-5270, on such forms as may be prescribed by that office.
(4) Firms claiming the income tax credit shall maintain evidence of work performed for a state contract by minority subcontractors and shall present such evidence on a form and in a manner prescribed by the Department of Revenue at the time of filing its state income tax return and claim such credit at the time of filing. All records shall be available for audit by the Department of Revenue in accordance with prevailing tax statutes.

§ 11-35-5240. Minority Business Enterprise (MBE) Utilization Plan.
(l) In order to emphasize the use of minority small businesses, each agency director shall develop a Minority Business Enterprise (MBE) Utilization Plan. The MBE Utilization Plan shall include but not be limited to:
(a) The name of the governmental body;
(b) A policy statement expressing a commitment by the governmental body to use MBE's in all aspects of procurement;
(c) The name of the coordinator responsible for monitoring the MBE Utilization Plan;
(d) Goals that include a reasonable percentage of each governmental body's total procurements directed toward minority vendors;
(e) Solicitation of qualified minority vendors, a current list of which shall be supplied by the Office of General Services, in each commodity category for which such minority vendor is qualified. The current listing of qualified minority vendors shall be made available by the Office of General Services on a timely basis;
(f) Procedures to be used when it is necessary to divide total project requirements into small tasks which will permit increased MBE participation;
(g) Procedures to be used when the governmental body subcontracts the scope of service to another governmental body; the responsible governmental body may set goals for the subcontractor in accordance with the MBE goal and the responsible governmental body may allow the subcontractor to present a MBE Utilization Plan detailing its procedure to obtain minority business enterprise participation.
(2) MBE utilization plans shall be submitted to the SMBAO for approval not later than July, thirtieth, annually. Progress reports shall be submitted to the SMBAO not later than ten days after the end of each fiscal quarter.
(a) Number of minority firms solicited;
(b) Number of minority bids received;
(c) Dollar amount of minority bids awarded.

§ 11-35-5250. Progress Payments and Letter of Credit.
(l) Progress Payments. The chief procurement officers may make special provisions for progress payments and letters of credit, as deemed reasonable to assist minority businesses to carry out the terms of a state contract pursuant to regulations which may be promulgated by the board.
(2) Letter of Contract Award. When a minority business firm certified by the Department of Revenue receives a contract with the State, the appropriate chief procurement officer shall furnish a letter, upon request, stating the dollar value and duration of, and other information about the contract, which may be used by the minority firm in negotiating lines of credit with lending institutions.

§ 11-35-5260. Annual Report to the Board.
Each governmental body shall report annually in writing to the board concerning the number and dollar value of contracts awarded to eligible minority businesses during the preceding fiscal year. These records shall be maintained to evaluate the progress of this program.

§ 11-35-5270. Small and Minority Business Assistance Office. A Small and Minority Business Assistance Office (SMBAO) shall be established to assist the board and the Department of Revenue and Taxation in carrying out the intent of this article. The responsibilities of the office shall include but not be limited to the following:
(l) Assist the chief procurement officers and governmental bodies in developing policies and procedures which will facilitate awarding contracts to small and minority firms;
(2) Assist the chief procurement officers in aiding small and minority-owned firms and community-based business in developing organizations to provide technical assistance to minority firms;
(3) Assist with the procurement and management training for small and minority firm owners;
(4) Assist in the identification of responsive small and minority firms;
(5) Receive and process applications to be registered as a minority firm in accordance with Section 11-35-5230(B);
(6) The SMBAO may revoke the certification of any firm which has been found to have engaged in any of the following:
(a) fraud or deceit in obtaining the certification;
(b) furnishing of substantially inaccurate or incomplete information concerning ownership or financial status;
(c) failure to report changes which affect the requirements for certification;
(d) gross negligence, incompetence, financial irresponsibility or misconduct in the practice of his business; or
(e) willful violation of any provision of this article.
(7) After a period of one year, the SMBAO may reissue a certificate of eligibility provided acceptable evidence has been presented to the commission that the conditions which caused the revocation have been corrected. The Governor shall evaluate the role of this office within two years from the date of its creation and shall request recommendations of the State Reorganization Commission. The Governor may propose a more appropriate location of the office should the findings warrant change.

19-445.2160. Assistance to Minority Businesses.
A. Definitions.
(1) "Minority Person" means a United States citizen who is economically and socially disadvantaged.
(2) "Socially disadvantaged individuals" means those individuals who have been subject to racial or ethnic prejudice or cultural bias because of their identification as members of a certain group, without regard to their individual qualities. Such groups include, but are not limited to, Black Americans, Hispanic Americans, Native Americans (including American Indians, Eskimos, Aleuts and Native Hawaiians), Asian Pacific Americans, Women and other minorities to be designated by the board of designated agency.
(3) "Economically disadvantaged individuals" means those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged.
(4) "A socially and economically disadvantaged small business" means any small business concern which:
(a) At a minimum is fifty-one (51) percent owned by one or more citizens of the United States who are determined to be socially and economically disadvantaged and who also exercise control over the business.
(b) In the case of a corporation, at a minimum, fifty-one (51) percent of all classes of voting stock of such corporation must be owned by an individual or individuals determined to be socially and economically disadvantaged who also exercise control over the business.
(c) In the case of a partnership, at a minimum, fifty-one (51) percent of the partnership interest must be owned by an individual or individuals determined to be socially and economically disadvantaged who also exercise control over the business.
(5) "Small Business" means a concern, including it affiliates, that is independently owned and operated, not dominant in the field of operation in which it is bidding on government contracts, and qualified as a small business under the criteria and size standards in 13 C.F.R Section 121 (1989). Such a concern is "not dominant in its field of operation" when it does not exercise a controlling or major influence on a national basis in a kind of business activity in which a number of business concerns are primarily engaged. In determining whether dominance exists, consideration shall be given to all appropriate factors, including volume of business, number of employees, financial resources, competitive status or position, ownership or control of materials, processes, patents, license agreements, facilities, sales territory, and nature of business activity.
(6) "Minority Business Enterprise" is a business which has been certified as a socially and economically disadvantaged small business.
(7) "OSMBA" means the Office of Small and Minority Business Assistance.

B. Certification as a Minority Business Enterprise (MBE).
(1) A business seeking certification as a Minority Business Enterprise must submit to OSMBA an application and any supporting documentation as may be required.
(2) Certification Process. The Certification Board within OSMBA will determine if the business is controlled and operated by socially and economically disadvantaged individuals. Upon recommendation of the Certification Board, OSMBA will certify the business as a socially and economically disadvantaged small business and issue a Certification as authorized by Section 11-35-5270 of the Procurement Code.

C. Certification Board/Procedures
(1) The certification board, as defined below, is responsible for reviewing files and applications in order to determine whether a business should be recommended for approval or disapproval by the Director of the OSMBA (hereinafter referred to as the Director) as a certified business in compliance with Article 21.
(2) The certification board shall be comprised of three (3) members of the Office in which the OSMBA is located and is chaired by a member selected by the Director. The board will meet at the request of the Director.
(3) Applications for certification must be addressed to the Director. Upon receipt, OSMBA shall conduct an investigation of the applicant and provide the results to the Certification Board. Failure to furnish requested information will be grounds for denial or revocation of certification.

D. Eligibility
In order for a firm to be certified, it must be found to be a small independent business owned and controlled by a person or persons who are socially and economically disadvantaged. The following factors will be considered in determining whether the applicant is eligible for certification:
(1) Small Business
The business must meet the definition of small business contained in Subsection A hereof.
(2) Independent Business
(a) Recognition of the business as a separate entity for tax or corporate purposes in not necessarily sufficient for certification under Article 21. In determining whether an applicant for certification is an independent business, OSMBA shall consider all relevant factors, including the date the business was established, the adequacy of its resources, and relationships with other businesses.
(b) A joint venture is eligible if one of the certified business partners of the joint venture meets the standards of a socially and economically disadvantaged small business and this partner's share in the ownership, control and management responsibilities, risks and profits of the joint venture is at least 51 percent, and this partner is also responsible for a clearly defined portion of the work to be performed.
(3) Ownership and Control
(a) The business must be 51 percent owned by socially and economically disadvantaged persons. The OSMBA will examine closely any recent transfers of ownership interests to insure that such transfers are not to be made for the sole purpose of obtaining certification.
(b) Ownership shall be real, substantial and continuing and shall go beyond the pro forma structure of the firm as reflected in its ownership documents. The minority owners shall enjoy the customary incidents of ownership and shall share in the risks and profits commensurate with their ownership interest, as demonstrated by an examination of the substance rather than form of ownership arrangements.
(c) The contribution of capital or expertise by the minority or women owners to acquire their interest in the business shall be real and substantial. Examples of insufficient contributions include gifts, inheritance, a promise to contribute capital, a note payable to the business or its owners who are not socially disadvantaged and economically disadvantaged, or the participation as an employee, rather than a manager.
(d) The minority owners must have management responsibilities and capabilities including the ability to hire and fire personnel at the highest level and to exercise financial control. A previous and/or continuing employer/employee relationship between or among present owners is carefully reviewed.
(e) Where the actual management of the firm is contracted out to individuals other than the owner, those persons who have the ultimate power to hire and fire the managers can, for the purpose of this part, be considered as controlling the business.
(f) Any relationship between a business that is applying for certification under Article 21 and a business which is not certified will be carefully reviewed to determine if there are conflicts with the ownership and control requirements of this section.
(g) All securities which constitute ownership and/or control of a business for purposes of establishing it as a Minority shall be held directly by minorities. No securities held in trust, or by any guardian for a minor, shall be considered in determining ownership or control
(4) Socially Disadvantaged
The only factor to be considered in determining whether a firm is socially disadvantaged is membership in a minority group which is listed in Subsection A hereof. Membership shall be established on the basis of the individual's claim that he or she is a member of one of the minority groups included in the definition of socially disadvantaged in Subsection A above and is so regarded by that particular group.
(5) Economically Disadvantaged
(a) OSMBA will make a determination of whether a firm is socially disadvantaged before proceeding to make a determination of economic disadvantage. If OSMBA determines that the business owner is not socially disadvantaged, it is not necessary to make the economically disadvantaged determination.
(b) OSMBA may consider as evidence of the business owner's economic disadvantage the following: unequal access to credit or capital; acquisition of credit under unfavorable circumstances; difficulty in meeting requirements to receive government contracts; discrimination by potential clients; exclusion from business or professional organizations; and other similar factors which have restricted the owner's business development.
(c) In determining the degree of diminished credit and capital opportunities of a socially disadvantaged individual, consideration will be given to both the disadvantaged individual and the business with which he or she is affiliated.
(d) In considering the economic disadvantages of businesses and owners, OSMBA will make a comparative judgement about relative disadvantage. The test is not absolute deprivation, but rather whether the individuals and businesses owned by such individuals are disadvantaged in this respect.
(e) It is the responsibility of an applicant business and its owner(s) to provide information to OSMBA about its economic situation when it seeks certifcation. OSMBA will be making a judgement about whether the applicant business and its socially disadvantaged owner(s) are in a more difficult economic situation than most businesses (including establishing businesses) and owners who are not socially disadvantaged. OSMBA is not required to make a detailed, point-to-point, accountant like comparison of the business involved.

E. Decertification
OSMBA reserves the right to cancel a certification at any time if a business becomes ineligible after certification. OSMBA will take action to ensure that only firms meeting the eligibility requirements stated herein qualify for certification. OSMBA will also review the eligibility of businesses with existing certifications to ensure that they remain eligible. A business organization's ownership or control can change over time resulting in a once eligible business becoming ineligible. Certified businesses must notify OSMBA, in writing within 30 days, of changes in organization, ownership or control. When OSMBA determines that an existing business may no longer be eligible, it will file a Complaint with the Certification Board, and send a copy of the Complaint by certified mailto the business. Upon receipt of such a complaint, the Certification Board shall conduct a hearing in accordance with the procedures set forth in the Administrative Procedures Act (1-23-310, et. seq., Code of Laws of South Carolina, 1976, as amended).

Preliminary Fiscal Impact Statement
The Office of Small and Minority Business estimates that there will be no additional costs incurred by the State and its political subdivisions in complying with the proposed amendment to Regulation 19-445.2160.