Name Title: Initials Date

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1 OWNER Name Marisol Robles, SMWB Program Mgr. Dept/Div Contracting Department APPROVERS Name Title: Initials Date First Name, Last Name Title, Group/Department VERSION HISTORY Version # Date 1

2 SMWB Policy Executive Summary The Small, Minority, and Woman-owned Business (SMWB) Policy has been created to address instances of disparity captured in the SAWS Regional Business Disparity Causation Analysis Study ( ), and in the updated data. Prior to this policy, the entire SAWS SMWB Policy consisted of three paragraphs that lacked effectual policy guidelines. We have greatly improved upon the current policy by incorporating sections that are needed to have a valid and legal SMWB Policy, such as: Data-driven goals Race-neutral disparity remedies Race-conscious disparity remedies Waiver provision for prime contractors who are not able to meet SMWB goals Graduation and Suspension provisions Sanctions and Penalties Sunset Clause Severability Clause The overall purpose of the policy is to focus on SMWBs in the San Antonio Metropolitan Statistical area that meet the Small Business Administration s small business size standards. In effect, we are reserving contracts and providing evaluation preference for SMWB firms so that we can grow our pool of SMWB prime contractors and consultants. Our intent is to foster greater opportunities for small minority, non-minority, and woman-owned businesses in public sector procurement of goods and services. 2

3 1.0 PURPOSE The purpose of this policy is to provide lawful remedial relief, through Good Faith Efforts, to address the identified barriers and ongoing effects of marketplace discrimination that impede the equitable participation of small minority and woman-owned business firms that are ready, willing, and able to engage in business with the San Antonio Water System. This Policy is based upon the totality of the factual predicate before the Board of Trustees as of the time of the adoption of this Policy, including, but not limited to, the disparity study for the San Antonio Water System (SAWS) released in August 2009, comments on the study received in the course of various public hearings, a policy option matrix outlining the factual and legal justifications for various policy recommendations provided by MGT and an independent legal expert, and supplemental disparity data provided by the Small Minority Women Business (SMWB) Program Office for the period from FY This Policy seeks to address the following findings of the SAWS Board of Trustees: (1) There is evidence of ongoing effects of past discrimination in the local marketplace and in SAWS purchases of goods and supplies. The present opportunities for M/WBE participation in the local marketplace and in SAWS contracts are affected by past discrimination. For example, Public Use Micro Sample data from 2002 for the San Antonio Metropolitan Statistical Area indicates that there were statistically significant disparities in entry into, and earnings from, self-employment by women and minorities even after controlling for factors such as education, age, wealth and other variables as compared to nonminority males. Moreover, an econometric analysis of data in the 2003 National Survey of Small Business Finance found a statistically significant positive relationship between the probability of loan denial and African American ownership. The data also found that African American-owned businesses paid approximately 30 to 150 percent more in interest rate charges than similarly-situated non-minority firms. The ongoing effects of such discrimination are also reflected in analysis reflecting significant underutilization of M/WBE firms in SAWS contracts and in the overall marketplace from 2002 through (2) There is contemporary evidence of discrimination against minority- and womenowned firms in the Relevant Marketplace. Some practices within the marketplace have the effect of causing disadvantage to M/WBE firms. MGT found evidence of negative stereotypes against M/WBEs and public testimony confirmed fraud and exclusionary practices of Prime Contractors to avoid utilizing M/WBE subcontractors and sub-consultants on some government contracts where commitments had been made to use them. Such practices adversely affect M/WBE contract participation, growth and competitiveness. There was also evidence of discrimination against M/WBE business owners when seeking commercial credit within the local market. Credit is needed for a firm to be successful in each of the industries from which SAWS makes purchases. (3) There is evidence that the M/WBE opportunities for participation in SAWS contracts are affected by discrimination in the marketplace. M/WBE firms appear to be at a 3

4 disadvantage in certain types of SAWS purchases because of discrimination that keeps them smaller and less experienced than they otherwise would be. As a result of these effects, they are less able to compete on the basis of price or qualifications. There are well-documented reports from smaller M/WBE firms that they were unable to compete against larger firms. (4) The evidence indicated some Prime Contractors that are doing business with local government discriminated against M/WBE subcontractors. Anecdotal evidence suggests that some Prime Contractors discriminate against minority- and women-owned Subcontractors on government projects and private sector contracts in the Relevant Marketplace. Whenever this occurs, SAWS contract dollars reinforce a discriminatory scheme by rewarding those bad actors that have excluded legitimate M/WBE firms from the subcontracting process and thereby make it more difficult for those M/WBE firms to grow and become competitive on future contracts. (5) In some areas of SAWS purchasing and contracting, race- and gender-neutral programs alone may be effective but, in other areas, race- and gender-neutral programs alone are not likely to be effective. In certain areas of SAWS contracting, under the SMWB Program, most recent data suggests that some segments of the M/WBE population are no longer experiencing significant disparity in utilization. (For example, non-minority WBEs are no longer experiencing underutilization in prime General Services contracts during the Study period from 2002 through 2006, nor from the follow-up period between , but have continued to experience significant disparities in the award of Professional Services prime contracts.) Accordingly, SAWS should retain the authority to implement narrowly-tailored race- and gender-conscious programs in the event that neutral and/or race- and genderconscious programs prove or have proven to be inadequate to fully remedy disparities in the awarding of Prime Contracts. Due to an unavailability of subcontracting payment data during MGT s relevant Study Period, there is at this time insufficient evidence to make a determination of whether such remedies may be warranted within the realm of subcontracting, which will become available with data collected from the Subcontractor Payment & Utilization Reporting (S.P.U.R.) System. 2.0 POLICY STATEMENTS It is the policy of San Antonio Water System (SAWS) to establish this Small, Minority, and Woman-owned Business (SMWB) Program to remedy the ongoing effects of marketplace discrimination that continue to adversely affect the participation of SMWB firms in SAWS contracts. Furthermore, it is the policy of SAWS not to engage in business with firms that discriminate in the solicitation, selection, or treatment of subcontractors, suppliers, vendors, or commercial customers on the basis of race, color, religion, ancestry or national origin, sex, age, marital status, or sexual orientation or any otherwise unlawful use of characteristics regarding the vendor s supplier s, or commercial customer s employees or owners. This Policy and the Standard Operating Procedures adopted pursuant to this Policy by the SMWB Program Manager serve SAWS compelling interest to remedy the various ongoing effects of marketplace discrimination against those SMWB firms that are ready, willing, and able to sell goods and services to SAWS. This Policy is also established, in part, to further SAWS 4

5 compelling interest in ensuring that it is neither an active nor passive participant in private sector marketplace discrimination. The narrowly-tailored remedial efforts established within this Policy are designed to promote greater availability, capacity development, and contract participation by SMWB firms in SAWS contracts. The ability of a prime contractor/consultant to perform the work of a contract with its own organization s resources does not relieve the contractor/consultant of the requirement to demonstrate Good Faith Efforts, or the necessity to comply with this Policy. In areas of SAWS contracting where data has shown continuing disparities, SAWS shall resort to the use of race- and gender-conscious means for addressing disparities within its contract participation. Furthermore, use of race- and gender-conscious means shall be applied only when, A.) It is apparent that the use of neutral means alone has been or will likely be insufficient to remedy the effects of identified discrimination, and/or, B.) It is apparent that race- and genderconscious means have not remedied significant disparities found between Moreover, SAWS seeks to exercise its spending powers in a manner that promotes economic inclusion of all segments of the business population that it serves, regardless of race or gender, so as to maximize the economic vitality and development of the San Antonio region, to expand and diversify SAWS supplier base in order to maximize competition, and to obtain the best value on behalf of its ratepayers for its purchased goods and services. 3.0 DEFINITIONS Annual Aspirational Goal a non-mandatory annual aspirational percentage goal for overall M/WBE Prime and subcontract participation in SAWS contracts is established each year for Construction, Architectural & Engineering, Professional Services, and General Services contract Industry Categories. This Annual Aspirational Goal is to be set (and thereafter adjusted) by the SMWB Program Manager on an annual basis based upon relative M/WBE availability data to be collected by SAWS through its Vendor Registration and Notification System (VRN), and through M/WBE payment and utilization information collected from the Subcontractor Payment & Utilization Reporting (S.P.U.R.) System. Annual Aspirational Goals are intended to serve as a benchmark against which to measure the overall effectiveness of the SMWB Program on an annual basis, and to gauge the need for future adjustments to the mix and to the aggressiveness of remedies being applied under the Program. Percentage Goals for SMWB participation may be established by the SMWB Program Office on a contract-by-contract basis based upon similar data and analysis for the particular goods and services being purchased in a given contract. Award the final selection of a Respondent for a specified Prime Contract. Contract awards are made by SAWS to Prime Contractors/Consultants or vendors and by Prime Contractors/Consultants or vendors to Subcontractors/Subconsultants or sub-vendors, usually pursuant to a solicitation process. (Contract awards are to be distinguished from contract payments in that they only reflect the anticipated dollar amounts instead of actual dollar amounts that are paid to contractors/consultants under an awarded contract). Best Value Contracting a purchasing solicitation process which may evaluate factors other than price. Evaluation criteria for selection may include a Respondent s previous 5

6 experience, location, and quality of product or services procured, and other factors identified in the applicable statute. Vendor Registration and Notification System (VRN) a mandatory electronic system wherein SAWS requires all prospective Respondents and Subcontractors that are ready, willing and able to sell goods or services to SAWS to register. The VRN system assigns a unique identifier to each registrant that is then required for the purpose of submitting solicitation responses and invoices, and for receiving payments from SAWS. The VRNassigned identifiers are also used by the SMWB Program Office for measuring relative availability and tracking utilization of SBE and M/WBE firms by Industry or commodity codes, and for establishing Annual Aspirational Goals and Contract-by-Contract Subcontracting Goals. Certification the process by which the South Central Texas Regional Certification Agency, the State of Texas, and the Small Business Administration staff determines a firm to be a bona-fide small, minority-, or woman-owned business enterprise that is located in the San Antonio Metropolitan Statistical Area. Any firm may apply for multiple Certifications that cover each and every status category (e.g., SBE, MBE, or WBE) for which it is able to satisfy eligibility standards. For purposes of Certification, SAWS may accept any firm that is certified by governmental entities and organizations that have adopted Certification standards and procedures similar to those followed by the South Central Texas Regional Certification Agency, provided the prospective firm satisfies the eligibility requirements set forth in this Policy, including having a significant business presence in the San Antonio Metropolitan Statistical Area. Commercially Useful Function an SMWB firm performs a Commercially Useful Function when it is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, staffing, managing and supervising the work involved. To perform a Commercially Useful Function, the SMWB firm must also be responsible, with respect to materials and supplies used on the contract, for negotiating price, determining quantity and quality, ordering the material, and installing (where applicable) and paying for the material itself. To determine whether an SMWB firm is performing a Commercially Useful Function, an evaluation must be performed of the amount of work subcontracted, normal industry practices, whether the amount the SMWB firm is to be paid under the contract is commensurate with the work it is actually performing and the SMWB credit claimed for its performance of the work, and other relevant factors. Specifically, an SMWB firm does not perform a Commercially Useful Function if its role is limited to that of an extra participant in a transaction, contract or project through which funds are passed in order to obtain the appearance of meaningful and useful SMWB participation, when in similar transactions in which SMWB firms do not participate, there is no such role performed. Control the authority of a person or business owner to sign responses to solicitations and contracts, make price negotiation decisions, sell or liquidate the business and have the 6

7 primary authority to direct the day-to-day management and operation of a business enterprise without interference from others. Disparity Remedies (DR) Refers to various SMWB Program tools and Solicitation Incentives that are used to encourage greater Prime and subcontract participation by SMWB firms, including evaluation preferences, subcontracting goals and vendor rotation incentives. (For full descriptions of these and other SMWB Program tools, see Section 5.0 of this Policy). Economic Inclusion efforts to promote and maximize commercial transactions within, between and among all segments of the business population, regardless of race or gender, within the Relevant Marketplace. Evaluation Preference a DR that may be applied by the SMWB Program Manager to Construction, Architectural & Engineering, Professional Services, Commodity Procurement and General Services contracts that are to be awarded on a basis that includes factors other than lowest price, and wherein responses that are submitted to SAWS by SMWB firms may be awarded additional Points in the evaluation process in the scoring and ranking of their proposals against those submitted by other prime Respondents. Formal Solicitation an invitation for bids, request for proposals, requests for competitive sealed proposals, request for qualifications or other solicitation document issued by a SAWS department for a contract that requires Board approval, in accordance with the procurement rules adopted by SAWS through an official Policy or Standard Operating Procedure under the authority of Board of Trustees or pursuant to statutory requirements. Good Faith Efforts documentation of the Respondent s intent to comply with SMWB Program Goals and procedures including, but not limited to, the following: (1) documentation within the Good Faith Effort document of a solicitation response reflecting the Respondent s commitment to comply with SBE or M/WBE Program Goals as established by SAWS for a particular contract by listing all subcontractors and suppliers who will perform a commercially- useful function on a project; (2) documentation of efforts made toward achieving the SBE or M/WBE Program Goals (e.g., timely advertisements in appropriate trade publications and publications of wide general circulation; solicitations of bids/proposals/qualification statements from all qualified SBE or M/WBE firms listed in the SMWB Office s directory of certified SBE or M/WBE firms (subject to availability); correspondence from qualified SBE or M/WBE firms documenting their unavailability to perform SBE or M/WBE contracts; documentation of efforts to subdivide work into smaller quantities for subcontracting purposes to enhance opportunities for SBE or M/WBE firms; documentation of a Prime Contractor s posting of a bond covering the work of SBE or M/WBE Subcontractors; documentation of efforts to assist SBE or M/WBE firms with obtaining financing, bonding or insurance required by the Respondent; and documentation of consultations with trade associations and consultants that represent the interests of SBE and/or M/WBEs in order to identify qualified and available SBE or M/WBE Subcontractors.) 7

8 Graduation an SBE firm permanently graduates from the SAWS SBE program when it meets the criteria for graduation set forth in Section of this Policy. A firm s graduation or temporary suspension from the SBE program does not necessarily affect its eligibility to be certified and to participate in SAWS s M/WBE Program as an M/WBE. An M/WBE firm permanently graduates from the M/WBE program when it meets the criteria for graduation as set forth in this Resolution in Section However, a graduated M/WBE firm may continue to participate in and benefit from other Race-Neutral non-industryspecific remedies of the SMWB Program as described in Sections 5.1, 5.2, 5.3, 5.4, 5.6, and 5.7 of this Policy. Independently Owned and Operated ownership of an SBE firm must be direct, independent and by Individuals only. Ownership of an M/WBE firm may be by Individuals and/or by other businesses provided the ownership interests in the M/WBE firm can satisfy the M/WBE eligibility requirements for ownership and Control as defined in Sections 3.0 and of this Policy as promulgated by the SMWB Program Manager. The M/WBE firm must also be Independently Owned and Operated in the sense that it cannot be the subsidiary of another firm that does not itself (and in combination with the certified M/WBE firm) satisfy the eligibility requirements for M/WBE Certification. Individual an adult person that is of legal majority age. Industry Categories procurement groupings for SAWS inclusive of Construction, Architectural & Engineering (A&E), Professional Services, Commodity Procurement, and General Services (i.e., non-professional services, manufacturing, wholesale and retail distribution of commodities). This term may sometimes be referred to as business categories. Informal Solicitations solicitations for contracts that exceed $3,000, but are less than $49, These contracts do not require Formal Solicitations. Minority/Woman Business Enterprise (M/WBE) firm that is certified as either a Minority Business Enterprise or as a Woman-owned Business Enterprise; and which is at least fifty-one percent (51%) owned, managed and Controlled by one or more Minority Group Members (male or female) or one or more Caucasian Women; Atascosa, Bandera, Bexar, Comal, Frio, Guadalupe, Kendall, Kerr, McMullen, Medina and Wilson and that is ready, willing and able to sell goods or services that are purchased by SAWS. M/WBEs must meet the U.S. Small Business Administration s (SBA) size standard for a small business within the appropriate industry category in order to be eligible for the M/WBE program. Minority Business Enterprise (MBE) A business structure that is Certified by the Small Business Administration, Texas State Comptroller s Office or the South Central Texas Regional Certification Agency as being 51% owned, operated, and controlled by a male or female ethnic minority group member(s) who is legally residing in or a citizen of the United States, and that is ready, willing, and able to sell goods or services that are purchased by 8

9 SAWS. The ethnic minority group members recognized by SAWS are African Americans, Hispanic Americans, Asian Americans, and Native Americans. To qualify as an MBE, the enterprise shall meet the Significant Business Presence requirement as defined herein. Minority Group Members African-Americans, Hispanic Americans, Asian Americans and Native Americans legally residing in, or that are citizens of, the United States or its territories, as defined below: African-Americans: Persons having origins in any of the black racial groups of Africa as well as those identified as Jamaican, Trinidadian, or West Indian. Hispanic-Americans: Persons of Mexican, Puerto Rican, Cuban, Spanish or Central or South American origin. Asian-Americans: Persons having origins in any of the original peoples of the Far East, Southeast Asia, the Indian subcontinent or the Pacific Islands. Native Americans: Persons having no less than 1/16th percentage origin in any of the Native American Tribes, as recognized by the U.S. Department of the Interior, Bureau of Indian Affairs and as demonstrated by possession of personal tribal role documents. Originating Department or Contracting or Procurement Department the SAWS contracting or procurement department or authorized representative of SAWS which issues solicitations for bids or requests for proposals for the purchase goods or services, evaluates resulting bids or proposals, and makes contract awards pursuant to such evaluations. Payment dollars actually paid to Prime Contractors/Consultants and/or Subcontractors/Subconsultants and vendors for SAWS contracted goods and/or services. Points the quantitative assignment of value for specific evaluation criteria in the vendor selection process used in some Construction, Architectural & Engineering, Professional Services, Procurement of Commodities and General Services contracts (e.g., up to 15 points out of a total of 100 points assigned for SMWB participation as stated in response to a Request for Proposals). Prime Contractor the vendor or contractor/consultant to whom a purchase order or contract is issued by SAWS for purposes of providing goods or services to SAWS. Race-Conscious any business classification or DR wherein the race or gender of business owners is taken into consideration (e.g., references to M/WBE programs and DRs that are listed herein under the heading of Race-Conscious ). Race-Neutral any business classification or DR wherein the race or gender of business owners is not taken into consideration (e.g., references to SBE programs and DRs that are listed herein under the heading of Race-Neutral ). 9

10 Relevant Marketplace the geographic market area affecting the SMWB Program as determined for purposes of collecting data for the prior and any future Disparity Study, and for determining eligibility for participation under various programs established by this Policy, is defined as the San Antonio Metropolitan Statistical Area (SAMSA). Respondent a vendor/contractor/consultant submitting a bid, statement of qualifications, or proposal in response to a solicitation issued by SAWS. Responsible a firm which is capable in all respects to fully perform contract requirements and has the integrity and reliability which will assure good faith performance of contract specifications. Responsive a firm s submittal (bid, response or proposal) that conforms in all material respects to a solicitation (Invitation for Bid, Request for Qualifications, Request for Proposal, or Request for Competitive Sealed Proposal) and shall include compliance with SMWB Program requirements. San Antonio Metropolitan Statistical Area (SAMSA) also known as the Relevant Marketplace, the geographic market area from which the prior Disparity Study analyzed contract utilization and availability data for disparity (currently including the counties of Atascosa, Bandera, Bexar, Comal, Guadalupe, Kendall, Medina and Wilson). Significant Business Presence to qualify for participation in this Program, a firm must be headquartered or have a significant business presence for at least one year within the Relevant Marketplace, defined as: an established place of business in one or more of the eight counties that make up the San Antonio Metropolitan Statistical Area (SAMSA), and from which a substantial role in a firm s performance of a Commercially Useful Function is conducted. A location utilized solely as a post office box, mail drop or telephone message center or any combination thereof, with no other substantial work function, shall not be construed to constitute a significant business presence. For the purposes of this policy, a firm with a Significant Business Presence within the SAMSA may be referred to as local. Small Business Enterprise (SBE) A business structure that is Certified by the Small Business Administration, Texas State Comptroller s Office or the South Central Texas Regional Certification Agency as being 51% owned, operated and controlled by someone who is legally residing in or a citizen of the United States, that is ready, willing, and able to sell goods or services that are purchased by SAWS, and the business structure meets the U.S. Small Business Administration s (SBA) size standard for a small business within the appropriate industry category. To qualify as an SBE, the enterprise shall meet the Significant Business Presence requirements as defined herein. Small Minority Women Business Program Office (SMWB Program Office) the office within SAWS that is primarily responsible for general oversight and administration of the SMWB Program. 10

11 SMWB Program Manager the Manager of the SMWB Program that is responsible for the management of the SMWB Program Office and ultimately responsible for oversight, tracking, monitoring, administration, implementation and reporting of the SMWB Program. The SMWB Program Manager is also responsible for enforcement of contractor and vendor compliance with contract participation requirements, and ensuring that overall Program goals and objectives are met. Small, Minority, and Woman-owned Business Program (SMWB Program) the combination of SBE Program and M/WBE Program features contained in this Policy. Solicitation Incentives additional inducements or enhancements in the solicitation process that are designed to increase the chances for the selection of SMWB firms in competition with other firms. Such inducements and enhancements may include such terms as additional contract option years, increased quantities in supply contracts, and evaluation preferences, where not prohibited by law. These solicitation incentives may be applied as appropriate to solicitations, contracts, and letter agreements for Architecture and Engineering services, Construction, Professional Services, Procurement of Commodities, and General Services contracts, including change orders and amendments. Subcontractor any vendor or contractor/consultant that is providing goods or services to a Prime Contractor/Consultant in furtherance of the Prime Contractor s/consultant s performance under a contract or purchase order with SAWS. Suspension the temporary stoppage of an SMWB firm s beneficial participation in SAWS SMWB Program for a finite period of time due to ineligibility or cumulative contract payments that the SMWB firm received during a fiscal year that exceed the $20 Million dollar threshold as set forth in Section , or pursuant to the Penalties and Sanctions set forth in Section Utilization Documentation the contractor will be required to report the actual payments to all subcontractors, utilizing the Sub-contracting Payment and Utilization Reporting (S.P.U.R.) System, in the time intervals and format prescribed by SAWS. This information will be utilized for SMWB participation tracking purposes. Any unjustified failure to comply with the committed SWMB levels may be considered breach of contract. Additions, substitutions, deletions, or a modification of the utilization amounts of subcontractors/subconsultants requires an amendment to be approved in advance by the SMWB Program Manager. Woman-owned Business Enterprises (WBEs) - A business structure that is Certified by the Small Business Administration, Texas State Comptroller s Office or the South Central Texas Regional Certification Agency as being 51% owned, operated and controlled by a nonminority woman or women who are legally residing in or are citizens of the United States, that is ready, willing and able to sell goods or services that are purchased by SAWS. To qualify as an SBE, the enterprise shall meet the Significant Business Presence requirements 11

12 as defined herein. Unless otherwise stated, the term WBE as used in this Policy is not inclusive of MBEs. 4.0 PROGRAM RESPONSIBILITIES 4.1. Responsibility 1: SAWS Small Minority Women Business Program Office has overall responsibility to interpret, administer, and enforce SMWB Program policies, standards, definitions, criteria, and procedures to govern the implementation, interpretation, and application of this program in a manner to achieve its stated objectives and purposes. This office also has primary responsibility for establishing and disseminating the Standard Operating Procedures for SAWS administration of this Policy Program Abuse: Program abuse, suspected fraud, or any violation of this program s rules and standard operating procedures by SAWS s officials, prime contractors, subcontractors, or vendors shall be referred to the SMWB Program Manager for investigation, review, and appropriate sanctions or resolution. Inquiries and complaints regarding the conduct of any of the above shall be submitted formally in a written nonanonymous format, and shall request a specific action to be taken. The SMWB Program Office reserves the right to accept or decline to pursue submitted inquiries and complaints that are not in the specified format as established under the Standard Operating Procedures for this Policy Reporting: The SMWB Program Manager shall be responsible for reporting to the SAWS Board of Trustees on at least an annual basis regarding SAWS progress toward satisfying the SMWB Program policy objectives, and to make recommendations for any necessary adjustments or amendments to the policy and administration of the SMWB Program to fully effectuate its purposes. To this end, the SMWB Program Manager shall also have oversight responsibility to ensure that appropriate data tracking systems are maintained by SAWS to enable accurate reporting on the relative availability and utilization of SAWS prime contractors, subcontractors, and vendors by race and gender of business ownership, and by industry Outreach and Public Education: The SMWB Program Office shall be primarily responsible for internal and external communications regarding this Policy. Such communications shall include, but not be limited to, providing key information on contracting policies and procedures to the SMWB community in a timely and effective manner; providing assistance to prospective bidders and respondents to SAWS bid solicitations, Best Value Bid solicitations, Requests for Proposals, Requests for Qualifications, and Requests for Competitive Sealed Proposals regarding SMWB Program requirements; development and dissemination of SMWB certification directories for potential SMWB subcontracting/subconsulting, and procurement opportunities. In addition, this Office shall be an advocate to SAWS Originating Departments and to SAWS contracting and vendor community regarding SMWB Program policy objectives and benefits from participation in the program. SAWS Originating Departments shall coordinate with 12

13 the SMWB Program Office to provide SMWB staff with information for the contracting and vending community regarding upcoming projects and contract opportunities Disparity Study Updates: The SMWB Program Office shall have primary responsibility for initiating and providing oversight of a disparity study update at least once every four years to determine the extent to which the continuation, modification, or termination of this Policy is warranted Certification: The SMWB Program Manager shall serve as the official SAWS representative on the South Central Texas Regional Certification Agency (SCTRCA) Board of Directors and shall represent SAWS interests in SMWB certification standards and program eligibility criteria so as to maintain the integrity of this Policy without unduly burdening certification applicants Contract Compliance: SAWS Contracting and Purchasing Departments, which are generally responsible for the issuance of bid solicitations and/or oversight of contracts awarded by SAWS, shall have primary responsibility for ensuring that contract specifications relating to the SMWB Program requirements (as designated for each specific contract by the SMWB Program Office) are included in all appropriate bid documents. Compliance with such SMWB Program bid specifications shall be material in determining whether a bid or proposal is responsive. The Contracting and Purchasing Departments are also responsible for ensuring that such specified SMWB Program requirements are appropriately incorporated and included in all contract documents. Moreover, the SMWB Program Office shall ensure that such SMWB Program contract provisions are adhered to by selected contractors/consultants, subcontractors/subconsultants, and vendors in a manner consistent with other contract deliverables and performance requirements. To this end, Originating Departments are required to provide the SMWB Program Office with copies of executed contract documents including listings of all subcontractors/subconsultants, their designated scopes of work, contract deliverables, or projected monetary values for performance. Originating Departments shall be primarily responsible for informing the SMWB Program Manager of change orders and contract amendments, including proposed changes to subcontractors /subconsultants participation on a contract Elimination of Barriers: Originating Departments shall assist the SMWB Program Office in identifying and eliminating barriers to SMWB firm participation in the bid solicitation and contract award processes Legal Review: The Legal Department shall be responsible for periodically reviewing standard and non-standard contract forms used by SAWS to ensure that SMWB Program requirements and contractual clauses are properly included and legally worded. To the extent non-compliance issues arise, the Legal Department shall provide guidance and recommendations to SAWS regarding appropriate sanctions and available enforcement options. In addition, the Legal Department shall generally provide legal guidance, advice, and direction on SMWB program policy, policy implementation, issues, and concerns. 13

14 4.10. Payment Reporting: Contractors/consultants shall be required to electronically submit subcontractor/subconsultant utilization and payment information (as pledged in the project submittal s Good Faith Effort Plan) by reporting payment data into the Subcontractor Payment and Utilization Reporting (S.P.U.R.) System, beginning with the first SAWS payment for services under the contract, and with every payment thereafter (for the duration of the contract). Electronic submittal of subcontractor payment information will be accessed through a link on SAWS Business Center web page. The Contractor and all subcontractors will be provided a unique log-in credential and password to access the SAWS subcontractor payment reporting system. The link may also be accessed through the following internet address: After the prime reports payments to subcontractors/subconsultants, the S.P.U.R. system will subcontractors/subconsultants and ask for verification of the payment data entered by prime contractors/consultants. 5.0 PROGRAM REQUIREMENTS AND IMPLEMENTATION 5.1 Commercial Nondiscrimination Policy The SMWB Program Office, the Originating Departments, and the Legal Department shall insure that the following commercial nondiscrimination clause language is set forth in and incorporated into all SAWS contracts that result from Formal Solicitations: "As a condition of entering into this agreement, the company represents and warrants that it will comply with SAWS Commercial Nondiscrimination Policy, as described under Section 2.0 of the SMWB Program Policy. As part of such compliance, the company shall not discriminate on the basis of race, color, religion, ancestry or national origin, sex, age, marital status, or sexual orientation or any otherwise unlawful use of characteristics in the solicitation, selection, hiring or commercial treatment of Subcontractors/Subconsultants, vendors, suppliers, or commercial customers, nor shall the company retaliate against any person for reporting instances of such discrimination. The company shall provide equal opportunity for Subcontractors/Subconsultants, vendors and suppliers to participate in all of its public sector subcontracting and supply opportunities, provided that nothing contained in this clause shall prohibit or limit otherwise lawful efforts to remedy the effects of marketplace discrimination that have occurred or are occurring in the SAWS Relevant Marketplace. The company understands and agrees that a material violation of this clause shall be considered a material breach of this agreement and may result in termination of this agreement, disqualification of the company from participating in SAWS contracts, or other sanctions. This clause is not enforceable by or for the benefit of, and creates no obligation to, any third party. All Formal Solicitations issued for SAWS contracts shall include the following certification to be completed by the Respondent: "The undersigned Respondent hereby certifies and agrees that the following information is correct: 14

15 In preparing its response on this project, the Respondent has notified potential Subcontractors/Subconsultants located within the San Antonio Metropolitan Statistical Area of subcontracting opportunities not less than five (5) business days prior to response/submittal date, has considered all proposals submitted from qualified, potential Subcontractors/Subconsultants and suppliers, and has not engaged in "discrimination" as defined in SAWS SMWB Program Policy, Section 2.0; to wit: discrimination in the solicitation, selection or commercial treatment of any Subcontractor/Subconsultant, vendor, supplier or commercial customer on the basis of race, color, religion, ancestry or national origin, sex, age, marital status, sexual orientation or other unlawful forms of discrimination. Without limiting the foregoing, "discrimination" also includes retaliating against any person or other entity for reporting any incident of "discrimination". Without limiting any other provision of the solicitation for responses on this project, it is understood and agreed that, if this certification is false, such false certification will constitute grounds for SAWS to reject the response submitted by the Respondent on this project, and terminate any contract awarded based on the response. As part of its response, the Respondent shall provide to SAWS a list of all instances within the immediate past 4 years where there has been a final adjudicated determination in a legal or administrative proceeding in the State of Texas that the Respondent discriminated against its Subcontractors/Subconsultants, vendors, suppliers or commercial customers, and a description of the status or resolution of that complaint, including any remedial action taken. As a condition of submitting a response to SAWS, the Respondent agrees to comply with SAWS Commercial Nondiscrimination Policy as described under its SMWB Program Policy, Section 2.0." Only certified SMWB subcontractors/subconsultants located within the San Antonio Metropolitan Statistical Area are eligible for SMWB recognition on a solicitation submittal s Good Faith Effort Plan. 5.2 Vendor Registration and Notification System (VRN) Policy SAWS shall establish and maintain an electronic online Vendor Registration and Notification System (VRN) to provide the elements and functionalities necessary to advance and facilitate the Program objectives of the SMWB Program stated herein. Registration in the VRN shall be required of every business interested in being a prime contractor, consultant, vendor, subcontractor, or subconsultant for SAWS. The VRN shall be used as a means of communication by the SAWS Contracting and Purchasing departments for the purpose of notifying prospective Respondents and Subcontractors/Subconsultants of contracting opportunities. 5.3 Solicitation Debriefings For any contract in which SAWS has undertaken a Formal Solicitation and subsequent evaluation of responses in accordance with the following methods of procurement: Best Value Bids, Low bids, Requests for Proposals, Requests for Qualifications, or Requests for Competitive Sealed Proposals, the Director of the Originating Department issuing the solicitation, or the department on whose behalf the solicitation was issued, or their designees, shall, upon request, provide a debriefing to any non-recommended Respondent. At a minimum, debriefings shall include disclosures of scoring criteria and scores from the 15

16 evaluation panel responsible for making the selection for each response that was evaluated. To the extent possible, the de-briefing should also identify for the non-recommended Respondent those areas where its submittal was as not as competitive as others. A maximum of one debriefing will be offered per firm, per calendar year. Bid debriefings must be requested within 30 days after the Board Meeting date when the SAWS Board of Trustees awarded the contract. 5.4 Business Development Assistance The SMWB Program Office shall refer SMWB firms to technical assistance resources and provide links on its website page to such resources. Moreover, the SMWB shall coordinate periodic seminars for the benefit of prospective bidders to explain the procurement and solicitation process at SAWS and SMWB Program requirements. 5.5 SAWS Staff Performance Recognition The SMWB Program Office shall collaborate with the SAWS leadership to establish official recognition for SAWS department managers whose departments exceed annual aspirational goals for SMWB participation in SAWS contracts, and for other SAWS personnel whose job performances have exceeded standards for performance of SMWB Program duties. 5.6 Prompt Payment Notification / Alerts The Subcontractor Payment & Utilization Reporting (S.P.U.R.) System shall be programmed to send alerts to a subcontractor/subconsultant listed by prime contractors/consultants as being used in the performance of a contract under the following circumstances: A.) the first contract payment is issued by SAWS to the prime contractor, and B.) the prime contractor/consultant has reported payment to a subcontractor/subconsultant. The alerts shall disclose the date and amount of payment to the prime contractor, and the time period covered by the invoice submitted by the prime. The purpose of the S.P.U.R. System is to ensure that prime contractors/consultants are utilizing their subcontractors/subconsultants as pledged in their Good Faith Effort Plan documents. 5.7 Industry-Specific Disparity Remedies The SMWB Program Manager shall evaluate categories of Informal Solicitations and each prospective Formal Solicitation document from all Originating Departments in advance of any advertisement posting of the solicitation to the public to determine which of the following DRs shall be applied by SAWS to a given contract within a particular industry: Small Business Enterprise Prime Contract Program for Construction For any construction contract that is estimated by SAWS to be valued at $50,000 or more, but less than $200,000, the SMWB Program Manager may reserve such contract opportunity for competition solely among certified Small Business Enterprises (SBEs). 16

17 5.7.2 Small Business Enterprise Subcontracting Program for Construction For any construction contract that is estimated by SAWS to be valued at $250,000 or greater, the SMWB Program Manager may require that a mandatory predetermined portion of such contract, up to 40%, must be subcontracted to certified SBE firms. Factors to be considered by the SMWB Program Manager in making this determination shall include the relative availability of SBE firms to perform Commercially Useful Functions on the specific contract. A Respondent may request a full or partial waiver of this mandatory subcontracting requirement for good cause by submitting the appropriate form(s) and documentation to the SMWB Program Manager no less than 5 days prior to the solicitation closing date. Under no circumstances shall a waiver of a mandatory subcontracting requirement be granted without submission of adequate documentation of Good Faith Efforts by the Respondent and careful review by the SMWB Program Manager. The SMWB Program Manager shall base his or her determination of a waiver request on the following criteria: 1. Whether the requestor of the waiver has made Good Faith Efforts to subcontract with qualified and available SBEs; 2. Whether subcontracting would be inappropriate and/or not provide a "Commercially Useful Function" under the scope of the contract; and 3. Whether there are no certified SBE firms that are qualified and available to provide the goods or services required. In the absence of a waiver granted by the SMWB Program Manager, failure of a Prime Contractor to commit in its response to satisfying the SBE subcontracting goal shall render its response non-responsive. A Prime Contractor is required to notify and obtain prior written approval from the SMWB Program Manager in advance of any executed reduction in subcontract scope, unless such reduction in scope is the direct and immediate result of a SAWS-mandated change order or contract amendment, or SAWS has mandated the de- Certification, suspension, graduation or termination of a designated SBE Subcontractor. However, under such circumstances, the Prime Contractor shall undertake Good Faith Efforts to replace the de-certified, suspended, graduated or terminated SBE s with one or more other certified SBE Subcontractors and shall submit a waiver request to the SMWB Program Manager in the event such Good Faith Efforts are unsuccessful. Upon award of the prime contract to a Respondent, the Prime Contractor shall be required to report accurate progress payment information with each invoice regarding each of its Subcontractors/Subconsultants, including SBE Subcontractors/Subconsultants in the Subcontractor Payment & Utilization Reporting (S.P.U.R.) System. The SMWB Program Manager shall audit 100% of the reported payments to SBE and non-sbe Subcontractors to ensure that the Prime Contractor's reported subcontract participation is accurate. SAWS contracts with Prime Contractors shall include clauses requiring Prime Contractors to pay Subcontractors in compliance with Chapter 2251, Texas Government Code (the "Prompt Payment Act"), and such clauses shall mandate that in the event of Prime Contractor non-compliance regarding such payments, no 17

18 final retainage on the Prime Contract shall be released to the Prime Contractor, and no new SAWS contracts should be issued to the Prime Contractor until the audit of previous subcontract payments is complete and payments are verified to be in accordance with the specifications of the contract Small Business Enterprise Evaluation Preference for Construction For any construction contract that is let pursuant to alternative construction delivery methods (e.g., Request for Competitive Sealed Proposals), is estimated by SAWS to be valued below $1,500,000, and is determined by the SMWB Program Manager to present SAWS with a capacity-building opportunity to enhance long-term competition and to provide SAWS with its Best Value in accordance with Texas Local Government Code, Chapter 252, following the Contracting Standard Procedures for Chapter 271, the SMWB Program Manager may apply an evaluation preference for SBE prime contractor bidders. Under this evaluation preference, SAWS may reserve up to 10% of the total points awarded in weighted selection criteria in favor of the selection of Respondents that are certified SBE firms. An SBE Prime Contractor that is awarded a prime contract pursuant to this program may not subcontract more than 49% of the contract value to a non-sbe firm. In determining whether the Small Business Enterprise Evaluation Preference for Construction shall be applied to a given contract, the SMWB Program Manager shall consider: a) whether there are at least three SBEs that are available and capable to perform as Prime Contractors for the contract; and b) the degree of underutilization of SBE Prime Contractors in the specific Industry Category Race-Conscious M/WBE Construction Programs The SMWB Program Manager shall make a determination whether to apply any of the following Race-Conscious DRs to SAWS Construction contracts based upon the following criteria: a) Whether the most recent data on M/WBE utilization indicates that contracts of this type have exhibited significant disparities in the utilization of M/WBE Subcontractors and/or M/WBE Prime Contractors under the following circumstances: A.) The use of neutral means alone have- been or will likely be insufficient to remedy the effects of identified discrimination, and/or, B.) It is apparent that race- and gender-conscious means have not remedied significant disparities found between b) Whether a particular DR is the least burdensome available remedy to Non-SMWB Respondents that is narrowly-tailored and that can effectively eliminate the disparities in the utilization of M/WBEs in such contracts c) Whether an M/WBE respondent meets the criteria of being a local business; and d) Whether the particular DR is appropriate for the specific type of contract or contracts being procured. Whenever the SMWB Program Manager uses his or her discretion to apply any of the following Race-Conscious DRs to bid solicitations, he or she shall provide an 18