South Carolina General Assembly
117th Session, 2007-2008

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Bill 3514


Indicates Matter Stricken
Indicates New Matter


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND SECTION 11-35-310, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS FOR PURPOSES OF THE CONSOLIDATED PROCUREMENT CODE, SO AS TO DELETE THE DEFINITION FOR "OFFICE"; AND TO AMEND SECTION 11-35-1524, RELATING TO VENDOR PREFERENCES, SO AS TO PROVIDE FOR PREFERENCES FOR END PRODUCTS FROM SOUTH CAROLINA AND FROM THE UNITED STATES AND FOR CONTRACTORS AND SUBCONTRACTORS WHO EMPLOY INDIVIDUALS DOMICILED IN SOUTH CAROLINA, TO DEFINE CERTAIN TERMS, PROVIDE FOR ELIGIBILITY REQUIREMENTS FOR THE PREFERENCES, PROVIDE FOR APPLICATION FOR THE PREFERENCES AND PENALTIES FOR FALSE APPLICATION, AND TO MAKE EXCEPTIONS TO THE PREFERENCES.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Section 11-35-310(22) of the 1976 Code, as added by Act 153 of 1997 is amended to read:

"(22)    'Office' means a nonmobile place for the regular transaction of business or performance of a particular service and staffed by at least one employee on a routine basis. Reserved."

SECTION    2.    Section 11-35-1524 of the 1976 Code, as last amended by Act 333 of 2002, is further amended to read:

"Section 11-35-1524.    (A)    A preference of seven percent must be provided to vendors who are residents of South Carolina or whose products are made, manufactured, or grown in South Carolina as set forth in this section.

(B)    As used in this section, unless the context indicates otherwise, the terms below have the following meanings:

(1)    'Made' means to assemble, fabricate, or process component parts into a finished end-product, the value of which assembly, fabrication or processing is a significant portion of the value of the finished end-product.

(2)    'Manufacture' means to make or process raw materials into a finished end-product.

(3)    'Grown' means to produce, cultivate, raise, or harvest timber, agricultural produce, or livestock on the land, or to cultivate, raise, catch, or harvest products or food from the water which results in an end-product that is locally derived from the product cultivated, raised, caught, or harvested.

(4)    'End-product' means the item sought by the governmental body of the State and described in the solicitation including all component parts and in final form and ready for the use intended by the governmental body.

(5)    'Unreasonable Cost' means:

(a)    the cost of an item from a resident vendor or an end-product made, manufactured, or grown in South Carolina is unreasonable if the bid exceeds by more than seven percent the lowest qualified bid on the same item or end-product which is made, manufactured, or grown in other states of the United States, or in a foreign country or territory;

(b)    the cost of an end-product made, manufactured, or grown in other states of the United States is unreasonable if the bid exceeds by more than two percent the lowest qualified bid on the same or similar end-product which is made, manufactured, or grown in a foreign country or territory;

(6)    'Resident vendor' means a vendor who is considered to be a resident of this State if the vendor:

(a)    is an individual, partnership, association, or corporation that is authorized to transact business within the State,

(b)    maintains an office in the State,

(c)    maintains an inventory for expendable items which are representative of the general type of commodities on which the bid is submitted and located in South Carolina at the time of the bid having a total value of ten thousand dollars or more based on the bid price, but not to exceed the amount of the contract, or is a manufacturer which is headquartered and has at least a ten million dollar payroll in South Carolina and the product is made or processed from raw materials into a finished end-product by such manufacturer or an affiliate (as defined in Section 1563 of the Internal Revenue Code) of such manufacturer, and

(d)    has paid all assessed taxes.

(C)    Application.    Competitive procurements made by governmental bodies shall be made from vendors resident to South Carolina or vendors who bid end-products made, manufactured, or grown in South Carolina or in the United States if available, provided that (1) the bidder has certified in writing in the bid that he or she is resident to the State, or (2) the bidder has certified in writing in the bid that the end-product was made, manufactured, or grown in South Carolina or in the United States, (3) the end-product is available, and (4) the cost of the end-product is not unreasonable. In order to receive the award the vendor must be a responsible and responsive bidder, and the bid must otherwise comply with the Procurement Code and Regulations.

In the case of a request for resident vendor status, this requirement shall apply to the entire solicitation. In the case of a request for end-product status, this requirement shall apply to each line item or each lot in a solicitation to which a separate, responsive bid may be made.

(D)    Exceptions.    This section shall not apply:

(1)    to any procurements conducted under Article 9 of the 1976 Code;

(2)    to any prime contractor or subcontractor providing materials or services relating to permanent improvements to real estate;

(3)    to any solicitation, bid, offer, or procurement when the price of a single unit of the end-product is more than thirty thousand dollars, whether or not more than one unit is bid or offered;

(4)    to any solicitation, bid, offer, or procurement where the contract award is less than ten thousand dollars;

(5)    to any solicitation conducted under Section 11-35-1530 of the 1976 Code; or

(6)    to any solicitation, bid, offer, or procurement of motor vehicles as defined in Section 56-15-10.

(E)    Enforcement.    A bidder shall be suspended or debarred from doing business with the State in accordance with Section 11-35-4220 of the South Carolina Consolidated Procurement Code if the chief procurement officer determines that the certification made by the bidder as to the resident vendor request or the origin of the end-product was filed under false pretenses and is not valid. In addition, if the bidder with the invalid certification of origin was awarded the contract, he shall also pay the State of South Carolina the amount by which the bid based on the invalid certification exceeded the lowest responsible and responsive bid that would have been selected but for the invalid certification.

If a bidder has not requested the preference, he will neither be entitled to claim any preference against another bidder nor will he be protected from application of another bidder's claim to a preference against his bid in determining contract award.

(F)    If a vendor qualifies as a resident vendor and is bidding a product made, manufactured, or grown in South Carolina, an additional three percent preference must be given if claimed by the bidder (A)    For purposes of this section:

(1)    'End product' means the tangible product described in the solicitation including all component parts and in final form and ready for the state's intended use.

(2)    'Grown' means to produce, cultivate, raise, or harvest timber, agricultural produce, or livestock on the land, or to cultivate, raise, catch, or harvest products or food from the water which results in an end product that is locally derived from the product cultivated, raised, caught, or harvested.

(3)    'Labor cost' means salary and fringe benefits.

(4)    'Made' means to assemble, fabricate, or process component parts into an end product, the value of which, assembly, fabrication, or processing is a substantial portion of the price of the end product.

(5)    'Manufactured' means to make or process raw materials into and end product.

(6)    'Services' means services as defined by Section 11-35-310(29) and also includes services as defined in Section 11-35-310(1)(d).

(7)    'South Carolina End Product' means an end product made, manufactured, or grown in South Carolina.

(8)    'United States End Product' means an end product made, manufactured, or grown in the United States of America.

(B)(1)    When evaluating pricing for purposes of making an award determination, the procurement officer shall decrease by seven percent the price of any offer for a South Carolina end product.

(2)    When evaluating pricing for purposes of making an award determination, the procurement officer shall decrease by two percent the price of any offer for a United States end product. This preference does not apply to an item to which the South Carolina end product preference has been applied.

(3)    The preferences provided in this subsection (B) apply to an entire solicitation if the procurement is predominantly for the acquisition of supplies. If award is to be made by item, the preferences must be applied to the price of each item of end product identified for award. If award is to be made by lot, the preferences must be applied to the price of each item of qualified end product in the lot awarded.

(4)    If a contract is awarded to a bidder that received the South Carolina end product or United States end product preference, the contractor may not substitute a nonqualifying end product for a qualified end product. A substitution in violation of this item is grounds for debarment pursuant to Section 11-35-4220. If a contractor violates this provision, the State may terminate the contract for cause and, in addition, the contractor shall pay to the State an amount equal to twice the difference between the price paid by the State and the bidder's evaluated price for a substituted item.

(C)(1)    When evaluating pricing for purposes of making an award determination, the procurement officer shall decrease a bidder's price by six percent if the bidder directly employs, at the time of bidding, individuals domiciled in South Carolina that will perform services required by the solicitation and the total direct labor cost to bidder for those individuals to provide those services exceeds fifty percent of bidder's total bid price.

(2)    The preference provided in this subsection (C) applies to an entire solicitation if the procurement is predominantly for the acquisition of services, whether or not supplies are involved. If award is to be made by item, the preferences must be applied to the price of each item of work identified for award. If award is to be made by lot, the preferences must be applied to the price of each item of work in the lot awarded.

(3)    If a bidder is requesting this preference, the bidder, upon request by the procurement officer, must identify the persons domiciled in South Carolina upon which bidder relies in qualifying for the preference which will perform the services involved in the procurement, the services those individuals are to perform, the employer of those persons, and documentation of the bidder's labor cost for each person identified. Bidder's failure to provide this information promptly is grounds to deny the preference and for enforcement under subsection (E)(6) below.

(D)(1)    When evaluating pricing for purposes of making an award determination, the procurement officer shall decrease a bidder's price by two percent if:

(a)    the bidder has a documented commitment from a single proposed first-tier subcontractor to perform some portion of the services required by the solicitation; and

(b)    the subcontractor directly employs, at the time of bidding, individuals domiciled in South Carolina that will perform services required by the solicitation and the total direct labor cost to subcontractor for those individuals to provide those services exceeds twenty percent of bidder's total bid price.

(2)    When evaluating pricing for purposes of making an award determination, the procurement officer shall decrease a bidder's price by four percent if:

(a)    the bidder has a documented commitment from a single proposed first-tier subcontractor to perform some portion of the services required by the solicitation; and

(b)    the subcontractor directly employs, at the time of bidding, individuals domiciled in South Carolina that will perform services required by the solicitation and the total direct labor cost to subcontractor for those individuals to provide those services exceeds forty percent of bidder's total bid price.

(3)    If award is to be made by item, the preferences must be applied to the price of each item of work identified for award. If award is to be made by lot, the preferences must be applied to the price of each item of work in the lot awarded.

(4)    Subject to other limits in this section, an offeror may benefit from applying for more than one of, or from multiple applications of, the preferences allowed by items (1) and (2).

(5)(a)    In its bid, a bidder requesting any of the South Carolina subcontractor preferences must identify the subcontractor to perform the work, the work the subcontractor is to perform, and the bidder's factual basis for concluding that the subcontractor's work constitutes the required percentage of the work to be performed in the procurement.

(b)    If a bidder is requesting a preference allowed by items (1) or (2), upon request by the procurement officer, the bidder shall identify the persons domiciled in South Carolina that are to perform the services involved in the procurement upon which bidder relies in qualifying for the preference, the services those individuals are to perform, the employer of those persons, and the bidder's relationship with the employer. Bidder's failure to provide this information promptly will be grounds to deny the preference and for enforcement pursuant to subsection (E)(6) below.

(c)    If a contract is awarded to a bidder that received a preference allowed by items (1) or (2), the contractor may not substitute any business for the subcontractor on which bidder relied to qualify for the preference, unless first approved in writing by the procurement officer. A substitution in violation of this subitem is grounds for debarment pursuant to Section 11-35-4220. If a contractor violates this provision, the procurement officer may terminate the contract for cause. If the contract is not terminated, the procurement officer may require the contractor to pay the State an amount equal to the difference between the price paid by the State and the price offered by the next lowest bidder, unless the substituted subcontractor qualifies for the preference.

(E)(1)    A business is not entitled to any preferences unless the business, to the extent required by law, has:

(a)    paid all taxes assessed by the State; and

(b)    registered with the South Carolina Secretary of State and the South Carolina Department of Revenue.

(2)    The preferences provided in subsection (B) do not apply to a single unit of an end product with a price in excess of fifty thousand dollars or a single award with a total potential value in excess of five hundred thousand dollars.

(3)    The preferences provided in subsections (C) and (D) do not apply to a bid for an item of work by the bidder if the annual price of the bidder's work exceeds fifty thousand dollars or the total potential price of the bidder's work exceeds five hundred thousand dollars.

(4)    A solicitation must provide potential bidders an opportunity to request the preferences that apply to a procurement. By submitting a bid and requesting that a preference be applied to that bid, a business certifies that its bid qualifies for the preference for that procurement. For purposes of applying this section, a bidder is not qualified for a preference unless the bidder makes a request for the preference as required in the solicitation. If a solicitation specifies which preferences, if any, apply to a procurement, the applicability of preferences to that procurement is conclusively determined by the solicitation unless the solicitation document is timely protested as provided in Section 11-35-4210. If two or more bidders are tied after the application of the preferences allowed by this section, the tie must be resolved as provided in Section 11-35-1520(9). Price adjustments required by this section for purposes of evaluation and application of the preferences do not change the actual price offered by the bidder.

(5)    This section does not apply to an acquisition of motor vehicles as defined in Section 56-15-10 or an acquisition of supplies or services relating to construction. This section does not apply to a procurement conducted pursuant to Section 11-35-1550(2)(a) or (b), Section 11-35-1530, or Article 9 of Chapter 35.

(6)    Pursuant to Section 11-35-4220, a business may be debarred if (i) the business certified that it qualified for a preference, (ii) the business is not qualified for the preference claimed, and (iii) the certification was made in bad faith or under false pretenses. If a contractor has invalidly certified that a preference is applicable, the chief procurement officer may terminate the contract for cause, and the chief procurement officer may require the contractor to pay the State an amount equal to the difference between the price paid by the State and the price offered by the next lowest bidder.

(7)    If award is to be made by item, the cumulative preferences applied to each item identified for award may not exceed ten percent. If award is to be made by lot, the cumulative preferences applied to the price of each item in the lot awarded may not exceed ten percent."

SECTION    3.    This act takes effect upon approval by the Governor and applies to any solicitations issued after the first Monday in September following that date.

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