EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0389*
HOUSE BILL 389
P2 2lr3019
CF SB 487
By: Delegate Wilson
Introduced and read first time: January 19, 2022
Assigned to: Health and Government Operations
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 2, 2022
CHAPTER ______
AN ACT concerning 1
Procurement – Minority Business Enterprises – Revisions 2
FOR the purpose of requiring a procurement officer, in an invitation for bids or a request 3
for proposals, to include a certain summary of the factors used to determine the 4
expected degree of minority business enterprise participation for the contract; 5
authorizing certain entities to retain certification as a minority business enterprise 6
if the entity participates as a mentor in a certain mentorship program and under 7
certain circumstances; requiring the Special Secretary for the Office of Small, 8
Minority, and Women Business Affairs to establish certain statewide minority 9
business enterprise participation goals by industry type in a certain manner; 10
establishing that certain statewide goals by industry type apply under certain 11
circumstances; requiring each unit of the Executive Branch of State government to 12
annually report the results of certain compliance assessments to the Governor’s 13
Office of Small, Minority, and Women Business Affairs; authorizing the Special 14
Secretary to waive the requirement for a unit to report certain information under 15
certain circumstances; requiring the Office to maintain and publish on its website a 16
list of prime contractors who, based on the results of the compliance assessments, 17
Governor’s Office of Small, Minority, and Women Business Affairs and the Office of 18
State Procurement, in consultation with the Office of the Attorney General and 19
Board of Public Works, to adopt by regulation criteria used to determine that a prime 20
contractor has persistently fail failed to meet contract goals; requiring the results of 21
certain compliance assessments to be included in certain criteria; requiring the 22
Governor’s Office of Small, Minority, and Women Business Affairs to refer certain 23
prime contractors to the Office of the Attorney General for debarment; authorizing 24
the Board of Public Works to debar a person for a certain period of time under certain 25 2 HOUSE BILL 389
circumstances; requiring certain units of the Executive Branch of State government 1
to designate certain procurements for the small business reserve under certain 2
circumstances; requiring certain standards and guidelines relating to participation 3
in the small business reserve program to allow for the registration of certain 4
businesses without the need to file certain paperwork; establishing that certain 5
procurements may be exempt from designation for the small business reserve under 6
certain circumstances; making certain provisions of law relating to the prompt 7
payment of subcontractors apply to all State contracts, rather than only State 8
contracts for construction; creating the position of Minority Business Enterprise 9
Ombudsman in the Governor’s Office of Small, Minority, and Women Business 10
Affairs; establishing certain duties and authority of the Ombudsman; altering the 11
definition of “responsible bidder or offeror” to exclude contractors who persistently 12
fail to meet contract goals, based on the results of certain compliance assessments 13
requiring the Ombudsman, Governor’s Office of Small, Minority, and Women 14
Business Affairs, and the Department of Legislative Services to submit certain 15
reports on or before certain dates; and generally relating to procurement and 16
minority business enterprises. 17
BY repealing and reenacting, without amendments, 18
Article – State Finance and Procurement 19
Section 11–101(a) 20
Annotated Code of Maryland 21
(2021 Replacement Volume) 22
BY repealing and reenacting, with amendments, 23
Article – State Finance and Procurement 24
Section 11–101(s), 13–103(a), 13–104(b), 14–301(f), 14–302(a)(1), 14–303, and 25
14–303(b)(2), 14–305; 14–305, and 14–502(f); and 15–226 to be under the 26
amended part “Part IV. Prompt Payment of Subcontractors”; and 16–203(d) 27
Annotated Code of Maryland 28
(2021 Replacement Volume) 29
BY adding to 30
Article – State Finance and Procurement 31
Section 14–301(e–1) and 14–502.1 32
Annotated Code of Maryland 33
(2021 Replacement Volume) 34
BY adding to 35
Article – State Government 36
Section 9–303.3 37
Annotated Code of Maryland 38
(2021 Replacement Volume) 39
BY repealing and reenacting, with amendments, 40
Article – State Government 41
Section 9–305(b)(7) 42 HOUSE BILL 389 3
Annotated Code of Maryland 1
(2021 Replacement Volume) 2
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 3
That the Laws of Maryland read as follows: 4
Article – State Finance and Procurement 5
11–101. 6
(a) In this Division II the following words have the meanings indicated unless: 7
(1) the context clearly requires a different meaning; or 8
(2) a different definition is provided for a particular title or provision. 9
(s) “Responsible bidder or offeror” means a person who: 10
(1) has the capability in all respects to perform fully the requirements for 11
a procurement contract; [and] 12
(2) possesses the integrity and reliability that will ensure good faith 13
performance; AND 14
(3) IS NOT A CONTRACTOR WHO PERSISTENTLY FAI LS TO MEET 15
CONTRACT GOALS AS DETER MINED UNDER § 14–305(C)(2) OF THIS ARTICLE . 16
13–103. 17
(a) (1) Whenever procurement is based on competitive sealed bids, a 18
procurement officer shall seek bids by issuing an invitation for bids. 19
(2) Subject to subsection (b) of this section, an invitation for bids shall 20
include: 21
(i) the specifications of the procurement contract, including the 22
expected degree of minority business enterprise participation, as provided in § 14–303(b) of 23
this article; 24
(II) A SUMMARY OF THE FAC TORS USED TO DETERMI NE THE 25
EXPECTED DEGREE OF M INORITY BUSINESS ENT ERPRISE PARTICIPATIO N FOR THE 26
PROCUREMENT CONTRACT , INCLUDING SUBCONTRAC TING OPPORTUNITIES 27
IDENTIFIED FOR THE P ROJECT, ANY APPLICABLE NORTH AMERICAN INDUSTRY 28
CLASSIFICATION SYSTEM CODES LINKED T O THE SUBCONTRACTING 29
OPPORTUNITIES , AND THE NUMBER OF CE RTIFIED MINORITY BUS INESS 30
ENTERPRISES IN THOSE INDUSTRIES; 31 4 HOUSE BILL 389
[(ii)] (III) whether the procurement contract will be awarded based 1
on the lowest bid price, the lowest evaluated bid price or, if the procurement is subject to § 2
11–202(3) of this article, the bid most favorable to the State; 3
[(iii)] (IV) if the procurement contract will be based on evaluated bid 4
price, the objective measurable criteria by which the lowest evaluated bid price will be 5
determined; and 6
[(iv)] (V) if the Secretary of General Services, the Secretary of 7
Transportation, or the Chancellor of the University System of Maryland has so designated, 8
the small business preference. 9
13–104. 10
(b) (1) Whenever procurement is based on competitive sealed proposals, a 11
procurement officer shall seek proposals by issuing a request for proposals. 12
(2) A request for proposals shall include a statement of: 13
(i) the scope of the procurement contract, including the expected 14
degree of minority business enterprise participation, as provided in § 14–303(b) of this 15
article; 16
(II) A SUMMARY OF THE FAC TORS USED TO DETERMI NE THE 17
EXPECTED DEGREE OF M INORITY BUSINESS ENT ERPRISE PARTICIPATIO N FOR THE 18
PROCUREMENT C ONTRACT, INCLUDING SUBCONTRAC TING OPPORTUNITIES 19
IDENTIFIED FOR THE P ROJECT, ANY APPLICABLE NORTH AMERICAN INDUSTRY 20
CLASSIFICATION SYSTEM CODES LINKED T O THE SUBCONTRACTING 21
OPPORTUNITIES , AND THE NUMBER OF CE RTIFIED MINORITY BUS INESS 22
ENTERPRISES IN THOSE INDUSTRIES; 23
[(ii)] (III) the factors, including price, that will be used in evaluating 24
proposals; and 25
[(iii)] (IV) the relative importance of each factor. 26
14–301. 27
(f) “Minority business enterprise” means: 28
(1) any legal entity, except a joint venture, that is: 29
[(1)] (I) organized to engage in commercial transactions; 30
HOUSE BILL 389 5
[(2)] (II) at least 51% owned and controlled by 1 or more individuals who 1
are socially and economically disadvantaged; and 2
[(3)] (III) managed by, and the daily business operations of which are 3
controlled by, one or more of the socially and economically disadvantaged individuals who 4
own it; OR 5
(2) AN ENTITY THAT: 6
(I) HAS GRADUATED OR OTH ERWISE IS NO LONGER CERTIFIED 7
UNDER THE TERMS OF T HE GRADUATION PROGRA M ESTABLISH ED IN ACCORDANCE 8
WITH § 14–303(B)(15) OF THIS SUBTITLE; AND 9
(II) HAS BEEN AUTHORIZED TO RETAIN CERTIFICAT ION UNDER 10
§ 9–305(B)(7) OF THE STATE GOVERNMENT ARTICLE. 11
(E–1) “INDUSTRY TYPE ” MEANS THE FOLLOWING PROCUREMENT 12
CATEGORIES: 13
(1) CONSTRUCTION ; 14
(2) ARCHITECTURAL AND EN GINEERING SERVICES A ND OTHER 15
CONSTRUCTION –RELATED PROFESSIONAL SERVICES; 16
(3) MAINTENANCE ; 17
(4) INFORMATION TECHNOLO GY; 18
(5) SERVICES; AND 19
(6) GOODS, SUPPLIES, AND EQUIPMENT . 20
14–302. 21
(a) (1) (i) 1. Except for leases of real property, each unit shall structure 22
procurement procedures, consistent with the purposes of this subtitle, to try to achieve an 23
overall percentage goal of the unit’s total dollar value of procurement contracts being made 24
directly or indirectly to certified minority business enterprises. 25
2. Notwithstanding subsubparagraph 1 of this 26
subparagraph, the following contracts may not be counted as part of a unit’s total dollar 27
value of procurement contracts: 28
A. a procurement contract awarded in accordance with 29
Subtitle 1 of this title; 30 6 HOUSE BILL 389
B. a procurement contract awarded to a nonprofit entity in 1
accordance with requirements mandated by State or federal law; and 2
C. a procurement by the Maryland Developmental 3
Disabilities Administration of the Maryland Department of Health for family and 4
individual support services, community residential services, resource coordination services, 5
behavioral support services, vocational and day services, and respite services, as those 6
terms are defined in regulations adopted by the Maryland Department of Health. 7
(ii) 1. The overall percentage goal shall be established on a 8
biennial basis by the Special Secretary for the Office of Small, Minority, and Women 9
Business Affairs, in consultation with the Secretary of Transportation and the Attorney 10
General. 11
2. During any year in which there is a delay in establishing 12
the overall goal, the previous year’s goal will apply. 13
(III) 1. IN CONSULTATION WITH THE SECRETARY OF 14
TRANSPORTATION AND TH E ATTORNEY GENERAL, THE SPECIAL SECRETARY FOR 15
THE OFFICE OF SMALL, MINORITY, AND WOMEN BUSINESS AFFAIRS SHALL 16
ESTABLISH STATEWIDE GOALS BY INDUSTRY TY PE ON A BIENNIAL BAS IS. 17
2. IN ESTABLISHING STATE WIDE GOALS BY INDUST RY 18
TYPE, THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL, MINORITY, AND 19
WOMEN BUSINESS AFFAIRS SHALL USE THE SAME METHODOLOGY USE D TO 20
DEVELOP THE OVERALL STATEWIDE GOAL UNDER SUBPARAGRAPH (II) OF THIS 21
PARAGRAPH , WITH CONSIDERATION G IVEN TO AVAILABILITY AND UTILIZATION OF 22
MINORITY BUSINESS EN TERPRISES IN THE INDUSTR Y. 23
3. DURING ANY YEAR IN WH ICH THERE IS A DELAY IN 24
ESTABLISHING THE STA TEWIDE GOALS BY INDU STRY TYPE, THE PREVIOUS YEAR ’S 25
GOALS WILL APPLY . 26
[(iii)] (IV) 1. In consultation with the Secretary of 27
Transportation and the Attorney General, the Special Secretary for the Office of Small, 28
Minority, and Women Business Affairs shall establish guidelines on a biennial basis for 29
each unit to consider while determining whether to set subgoals for the minority groups 30
listed in § 14–301(k)(1)(i)1, 2, 3, 4, and 6 of this subtitle. 31
2. During any year in which there is a delay in establishing 32
the subgoal guidelines, the previous year’s subgoal guidelines will apply. 33
[(iv)] (V) 1. The Special Secretary for the Office of Small, 34
Minority, and Women Business Affairs, in consultation with the Secretary of 35
Transportation and the Attorney General, shall establish goals and subgoal guidelines that, 36 HOUSE BILL 389 7
to the maximum extent feasible, approximate the level of minority business enterprise 1
participation that would be expected in the absence of discrimination. 2
2. In establishing overall goals and subgoal guidelines, the 3
Special Secretary for the Office of Small, Minority, and Women Business Affairs shall 4
provide for public participation by consulting with minority, women’s, and general 5
contractor groups, community organizations, and other officials or organizations that could 6
be expected to have information concerning: 7
A. the availability of minority– and women–owned 8
businesses; 9
B. the effects of discrimination on opportunities for 10
minority– and women–owned businesses; and 11
C. the State’s operation of the Minority Business Enterprise 12
Program. 13
[(v)] (VI) In establishing overall goals, the factors to be considered 14
shall include: 15
1. the relative availability of minority– and women–owned 16
businesses to participate in State procurement as demonstrated by the State’s most recent 17
disparity study; 18
2. past participation of minority business enterprises in 19
State procurement, except for procurement related to leases of real property; and 20
3. other factors that contribute to constitutional goal setting. 21
[(vi)] (VII) Notwithstanding § 12–101 of this article, the Special 22
Secretary for the Office of Small, Minority, and Women Business Affairs shall adopt 23
regulations in accordance with Title 10, Subtitle 1 of the State Government Article setting 24
forth the State’s overall goal. 25
14–303. 26
(a) (1) (i) In accordance with Title 10, Subtitle 1 of the State Government 27
Article, the Board shall adopt regulations consistent with the purposes of this Division II 28
to carry out the requirements of this subtitle. 29
(ii) The Board shall keep a record of information regarding any 30
waivers requested in accordance with § 14–302(a)(9)(i) of this subtitle and subsection 31
(b)(12) of this section and submit a copy of the record to the General Assembly on or before 32
October 1 of each year, in accordance with § 2–1257 of the State Government Article. 33
8 HOUSE BILL 389
(2) The regulations shall establish procedures to be followed by units, 1
prospective contractors, and successful bidders or offerors to maximize notice to, and the 2
opportunity to participate in the procurement process by, a broad range of minority 3
business enterprises. 4
(b) These regulations shall include: 5
(1) provisions: 6
(i) designating one State agency to certify and decertify minority 7
business enterprises for all units through a single process that meets applicable federal 8
requirements, including provisions that promote and facilitate the submission of some or 9
all of the certification application through an electronic process; 10
(ii) for the purpose of certification under this subtitle, that promote 11
and facilitate certification of minority business enterprises that have received certification 12
from a federal or a county program that uses a certification process substantially similar 13
to the process established in accordance with item (i) of this item, including a provision that 14
provides for certification of a business as a minority business enterprise if the business: 15
1. has obtained certification under the federal 16
Disadvantaged Business Enterprise Program; and 17
2. meets the eligibility requirements of the Minority 18
Business Enterprise Program; 19
(iii) requiring the agency designated to certify minority business 20
enterprises to complete the agency’s review of an application for certification and notify the 21
applicant of the agency’s decision within 90 days of receipt of a complete application that 22
includes all of the information necessary for the agency to make a decision; and 23
(iv) authorizing the agency designated to certify minority business 24
enterprises to extend the notification requirement established under item (iii) of this item 25
once, for no more than an additional 60 days, if the agency provides the applicant with a 26
written notice and explanation; 27
(2) a requirement that the solicitation document accompanying each 28
solicitation: 29
(I) set forth the expected degree of minority business enterprise 30
participation based, in part, on the factors set forth in § 14–302(a)(3)(ii) of this subtitle; 31
AND 32
(II) INCLUDE A SUMMARY OF THE FACTORS USED TO 33
DETERMINE THE EXPECT ED DEGREE OF MINORIT Y BUSINESS ENTERPRIS E 34
PARTICIPATION , INCLUDING SUBCONTRAC TING OPPORTUNITIES I DENTIFIED FOR 35 HOUSE BILL 389 9
THE PROJECT , ANY APPLICABLE NORTH AMERICAN INDUSTRY CLASSIFICATION 1
SYSTEM CODES LINKED T O THE SUBCONTRACTING OPPORTUNITIES , AND THE 2
NUMBER OF CERTIFIED MINORITY BUSINESS EN TERPRISES IN THOSE I NDUSTRIES; 3
(3) a requirement that bidders or offerors complete a document setting 4
forth the percentage of the total dollar amount of the contract that the bidder or offeror 5
agrees will be performed by certified minority business enterprises; 6
(4) a requirement that within 10 days after notice from the prime 7
contractor of the State’s intent to award a contract, each minority business enterprise 8
serving as a subcontractor on the contract complete a document setting forth the percentage 9
and type of work assigned to the subcontractor under the contract and submit copies of the 10
completed form to both the procurement officer and the contractor; 11
(5) a requirement that the solicitation documents completed and submitted 12
by the bidder or offeror in connection with its minority business enterprise participation 13
commitment must be attached to and made a part of the contract; 14
(6) [(i) a requirement that all contracts containing minority business 15
enterprise participation goals shall contain a liquidated damages provision that applies in 16
the event that the contractor fails to comply in good faith with the provisions of this subtitle 17
or the pertinent terms of the applicable contract; and 18
(ii) a provision that prohibits a unit from assessing liquidated 19
damages for an indefinite delivery contract or an indefinite performance contract if a unit 20
fails to request the performance or delivery of a task for which: 21
1. a minority business enterprise subcontractor was named 22
on the participation schedule; or 23
2. a minority business enterprise subcontractor was named 24
on the participation schedule and qualified based on the subcontractor’s existing North 25
American Industry Classification System code; 26
(7)] a requirement that the unit provide a current list of certified minority 27
business enterprises to each prospective contractor; 28
[(8)] (7) provisions to ensure the uniformity of requests for bids on 29
subcontracts; 30
[(9)] (8) provisions relating to the timing of requests for bids on 31
subcontracts and of submission of bids on subcontracts; 32
[(10)] (9) provisions designed to ensure that a fiscal disadvantage to the 33
State does not result from an inadequate response by minority business enterprises to a 34
request for bids; 35 10 HOUSE BILL 389
[(11)] (10) provisions relating to joint ventures, under which a bidder may 1
count toward meeting its minority business enterprise participation goal, the minority 2
business enterprise portion of the joint venture; 3
[(12)] (11) consistent with § 14–302(a)(9) of this subtitle, provisions relating 4
to any circumstances under which a unit may waive obligations of the contractor relating 5
to minority business enterprise participation; 6
[(13)] (12) provisions requiring a monthly submission to the unit by 7
minority business enterprises acknowledging all payments received in the preceding 30 8
days under a contract governed by this subtitle; 9
[(14)] (13) a requirement that a unit shall verify and maintain data 10
concerning payments received by minority business enterprises, including a requirement 11
that, upon completion of a project, the unit shall compare the total dollar value actually 12
received by minority business enterprises with the amount of contract dollars initially 13
awarded, and an explanation of any discrepancies therein; 14
[(15)] (14) a requirement that a unit verify that minority business 15
enterprises listed in a successful bid are actually participating to the extent listed in the 16
project for which the bid was submitted; 17
[(16)] (15) provisions establishing a graduation program based on the 18
financial viability of the minority business enterprise, using annual gross receipts or other 19
economic indicators as may be determined by the Board; 20
[(17)] (16) a requirement that a bid or proposal based on a solicitation with 21
an expected degree of minority business enterprise participation identify the specific 22
commitment of certified minority business enterprises at the time of submission; 23
[(18)] (17) provisions promoting and providing for the counting and 24
reporting of certified minority business enterprises as prime contractors; 25
[(19)] (18) provisions establishing standards to require a minority business 26
enterprise to perform a commercially useful function on a contract; 27
[(20)] (19) a requirement that each unit work with the Governor’s Office of 28
Small, Minority, and Women Business Affairs to designate certain procurements as being 29
excluded from the requirements of § 14–302(a) of this subtitle; 30
[(21)] (20) provisions promoting and providing for the counting and 31
reporting of minority business enterprises certified as both a woman–owned business and 32
a business owned by a member of an ethnic or racial group in accordance with § 33
14–302(a)(5) of this subtitle; and 34
HOUSE BILL 389 11
[(22)] (21) other provisions that the Board considers necessary or 1
appropriate to encourage participation by minority business enterprises and to protect the 2
integrity of the procurement process. 3
(c) The regulations adopted under this section shall specify that: 4
(1) a unit may not allow a business to participate as if it were a certified 5
minority business enterprise if the business’s certification is pending; AND 6
(2) A UNIT SHALL ALLOW A BUSINESS TO PARTICIP ATE AS A 7
CERTIFIED MINORITY B USINESS ENTERPRISE I F THE CERTIFICATION HAS BEEN 8
GRANTED UNDER § 9–305(B)(7) OF THE STATE GOVERNMENT ARTICLE. 9
14–305. 10
(a) (1) Within 90 days after the end of the fiscal year, each unit shall report to 11
the Governor’s Office of Small, Minority, and Women Business Affairs, the certification 12
agency, and, subject to § 2–1257 of the State Government Article, the Joint Committee on 13
Fair Practices and Personnel Oversight. 14
(2) A report under this subsection shall for the preceding fiscal year: 15
(i) state the total number and value of procurement contracts 16
between the unit and certified minority business enterprises, by specific category of 17
minority business enterprise AND BY INDUSTRY TYPE , including whether the minority 18
business enterprise participated as a prime contractor or as a subcontractor; 19
(ii) indicate the percentage that those procurement contracts 20
represent, by specific category of minority business enterprise AND BY INDUSTRY TYPE , 21
of the total number and value of procurement contracts; 22
(iii) state the total number and the names of certified minority 23
business enterprises that participated as prime contractors or as subcontractors on 24
procurement contracts awarded by a unit; 25
(iv) for each minority business included in the report under item (iii) 26
of this paragraph, list all procurement contracts awarded by a unit to the minority business 27
enterprise, including a description of the contract AND INDUSTRY TYPE; [and] 28
(V) PROVIDE THE RESULTS OF EACH COMPLIANCE ASSESSMEN T 29
CONDUCTED BY THE UNI T UNDER § 14–303(B)(14)(B)(15) OF THIS SUBTITLE , 30
INCLUDING FOR EACH C ONTRACT COMPLETED DU RING THE FISCAL YEAR : 31
1. THE NAMES OF EACH PR IME CONTRACTOR AND E ACH 32
MINORITY BUSINESS SUBCONTRACTOR THAT PARTICIPATED IN THE CONTRACT ; 33
12 HOUSE BILL 389
2. THE TYPE OF GOOD OR SERVICE PROVIDED BY THE 1
CONTRACT; 2
3. THE MINORITY BUSINES S ENTERPRISE 3
PARTICIPATION GOAL F OR THE CONTRACT ; 4
4. WHETHER A WAIVER WAS GRANTED FOR THE 5
MINORITY BUSINESS ENT ERPRISE PARTICIPATIO N GOAL; 6
5. THE TOTAL DOLLAR VAL UE OF PAYMENTS MADE TO 7
EACH PRIME CONTRACTO R AND BY EACH PRIME CONTRACTOR TO EACH 8
SUBCONTRACTOR DURING THE CONTRACT TERM ; 9
6. WHETHER EACH SUBCONT RACTOR IS A CERTIFIE D 10
MINORITY BUSINESS ENTERPRI SE; AND 11
7. IF APPLICABLE, A DESCRIPTION OF FAC TORS THAT 12
MAY HAVE CONTRIBUTED TO FAILURE TO ACHIEV E THE MINORITY BUSIN ESS 13
ENTERPRISE PARTICIPA TION GOAL FOR THE CO NTRACT, INCLUDING DOCUMENTED 14
NONPERFORMANCE OR UN AVAILABILITY OF A MI NORITY BUSINESS ENTER PRISE; 15
AND 16
[(v)] (VI) contain other such information as required by the 17
Governor’s Office of Small, Minority, and Women Business Affairs and the certification 18
agency and approved by the Board. 19
(3) As to procurement contracts for architectural services and engineering 20
services reported under paragraph (2) of this subsection, the report shall identify by 21
separate category of minority business enterprise procurements for: 22
(i) architectural services; and 23
(ii) engineering services. 24
(4) A report under this subsection shall be in a form prescribed by the 25
Governor’s Office of Small, Minority, and Women Business Affairs and the certification 26
agency and approved by the Board. 27
(5) THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL, 28
MINORITY, AND WOMEN BUSINESS AFFAIRS MAY WAIVE THE REQUIREMENT FOR A 29
UNIT TO REPORT MINOR ITY BUSINESS PARTICI PATION BY INDUSTRY T YPE UNDER 30
PARAGRAPH (2) OF THIS SUBSECTION I F THE SPENDING THRES HOLD FOR THE 31
INDUSTRY TYPE IS TOO LOW FOR THE UNIT TO PROVIDE SUFFICIENT DATA. 32
HOUSE BILL 389 13
(b) (1) On or before December 31 of each year, the Governor’s Office of Small, 1
Minority, and Women Business Affairs shall submit to the Board of Public Works and, 2
subject to § 2–1257 of the State Government Article, to the Legislative Policy Committee a 3
report summarizing the information the Office receives under subsection (a) of this section. 4
(2) IF APPLICABLE, THE REPORT SUBMITTED UNDER PARAGRAPH (1) 5
OF THIS SUBSECTION S HALL INCLUDE MINORIT Y BUSINESS ENTERPRIS E 6
PARTICIPATION DATA F OR EACH UNIT BY INDUSTR Y TYPE. 7
(2) (3) This report may be prepared in conjunction with the annual 8
report required under § 9–306 of the State Government Article. 9
(C) (1) IN THIS SUBSECTION , “MITIGATING FACTORS ” INCLUDES 10
DOCUMENTED NONPERFOR MANCE OR UNA VAILABILITY OF A MIN ORITY BUSINESS 11
ENTERPRISE DESIGNATE D FOR A CONTRACT . 12
(2) THE GOVERNOR’S OFFICE OF SMALL, MINORITY, AND WOMEN 13
BUSINESS AFFAIRS SHALL MAINTAIN AND P UBLISH ON ITS WEBSIT E A LIST OF 14
PRIME CONTRACTORS WH O, BASED ON THE RESULTS OF THE COMPLIANCE 15
ASSESSMENTS RECEIVED UNDER SUBSECTION (A)(2)(V) OF THIS SECTION , 16
PERSISTENTLY FAIL AND THE OFFICE OF STATE PROCUREMENT IN THE 17
DEPARTMENT OF GENERAL SERVICES, IN CONSULTATION WITH THE OFFICE OF 18
THE ATTORNEY GENERAL AND THE BOARD OF PUBLIC WORKS, SHALL ADOPT BY 19
REGULATION CRITERIA USED TO DETERMINE TH AT A PRIME CONTRACTO R HAS 20
PERSISTENTLY FAILED TO MEET CONTRACT GOA LS IN THE ABSENCE OF MITIGATING 21
FACTORS. 22
(3) THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL, 23
MINORITY, AND WOMEN BUSINESS AFFAIRS MAY ADOPT REGULATIONS NECESSARY 24
TO CARRY OUT THE REQ UIREMENTS OF THIS SU BSECTION. 25
(3) THE CRITERIA ADOPTED UNDER PARAGRAPH (2) OF THIS 26
SUBSECTION SHALL INC LUDE THE RESULTS OF THE COMPLIANCE ASSES SMENTS 27
MADE UNDER SUBSECTIO N (A)(2)(V) OF THIS SECTION. 28
(4) THE GOVERNOR’S OFFICE OF SMALL, MINORITY, AND WOMEN 29
BUSINESS AFFAIRS SHALL REFER P RIME CONTRACTORS IDE NTIFIED UNDER THE 30
CRITERIA ADOPTED UND ER PARAGRAPH (2) OF THIS SUBSECTION T O THE OFFICE 31
OF THE ATTORNEY GENERAL FOR DEBARMENT UNDER § 16–203(D)(4) OF THIS 32
ARTICLE. 33
14–502. 34
14 HOUSE BILL 389
(f) (1) The Special Secretary for the Office of Small, Minority, and Women 1
Business Affairs, in consultation with the Attorney General, shall establish standards and 2
guidelines for participation in the Small Business Reserve Program every 5 years. 3
(2) THE STANDARDS AND GUI DELINES ESTABLISHED UNDER 4
PARAGRAPH (1) OF THIS SUBSECTION S HALL ALLOW FOR THE R EGISTRATION OF 5
BUSINESSES FOR PARTI CIPATION IN THE SMALL BUSINESS RESERVE PROGRAM 6
WITHOUT THE NEED TO FILE ANY ADDITIONAL PAPERWORK OTHER THAN EV IDENCE 7
THAT THE BUSINESS : 8
(I) IS A SMALL BUSINESS UNDER THIS SUBTITLE ; AND 9
(II) 1. IS CERTIFIED AS A MI NORITY BUSINESS ENTE RPRISE 10
UNDER SUBTITLE 3 OF THIS TITLE; 11
2. IS CERTIFIED UNDER T HE FEDERAL DISADVANTAGED 12
BUSINESS ENTERPRISE PROGRAM; OR 13
3. IS QUALIFIED AS A SM ALL BUSINESS UNDER 14
SUBTITLE 2 OF THIS TITLE. 15
14–502.1. 16
(A) (1) THIS SECTION APPLIES TO A PROCUREMENT BY ANY UNIT OR 17
AGENCY OF THE EXECUTIVE BRANCH OF STATE GOVERNMENT FOR GOODS, 18
SUPPLIES, SERVICES, MAINTENANCE, CONSTRUCTION , CONSTRUCTION –RELATED 19
SERVICES, ARCHITECTURAL SERVIC ES, OR ENGINEERING SERVI CES. 20
(2) THIS SECTION DOES NOT APPLY TO: 21
(I) PROCUREMENTS MADE UN DER SUBTITLE 1 OF THIS TITLE; 22
(II) PROCUREMENTS INVOLVI NG EXPENDITURES OF F EDERAL 23
DOLLARS, TO THE EXTENT THAT I NCLUSION IN THE SMAL L BUSINESS RESERVE 24
PROGRAM CONFLICTS WI TH FEDERAL LAW OR GR ANT PROVISIONS ; 25
(III) PROCUREMENTS WITH A TOTAL DOLLAR VALUE U NDER 26
$50,000; 27
(IV) THE PROCUR EMENT OF HUMAN , SOCIAL, CULTURAL, OR 28
EDUCATIONAL SERVICES ; OR 29
(V) TERM AND MASTER CONT RACTS EXEMPTED UNDER 30
SUBSECTION (C) OF THIS SECTION. 31
HOUSE BILL 389 15
(B) (1) A PROCUREMENT WITH A T OTAL DOLLAR VALUE BE TWEEN 1
$50,000 AND $500,000 SHALL BE DESIGNATED FOR THE SMALL BUSINE SS RESERVE. 2
(2) EACH UNIT OR AGENCY S HALL IMPLEMENT THIS SUBSECTION IN 3
A MANNER CONSISTENT WITH ALL APPLICABLE STATUTES, INCLUDING THE 4
REQUIREM ENTS OF SUBTITLE 3 OF THIS TITLE. 5
(C) (1) A PROCUREMENT MAY BE E XEMPT FROM DESIGNATI ON UNDER 6
SUBSECTION (B) OF THIS SECTION IF T HE GOVERNOR’S OFFICE OF SMALL, 7
MINORITY, AND WOMEN BUSINESS AFFAIRS CERTIFIES , CONCURRENTLY WITH 8
REVIEW OF ANY WAIVER DETERMINATIONS FOR CERTIFIE D MINORITY BUSINESS 9
ENTERPRISE PARTICIPA TION CONTRACT GOALS , THAT IT IS NOT PRACT ICABLE TO 10
DO SO. 11
(2) THE OFFICE OF STATE PROCUREMENT IN THE DEPARTMENT OF 12
GENERAL SERVICES SHALL ASSIST THE GOVERNOR’S OFFICE OF SMALL, 13
MINORITY, AND WOMEN BUSINESS AFFAIRS IN ESTABLISHI NG PROCEDURES AND 14
GUIDELINES FOR THE E XEMPTION OF PROCUREM ENTS UNDER PARAGRAPH (1) OF 15
THIS SUBSECTION . 16
Part IV. [Construction Contracts –] Prompt Payment of Subcontractors. 17
15–226. 18
(a) In this section, “undisputed amount” means an amount owed by a contractor 19
to a subcontractor for which there is no good faith dispute, including any retainage 20
withheld. 21
(b) It is the policy of the State that, for work under a State procurement contract 22
[for construction]: 23
(1) a contractor shall promptly pay to a subcontractor any undisputed 24
amount to which the subcontractor is entitled; and 25
(2) a subcontractor shall promptly pay to a lower tier subcontractor any 26
undisputed amount to which the lower tier subcontractor is entitled. 27
(c) (1) A contractor shall pay a subcontractor an undisputed amount to which 28
the subcontractor is entitled within 10 days of receiving a progress or final payment from 29
the State. 30
(2) If a contractor withholds payment from a subcontractor, within the time 31
period in which payment normally would be made, the contractor shall: 32
16 HOUSE BILL 389
(i) notify the subcontractor in writing and state the reason why 1
payment is being withheld; and 2
(ii) provide a copy of the notice to the procurement officer. 3
(d) (1) If a subcontractor does not receive a payment within the required time 4
period, the subcontractor may give written notice of the nonpayment to the procurement 5
officer. 6
(2) The notice shall: 7
(i) indicate the name of the contractor, the project under which the 8
dispute exists, and the amount in dispute; 9
(ii) provide an itemized description on which the amount is based; 10
and 11
(iii) if known, provide an explanation for any dispute concerning 12
payment by the contractor. 13
(e) (1) Within 2 business days of receipt of written notice from a subcontractor, 14
a representative of the unit designated by the procurement officer shall verbally contact 15
the contractor to ascertain whether the amount withheld is an undisputed amount. 16
(2) If the representative of the unit decides that a part or all of the amount 17
withheld is an undisputed amount, the representative of the unit shall instruct the 18
contractor to pay the subcontractor the undisputed amount within 3 business days. 19
(3) The representative of the unit shall verbally communicate to the 20
subcontractor the results of discussions with the contractor. 21
(4) If the contractor is instructed to pay the subcontractor and the 22
subcontractor is not paid within the time instructed under paragraph (2) of this subsection, 23
the subcontractor may report the nonpayment in writing to the procurement officer. 24
(f) (1) If the subcontractor notifies the procurement officer under subsection 25
(e)(4) of this section that payment has not been made, the representative of the unit shall 26
schedule a meeting to discuss the dispute with the unit’s project manager, the contractor, 27
and the subcontractor: 28
(i) at a time and location designated by the representative of the 29
unit; but 30
(ii) not later than 10 days after receiving notice from the 31
subcontractor under subsection (e)(4) of this section. 32
HOUSE BILL 389 17
(2) The purpose of the meeting is to establish why the contractor has not 1
paid the subcontractor in the required time period. 2
(3) The representative of the unit shall require the parties to provide at the 3
meeting any information that the representative believes necessary to evaluate the dispute. 4
(4) If the representative of the unit determines that the contractor is 5
delinquent in payment of an undisputed amount to the subcontractor, further progress 6
payments to the contractor may be withheld until the subcontractor is paid. 7
(5) If payment is not paid to the subcontractor within 7 days after the 8
representative of the unit determines that the contractor is delinquent in paying the 9
subcontractor under this subsection, the representative shall schedule a second meeting to 10
address the dispute: 11
(i) at a time and location designated by the representative of the 12
unit; but 13
(ii) not later than 5 days after the close of the 7–day period. 14
(6) If, at the completion of the second meeting, the representative of the 15
unit determines that the contractor continues to be delinquent in payments owed to the 16
subcontractor, the representative: 17
(i) shall order that further payments to the contractor not be 18
processed until payment to the subcontractor is verified; 19
(ii) may order that work under the contract be suspended based on 20
the failure of the contractor to meet obligations under the contract; and 21
(iii) subject to paragraph (7) of this subsection, may require that the 22
contractor pay a penalty to the subcontractor, in an amount not exceeding $100 per day, 23
from the date that payment was required under subsection (e)(2) of this section. 24
(7) A penalty may not be imposed under paragraph (6)(i ii) of this 25
subsection for any period that the representative of the unit determines the subcontractor 26
was not diligent in reporting nonpayment to the procurement officer. 27
(g) (1) A contractor or a subcontractor may appeal a decision under subsection 28
(f)(6) of this section to the procurement officer. 29
(2) The contractor shall comply with the procurement officer’s decision. 30
(h) An act, failure to act, or decision of a procurement officer or a representative 31
of a unit concerning a payment dispute between a contractor and subcontractor or between 32
subcontractors under this section may not: 33
18 HOUSE BILL 389
(1) affect the rights of the contracting parties under any other provision of 1
law; 2
(2) be used as evidence on the merits of a dispute between the unit and the 3
contractor or the contractor and subcontractor in any other proceeding; or 4
(3) result in liability against or prejudice the rights of the unit. 5
(i) A decision of a procurement officer or a representative of the unit designated 6
by the procurement officer under this section is not subject to judicial review or the 7
provisions of Part III of this subtitle. 8
(j) (1) A unit shall include in each State procurement contract [for 9
construction] a provision: 10
(i) governing prompt payment to subcontractors; and 11
(ii) requiring inclusion of a similar provision in each subcontract at 12
any tier. 13
(2) The contract provision shall establish procedures and remedies for the 14
resolution of payment disputes similar to the process and remedies prescribed in 15
subsections (c) through (g) of this section. 16
16–203. 17
(d) A person may be debarred from entering into a contract with the State: 18
(1) if the Board finds that the person was established or operates in a 19
manner designed to evade the application of this title or to defeat the purpose of this title; 20
(2) if the person is a successor, assignee, subsidiary, or affiliate of a person 21
who is debarred or suspended; 22
(3) EXCEPT AS PROVIDED U NDER ITEM (4) OF THIS SUBSECTION , for 23
one of the following violations of a contract provision if the Board believes it to be serious 24
enough to justify debarment: 25
(i) the deliberate failure, without good cause, to perform in 26
accordance with the specifications, or within the time limit, provided in a contract; or 27
(ii) within the preceding 5 years, the failure to perform or of 28
unsatisfactory performance in accordance with the terms of one or more contracts, unless 29
the failure to perform or unsatisfactory performance was caused by acts beyond the control 30
of the person; 31
HOUSE BILL 389 19
(4) FOR A PERIOD NOT EXC EEDING 3 YEARS IF THE PERSON 1
PERSISTENTLY FAILS T O MEET CONTRACT GOAL S IN THE ABSENCE OF MITIGATING 2
FACTORS UNDER THE CR ITERIA ESTABLISHED U NDER § 14–305(C)(2) OF THIS 3
ARTICLE; 4
[(4)] (5) if the person is a competing contractor, or any officer, employee, 5
representative, agent, or consultant of any competing contractor who violates § 13–211 of 6
this article; or 7
[(5)] (6) for any other cause that the Board determines to be so serious as 8
to affect the integrity of the procurement process. 9
Article – State Government 10
9–303.3. 11
(A) IN THIS SECTION , “OMBUDSMAN ” MEANS THE MINORITY BUSINESS 12
ENTERPRISE OMBUDSMAN IN THE OFFICE. 13
(B) THERE IS A MINORITY BUSINESS ENTERPRISE OMBUDSMAN 14
APPOINTED BY THE SPECIAL SECRETARY. 15
(C) IN ACCORDANCE WITH THE STATE BUDGET , THE SPECIAL SECRETARY 16
SHALL ALLOCATE THE S TAFF AND OFFICE RESOURCES TO T HE OMBUDSMAN 17
NECESSARY FOR THE OMBUDSMAN TO FULFILL THE DUTIES OF THE OMBUDSMAN . 18
(D) THE OMBUDSMAN SHALL : 19
(1) MAKE REASONABLE ASSIST THE PROCURE MENT OFFICER 20
MANAGING THE CONTRAC T IN ATTEMPTS TO RESOLVE DISPUTES BETWEEN 21
MINORITY BUSINESS EN TERPRISES AND PRIME CONTRACTORS , INCLUDING 22
DISPUTES OVER CONTRA CT SCOPE AND PAYMENT S; AND 23
(2) SERVE AS A RESOURCE TO MINORITY BUSINESS EN TERPRISE 24
LIAISONS, PROCUREMENT OFFICERS I N UNITS OF STATE GOVERNMENT , PRIME 25
CONTRACTORS , AND MINORITY BUSINES S ENTERPRISES IN RES OLVING DISPUTES 26
RELATED TO CONTRACTS THAT INCLUDE A MINOR ITY BUSINESS ENTERPR ISE 27
PARTICIPATION GOAL .; AND 28
(3) CONDUCT TRAININGS FO R PROCUREMENT OFFICERS IN UNITS OF 29
STATE GOVERNMENT ON E NFORCEMENT OF THE RE QUIREMENTS OF TITLE 14, 30
SUBTITLE 3 OF THE STATE FINANCE AND PROCUREMENT ARTICLE, INCLUDING THE 31
ASSESSMENT OF LIQUID ATED DAMAGES UNDER § 14–303(B)(6) OF THE STATE 32
FINANCE AND PROCUREMENT ARTICLE. 33
20 HOUSE BILL 389
(E) IN RESOLVING A DISPUT E UNDER SUBSECTION (D) OF THIS SECTION , 1
THE OMBUDSMAN MAY : 2
(1) COMPEL PRIME CONTRAC TORS AND MINORITY BU SINESS 3
ENTERPRISES TO PROVI DE DOCUMENTATION REL ATED TO CONTRACT 4
PERFORMANCE AND PAYM ENTS; AND 5
(2) ORDER ASSIST THE PRO CUREMENT OFFICER MAN AGING THE 6
CONTRACT IN ORDERING ANY RELEVANT PAYMENT S TO BE MADE IN CONJ UNCTION 7
WITH A DISPUTE RESOL UTION. 8
(F) (1) EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS SUBSECTION , 9
WHEN RESOLVING A DIS PUTE UNDER SUBSECTIO N (D) OF THIS SECTION , THE 10
OMBUDSMAN MAY NOT DIS CLOSE INFORMATION RE CEIVED FROM A UNIT O F STATE 11
GOVERNMENT , PRIME CONTRACTOR , OR MINORITY BUSINESS ENTERPRISE 12
WITHOUT THE WRITTEN CONSENT OF THE PARTY FROM WHOM THE INFORM ATION 13
WAS OBTAINED . 14
(2) THE OMBUDSMAN MAY DISCLOS E INFORMATION RECEIVED 15
UNDER THIS SECTION T O THE ASSISTANT ATTORNEY GENERAL ASSIGNED TO T HE 16
OFFICE. 17
9–305. 18
(b) Subject to the limitations of any law that governs the activities of other units 19
of the Executive Branch of the State government, the Special Secretary shall: 20
(7) establish a mentoring program: 21
(i) in which larger and more established minority businesses can 22
mentor start–up and small minority businesses; and 23
(ii) that incentivizes mentor participation by providing benefits to 24
mentors, including: 25
1. special recognition on the Office website, and in the Office 26
newsletter and participation updates; 27
2. a certificate of participation awarded by the Office; 28
3. the opportunity to present highlights of mentor and 29
protege relationships at an annual appreciation event sponsored by the Office; [and] 30
4. increased networking and educational opportunities; AND 31
HOUSE BILL 389 21
5. AUTHORIZATION FOR MI NORITY BUSINESSES TH AT 1
HELD CERTIFICATION U NDER TITLE 14, SUBTITLE 3 OF THE STATE FINANCE AND 2
PROCUREMENT ARTICLE AND HAVE BEEN DECERTIFIED TO OBTAI N OR RETAIN 3
CERTIFICATION FOR A PERIOD OF TIME SET B Y THE SPECIAL SECRETARY; 4
SECTION 2. AND BE IT FURTHER ENACTED, That, on or before December 1, 5
2023, the Minority Business Enterprise Ombudsman established under Section 1 of this 6
Act shall report to the Senate Budget and Taxation Committee and the House Health and 7
Government Operations Committee, in accordance with § 2–1257 of the State Government 8
Article, on the activities of the Ombudsman, including whether the number of staff 9
allocated to the Ombudsman is adequate to accomplish the requirements of § 9–303.3 of 10
the State Government Article, as enacted under Section 1 of this Act. 11
SECTION 3. AND BE IT FURTHER ENACTED, That, on or before June 1, 2024, 12
the Governor’s Office of Small, Minority, and Women Business Affairs shall study the use 13
of liquidated damages by procurement officers under § 14–303(b)(6) of the State Finance 14
and Procurement Article to enforce the requirements of Title 14, Subtitle 3 of the State 15
Finance and Procurement Article and report to the Senate Budget and Taxation Committee 16
and the House Health and Government Operations Committee, in accordance with § 17
2–1257 of the State Government Article, on: 18
(1) the number of instances in which a procurement officer could have 19
applied a liquidated damages penalty for failure of a contractor to comply in good faith with 20
the provisions of Title 14, Subtitle 3 of the State Finance and Procurement Article; 21
(2) the number of instances in which liquidated damages were actually 22
assessed; 23
(3) the amount of liquidated damages collected, if any; 24
(4) the reasons for any failure to assess liquidated damages; and 25
(5) recommendations for effective enforcement of the requirements of Title 26
14, Subtitle 3 of the State Finance and Procurement Article, including any suggested 27
statutory changes. 28
SECTION 4. AND BE IT FURTHER ENACTED, That, on or before December 1, 29
2024, the Department of Legislative Services shall report to the Senate Budget and 30
Taxation Committee and the House Health and Government Operations Committee, in 31
accordance with § 2–1257 of the State Government Article, on: 32
(1) the status of the recommendations included in the Department’s 2021 33
report “Evaluation of the Minority Business Enterprise Program”, including an assessment 34
of: 35
(i) the effectiveness of changes implemented in response to the 36
recommendations; and 37 22 HOUSE BILL 389
(ii) for any recommendations that were not implemented or only 1
partially implemented, whether the Department reaffirms its 2021 recommendation; and 2
(2) any updated findings and recommendations related to the Minority 3
Business Enterprise Program. 4
SECTION 2. 5. AND BE IT FURTHER ENACTED, That this Act shall take effect 5
July 1, 2022. 6
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.