EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0487*
SENATE BILL 487
P2 2lr1963
CF HB 389
By: Senators Griffith, Elfreth, Augustine, Jackson, Kelley, Washington, Sydnor,
Zucker, Guzzone, Pinsky, Lam, King, and Patterson
Introduced and read first time: January 27, 2022
Assigned to: Budget and Taxation
A BILL ENTITLED
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 Office; 13
authorizing the Special Secretary to waive the requirement for a unit to report 14
certain information under certain circumstances; requiring the Office to maintain 15
and publish on its website a list of prime contractors who, based on the results of the 16
compliance assessments, persistently fail to meet contract goals; requiring certain 17
units of the Executive Branch of State government to designate certain 18
procurements for the small business reserve under certain circumstances; 19
establishing that certain procurements may be exempt from designation for the 20
small business reserve under certain circumstances; making certain provisions of 21
law relating to the prompt payment of subcontractors apply to all State contracts, 22
rather than only State contracts for construction; creating the position of Minority 23
Business Enterprise Ombudsman in the Office; establishing certain duties and 24
authority of the Ombudsman; altering the definition of “responsible bidder or offeror” 25
to exclude contractors who persistently fail to meet contract goals, based on the 26
results of certain compliance assessments; and generally relating to procurement 27
and minority business enterprises. 28
BY repealing and reenacting, without amendments, 29 2 SENATE BILL 487
Article – State Finance and Procurement 1
Section 11–101(a) 2
Annotated Code of Maryland 3
(2021 Replacement Volume) 4
BY repealing and reenacting, with amendments, 5
Article – State Finance and Procurement 6
Section 11–101(s), 13–103(a), 13–104(b), 14–301(f), 14–302(a)(1), 14–303, and 7
14–305; and 15–226 to be under the amended part “Part IV. Prompt Payment 8
of Subcontractors” 9
Annotated Code of Maryland 10
(2021 Replacement Volume) 11
BY adding to 12
Article – State Finance and Procurement 13
Section 14–502.1 14
Annotated Code of Maryland 15
(2021 Replacement Volume) 16
BY adding to 17
Article – State Government 18
Section 9–303.3 19
Annotated Code of Maryland 20
(2021 Replacement Volume) 21
BY repealing and reenacting, with amendments, 22
Article – State Government 23
Section 9–305(b)(7) 24
Annotated Code of Maryland 25
(2021 Replacement Volume) 26
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 27
That the Laws of Maryland read as follows: 28
Article – State Finance and Procurement 29
11–101. 30
(a) In this Division II the following words have the meanings indicated unless: 31
(1) the context clearly requires a different meaning; or 32
(2) a different definition is provided for a particular title or provision. 33
(s) “Responsible bidder or offeror” means a person who: 34
SENATE BILL 487 3
(1) has the capability in all respects to perform fully the requirements for 1
a procurement contract; [and] 2
(2) possesses the integrity and reliability that will ensure good faith 3
performance; AND 4
(3) IS NOT A CONTRA CTOR WHO PERSISTENTL Y FAILS TO MEET 5
CONTRACT GOALS AS DE TERMINED UNDER § 14–305(C)(2) OF THIS ARTICLE . 6
13–103. 7
(a) (1) Whenever procurement is based on competitive sealed bids, a 8
procurement officer shall seek bids by issuing an invitation for bids. 9
(2) Subject to subsection (b) of this section, an invitation for bids shall 10
include: 11
(i) the specifications of the procurement contract, including the 12
expected degree of minority business enterprise participation, as provided in § 14–303(b) of 13
this article; 14
(II) A SUMMARY OF THE FAC TORS USED TO DETERMI NE THE 15
EXPECTED DEGREE OF M INORITY BUSINESS ENT ERPRISE PARTICIPATIO N FOR THE 16
PROCUREMENT CONTRACT , INCLUDING SUBCONTRAC TING OPPORTUNITIES 17
IDENTIFIED FOR THE P ROJECT, ANY APPLICABLE NORTH AMERICAN INDUSTRY 18
CLASSIFICATION SYSTEM CODES LINKED T O THE SUBCONTRACTING 19
OPPORTUNITIES , AND THE NUMBER OF CERTIFIED MINORITY BUSINESS 20
ENTERPRISES IN THOSE INDUSTRIES; 21
[(ii)] (III) whether the procurement contract will be awarded based 22
on the lowest bid price, the lowest evaluated bid price or, if the procurement is subject to § 23
11–202(3) of this article, the bid most favorable to the State; 24
[(iii)] (IV) if the procurement contract will be based on evaluated bid 25
price, the objective measurable criteria by which the lowest evaluated bid price will be 26
determined; and 27
[(iv)] (V) if the Secretary of General Services, the Secretary of 28
Transportation, or the Chancellor of the University System of Maryland has so designated, 29
the small business preference. 30
13–104. 31
(b) (1) Whenever procurement is based on competitive sealed proposals, a 32
procurement officer shall seek proposals by issuing a request for proposals. 33
4 SENATE BILL 487
(2) A request for proposals shall include a statement of: 1
(i) the scope of the procurement contract, including the expected 2
degree of minority business enterprise participation, as provided in § 14–303(b) of this 3
article; 4
(II) A SUMMARY OF THE FAC TORS USED TO DETERMI NE THE 5
EXPECTED DEGREE OF M INORITY BUSINESS ENT ERPRISE PARTICIPATIO N FOR THE 6
PROCUREMENT CONTRACT , INCLUDING SUBCONTRAC TING OPPORTUNITIES 7
IDENTIFIED FOR THE P ROJECT, ANY APPLICABLE NORTH AMERICAN INDUSTRY 8
CLASSIFICATION SYSTEM CODES LINKED T O THE SUBCONTRACTING 9
OPPORTUNITIES , AND THE NUMBER OF CERTIFIED MINORITY BUSINESS 10
ENTERPRISES IN THOSE INDUSTRIES; 11
[(ii)] (III) the factors, including price, that will be used in evaluating 12
proposals; and 13
[(iii)] (IV) the relative importance of each factor. 14
14–301. 15
(f) “Minority business enterprise” means: 16
(1) any legal entity, except a joint venture, that is: 17
[(1)] (I) organized to engage in commercial transactions; 18
[(2)] (II) at least 51% owned and controlled by 1 or more individuals who 19
are socially and economically disadvantaged; and 20
[(3)] (III) managed by, and the daily business operations of which are 21
controlled by, one or more of the socially and economically disadvantaged individuals who 22
own it; OR 23
(2) AN ENTITY THAT: 24
(I) HAS GRADUATED OR OTH ERWISE IS NO LONGER CERTIFIED 25
UNDER THE TERMS OF T HE GRADUATION PROGRA M ESTABLISHED IN ACC ORDANCE 26
WITH § 14–303(B)(15) OF THIS SUBTITLE; AND 27
(II) HAS BEEN AUTHORIZED TO RETAIN CERTIFICAT ION UNDER 28
§ 9–305(B)(7) OF THE STATE GOVERNMENT ARTICLE. 29
14–302. 30
SENATE BILL 487 5
(a) (1) (i) 1. Except for leases of real property, each unit shall structure 1
procurement procedures, consistent with the purposes of this subtitle, to try to achieve an 2
overall percentage goal of the unit’s total dollar value of procurement contracts being made 3
directly or indirectly to certified minority business enterprises. 4
2. Notwithstanding subsubparagraph 1 of this 5
subparagraph, the following contracts may not be counted as part of a unit’s total dollar 6
value of procurement contracts: 7
A. a procurement contract awarded in accordance with 8
Subtitle 1 of this title; 9
B. a procurement contract awarded to a nonprofit entity in 10
accordance with requirements mandated by State or federal law; and 11
C. a procurement by the Maryland Developmental 12
Disabilities Administration of the Maryland Department of Health for family and 13
individual support services, community residential services, resource coordination services, 14
behavioral support services, vocational and day services, and respite services, as those 15
terms are defined in regulations adopted by the Maryland Department of Health. 16
(ii) 1. The overall percentage goal shall be established on a 17
biennial basis by the Special Secretary for the Office of Small, Minority, and Women 18
Business Affairs, in consultation with the Secretary of Transportation and the Attorney 19
General. 20
2. During any year in which there is a delay in establishing 21
the overall goal, the previous year’s goal will apply. 22
(III) 1. IN CONSULTATION WITH THE SECRETARY OF 23
TRANSPORTATION AND TH E ATTORNEY GENERAL, THE SPECIAL SECRETARY FOR 24
THE OFFICE OF SMALL, MINORITY, AND WOMEN BUSINESS AFFAIRS SHALL 25
ESTABLISH STATEWIDE GOALS BY I NDUSTRY TYPE ON A BIENNIAL BASIS . 26
2. IN ESTABLISHING STATE WIDE GOALS BY INDUST RY 27
TYPE, THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL, MINORITY, AND 28
WOMEN BUSINESS AFFAIRS SHALL USE THE SAME METHODOLOGY USE D TO 29
DEVELOP THE OVERALL STATEWIDE GOAL UNDER SUBPARAGRAPH (II) OF THIS 30
PARAGRAPH , WITH CONSIDERATION GIVEN TO AVAILABILITY AND UTILIZATION OF 31
MINORITY BUSINESS EN TERPRISES IN THE IND USTRY. 32
3. DURING ANY YEAR IN WH ICH THERE IS A DELAY IN 33
ESTABLISHING THE STA TEWIDE GOAL S BY INDUSTRY TYPE , THE PREVIOUS YEAR ’S 34
GOALS WILL APPLY. 35
6 SENATE BILL 487
[(iii)] (IV) 1. In consultation with the Secretary of 1
Transportation and the Attorney General, the Special Secretary for the Office of Small, 2
Minority, and Women Business Affairs shall establish guidelines on a biennial basis for 3
each unit to consider while determining whether to set subgoals for the minority groups 4
listed in § 14–301(k)(1)(i)1, 2, 3, 4, and 6 of this subtitle. 5
2. During any year in which there is a delay in establishing 6
the subgoal guidelines, the previous year’s subgoal guidelines will apply. 7
[(iv)] (V) 1. The Special Secretary for the Office of Small, 8
Minority, and Women Business Affairs, in consultation with the Secretary of 9
Transportation and the Attorney General, shall establish goals and subgoal guidelines that, 10
to the maximum extent feasible, approximate the level of minority business enterprise 11
participation that would be expected in the absence of discrimination. 12
2. In establishing overall goals and subgoal guidelines, the 13
Special Secretary for the Office of Small, Minority, and Women Business Affairs shall 14
provide for public participation by consulting with minority, women’s, and general 15
contractor groups, community organizations, and other officials or organizations that could 16
be expected to have information concerning: 17
A. the availability of minority– and women–owned 18
businesses; 19
B. the effects of discrimination on opportunities for 20
minority– and women–owned businesses; and 21
C. the State’s operation of the Minority Business Enterprise 22
Program. 23
[(v)] (VI) In establishing overall goals, the factors to be considered 24
shall include: 25
1. the relative availability of minority– and women–owned 26
businesses to participate in State procurement as demonstrated by the State’s most recent 27
disparity study; 28
2. past participation of minority business enterprises in 29
State procurement, except for procurement related to leases of real property; and 30
3. other factors that contribute to constitutional goal setting. 31
[(vi)] (VII) Notwithstanding § 12–101 of this article, the Special 32
Secretary for the Office of Small, Minority, and Women Business Affairs shall adopt 33
regulations in accordance with Title 10, Subtitle 1 of the State Government Article setting 34
forth the State’s overall goal. 35
SENATE BILL 487 7
14–303. 1
(a) (1) (i) In accordance with Title 10, Subtitle 1 of the State Government 2
Article, the Board shall adopt regulations consistent with the purposes of this Division II 3
to carry out the requirements of this subtitle. 4
(ii) The Board shall keep a record of information regarding any 5
waivers requested in accordance with § 14–302(a)(9)(i) of this subtitle and subsection 6
(b)(12) of this section and submit a copy of the record to the General Assembly on or before 7
October 1 of each year, in accordance with § 2–1257 of the State Government Article. 8
(2) The regulations shall establish procedures to be followed by units, 9
prospective contractors, and successful bidders or offerors to maximize notice to, and the 10
opportunity to participate in the procurement process by, a broad range of minority 11
business enterprises. 12
(b) These regulations shall include: 13
(1) provisions: 14
(i) designating one State agency to certify and decertify minority 15
business enterprises for all units through a single process that meets applicable federal 16
requirements, including provisions that promote and facilitate the submission of some or 17
all of the certification application through an electronic process; 18
(ii) for the purpose of certification under this subtitle, that promote 19
and facilitate certification of minority business enterprises that have received certification 20
from a federal or a county program that uses a certification process substantially similar 21
to the process established in accordance with item (i) of this item, including a provision that 22
provides for certification of a business as a minority business enterprise if the business: 23
1. has obtained certification under the federal 24
Disadvantaged Business Enterprise Program; and 25
2. meets the eligibility requirements of the Minority 26
Business Enterprise Program; 27
(iii) requiring the agency designated to certify minority business 28
enterprises to complete the agency’s review of an application for certification and notify the 29
applicant of the agency’s decision within 90 days of receipt of a complete application that 30
includes all of the information necessary for the agency to make a decision; and 31
(iv) authorizing the agency designated to certify minority business 32
enterprises to extend the notification requirement established under item (iii) of this item 33
once, for no more than an additional 60 days, if the agency provides the applicant with a 34
written notice and explanation; 35
8 SENATE BILL 487
(2) a requirement that the solicitation document accompanying each 1
solicitation: 2
(I) set forth the expected degree of minority business enterprise 3
participation based, in part, on the factors set forth in § 14–302(a)(3)(ii) of this subtitle; 4
AND 5
(II) INCLUDE A SUMMARY OF THE FACTORS USED TO 6
DETERMINE THE EXPECT ED DEGREE OF MINORIT Y BUSINESS ENTER PRISE 7
PARTICIPATION , INCLUDING SUBCONTRAC TING OPPORTUNITIES I DENTIFIED FOR 8
THE PROJECT , ANY APPLICABLE NORTH AMERICAN INDUSTRY CLASSIFICATION 9
SYSTEM CODES LINKED T O THE SUBCONTRACTING OPPORTUNITIES , AND THE 10
NUMBER OF CERTIFIED MINORITY BUSINESS EN TERPRISES IN THOSE INDUSTRIES ; 11
(3) a requirement that bidders or offerors complete a document setting 12
forth the percentage of the total dollar amount of the contract that the bidder or offeror 13
agrees will be performed by certified minority business enterprises; 14
(4) a requirement that within 10 days after notice from the prime 15
contractor of the State’s intent to award a contract, each minority business enterprise 16
serving as a subcontractor on the contract complete a document setting forth the percentage 17
and type of work assigned to the subcontractor under the contract and submit copies of the 18
completed form to both the procurement officer and the contractor; 19
(5) a requirement that the solicitation documents completed and submitted 20
by the bidder or offeror in connection with its minority business enterprise participation 21
commitment must be attached to and made a part of the contract; 22
(6) [(i) a requirement that all contracts containing minority business 23
enterprise participation goals shall contain a liquidated damages provision that applies in 24
the event that the contractor fails to comply in good faith with the provisions of this subtitle 25
or the pertinent terms of the applicable contract; and 26
(ii) a provision that prohibits a unit from assessing liquidated 27
damages for an indefinite delivery contract or an indefinite performance contract if a unit 28
fails to request the performance or delivery of a task for which: 29
1. a minority business enterprise subcontractor was named 30
on the participation schedule; or 31
2. a minority business enterprise subcontractor was named 32
on the participation schedule and qualified based on the subcontractor’s existing North 33
American Industry Classification System code; 34
(7)] a requirement that the unit provide a current list of certified minority 35
business enterprises to each prospective contractor; 36 SENATE BILL 487 9
[(8)] (7) provisions to ensure the uniformity of requests for bids on 1
subcontracts; 2
[(9)] (8) provisions relating to the timing of requests for bids on 3
subcontracts and of submission of bids on subcontracts; 4
[(10)] (9) provisions designed to ensure that a fiscal disadvantage to the 5
State does not result from an inadequate response by minority business enterprises to a 6
request for bids; 7
[(11)] (10) provisions relating to joint ventures, under which a bidder may 8
count toward meeting its minority business enterprise participation goal, the minority 9
business enterprise portion of the joint venture; 10
[(12)] (11) consistent with § 14–302(a)(9) of this subtitle, provisions relating 11
to any circumstances under which a unit may waive obligations of the contractor relating 12
to minority business enterprise participation; 13
[(13)] (12) provisions requiring a monthly submission to the unit by 14
minority business enterprises acknowledging all payments received in the preceding 30 15
days under a contract governed by this subtitle; 16
[(14)] (13) a requirement that a unit shall verify and maintain data 17
concerning payments received by minority business enterprises, including a requirement 18
that, upon completion of a project, the unit shall compare the total dollar value actually 19
received by minority business enterprises with the amount of contract dollars initially 20
awarded, and an explanation of any discrepancies therein; 21
[(15)] (14) a requirement that a unit verify that minority business 22
enterprises listed in a successful bid are actually participating to the extent listed in the 23
project for which the bid was submitted; 24
[(16)] (15) provisions establishing a graduation program based on the 25
financial viability of the minority business enterprise, using annual gross receipts or other 26
economic indicators as may be determined by the Board; 27
[(17)] (16) a requirement that a bid or proposal based on a solicitation with 28
an expected degree of minority business enterprise participation identify the specific 29
commitment of certified minority business enterprises at the time of submission; 30
[(18)] (17) provisions promoting and providing for the counting and 31
reporting of certified minority business enterprises as prime contractors; 32
[(19)] (18) provisions establishing standards to require a minority business 33
enterprise to perform a commercially useful function on a contract; 34 10 SENATE BILL 487
[(20)] (19) a requirement that each unit work with the Governor’s Office of 1
Small, Minority, and Women Business Affairs to designate certain procurements as being 2
excluded from the requirements of § 14–302(a) of this subtitle; 3
[(21)] (20) provisions promoting and providing for the counting and 4
reporting of minority business enterprises certified as both a woman–owned business and 5
a business owned by a member of an ethnic or racial group in accordance with § 6
14–302(a)(5) of this subtitle; and 7
[(22)] (21) other provisions that the Board considers necessary or 8
appropriate to encourage participation by minority business enterprises and to protect the 9
integrity of the procurement process. 10
(c) The regulations adopted under this section shall specify that: 11
(1) a unit may not allow a business to participate as if it were a certified 12
minority business enterprise if the business’s certification is pending; AND 13
(2) A UNIT SHALL ALLOW A BUSINESS TO PARTICIP ATE AS A 14
CERTIFIED MINORITY B USINESS ENTERPRISE IF THE CE RTIFICATION HAS BEEN 15
GRANTED UNDER § 9–305(B)(7) OF THE STATE GOVERNMENT ARTICLE. 16
14–305. 17
(a) (1) Within 90 days after the end of the fiscal year, each unit shall report to 18
the Governor’s Office of Small, Minority, and Women Business Affairs, the certification 19
agency, and, subject to § 2–1257 of the State Government Article, the Joint Committee on 20
Fair Practices and Personnel Oversight. 21
(2) A report under this subsection shall for the preceding fiscal year: 22
(i) state the total number and value of procurement contracts 23
between the unit and certified minority business enterprises, by specific category of 24
minority business enterprise AND BY INDUSTRY TYPE , including whether the minority 25
business enterprise participated as a prime contractor or as a subcontractor; 26
(ii) indicate the percentage that those procurement contracts 27
represent, by specific category of minority business enterprise AND BY INDUSTRY TYPE , 28
of the total number and value of procurement contracts; 29
(iii) state the total number and the names of certified minority 30
business enterprises that participated as prime contractors or as subcontractors on 31
procurement contracts awarded by a unit; 32
SENATE BILL 487 11
(iv) for each minority business included in the report under item (iii) 1
of this paragraph, list all procurement contracts awarded by a unit to the minority business 2
enterprise, including a description of the contract AND INDUSTRY TYPE ; [and] 3
(V) THE RESULTS OF EACH COMPLIANCE ASSESSMEN T 4
CONDUCTED BY THE UNI T UNDER § 14–303(B)(14) OF THIS SUBTITLE , INCLUDING 5
FOR EACH CONTRACT COMPLETED DURING THE FISCAL YEAR: 6
1. THE NAMES OF EACH PR IME CONTRACTOR AND E ACH 7
MINORITY BUSINESS TH AT PARTICIPATED IN T HE CONTRACT ; 8
2. THE TYPE OF GOOD OR SERVICE PROVIDED BY THE 9
CONTRACT; 10
3. THE MINORITY BUSINES S ENTERPRISE 11
PARTICIPATION GOAL F OR THE CONTRACT ; 12
4. WHETHER A WAIVER WAS GRANTED FOR THE 13
MINORITY BUSINESS ENTERPRISE PARTICIPATION GOAL ; 14
5. THE TOTAL DOLLAR VA LUE OF PAYMENTS MADE TO 15
EACH PRIME CONTRACTO R AND BY EACH PRIME CONTRACTOR TO EACH 16
SUBCONTRACTOR DURING THE CONTRACT TERM; 17
6. WHETHER EACH SUBCONT RACTOR IS A CERTIFIE D 18
MINORITY BUSINESS EN TERPRISE; AND 19
7. IF APPLICABLE, A DESCRIPTION OF FAC TORS THAT 20
MAY HAVE CONTRIBUTED TO FAILURE TO ACHIEV E THE MINORITY BUSIN ESS 21
ENTERPRISE PARTICIPA TION GOAL FOR THE CO NTRACT, INCLUDING DOCUMENTED 22
NONPERFORMANCE OR UN AVAILABILITY OF A MI NORITY BUSINESS ENTE RPRISE; 23
AND 24
[(v)] (VI) contain other such information as required by the 25
Governor’s Office of Small, Minority, and Women Business Affairs and the certification 26
agency and approved by the Board. 27
(3) As to procurement contracts for architectural services and engineering 28
services reported under paragraph (2) of this subsection, the report shall identify by 29
separate category of minority business enterprise procurements for: 30
(i) architectural services; and 31
(ii) engineering services. 32 12 SENATE BILL 487
(4) A report under this subsection shall be in a form prescribed by the 1
Governor’s Office of Small, Minority, and Women Business Affairs and the certification 2
agency and approved by the Board. 3
(5) THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL, 4
MINORITY, AND WOMEN BUSINESS AFFAIRS MAY WAIVE THE REQUIREMENT FOR A 5
UNIT TO REPORT MINORITY BUSI NESS PARTICIPATION B Y INDUSTRY TYPE UNDE R 6
PARAGRAPH (2) OF THIS SUBSECTION I F THE SPENDING THRES HOLD FOR THE 7
INDUSTRY TYPE IS TOO LOW FOR THE UNIT TO PROVIDE SUFFICIEN T DATA. 8
(b) (1) On or before December 31 of each year, the Governor’s Office of Small, 9
Minority, and Women Business Affairs shall submit to the Board of Public Works and, 10
subject to § 2–1257 of the State Government Article, to the Legislative Policy Committee a 11
report summarizing the information the Office receives under subsection (a) of this section. 12
(2) This report may be prepared in conjunction with the annual report 13
required under § 9–306 of the State Government Article. 14
(C) (1) IN THIS SUBSECTION , “MITIGATING FACTORS ” INCLUDES 15
DOCUMENTED NONPERFOR MANCE OR UNAVAILABIL ITY OF A MINORITY BU SINESS 16
ENTERPRISE DESIGNATE D FOR A CONTRACT . 17
(2) THE GOVERNOR’S OFFICE OF SMALL, MINORITY, AND WOMEN 18
BUSINESS AFFAIRS SHALL MAINTAI N AND PUBLISH ON ITS WEBSITE A LIST OF 19
PRIME CONTRACTORS WHO, BASED ON THE RESULTS OF THE COMPLIANCE 20
ASSESSMENTS RECEIVED UNDER SUBSECTION (A)(2)(V) OF THIS SECTION , 21
PERSISTENTLY FAIL TO MEET CONTRACT GOALS IN THE ABSENCE OF MI TIGATING 22
FACTORS. 23
(3) THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL, 24
MINORITY, AND WOMEN BUSINESS AFFAIRS MAY ADOPT REG ULATIONS NECESSARY 25
TO CARRY OUT THE REQ UIREMENTS OF THIS SU BSECTION. 26
14–502.1. 27
(A) (1) THIS SECTION APPLIES TO A PROCUREMENT BY ANY UNIT OR 28
AGENCY OF THE EXECUTIVE BRANCH OF STATE GOVERNMENT FOR GOODS, 29
SUPPLIES, SERVICES, MAINTENANCE , CONSTRUCTION , CONSTRUCTION –RELATED 30
SERVICES, ARCHITECTURAL SERVIC ES, OR ENGINEERING SERVI CES. 31
(2) THIS SECTION DOES NOT APPLY TO: 32
(I) PROCUREMENTS MADE UN DER SUBTITLE 1 OF THIS TITLE; 33 SENATE BILL 487 13
(II) PROCUREMENTS INVOLVI NG EXPENDITURES OF FEDERAL 1
DOLLARS, TO THE EXTENT THAT I NCLUSION IN THE SMAL L BUSINESS RESERVE 2
PROGRAM CONFLICTS WI TH FEDERAL LAW OR GR ANT PROVISIONS ; 3
(III) PROCUREMENTS WITH A TOTAL DOLLAR VALUE U NDER 4
$50,000; 5
(IV) THE PROCUREMENT OF H UMAN, SOCIAL, CULTURAL, OR 6
EDUCATIONAL SERVICES ; OR 7
(V) TERM AND MASTER CONT RACTS EXEMPTED UNDER 8
SUBSECTION (C) OF THIS SECTION. 9
(B) (1) A PROCUREMENT WITH A T OTAL DOLLAR VALUE BE TWEEN 10
$50,000 AND $500,000 SHALL BE DESIGNATED FOR THE SMALL BUSINE SS RESERVE. 11
(2) EACH UNIT OR AGENCY S HALL IMPLEMENT THIS SUBSECTION IN 12
A MANNER CONSISTENT WITH ALL APPLICABLE STATUTES, INCLUDING THE 13
REQUIREMENTS OF SUBTITLE 3 OF THIS TITLE. 14
(C) (1) A PROCUREMENT MAY BE E XEMPT FROM DESIGNATI ON UNDER 15
SUBSECTION (B) OF THIS SECTION IF THE GOVERNOR’S OFFICE OF SMALL, 16
MINORITY, AND WOMEN BUSINESS AFFAIRS CERTIFIES, CONCURRENTLY WITH 17
REVIEW OF ANY WAIVER DETERMINATIONS FOR C ERTIFIED MINORITY BU SINESS 18
ENTERPRISE PARTICIPA TION CONTRACT GOALS , THAT IT IS NOT PRACT ICABLE TO 19
DO SO. 20
(2) THE OFFICE OF STATE PROCUREMENT IN THE DEPARTMENT OF 21
GENERAL SERVICES SHALL ASSIST THE GOVERNOR’S OFFICE OF SMALL, 22
MINORITY, AND WOMEN BUSINESS AFFAIRS IN ESTABLISHING PROC EDURES AND 23
GUIDELINES FOR THE E XEMPTION OF PROCUREM ENTS UNDER PARAGRAPH (1) OF 24
THIS SUBSECTION. 25
Part IV. [Construction Contracts –] Prompt Payment of Subcontractors. 26
15–226. 27
(a) In this section, “undisputed amount” means an amount owed by a contractor 28
to a subcontractor for which there is no good faith dispute, including any retainage 29
withheld. 30
(b) It is the policy of the State that, for work under a State procurement contract 31
[for construction]: 32 14 SENATE BILL 487
(1) a contractor shall promptly pay to a subcontractor any undisputed 1
amount to which the subcontractor is entitled; and 2
(2) a subcontractor shall promptly pay to a lower tier subcontractor any 3
undisputed amount to which the lower tier subcontractor is entitled. 4
(c) (1) A contractor shall pay a subcontractor an undisputed amount to which 5
the subcontractor is entitled within 10 days of receiving a progress or final payment from 6
the State. 7
(2) If a contractor withholds payment from a subcontractor, within the time 8
period in which payment normally would be made, the contractor shall: 9
(i) notify the subcontractor in writing and state the reason why 10
payment is being withheld; and 11
(ii) provide a copy of the notice to the procurement officer. 12
(d) (1) If a subcontractor does not receive a payment within the required time 13
period, the subcontractor may give written notice of the nonpayment to the procurement 14
officer. 15
(2) The notice shall: 16
(i) indicate the name of the contractor, the project under which the 17
dispute exists, and the amount in dispute; 18
(ii) provide an itemized description on which the amount is based; 19
and 20
(iii) if known, provide an explanation for any dispute concerning 21
payment by the contractor. 22
(e) (1) Within 2 business days of receipt of written notice from a subcontractor, 23
a representative of the unit designated by the procurement officer shall verbally contact 24
the contractor to ascertain whether the amount withheld is an undisputed amount. 25
(2) If the representative of the unit decides that a part or all of the amount 26
withheld is an undisputed amount, the representative of the unit shall instruct the 27
contractor to pay the subcontractor the undisputed amount within 3 business days. 28
(3) The representative of the unit shall verbally communicate to the 29
subcontractor the results of discussions with the contractor. 30
SENATE BILL 487 15
(4) If the contractor is instructed to pay the subcontractor and the 1
subcontractor is not paid within the time instructed under paragraph (2) of this subsection, 2
the subcontractor may report the nonpayment in writing to the procurement officer. 3
(f) (1) If the subcontractor notifies the procurement officer under subsection 4
(e)(4) of this section that payment has not been made, the representative of the unit shall 5
schedule a meeting to discuss the dispute with the unit’s project manager, the contractor, 6
and the subcontractor: 7
(i) at a time and location designated by the representative of the 8
unit; but 9
(ii) not later than 10 days after receiving notice from the 10
subcontractor under subsection (e)(4) of this section. 11
(2) The purpose of the meeting is to establish why the contractor has not 12
paid the subcontractor in the required time period. 13
(3) The representative of the unit shall require the parties to provide at the 14
meeting any information that the representative believes necessary to evaluate the dispute. 15
(4) If the representative of the unit determines that the contractor is 16
delinquent in payment of an undisputed amount to the subcontractor, further progress 17
payments to the contractor may be withheld until the subcontractor is paid. 18
(5) If payment is not paid to the subcontractor within 7 days after the 19
representative of the unit determines that the contractor is delinquent in paying the 20
subcontractor under this subsection, the representative shall schedule a second meeting to 21
address the dispute: 22
(i) at a time and location designated by the representative of the 23
unit; but 24
(ii) not later than 5 days after the close of the 7–day period. 25
(6) If, at the completion of the second meeting, the representative of the 26
unit determines that the contractor continues to be delinquent in payments owed to the 27
subcontractor, the representative: 28
(i) shall order that further payments to the contractor not be 29
processed until payment to the subcontractor is verified; 30
(ii) may order that work under the contract be suspended based on 31
the failure of the contractor to meet obligations under the contract; and 32
16 SENATE BILL 487
(iii) subject to paragraph (7) of this subsection, may require that the 1
contractor pay a penalty to the subcontractor, in an amount not exceeding $100 per day, 2
from the date that payment was required under subsection (e)(2) of this section. 3
(7) A penalty may not be imposed under paragraph (6)(iii) of this 4
subsection for any period that the representative of the unit determines the subcontractor 5
was not diligent in reporting nonpayment to the procurement officer. 6
(g) (1) A contractor or a subcontractor may appeal a decision under subsection 7
(f)(6) of this section to the procurement officer. 8
(2) The contractor shall comply with the procurement officer’s decision. 9
(h) An act, failure to act, or decision of a procurement officer or a representative 10
of a unit concerning a payment dispute between a contractor and subcontractor or between 11
subcontractors under this section may not: 12
(1) affect the rights of the contracting parties under any other provision of 13
law; 14
(2) be used as evidence on the merits of a dispute between the unit and the 15
contractor or the contractor and subcontractor in any other proceeding; or 16
(3) result in liability against or prejudice the rights of the unit. 17
(i) A decision of a procurement officer or a representative of the unit designated 18
by the procurement officer under this section is not subject to judicial review or the 19
provisions of Part III of this subtitle. 20
(j) (1) A unit shall include in each State procurement contract [for 21
construction] a provision: 22
(i) governing prompt payment to subcontractors; and 23
(ii) requiring inclusion of a similar provision in each subcontract at 24
any tier. 25
(2) The contract provision shall establish procedures and remedies for the 26
resolution of payment disputes similar to the process and remedies prescribed in 27
subsections (c) through (g) of this section. 28
Article – State Government 29
9–303.3. 30
SENATE BILL 487 17
(A) IN THIS SECTION , “OMBUDSMAN ” MEANS THE MINORITY BUSINESS 1
ENTERPRISE OMBUDSMAN IN THE OFFICE. 2
(B) THERE IS A MINORITY BUSINESS ENTERPRISE OMBUDSMAN 3
APPOINTED BY THE SPECIAL SECRETARY. 4
(C) IN ACCORDANCE WITH TH E STATE BUDGET , THE SPECIAL SECRETARY 5
SHALL ALLOCATE THE S TAFF AND OFFICE RESOURCES TO THE OMBUDSMAN 6
NECESSARY FOR THE OMBUDSMAN TO FULFILL THE DUTIES OF THE OMBUDSMAN . 7
(D) THE OMBUDSMAN SHALL : 8
(1) MAKE REASONABLE ATTE MPTS TO RESOLVE DISP UTES BETWEEN 9
MINORITY BUSINESS EN TERPRISES AND PRIME CONTRACTORS , INCLUDING 10
DISPUTES OVER CONTRA CT SCOPE AND PAYMENT S; AND 11
(2) SERVE AS A RESOURCE TO UNITS OF STATE GOVERNMENT , PRIME 12
CONTRACTORS , AND MINORITY BUSINES S ENTERPRISES IN RES OLVING DISPUTES 13
RELATED TO CONTRACTS THAT INCLUDE A MINOR ITY BUSINESS ENTERPR ISE 14
PARTICIPATION GOAL . 15
(E) IN RESOLVING A DISPUT E UNDER SUBSECTION (D) OF THIS SECTION , 16
THE OMBUDSMAN MAY : 17
(1) COMPEL PRIME CONTRAC TORS AND MINORITY BU SINESS 18
ENTERPRISES TO PROVI DE DOCUMENTATION REL ATED TO CONTRACT 19
PERFORMANCE AND PAYM ENTS; AND 20
(2) ORDER ANY RELEVANT P AYMENTS TO BE MADE I N CONJUNCTION 21
WITH A DISPUTE RESOL UTION. 22
(F) (1) EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS SUBSECTION , 23
WHEN RESOLVING A DISPUTE UNDER SUBSECTION (D) OF THIS SECTION, THE 24
OMBUDSMAN MAY NOT DIS CLOSE INFORMATION RE CEIVED FROM A UNIT O F STATE 25
GOVERNMENT , PRIME CONTRACTOR , OR MINORITY BUSINESS ENTERPRISE 26
WITHOUT THE WRITTEN CONSENT OF THE PARTY FROM WHOM THE INFORMATION 27
WAS OBTAINED . 28
(2) THE OMBUDSMAN MAY DISCLOS E INFORMATIO N RECEIVED 29
UNDER THIS SECTION T O THE ASSISTANT ATTORNEY GENERAL ASSIGNED TO T HE 30
OFFICE. 31
9–305. 32 18 SENATE BILL 487
(b) Subject to the limitations of any law that governs the activities of other units 1
of the Executive Branch of the State government, the Special Secretary shall: 2
(7) establish a mentoring program: 3
(i) in which larger and more established minority businesses can 4
mentor start–up and small minority businesses; and 5
(ii) that incentivizes mentor participation by providing benefits to 6
mentors, including: 7
1. special recognition on the Office website, and in the Office 8
newsletter and participation updates; 9
2. a certificate of participation awarded by the Office; 10
3. the opportunity to present highlights of mentor and 11
protege relationships at an annual appreciation event sponsored by the Office; [and] 12
4. increased networking and educational opportunities; AND 13
5. AUTHORIZATION FOR MI NORITY BUSINESSES THAT 14
HELD CERTIFICATION UNDER TITLE 14, SUBTITLE 3 OF THE STATE FINANCE AND 15
PROCUREMENT ARTICLE AND HAVE BEEN DECERT IFIED TO OBTAIN OR RETAIN 16
CERTIFICATION FOR A PERIOD OF TIME SET B Y THE SPECIAL SECRETARY; 17
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 18
1, 2022. 19