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