LAWRENCE J. HOGAN, JR., Governor Ch. 156
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Chapter 156
(Senate Bill 487)
AN ACT concerning
Procurement – Minority Business Enterprises – Revisions
FOR the purpose of requiring a procurement officer, in an invitation for bids or a request
for proposals, to include a certain summary of the factors used to determine the
expected degree of minority business enterprise participation for the contract;
authorizing certain entities to retain certification as a minority business enterprise
if the entity participates as a mentor in a certain mentorship program and under
certain circumstances; requiring the Special Secretary for the Office of Small,
Minority, and Women Business Affairs to establish certain statewide minority
business enterprise participation goals by industry type in a certain manner;
establishing that certain statewide goals by industry type apply under certain
circumstances; requiring each unit of the Executive Branch of State government to
annually report the results of certain compliance assessments to the Governor’s
Office of Small, Minority, and Women Business Affairs; authorizing the Special
Secretary to waive the requirement for a unit to report certain information under
certain circumstances; requiring the Office to maintain and publish on its website a
list of prime contractors who, based on the results of the compliance assessments,
Governor’s Office of Small, Minority, and Women Business Affairs and the Office of
State Procurement, in consultation with the Office of the Attorney General and
Board of Public Works, to adopt by regulation criteria used to determine that a prime
contractor has persistently fail failed to meet contract goals; requiring the results of
certain compliance assessments to be included in certain criteria; requiring the
Governor’s Office of Small, Minority, and Women Business Affairs to refer certain
prime contractors to the Office of the Attorney General for debarment; authorizing
the Board of Public Works to debar a person for a certain period of time under certain
circumstances; requiring certain units of the Executive Branch of State government
to designate certain procurements for the small business reserve under certain
circumstances; requiring certain standards and guidelines relating to participation
in the small business reserve program to allow for the registration of certain
businesses without the need to file certain paperwork; establishing that certain
procurements may be exempt from designation for the small business reserve under
certain circumstances; making certain provisions of law relating to the prompt
payment of subcontractors apply to all State contracts, rather than only State
contracts for construction; creating the position of Minority Business Enterprise
Ombudsman in the Governor’s Office of Small, Minority, and Women Business
Affairs; establishing certain duties and authority of the Ombudsman; altering the
definition of “responsible bidder or offeror” to exclude contractors who persistently
fail to meet contract goals, based on the results of certain compliance assessments
requiring the Ombudsman, Governor’s Office of Small, Minority, and Women
Business Affairs, and the Department of Legislative Services to submit certain Ch. 156 2022 LAWS OF MARYLAND
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reports on or before certain dates; and generally relating to procurement and
minority business enterprises.
BY repealing and reenacting, without amendments,
Article – State Finance and Procurement
Section 11–101(a)
Annotated Code of Maryland
(2021 Replacement Volume)
BY repealing and reenacting, with amendments,
Article – State Finance and Procurement
Section 11–101(s), 13–103(a), 13–104(b), 14–301(f), 14–302(a)(1), 14–303, and
14–303(b)(2), 14–305; 14–305, and 14–502(f); and 15–226 to be under the
amended part “Part IV. Prompt Payment of Subcontractors”; and 16–203(d)
Annotated Code of Maryland
(2021 Replacement Volume)
BY adding to
Article – State Finance and Procurement
Section 14–301(e–1) and 14–502.1
Annotated Code of Maryland
(2021 Replacement Volume)
BY adding to
Article – State Government
Section 9–303.3
Annotated Code of Maryland
(2021 Replacement Volume)
BY repealing and reenacting, with amendments,
Article – State Government
Section 9–305(b)(7)
Annotated Code of Maryland
(2021 Replacement Volume)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – State Finance and Procurement
11–101.
(a) In this Division II the following words have the meanings indicated unless:
(1) the context clearly requires a different meaning; or
LAWRENCE J. HOGAN, JR., Governor Ch. 156
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(2) a different definition is provided for a particular title or provision.
(s) “Responsible bidder or offeror” means a person who:
(1) has the capability in all respects to perform fully the requirements for
a procurement contract; [and]
(2) possesses the integrity and reliability that will ensure good faith
performance; AND
(3) IS NOT A CONTRACTOR WHO PERSISTENTLY FAI LS TO MEET
CONTRACT GOALS AS DETER MINED UNDER § 14–305(C)(2) OF THIS ARTICLE .
13–103.
(a) (1) Whenever procurement is based on competitive sealed bids, a
procurement officer shall seek bids by issuing an invitation for bids.
(2) Subject to subsection (b) of this section, an invitation for bids shall
include:
(i) the specifications of the procurement contract, including the
expected degree of minority business enterprise participation, as provided in § 14–303(b) of
this article;
(II) A SUMMARY OF THE FAC TORS USED TO DETERMINE THE
EXPECTED DEGREE OF M INORITY BUSINESS ENT ERPRISE PARTICIPATIO N FOR THE
PROCUREMENT CONTRACT , INCLUDING SUBCONTRAC TING OPPORTUNITIES
IDENTIFIED FOR THE P ROJECT, ANY APPLICABLE NORTH AMERICAN INDUSTRY
CLASSIFICATION SYSTEM CODES LINKED TO THE SUBCONTRACTIN G
OPPORTUNITIES , AND THE NUMBER OF CE RTIFIED MINORITY BUS INESS
ENTERPRISES IN THOSE INDUSTRIES;
[(ii)] (III) whether the procurement contract will be awarded based
on the lowest bid price, the lowest evaluated bid price or, if the procurement is subject to §
11–202(3) of this article, the bid most favorable to the State;
[(iii)] (IV) if the procurement contract will be based on evaluated bid
price, the objective measurable criteria by which the lowest evaluated bid price will be
determined; and
[(iv)] (V) if the Secretary of General Services, the Secretary of
Transportation, or the Chancellor of the University System of Maryland has so designated,
the small business preference.
Ch. 156 2022 LAWS OF MARYLAND
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13–104.
(b) (1) Whenever procurement is based on competitive sealed proposals, a
procurement officer shall seek proposals by issuing a request for proposals.
(2) A request for proposals shall include a statement of:
(i) the scope of the procurement contract, including the expected
degree of minority business enterprise participation, as provided in § 14–303(b) of this
article;
(II) A SUMMARY OF THE FAC TORS USED TO DETERMI NE THE
EXPECTED DEGREE OF M INORITY BUSINESS ENT ERPRISE PARTICIPATIO N FOR THE
PROCUREMENT CONTRACT , INCLUDING SUBCONTRAC TING OPPORTUNITIES
IDENTIFIED FOR THE P ROJECT, ANY APPLICABLE NORTH AMERICAN INDUSTRY
CLASSIFICATION SYSTEM CODES LINKED T O THE SUBCONTRACTING
OPPORTUNITIES , AND THE NUMBER OF CE RTIFIED MINORITY BUS INESS
ENTERPRISES IN THOSE INDUSTRIES;
[(ii)] (III) the factors, including price, that will be used in evaluating
proposals; and
[(iii)] (IV) the relative importance of each factor.
14–301.
(f) “Minority business enterprise” means:
(1) any legal entity, except a joint venture, that is:
[(1)] (I) organized to engage in commercial transactions;
[(2)] (II) at least 51% owned and controlled by 1 or more individuals who
are socially and economically disadvantaged; and
[(3)] (III) managed by, and the daily business operations of which are
controlled by, one or more of the socially and economically disadvantaged individuals who
own it; OR
(2) AN ENTITY THAT:
(I) HAS GRADUATED OR OTH ERWISE IS NO LONGER CERTIFIED
UNDER THE TERMS OF T HE GRADUATION PROGRA M ESTABLISHED IN ACC ORDANCE
WITH § 14–303(B)(15) OF THIS SUBTITLE; AND LAWRENCE J. HOGAN, JR., Governor Ch. 156
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(II) HAS BEEN AUTHORIZED TO RETAIN CERTIFICAT ION UNDER
§ 9–305(B)(7) OF THE STATE GOVERNMENT ARTICLE.
(E–1) “INDUSTRY TYPE ” MEANS THE FOLLOWING PROCUREMENT
CATEGORIES:
(1) CONSTRUCTION ;
(2) ARCHITECTURAL AND EN GINEERING SERVICES A ND OTHER
CONSTRUCTION –RELATED PROFESSIONAL SERVICES;
(3) MAINTENANCE ;
(4) INFORMATION TECHNOLO GY;
(5) SERVICES; AND
(6) GOODS, SUPPLIES, AND EQUIPMENT .
14–302.
(a) (1) (i) 1. Except for leases of real property, each unit shall structure
procurement procedures, consistent with the purposes of this subtitle, to try to achieve an
overall percentage goal of the unit’s total dollar value of procurement contracts being made
directly or indirectly to certified minority business enterprises.
2. Notwithstanding subsubparagraph 1 of this
subparagraph, the following contracts may not be counted as part of a unit’s total dollar
value of procurement contracts:
A. a procurement contract awarded in accordance with
Subtitle 1 of this title;
B. a procurement contract awarded to a nonprofit entity in
accordance with requirements mandated by State or federal law; and
C. a procurement by the Maryland Developmental
Disabilities Administration of the Maryland Department of Health for family and
individual support services, community residential services, resource coordination services,
behavioral support services, vocational and day services, and respite services, as those
terms are defined in regulations adopted by the Maryland Department of Health.
(ii) 1. The overall percentage goal shall be established on a
biennial basis by the Special Secretary for the Office of Small, Minority, and Women Ch. 156 2022 LAWS OF MARYLAND
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Business Affairs, in consultation with the Secretary of Transportation and the Attorney
General.
2. During any year in which there is a delay in establishing
the overall goal, the previous year’s goal will apply.
(III) 1. IN CONSULTATION WITH THE SECRETARY OF
TRANSPORTATION AND TH E ATTORNEY GENERAL, THE SPECIAL SECRETARY FOR
THE OFFICE OF SMALL, MINORITY, AND WOMEN BUSINESS AFFAIRS SHALL
ESTABLISH STATEWIDE GOALS BY INDUSTRY TY PE ON A BIENNIAL BAS IS.
2. IN ESTABLISHING STATE WIDE GOALS BY INDUST RY
TYPE, THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL, MINORITY, AND
WOMEN BUSINESS AFFAIRS SHALL USE THE SAME METHODOLOGY USE D TO
DEVELOP THE OVERALL STATEWIDE GOAL UNDER SUBPARAGRAPH (II) OF THIS
PARAGRAPH , WITH CONSIDERATION G IVEN TO AVAILABILITY AND UTILIZATION OF
MINORITY BUSINESS EN TERPRISES IN THE IN DUSTRY.
3. DURING ANY YEAR IN WH ICH THERE IS A DELAY IN
ESTABLISHING THE STA TEWIDE GOALS BY INDU STRY TYPE, THE PREVIOUS YEAR ’S
GOALS WILL APPLY .
[(iii)] (IV) 1. In consultation with the Secretary of
Transportation and the Attorney General, the Special Secretary for the Office of Small,
Minority, and Women Business Affairs shall establish guidelines on a biennial basis for
each unit to consider while determining whether to set subgoals for the minority groups
listed in § 14–301(k)(1)(i)1, 2, 3, 4, and 6 of this subtitle.
2. During any year in which there is a delay in establishing
the subgoal guidelines, the previous year’s subgoal guidelines will apply.
[(iv)] (V) 1. The Special Secretary for the Office of Small,
Minority, and Women Busi ness Affairs, in consultation with the Secretary of
Transportation and the Attorney General, shall establish goals and subgoal guidelines that,
to the maximum extent feasible, approximate the level of minority business enterprise
participation that would be expected in the absence of discrimination.
2. In establishing overall goals and subgoal guidelines, the
Special Secretary for the Office of Small, Minority, and Women Business Affairs shall
provide for public participation by consulting with minority, women’s, and general
contractor groups, community organizations, and other officials or organizations that could
be expected to have information concerning:
A. the availability of minority– and women–owned
businesses; LAWRENCE J. HOGAN, JR., Governor Ch. 156
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B. the effects of discrimination on opportunities for
minority– and women–owned businesses; and
C. the State’s operation of the Minority Business Enterprise
Program.
[(v)] (VI) In establishing overall goals, the factors to be considered
shall include:
1. the relative availability of minority– and women–owned
businesses to participate in State procurement as demonstrated by the State’s most recent
disparity study;
2. past participation of minority business enterprises in
State procurement, except for procurement related to leases of real property; and
3. other factors that contribute to constitutional goal setting.
[(vi)] (VII) Notwithstanding § 12–101 of this article, the Special
Secretary for the Office of Small, Minority, and Women Business Affairs shall adopt
regulations in accordance with Title 10, Subtitle 1 of the State Government Article setting
forth the State’s overall goal.
14–303.
(a) (1) (i) In accordance with Title 10, Subtitle 1 of the State Government
Article, the Board shall adopt regulations consistent with the purposes of this Division II
to carry out the requirements of this subtitle.
(ii) The Board shall keep a record of information regarding any
waivers requested in accordance with § 14–302(a)(9)(i) of this subtitle and subsection
(b)(12) of this section and submit a copy of the record to the General Assembly on or before
October 1 of each year, in accordance with § 2–1257 of the State Government Article.
(2) The regulations shall establish procedures to be followed by units,
prospective contractors, and successful bidders or offerors to maximize notice to, and the
opportunity to participate in the procurement process by, a broad range of minority
business enterprises.
(b) These regulations shall include:
(1) provisions:
(i) designating one State agency to certify and decertify minority
business enterprises for all units through a single process that meets applicable federal Ch. 156 2022 LAWS OF MARYLAND
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requirements, including provisions that promote and facilitate the submission of some or
all of the certification application through an electronic process;
(ii) for the purpose of certification under this subtitle, that promote
and facilitate certification of minority business enterprises that have received certification
from a federal or a county program that uses a certification process substantially similar
to the process established in accordance with item (i) of this item, including a provision that
provides for certification of a business as a minority business enterprise if the business:
1. has obtained certification under the federal
Disadvantaged Business Enterprise Program; and
2. meets the eligibility requirements of the Minority
Business Enterprise Program;
(iii) requiring the agency designated to certify minority business
enterprises to complete the agency’s review of an application for certification and notify the
applicant of the agency’s decision within 90 days of receipt of a complete application that
includes all of the information necessary for the agency to make a decision; and
(iv) authorizing the agency designated to certify minority business
enterprises to extend the notification requirement established under item (iii) of this item
once, for no more than an additional 60 days, if the agency provides the applicant with a
written notice and explanation;
(2) a requirement that the solicitation document accompanying each
solicitation:
(I) set forth the expected degree of minority business enterprise
participation based, in part, on the factors set forth in § 14–302(a)(3)(ii) of this subtitle;
AND
(II) INCLUDE A SUMMARY OF THE FACTORS USED TO
DETERMINE THE EXPECT ED DEGREE OF MINORIT Y BUSINESS ENTERPRIS E
PARTICIPATION , INCLUDING SUBCONTRAC TING OPPORTUNITIES I DENTIFIED FOR
THE PROJECT , ANY APPLICABLE NORTH AMERICAN INDUSTRY CLASSIFICATION
SYSTEM CODES LINKED T O THE SUBCONTRACTING OPPORTUNITIES , AND THE
NUMBER OF CERTIFIED MINORITY BUSINESS EN TERPRISES IN THOSE I NDUSTRIES;
(3) a requirement that bidders or offerors complete a document setting
forth the percentage of the total dollar amount of the contract that the bidder or offeror
agrees will be performed by certified minority business enterprises;
(4) a requirement that within 10 days after notice from the prime
contractor of the State’s intent to award a contract, each minority business enterprise LAWRENCE J. HOGAN, JR., Governor Ch. 156
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serving as a subcontractor on the contract complete a document setting forth the percentage
and type of work assigned to the subcontractor under the contract and submit copies of the
completed form to both the procurement officer and the contractor;
(5) a requirement that the solicitation documents completed and submitted
by the bidder or offeror in connection with its minority business enterprise participation
commitment must be attached to and made a part of the contract;
(6) [(i) a requirement that all contracts containing minority business
enterprise participation goals shall contain a liquidated damages provision that applies in
the event that the contractor fails to comply in good faith with the provisions of this subtitle
or the pertinent terms of the applicable contract; and
(ii) a provision that prohibits a unit from assessing liquidated
damages for an indefinite delivery contract or an indefinite performance contract if a unit
fails to request the performance or delivery of a task for which:
1. a minority business enterprise subcontractor was named
on the participation schedule; or
2. a minority business enterprise subcontractor was named
on the participation schedule and qualified based on the subcontractor’s existing North
American Industry Classification System code;
(7)] a requirement that the unit provide a current list of certified minority
business enterprises to each prospective contractor;
[(8)] (7) provisions to ensure the uniformity of requests for bids on
subcontracts;
[(9)] (8) provisions relating to the timing of requests for bids on
subcontracts and of submission of bids on subcontracts;
[(10)] (9) provisions designed to ensure that a fiscal disadvantage to the
State does not result from an inadequate response by minority business enterprises to a
request for bids;
[(11)] (10) provisions relating to joint ventures, under which a bidder may
count toward meeting its minority business enterprise participation goal, the minority
business enterprise portion of the joint venture;
[(12)] (11) consistent with § 14–302(a)(9) of this subtitle, provisions relating
to any circumstances under which a unit may waive obligations of the contractor relating
to minority business enterprise participation;
Ch. 156 2022 LAWS OF MARYLAND
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[(13)] (12) provisions requiring a monthly submission to the unit by
minority business enterprises acknowledging all payments received in the preceding 30
days under a contract governed by this subtitle;
[(14)] (13) a requirement that a unit shall verify and maintain data
concerning payments received by minority business enterprises, including a requirement
that, upon completion of a project, the unit shall compare the total dollar value actually
received by minority business enterprises with the amount of contract dollars initially
awarded, and an explanation of any discrepancies therein;
[(15)] (14) a requirement that a unit verify that minority business
enterprises listed in a successful bid are actually participating to the extent listed in the
project for which the bid was submitted;
[(16)] (15) provisions establishing a graduation program based on the
financial viability of the minority business enterprise, using annual gross receipts or other
economic indicators as may be determined by the Board;
[(17)] (16) a requirement that a bid or proposal based on a solicitation with
an expected degree of minority business enterprise participation identify the specific
commitment of certified minority business enterprises at the time of submission;
[(18)] (17) provisions promoting and providing for the counting and
reporting of certified minority business enterprises as prime contractors;
[(19)] (18) provisions establishing standards to require a minority business
enterprise to perform a commercially useful function on a contract;
[(20)] (19) a requirement that each unit work with the Governor’s Office of
Small, Minority, and Women Business Affairs to designate certain procurements as being
excluded from the requirements of § 14–302(a) of this subtitle;
[(21)] (20) provisions promoting and providing for the counting and
reporting of minority business enterprises certified as both a woman–owned business and
a business owned by a member of an et hnic or racial group in accordance with §
14–302(a)(5) of this subtitle; and
[(22)] (21) other provisions that the Board considers necessary or
appropriate to encourage participation by minority business enterprises and to protect the
integrity of the procurement process.
(c) The regulations adopted under this section shall specify that:
(1) a unit may not allow a business to participate as if it were a certified
minority business enterprise if the business’s certification is pending; AND LAWRENCE J. HOGAN, JR., Governor Ch. 156
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(2) A UNIT SHALL ALLOW A B USINESS TO PARTICIPA TE AS A
CERTIFIED MINORITY B USINESS ENTERPRISE I F THE CERTIFICATION HAS BEEN
GRANTED UNDER § 9–305(B)(7) OF THE STATE GOVERNMENT ARTICLE.
14–305.
(a) (1) Within 90 days after the end of the fiscal year, each unit shall report to
the Governor’s Office of Small, Minority, and Women Business Affairs, the certification
agency, and, subject to § 2–1257 of the State Government Article, the Joint Committee on
Fair Practices and Personnel Oversight.
(2) A report under this subsection shall for the preceding fiscal year:
(i) state the total number and value of procurement contracts
between the unit and certified minority business enterprises, by specific category of
minority business enterprise AND BY INDUSTRY TYPE , including whether the minority
business enterprise participated as a prime contractor or as a subcontractor;
(ii) indicate the percentage that those procurement contracts
represent, by specific category of minority business enterprise AND BY INDUSTRY TY PE,
of the total number and value of procurement contracts;
(iii) state the total number and the names of certified minority
business enterprises that participated as prime contractors or as subcontractors on
procurement contracts awarded by a unit;
(iv) for each minority business included in the report under item (iii)
of this paragraph, list all procurement contracts awarded by a unit to the minority business
enterprise, including a description of the contract AND INDUSTRY TYPE ; [and]
(V) PROVIDE THE RESULTS OF EACH COMPLIANCE ASSESSMEN T
CONDUCTED BY THE UNI T UNDER § 14–303(B)(14)(B)(15) OF THIS SUBTITLE ,
INCLUDING FOR EACH C ONTRACT COMPLETED DU RING THE FISCAL YEAR :
1. THE NAMES OF EACH PR IME CONTRACTOR AND E ACH
MINORITY BUSINESS SUBCONTRACTOR THAT PARTICIPATED IN THE CONTRACT ;
2. THE TYPE OF GOOD OR SERVICE PROVIDED BY THE
CONTRACT;
3. THE MINORITY BUSINES S ENTERPRISE
PARTICIPATION GOAL F OR THE CONTRACT ;
Ch. 156 2022 LAWS OF MARYLAND
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4. WHETHER A WAIVER WAS GRANTED FOR THE
MINORITY BUSINESS E NTERPRISE PARTICIPAT ION GOAL;
5. THE TOTAL DOLLAR VAL UE OF PAYMENTS MADE TO
EACH PRIME CONTRACTO R AND BY EACH PRIME CONTRACTOR TO EACH
SUBCONTRACTOR DURING THE CONTRACT TERM ;
6. WHETHER EACH SUBCONT RACTOR IS A CERTIFIE D
MINORITY BUSINESS EN TERPRISE; AND
7. IF APPLICABLE, A DESCRIPTION OF FAC TORS THAT
MAY HAVE CONTRIBUTED TO FAILURE TO ACHIEV E THE MINORITY BUSIN ESS
ENTERPRISE PARTICIPA TION GOAL FOR THE CO NTRACT, INCLUDING DOCUMENTED
NONPERFORMANCE OR UN AVAILABILITY OF A MI NORITY BUSINESS ENT ERPRISE;
AND
[(v)] (VI) contain other such information as required by the
Governor’s Office of Small, Minority, and Women Business Affairs and the certification
agency and approved by the Board.
(3) As to procurement contracts for architectural services and engineering
services reported under paragraph (2) of this subsection, the report shall identify by
separate category of minority business enterprise procurements for:
(i) architectural services; and
(ii) engineering services.
(4) A report under this subsection shall be in a form prescribed by the
Governor’s Office of Small, Minority, and Women Business Affairs and the certification
agency and approved by the Board.
(5) THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL,
MINORITY, AND WOMEN BUSINESS AFFAIRS MAY WAIVE THE REQUIREMENT FOR A
UNIT TO REPORT MINOR ITY BUSINESS PARTICI PATION BY INDUSTRY T YPE UNDER
PARAGRAPH (2) OF THIS SUBSECTION I F THE SPENDING THRES HOLD FOR THE
INDUSTRY TYPE IS TOO LOW FOR THE UNIT TO PROVIDE SUFFICIENT D ATA.
(b) (1) On or before December 31 of each year, the Governor’s Office of Small,
Minority, and Women Business Affairs shall submit to the Board of Public Works and,
subject to § 2–1257 of the State Government Article, to the Legislative Policy Committee a
report summarizing the information the Office receives under subsection (a) of this section.
LAWRENCE J. HOGAN, JR., Governor Ch. 156
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(2) IF APPLICABLE, THE REPORT SUBMITTED UNDER PARAGRAPH (1)
OF THIS SUBSECTION S HALL INCLUDE MINORIT Y BUSINESS ENTERPRIS E
PARTICIPATION DATA F OR EACH UNIT BY INDUSTRY TYPE .
(2) (3) This report may be prepared in conjunction with the annual
report required under § 9–306 of the State Government Article.
(C) (1) IN THIS SUBSECTION , “MITIGATING FACTORS ” INCLUDES
DOCUMENTED NONPERFOR MANCE OR UNAVAILABIL ITY OF A MINORITY BUSINESS
ENTERPRISE DESIGNATE D FOR A CONTRACT .
(2) THE GOVERNOR’S OFFICE OF SMALL, MINORITY, AND WOMEN
BUSINESS AFFAIRS SHALL MAINTAIN AND P UBLISH ON ITS WEBSIT E A LIST OF
PRIME CONTRACTORS WH O, BASED ON THE RESULTS OF THE COMPLIANCE
ASSESSMENTS RECEIVED UNDER SUBSECTION (A)(2)(V) OF THIS SECTION ,
PERSISTENTLY FAIL AND THE OFFICE OF STATE PROCUREMENT IN THE
DEPARTMENT OF GENERAL SERVICES, IN CONSULTATION WITH THE OFFICE OF
THE ATTORNEY GENERAL AND THE BOARD OF PUBLIC WORKS, SHALL ADOPT BY
REGULATION CRITERIA US ED TO DETERMINE THAT A PRIME CONTRACTOR H AS
PERSISTENTLY FAILED TO MEET CONTRACT GOA LS IN THE ABSENCE OF MITIGATING
FACTORS.
(3) THE SPECIAL SECRETARY FOR THE OFFICE OF SMALL,
MINORITY, AND WOMEN BUSINESS AFFAIRS MAY ADOPT REGULATIONS NECESSAR Y
TO CARRY OUT THE REQ UIREMENTS OF THIS SU BSECTION.
(3) THE CRITERIA ADOPTED UNDER PARAGRAPH (2) OF THIS
SUBSECTION SHALL INC LUDE THE RESULTS OF THE COMPLIANCE ASSES SMENTS
MADE UNDER SUBSECTIO N (A)(2)(V) OF THIS SECTION.
(4) THE GOVERNOR’S OFFICE OF SMALL, MINORITY, AND WOMEN
BUSINESS AFFAIRS SHALL REFER P RIME CONTRACTORS IDE NTIFIED UNDER THE
CRITERIA ADOPTED UND ER PARAGRAPH (2) OF THIS SUBSECTION T O THE OFFICE
OF THE ATTORNEY GENERAL FOR DEBARMENT UNDER § 16–203(D)(4) OF THIS
ARTICLE.
14–502.
(f) (1) The Special Secretary for the Office of Small, Minority, and Women
Business Affairs, in consultation with the Attorney General, shall establish standards and
guidelines for participation in the Small Business Reserve Program every 5 years.
(2) THE STANDARDS AND GUI DELINES ESTABLISHED UNDER
PARAGRAPH (1) OF THIS SUBSECTION S HALL ALLOW FOR THE R EGISTRATION OF Ch. 156 2022 LAWS OF MARYLAND
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BUSINESSES FOR PARTI CIPATION IN THE SMALL BUSINESS RESERVE PROGRAM
WITHOUT THE NEED TO FILE ANY ADDITIONAL PAPERWORK OTHER THAN EVIDENCE
THAT THE BUSINESS :
(I) IS A SMALL BUSINESS UNDER THIS SUBTITLE ; AND
(II) 1. IS CERTIFIED AS A MI NORITY BUSINESS ENTE RPRISE
UNDER SUBTITLE 3 OF THIS TITLE;
2. IS CERTIFIED UNDER T HE FEDERAL DISADVANTAGED
BUSINESS ENTERPRISE PROGRAM; OR
3. IS QUALIFIED AS A SM ALL BUSINESS UNDER
SUBTITLE 2 OF THIS TITLE.
14–502.1.
(A) (1) THIS SECTION APPLIES TO A PROCUREMENT BY ANY UNIT OR
AGENCY OF THE EXECUTIVE BRANCH OF STATE GOVERNMENT FOR GOODS,
SUPPLIES, SERVICES, MAINTENANCE , CONSTRUCTION, CONSTRUCTION –RELATED
SERVICES, ARCHITECTURAL SERVIC ES, OR ENGINEERING SERVI CES.
(2) THIS SECTION DOES NOT APPLY TO:
(I) PROCUREMENTS MADE UN DER SUBTITLE 1 OF THIS TITLE;
(II) PROCUREMENTS INVOLVI NG EXPENDITURES OF F EDERAL
DOLLARS, TO THE EXTENT THAT I NCLUSION IN THE SMAL L BUSINESS RESERVE
PROGRAM CONFLICTS WI TH FEDERAL LAW OR GR ANT PROVISIONS ;
(III) PROCUREMENTS WITH A TOTAL DOLLAR VALUE U NDER
$50,000;
(IV) THE PROCUREMENT OF HUMAN , SOCIAL, CULTURAL, OR
EDUCATIONAL SERVICES ; OR
(V) TERM AND MASTER CONT RACTS EXEMPTED UNDER
SUBSECTION (C) OF THIS SECTION.
(B) (1) A PROCUREMENT WITH A T OTAL DOLLAR VALUE BE TWEEN
$50,000 AND $500,000 SHALL BE DESIGNATED FOR THE SMALL BUSINESS RESER VE.
LAWRENCE J. HOGAN, JR., Governor Ch. 156
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(2) EACH UNIT OR AGENCY S HALL IMPLEMENT THIS SUBSECTION IN
A MANNER CONSISTENT WITH ALL APPLICABLE STATUTES, INCLUDING THE
REQUIREMENTS OF SUBTITLE 3 OF THIS TITLE.
(C) (1) A PROCUREMENT MAY BE E XEMPT FROM DESIGNATI ON UNDER
SUBSECTION (B) OF THIS SECTION IF T HE GOVERNOR’S OFFICE OF SMALL,
MINORITY, AND WOMEN BUSINESS AFFAIRS CERTIFIES , CONCURRENTLY WITH
REVIEW OF ANY WAIVER DETERMINATIONS FOR C ERTIFIED MINORITY BU SINESS
ENTERPRISE PARTICIPA TION CONTRACT GOALS , THAT IT IS NOT PRACTICABLE TO
DO SO.
(2) THE OFFICE OF STATE PROCUREMENT IN THE DEPARTMENT OF
GENERAL SERVICES SHALL ASSIST THE GOVERNOR’S OFFICE OF SMALL,
MINORITY, AND WOMEN BUSINESS AFFAIRS IN ESTABLISHI NG PROCEDURES AND
GUIDELINES FOR THE E XEMPTION OF PROCUREM ENTS UNDER PARAGRAPH (1) OF
THIS SUBSECTION .
Part IV. [Construction Contracts –] Prompt Payment of Subcontractors.
15–226.
(a) In this section, “undisputed amount” means an amount owed by a contractor
to a subcontractor for which there is no good faith dispute, including any retainage
withheld.
(b) It is the policy of the State that, for work under a State procurement contract
[for construction]:
(1) a contractor shall promptly pay to a subcontractor any undisputed
amount to which the subcontractor is entitled; and
(2) a subcontractor shall promptly pay to a lower tier subcontractor any
undisputed amount to which the lower tier subcontractor is entitled.
(c) (1) A contractor shall pay a subcontractor an undisputed amount to which
the subcontractor is entitled within 10 days of receiving a progress or final payment from
the State.
(2) If a contractor withholds payment from a subcontractor, within the time
period in which payment normally would be made, the contractor shall:
(i) notify the subcontractor in writing and state the reason why
payment is being withheld; and
(ii) provide a copy of the notice to the procurement officer. Ch. 156 2022 LAWS OF MARYLAND
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(d) (1) If a subcontractor does not receive a payment within the required time
period, the subcontractor may give written notice of the nonpayment to the procurement
officer.
(2) The notice shall:
(i) indicate the name of the contractor, the project under which the
dispute exists, and the amount in dispute;
(ii) provide an itemized description on which the amount is based;
and
(iii) if known, provide an explanation for any dispute concerning
payment by the contractor.
(e) (1) Within 2 business days of receipt of written notice from a subcontractor,
a representative of the unit designated by the procurement officer shall verbally contact
the contractor to ascertain whether the amount withheld is an undisputed amount.
(2) If the representative of the unit decides that a part or all of the amount
withheld is an undisputed amount, the representative of the unit shall instruct the
contractor to pay the subcontractor the undisputed amount within 3 business days.
(3) The representative of the unit shall verbally communicate to the
subcontractor the results of discussions with the contractor.
(4) If the contractor is instructed to pay the subcontractor and the
subcontractor is not paid within the time instructed under paragraph (2) of this subsection,
the subcontractor may report the nonpayment in writing to the procurement officer.
(f) (1) If the subcontractor notifies the procurement officer under subsection
(e)(4) of this section that payment has not been made, the representative of the unit shall
schedule a meeting to discuss the dispute with the unit’s project manager, the contractor,
and the subcontractor:
(i) at a time and location designated by the representative of the
unit; but
(ii) not later than 10 days after receiving notice from the
subcontractor under subsection (e)(4) of this section.
(2) The purpose of the meeting is to establish why the contractor has not
paid the subcontractor in the required time period.
LAWRENCE J. HOGAN, JR., Governor Ch. 156
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(3) The representative of the unit shall require the parties to provide at the
meeting any information that the representative believes necessary to evaluate the dispute.
(4) If the representative of the unit determines that the contractor is
delinquent in payment of an undisputed amount to the subcontractor, further progress
payments to the contractor may be withheld until the subcontractor is paid.
(5) If payment is not paid to the subcontractor within 7 days after the
representative of the unit determines that the contractor is delinquent in paying the
subcontractor under this subsection, the representative shall schedule a second meeting to
address the dispute:
(i) at a time and location designated by the representative of the
unit; but
(ii) not later than 5 days after the close of the 7–day period.
(6) If, at the completion of the second meeting, the representative of the
unit determines that the contractor continues to be delinquent in payments owed to the
subcontractor, the representative:
(i) shall order that further payments to the contractor not be
processed until payment to the subcontractor is verified;
(ii) may order that work under the contract be suspended based on
the failure of the contractor to meet obligations under the contract; and
(iii) subject to paragraph (7) of this subsection, may require that the
contractor pay a penalty to the subcontractor, in an amount not exceeding $100 per day,
from the date that payment was required under subsection (e)(2) of this section.
(7) A penalty may not be imposed under paragraph (6)(iii) of this
subsection for any period that the representative of the unit determines the subcontractor
was not diligent in reporting nonpayment to the procurement officer.
(g) (1) A contractor or a subcontractor may appeal a decision under subsection
(f)(6) of this section to the procurement officer.
(2) The contractor shall comply with the procurement officer’s decision.
(h) An act, failure to act, or decision of a procurement officer or a representative
of a unit concerning a payment dispute between a contractor and subcontractor or between
subcontractors under this section may not:
(1) affect the rights of the contracting parties under any other provision of
law; Ch. 156 2022 LAWS OF MARYLAND
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(2) be used as evidence on the merits of a dispute between the unit and the
contractor or the contractor and subcontractor in any other proceeding; or
(3) result in liability against or prejudice the rights of the unit.
(i) A decision of a procurement officer or a representative of the unit designated
by the procurement officer under this section is not subject to judicial review or the
provisions of Part III of this subtitle.
(j) (1) A unit shall include in each State procurement contract [for
construction] a provision:
(i) governing prompt payment to subcontractors; and
(ii) requiring inclusion of a similar provision in each subcontract at
any tier.
(2) The contract provision shall establish procedures and remedies for the
resolution of payment disputes similar to the process and remedies prescribed in
subsections (c) through (g) of this section.
16–203.
(d) A person may be debarred from entering into a contract with the State:
(1) if the Board finds that the person was established or operates in a
manner designed to evade the application of this title or to defeat the purpose of this title;
(2) if the person is a successor, assignee, subsidiary, or affiliate of a person
who is debarred or suspended;
(3) EXCEPT AS PROVIDED U NDER ITEM (4) OF THIS SUBSECTION , for
one of the following violations of a contract provision if the Board believes it to be serious
enough to justify debarment:
(i) the deliberate failure, without good cause, to perform in
accordance with the specifications, or within the time limit, provided in a contract; or
(ii) within the preceding 5 years, the failure to perform or of
unsatisfactory performance in accordance with the terms of one or more contracts, unless
the failure to perform or unsatisfactory performance was caused by acts beyond the control
of the person;
(4) FOR A PERIOD NOT EXC EEDING 3 YEARS IF THE PERSON
PERSISTENTLY FAILS T O MEET CONTRACT GOAL S IN THE ABSENCE OF MITIGATING LAWRENCE J. HOGAN, JR., Governor Ch. 156
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FACTORS UNDER THE CR ITERIA ESTABLISHED U NDER § 14–305(C)(2) OF THIS
ARTICLE;
[(4)] (5) if the person is a competing contractor, or any officer, employee,
representative, agent, or consultant of any competing contractor who violates § 13–211 of
this article; or
[(5)] (6) for any other cause that the Board determines to be so serious as
to affect the integrity of the procurement process.
Article – State Government
9–303.3.
(A) IN THIS SECTION , “OMBUDSMAN ” MEANS THE MINORITY BUSINESS
ENTERPRISE OMBUDSMAN IN THE OFFICE.
(B) THERE IS A MINORITY BUSINESS ENTERPRISE OMBUDSMAN
APPOINTED BY THE SPECIAL SECRETARY.
(C) IN ACCORDANCE WITH TH E STATE BUDGET , THE SPECIAL SECRETARY
SHALL ALLOCATE THE S TAFF AND OFFICE RESOURCES TO T HE OMBUDSMAN
NECESSARY FOR THE OMBUDSMAN TO FULFILL THE DUTIES OF THE OMBUDSMAN .
(D) THE OMBUDSMAN SHALL :
(1) MAKE REASONABLE ASSIST THE PROCUREME NT OFFICER
MANAGING THE CONTRAC T IN ATTEMPTS TO RESOLVE DISPUTES BETWEEN
MINORITY BUSINESS EN TERPRISES AND PRIME CONTRACTORS , INCLUDING
DISPUTES OVER CONTRA CT SCOPE AND PAYMENT S; AND
(2) SERVE AS A RESOURCE TO MINORITY BUSINESS EN TERPRISE
LIAISONS, PROCUREMENT OFFICERS IN UNITS OF STATE GOVERNMENT , PRIME
CONTRACTORS , AND MINORITY BUSINES S ENTERPRISES IN RES OLVING DISPUTES
RELATED TO CONTRACTS THAT INCLUDE A MINOR ITY BUSINESS ENTERPR ISE
PARTICIPATION GOAL .; AND
(3) CONDUCT TRAININGS FO R PROCUREMENT OFFICE RS IN UNITS OF
STATE GOVERNMENT ON E NFORCEMENT OF THE RE QUIREMENTS OF TITLE 14,
SUBTITLE 3 OF THE STATE FINANCE AND PROCUREMENT ARTICLE, INCLUDING THE
ASSESSMENT OF LIQUID ATED DAMAGES UNDER § 14–303(B)(6) OF THE STATE
FINANCE AND PROCUREMENT ARTICLE.
Ch. 156 2022 LAWS OF MARYLAND
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(E) IN RESOLVING A DISPUT E UNDER SUBSECTION (D) OF THIS SECTION ,
THE OMBUDSMAN MAY :
(1) COMPEL PRIME CONTRAC TORS AND MINORITY BU SINESS
ENTERPRISES TO PROVI DE DOCUMENTATION REL ATED TO CONTRACT
PERFORMANCE AND PAYM ENTS; AND
(2) ORDER ASSIST THE PROCUREME NT OFFICER MANAGING THE
CONTRACT IN ORDERING ANY RELEVANT PAYMENT S TO BE MADE IN CONJ UNCTION
WITH A DISPUTE RESOL UTION.
(F) (1) EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS SUBSECTION ,
WHEN RESOLVING A DIS PUTE UNDE R SUBSECTION (D) OF THIS SECTION , THE
OMBUDSMAN MAY NOT DIS CLOSE INFORMATION RE CEIVED FROM A UNIT O F STATE
GOVERNMENT , PRIME CONTRACTOR , OR MINORITY BUSINESS ENTERPRISE
WITHOUT THE WRITTEN CONSENT OF THE PARTY FROM WHOM THE INFORM ATION
WAS OBTAINED .
(2) THE OMBUDSMAN MAY DISCLOS E INFORMATION RECEIV ED
UNDER THIS SECTION T O THE ASSISTANT ATTORNEY GENERAL ASSIGNED TO T HE
OFFICE.
9–305.
(b) Subject to the limitations of any law that governs the activities of other units
of the Executive Branch of the State government, the Special Secretary shall:
(7) establish a mentoring program:
(i) in which larger and more established minority businesses can
mentor start–up and small minority businesses; and
(ii) that incentivizes mentor participation by providing benefits to
mentors, including:
1. special recognition on the Office website, and in the Office
newsletter and participation updates;
2. a certificate of participation awarded by the Office;
3. the opportunity to present highlights of mentor and
protege relationships at an annual appreciation event sponsored by the Office; [and]
4. increased networking and educational opportunities; AND LAWRENCE J. HOGAN, JR., Governor Ch. 156
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5. AUTHORIZATION FOR MI NORITY BUSINESSES TH AT
HELD CERTIFICATION UNDER TITLE 14, SUBTITLE 3 OF THE STATE FINANCE AND
PROCUREMENT ARTICLE AND HAVE BEEN DECERTIFIED TO OBTAI N OR RETAIN
CERTIFICATION FOR A PERIOD OF TIME SET B Y THE SPECIAL SECRETARY;
SECTION 2. AND BE IT FURTHER ENACTED, That, on or before December 1,
2023, the Minority Business Enterprise Ombudsman established under Section 1 of this
Act shall report to the Senate Budget and Taxation Committee and the House Health and
Government Operations Committee, in accordance with § 2–1257 of the State Government
Article, on the activities of the Ombudsman, including whether the number of staff
allocated to the Ombudsman is adequate to accomplish the requirements of § 9–303.3 of
the State Government Article, as enacted under Section 1 of this Act.
SECTION 3. AND BE IT FURTHER ENACTED, That, on or before June 1, 2024,
the Governor’s Office of Small, Minority, and Women Business Affairs shall study the use
of liquidated damages by procurement officers under § 14–303(b)(6) of the State Finance
and Procurement Article to enforce the requirements of Title 14, Subtitle 3 of the State
Finance and Procurement Article and report to the Senate Budget and Taxation Committee
and the House Health and Government Operations Committee, in accordance with §
2–1257 of the State Government Article, on:
(1) the number of instances in which a procurement officer could have
applied a liquidated damages penalty for failure of a contractor to comply in good faith with
the provisions of Title 14, Subtitle 3 of the State Finance and Procurement Article;
(2) the number of instances in which liquidated damages were actually
assessed;
(3) the amount of liquidated damages collected, if any;
(4) the reasons for any failure to assess liquidated damages; and
(5) recommendations for effective enforcement of the requirements of Title
14, Subtitle 3 of the State Finance and Procurement Article, including any suggested
statutory changes.
SECTION 4. AND BE IT FURTHER ENACTED, That, on or before December 1,
2024, the Department of Legislative Services shall report to the Senate Budget and
Taxation Committee and the House Health and Government Operations Committee, in
accordance with § 2–1257 of the State Government Article, on:
(1) the status of the recommendations included in the Department’s 2021
report “Evaluation of the Minority Business Enterprise Program”, including an assessment
of:
Ch. 156 2022 LAWS OF MARYLAND
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(i) the effectiveness of changes implemented in response to the
recommendations; and
(ii) for any recommendations that were not implemented or only
partially implemented, whether the Department reaffirms its 2021 recommendation; and
(2) any updated findings and recommendations related to the Minority
Business Enterprise Program.
SECTION 2. 5. AND BE IT FURTHER ENACTE D, That this Act shall take effect
July 1, 2022.
Approved by the Governor, April 21, 2022.