EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW. [Brackets] indicate matter deleted from existing law. *hb0856* HOUSE BILL 856 P2 4lr1584 By: Delegate Alston Introduced and read first time: February 2, 2024 Assigned to: Health and Government Operations and Economic Matters A BILL ENTITLED AN ACT concerning 1 Procurement – Minority Business Enterprise Program – Work Performed by a 2 Regulated Lobbyist or Government Relations Firm 3 FOR the purpose of authorizing the costs for certain work performed on a procurement 4 contract by a regulated lobbyist or government relations firm that is a certified 5 minority business enterprise to be applied toward certain minority business 6 enterprise goals under certain circumstances; and generally relating to procurement 7 preferences. 8 BY repealing and reenacting, with amendments, 9 Article – State Finance and Procurement 10 Section 14–302 11 Annotated Code of Maryland 12 (2021 Replacement Volume and 2023 Supplement) 13 SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 14 That the Laws of Maryland read as follows: 15 Article – State Finance and Procurement 16 14–302. 17 (a) (1) (i) 1. Except for leases of real property, each unit shall structure 18 procurement procedures, consistent with the purposes of this subtitle, to try to achieve an 19 overall percentage goal of the unit’s total dollar value of procurement contracts being made 20 directly or indirectly to certified minority business enterprises. 21 2. Notwithstanding subsubparagraph 1 of this 22 subparagraph, the following contracts may not be counted as part of a unit’s total dollar 23 value of procurement contracts: 24 2 HOUSE BILL 856 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 Transportation and 16 the Attorney General, the Special Secretary for the Office of Small, Minority, and Women 17 Business Affairs shall establish guidelines on a biennial basis for each unit to consider 18 while determining whether to set subgoals for the minority groups listed in § 19 14–301(k)(1)(i)1, 2, 3, 4, and 6 of this subtitle. 20 2. During any year in which there is a delay in establishing 21 the subgoal guidelines, the previous year’s subgoal guidelines will apply. 22 (iv) 1. The Special Secretary for the Office of Small, Minority, 23 and Women Business Affairs, in consultation with the Secretary of Transportation and the 24 Attorney General, shall establish goals and subgoal guidelines that, to the maximum extent 25 feasible, approximate the level of minority business enterprise participation that would be 26 expected in the absence of discrimination. 27 2. In establishing overall goals and subgoal guidelines, the 28 Special Secretary for the Office of Small, Minority, and Women Business Affairs shall 29 provide for public participation by consulting with minority, women’s, and general 30 contractor groups, community organizations, and other officials or organizations that could 31 be expected to have information concerning: 32 A. the availability of minority– and women–owned 33 businesses; 34 B. the effects of discrimination on opportunities for 35 minority– and women–owned businesses; and 36 HOUSE BILL 856 3 C. the State’s operation of the Minority Business Enterprise 1 Program. 2 (v) In establishing overall goals, the factors to be considered shall 3 include: 4 1. the relative availability of minority– and women–owned 5 businesses to participate in State procurement as demonstrated by the State’s most recent 6 disparity study; 7 2. past participation of minority business enterprises in 8 State procurement, except for procurement related to leases of real property; and 9 3. other factors that contribute to constitutional goal setting. 10 (vi) Notwithstanding § 12–101 of this article, the Special Secretary 11 for the Office of Small, Minority, and Women Business Affairs shall adopt regulations in 12 accordance with Title 10, Subtitle 1 of the State Government Article setting forth the 13 State’s overall goal. 14 (2) The Special Secretary for the Office of Small, Minority, and Women 15 Business Affairs, in consultation with the Secretary of Transportation and the Attorney 16 General, shall establish guidelines for each unit to consider when determining the 17 appropriate minority business enterprise participation percentage goal for a procurement 18 contract in accordance with paragraph (3) of this subsection. 19 (3) Each unit shall: 20 (i) consider the practical severability of all contracts and, in 21 accordance with § 11–201 of this article, may not bundle contracts; 22 (ii) implement a program that will enable the unit to evaluate each 23 contract to determine the appropriate minority business enterprise participation goals, if 24 any, for the contract based on: 25 1. the potential subcontract opportunities available in the 26 prime procurement contract; 27 2. the availability of certified minority business enterprises 28 to respond competitively to the potential subcontract opportunities; 29 3. the contract goal guidelines established under paragraph 30 (2) of this subsection; 31 4. the subgoal guidelines established under paragraph (1)(iii) 32 of this subsection; and 33 4 HOUSE BILL 856 5. other factors that contribute to constitutional goal setting; 1 (iii) monitor and collect data with respect to prime contractor 2 compliance with contract goals; and 3 (iv) institute corrective action when prime contractors do not make 4 good–faith efforts to comply with contract goals. 5 (4) Units may not use quotas or any project goal–setting process that: 6 (i) solely relies on the State’s overall numerical goal, or any other 7 jurisdiction’s overall numerical goal; or 8 (ii) fails to incorporate the analysis outlined in paragraph (3)(ii) of 9 this subsection. 10 (5) (i) A woman who is also a member of an ethnic or racial minority 11 group may be certified in that category in addition to the gender category. 12 (ii) For purposes of achieving the goals in this subsection, a certified 13 minority business enterprise may participate in a procurement contract and be counted as 14 a woman–owned business, a business owned by a member of an ethnic or racial group, or 15 both, if the business has been certified in both categories. 16 (6) Each unit shall meet the maximum feasible portion of the State’s 17 overall goal established in accordance with this subsection by using race–neutral measures 18 to facilitate minority business enterprise participation in the procurement process. 19 (7) If a unit establishes minority business enterprise participation goals for 20 a contract, a contractor, including a contractor that is a certified minority business 21 enterprise, shall: 22 (i) identify specific work categories appropriate for subcontracting; 23 (ii) at least 10 days before bid opening, solicit minority business 24 enterprises, through written notice that: 25 1. describes the categories of work under item (i) of this 26 paragraph; and 27 2. provides information regarding the type of work being 28 solicited and specific instructions on how to submit a bid; 29 (iii) attempt to make personal contact with the firms in item (ii) of 30 this paragraph; 31 HOUSE BILL 856 5 (iv) offer to provide reasonable assistance to minority business 1 enterprises to fulfill bonding requirements or to obtain a waiver of those requirements; 2 (v) in order to publicize contracting opportunities to minority 3 business enterprises, attend prebid or preproposal meetings or other meetings scheduled 4 by the unit; and 5 (vi) upon acceptance of a bid or proposal, provide the unit with a list 6 of minority businesses with whom the contractor negotiated, including price quotes from 7 minority and nonminority firms. 8 (8) The Special Secretary for the Office of Small, Minority, and Women 9 Business Affairs shall: 10 (i) in consultation with the Secretary of Transportation and the 11 Attorney General, establish procedures governing how the participation of minority 12 business enterprise prime contractors is counted toward contract goals; and 13 (ii) notwithstanding § 12–101 of this article, adopt regulations 14 setting forth the procedures established in accordance with this paragraph. 15 (9) (i) 1. If a contractor, including a certified minority business 16 enterprise, does not achieve all or a part of the minority business enterprise participation 17 goals on a contract, the unit shall make a finding of whether the contractor has 18 demonstrated that the contractor took all necessary and reasonable steps to achieve the 19 goals, including compliance with paragraph (7) of this subsection. 20 2. A waiver of any part of the minority business enterprise 21 goals for a contract shall be granted if a contractor provides a reasonable demonstration of 22 good–faith efforts to achieve the goals. 23 (ii) If the unit determines that a waiver should be granted in 24 accordance with subparagraph (i) of this paragraph, the unit may not require the contractor 25 to renegotiate any subcontract in order to achieve a different result. 26 (iii) The head of the unit may waive any of the requirements of this 27 subsection relating to the establishment, use, and waiver of contract goals for a sole source, 28 expedited, or emergency procurement in which the public interest cannot reasonably 29 accommodate use of those requirements. 30 (iv) 1. Except for waivers granted in accordance with 31 subparagraph (iii) of this paragraph, when a waiver determination is made, the unit shall 32 issue the determination in writing. 33 2. The head of the unit shall: 34 6 HOUSE BILL 856 A. keep one copy of the waiver determination and the reasons 1 for the determination; and 2 B. forward one copy of the waiver determination to the 3 Governor’s Office of Small, Minority, and Women Business Affairs. 4 (v) On or before July 31 of each year, each unit shall submit directly 5 to the Board of Public Works and the Governor’s Office of Small, Minority, and Women 6 Business Affairs an annual report of waivers requested and waivers granted under this 7 paragraph. 8 (vi) The report required under subparagraph (v) of this paragraph 9 shall contain the following information on those contracts where the unit considered a 10 contractor’s request for waiver of all or a portion of the minority business enterprise goals: 11 1. the contract titles, numbers, and dates; 12 2. the number of waiver requests received; 13 3. the number of waiver requests granted; and 14 4. any other information specifically requested by the Board. 15 (10) (i) 1. This paragraph applies to a bidder or offeror after 16 submission of a bid or proposal and before the execution of a contract with an expected 17 degree of minority business enterprise participation. 18 2. If the bidder or offeror determines that a minority 19 business enterprise identified in the minority business enterprise participation schedule 20 has become or will become unavailable or ineligible to perform the work required under the 21 contract, the bidder or offeror shall notify the unit within 72 hours of making the 22 determination. 23 (ii) 1. If a minority business enterprise identified in the minority 24 business enterprise participation schedule submitted with a bid or offer has become or will 25 become unavailable or ineligible to perform the work required under the contract, the 26 bidder or offeror may submit a written request with the unit to amend the minority 27 business enterprise participation schedule. 28 2. The request to amend the minority business enterprise 29 participation schedule shall indicate the bidder’s or offeror’s efforts to substitute another 30 certified minority business enterprise to perform the work that the unavailable or ineligible 31 minority business enterprise would have performed. 32 (iii) A minority business enterprise participation schedule may not 33 be amended unless: 34 HOUSE BILL 856 7 1. the bidder or offeror provides a satisfactory explanation of 1 the reason for inclusion of the unavailable or ineligible firm on the minority business 2 enterprise participation schedule; and 3 2. the amendment is approved by the unit’s procurement 4 officer after consulting with the unit’s minority business enterprise liaison. 5 (11) (i) This paragraph applies after execution of a contract with an 6 expected degree of minority business enterprise participation. 7 (ii) The minority business enterprise participation schedule, 8 including any amendment, shall be attached to and made a part of the executed contract. 9 (iii) 1. A. Except as provided in subsubsubparagraph B of this 10 subsubparagraph, for purposes of this subparagraph, good cause for removal of a certified 11 minority business enterprise after contract execution includes documented 12 nonperformance by the minority business enterprise or election by the certified minority 13 business enterprise to cease work on the contract. 14 B. Failure of a certified minority business enterprise to 15 provide a bond requested by a contractor in violation of § 13–227 of this article may not be 16 considered nonperformance by the minority business enterprise. 17 2. A contractor may not terminate or otherwise cancel the 18 contract of a certified minority business enterprise subcontractor listed in the minority 19 business enterprise participation schedule without showing good cause and obtaining the 20 prior written consent of the minority business enterprise liaison and approval of the head 21 of the unit. 22 3. The unit shall send a copy of the written consent obtained 23 under subsubparagraph 2 of this subparagraph to the Governor’s Office of Small, Minority, 24 and Women Business Affairs. 25 (iv) A minority business enterprise participation schedule may not 26 be amended after the date of contract execution unless the request is approved by the head 27 of the unit and the contract is amended. 28 (12) If, during the performance of a contract, a certified minority business 29 enterprise contractor or subcontractor becomes ineligible to participate in the Minority 30 Business Enterprise Program because one or more of its owners has a personal net worth 31 that exceeds the amount specified in § 14–301(k)(3) of this subtitle: 32 (i) that ineligibility alone may not cause the termination of the 33 certified minority business enterprise’s contractual relationship for the remainder of the 34 term of the contract; and 35 8 HOUSE BILL 856 (ii) the certified minority business enterprise’s participation under 1 the contract shall continue to be counted toward the program and contract goals. 2 (13) (i) Except as provided in subparagraph (ii) of this paragraph, a 3 nonprofit entity participating as a minority business enterprise on a procurement contract 4 awarded by a unit before July 1, 2015, may continue to participate in the contract until the 5 contract expires or otherwise terminates, including all options, renewals, and other 6 extensions. 7 (ii) 1. The nonprofit entity’s participation may not be counted 8 toward achieving the minority business enterprise participation goals in this subsection. 9 2. The unit may not require that a certified minority 10 business enterprise be substituted for the nonprofit entity in order to meet the minority 11 business enterprise goals for the procurement contract. 12 (14) (i) For purposes of this paragraph and paragraph (15) of this 13 subsection, “regular dealer”: 14 1. means a firm that owns, operates, or maintains a store, a 15 warehouse, or any other establishment in which the materials, supplies, articles, or 16 equipment are of the general character described by the specifications required under the 17 contract and are bought, kept in stock, or regularly sold or leased to the public in the usual 18 course of business; and 19 2. does not include a packager, a broker, a manufacturer’s 20 representative, or any other person that arranges or expedites transactions. 21 (ii) A unit may apply only 60% of the costs of the materials and 22 supplies provided by the certified minority business enterprise if the certified minority 23 business enterprise is a regular dealer for purposes of achieving the minority business 24 enterprise contract goal. 25 (15) With respect to materials or supplies purchased from a certified 26 minority business enterprise that is neither a manufacturer nor a regular dealer: 27 (i) a unit may apply the entire amount of fees or commissions 28 charged for assistance in the procurement of the materials and supplies, fees, or 29 transportation charges for the delivery of materials and supplies required on a procurement 30 toward minority business enterprise contract goals, provided a unit determines the fees to 31 be reasonable and not excessive as compared with fees customarily allowed for similar 32 services; and 33 (ii) a unit may not apply any portion of the costs of the materials and 34 supplies toward minority business enterprise goals. 35 HOUSE BILL 856 9 (16) (I) IN THIS PARAGRAPH , “REGULATED LOBBYIST ” HAS THE 1 MEANING STATED IN § 5–101 OF THE GENERAL PROVISIONS ARTICLE. 2 (II) IF A CONTRACTOR OR SU BCONTRACTOR HAS CONT RACTED 3 WITH A REGULATED LOB BYIST OR GOVERNMENT RELATI ONS FIRM IN CONNECTION 4 WITH A PROCUREMENT CONTRACT AND THE REG ULATED LOBBYIST OR 5 GOVERNMENT RELATIONS FIRM IS A CERTIFIED MINORITY BUSINESS EN TERPRISE, 6 THE CONTRACTOR OR SU BCONTRACTOR MAY APPLY THE COSTS FOR THE WORK 7 PERFORMED BY THE REG ULATED LOBBYIST OR G OVERNMENT RELATIONS FIRM 8 UNDER THE CONTRACT TOWARD MINORITY BUSI NESS ENTERPRISE GOAL S. 9 (b) (1) The provisions of §§ 14–301(f) and 14–303 of this subtitle and 10 subsection (a) of this section are inapplicable to the extent that any unit determines the 11 provisions to be in conflict with any applicable federal program requirement. 12 (2) The determination under this subsection shall be included with the 13 report required under § 14–305 of this subtitle. 14 SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 15 October 1, 2024. 16