A minority-owned company that coordinates mental health services for needy Maryland residents is questioning the Ehrlich administration's efforts to boost minority business in the state.
Pennsylvania-based Mercer Staffing, founded by an African-American businessman, says it is being squeezed out of a $14 million-a-year contract to provide administrative services because the state Department of Health and Mental Hygiene has lowered the target for minority business participation.
With the contract up for renewal after five years, company owner Michael Traina says he would have an advantage if the state kept its previous goal of a 20 percent minority participation rate.
But the administration has dropped the goal to 10 percent, prompting Traina to file a formal protest and ask Lt. Gov. Michael S. Steele to intervene.
The administration's minority business office says it is reviewing the situation.
"I need to get all the facts in," said Sharon R. Pinder, director of the Governor's Office of Minority Affairs. "My governor and the lieutenant governor are very, very serious about our reform effort and goals. We are serious about this one. ... It has our attention."
Mercer has been working as a subcontractor under Magellan Health Services on the mental health contract.
Under an agreement between the two companies, Mercer has provided administrative staffing, helping bring the minority component of the mental health contract to near the 20 percent target, Traina said.
"As Michael Steele and Bob Ehrlich are really trying to support MBE's [minority business enterprises], cutting millions for minority businesses is not the way to do it," Traina said.
But state officials say they don't like the current mental health administration contract. Magellan relies too heavily on Traina's firm and another subcontractor, they say, creating a lack of oversight. Controls will be improved under the new contract, they say.
"Early on, the providers, they were not being paid as promptly or accurately as they should have been paid," said state Health Secretary Nelson J. Sabatini. "The state did not really have well-defined performance standards and measures."
The minority goal is being reduced, Sabatini said, as the department seeks greater control.
"When we take out the wage aspects of the contract, which is the bulk of the contract, the total portion that is available for potential subcontracting is smaller," he said.
State agencies are instructed to set a 25 percent minority goal for spending, said Warren Wright, a procurement specialist with the Board of Public Works. Within that, women-owned businesses are supposed to receive 10 percent of the work, with 7 percent going to African-American-owned companies.
"There are no criminal penalties associated with not meeting the goal," Wright said. "If it is not achieved, we are supposed to find out why and help them get there."
The health department met its target last year, the governor's office said. Health department officials deny Traina's assertion that Mercer Staffing helped successfully meet minority targets in the previous contract.
"None of the previous MBE goals were met," wrote Trudy Brown, deputy director of contract policy and procurement for the health department in a letter to Traina in April. "The goals previously achieved were heavily influenced by services not applicable or eligible with the new solicitation."
Traina companies have received attention in the past. Annapolis lobbyist Bruce C. Bereano represents Traina and his firms, and Bereano is accused of entering into an illegal contract with Traina that pays the lobbyist a portion of other companies' business in Maryland.
Such contingency fee arrangements are prohibited under state law.
Bereano is scheduled to appear in court next week challenging a decision by the State Ethics Commission to suspend his lobbying license for 10 months because of a fee arrangement with Mercer Ventures Inc., which holds a $42 million contract to provide foster care for 500 children in Baltimore.
Traina's protest over the mental health contract comes as the Ehrlich administration is trying to boost minority business participation in state government. Steele was head of the Governor's Commission on Minority Business Reform, which completed a study last year.
During the General Assembly session, the administration won passage of bills requiring agencies to set aside certain contracts for small businesses and creating the Office of the Special Secretary for Minority Affairs.
When he learned that the health contract was being altered, Traina contacted Steele.