Maryland to raise minority business goal to 29 percent

Critics say current goal of 25 percent still not met

April 29, 2013|By John Fritze, The Baltimore Sun

Maryland plans to steer to minority and women-owned businesses 29 percent of the nearly $8 billion a year it spends on contracts, increasing a target that was already among the most aggressive in the nation, Lt. Gov. Anthony Brown said Monday.

The new goal — an increase from the current 25 percent — would if attained have a profound impact on boosting minority-owned construction firms, IT contractors, engineers and other companies in Maryland that have historically struggled to land state government contracts, supporters said.

Those firms received $1.9 billion out of $7.7 billion state government spent on contracts last year, according to state data.

Officials said increasing the share of minority-owned businesses receiving contracts is possible in part because Maryland hit its 25 percent goal for the first time last year. Brown said state officials now believe the state's minority business community is ready for more work.

"It was time to increase the goal," said Brown, who is expected to officially announce the higher target as early as Tuesday.

Republican lawmakers countered that the way the state tracks the program inflates participation and that Maryland is nowhere close to its current goal. Raising the bar now, they said, is a political stunt that comes as Brown is planning to run for governor in 2014 and Gov. Martin O'Malley is deciding whether to pursue a bid for president. Both are Democrats.

"It might be politically popular, but it sure would be a better approach to try to hit the current goals," said Del. Nicholaus Kipke of Anne Arundel County, a top-ranking Republican on the House Health and Government Operations Committee. "There's a lot of smoke and mirrors."

Maryland's Minority Business Enterprise program, created in 1978, is one of the oldest in the country. Though the program faced criticism under prior administrations — in part for shoddy record keeping — O'Malley pushed for increased participation during his first term, and the amount of money directed to minority firms inched up every year.

About one-quarter of state contracting dollars went to the firms in the 2012 fiscal year compared with 20 percent in 2007, state data show.

Maryland's 25 percent target was set by law in 2001, during the Glendening administration. A national survey in 2007 by the nonprofit Insight Center for Community Economic Development called it the highest rate in the nation. In 2012, the General Assembly gave the administration authority to set the goal by regulation.

Advocates for minority businesses praised the higher goal Monday but said the state would have to increase outreach to small firms to meet it. The goals are not binding, and some state agencies do far better than others at hitting the target.

"Increasing that at all is extremely bold on the administration's part," said Wayne R. Frazier Sr., president of the Maryland-Washington Minority Contractors' Association. "Maryland is the leader in the nation for minority business inclusion, and Governor O'Malley has set the stage for it."

Some agencies have particularly high minority participation rates, such as the state Department of Housing and Community Development, which awarded 35 percent of its contracting dollars in 2012 to minority- and women-owned businesses. The Department of Budget and Management, by contrast, had only 6 percent minority participation, according to the Governor's Office of Minority Affairs.

But minority business advocates have argued for years that the numbers are inflated because the state counts nonprofits that aid the physically and mentally disabled toward minority business goals. The groups successfully pushed the General Assembly to approve legislation this year that will phase nonprofits out of the count by 2015.

Contracts awarded to nonprofits represented 35 percent of the state's minority spending in 2012, or $680 million. Once withdrawn from the count, the participation rate in the contracting program falls to about 16 percent.

"Bumping the goal isn't going make it any better," said Del. Justin Ready, a Carroll County Republican. "It doesn't make a whole lot of sense to raise the goals when we're not meeting the goals we have now."

Brown acknowledged that removing nonprofits from the tally would make meeting the goal more difficult. He said the state would continue to increase efforts to reach out to minority businesses and noted the steady progress the state has made in recent years.

State officials said they hope to have the higher threshold in place by July.

"It's not an absolute — it's an aspirational goal," said Del. Dan K. Morhaim, a Baltimore County Democrat regarded as a procurement law expert in the General Assembly. "It does mean some agencies will have to work a little harder."

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