Issue Position: Open for Business - Advancing Minority and Women-Owned Business

Issue Position

Over the past seven years, our commitment to Maryland's minority and women-owned businesses has been at the heart of our effort to create jobs and expand economic opportunity for all small businesses throughout our state. And as we've recovered from the greatest economic recession since the Great Depression, our minority and women-owned businesses have been a source of strength in our economy -- employing Marylanders and helping us achieve a job creation rate even faster than our neighbors in Virginia.

From Day One, we've been dedicated to supporting our minority and women-owned businesses through our state's MBE program. And that dedication has produced an historic result: for the first time in Maryland's history, we met -- and surpassed -- our procurement goal, with over 25 percent of state contracts awarded to MBEs. That 25 percent represents an 86 percent jump in awarded contracts since 2007, with $1.9 billion in contracts that supported over 27,000 jobs in 2012 alone.

But we're not satisfied with where we've been; we're focused on the future of minority and women-owned businesses in Maryland -- a future that looks stronger than ever. We've set a new procurement goal of 29 percent, and we're committed to strengthening and growing our state's MBEs in order to reach that goal.

Minority businesses can't grow through public contracting alone, so we've entered into partnerships with 20 different private sector firms, who share our goals of supporting minority and women-owned businesses.

But we also need a comprehensive plan for improving and helping our minority and women-owned businesses thrive in an increasingly competitive global economy.

So together, we're going to promote minority-owned business inclusion in the insurance market; establish a statewide mentor-protégé program; allow MBE prime contractors to count toward minority participation goals; expand the Small Business Reserve Program; increase diversity among state investment managers; enhance the responsibilities of the Governor's Office of Minority Affairs; increase outreach to uncertified minority-owned businesses; and increase transparency and accountability in the tracking of our state's MBE program.

If we're going to make Maryland's business climate the most competitive in the nation-- and I believe we will -- then that has to start with giving our minority and women-owned businesses every opportunity to succeed. By working together, and making these important changes, we'll turn that vision into a reality.

Sincerely,

Lt. Governor Anthony G. Brown

What We've Achieved

Progress: Over the last seven years, Maryland has:

Goals

In FY2012, reached 25.2% MBE participation in State contracts -- the highest rate in history and the first time Maryland has reached the 25% goal since it was established in 2001. (1)
In 2013, increased the State's MBE participation goal to 29%.

Awards

Increased awards to MBEs by 70% -- an additional $800 million from FY2007 to FY2012. (2)
Increased awards to African American firms by 86% -- an additional $178 million from FY2007 to FY2012.(3)
Increased awards to women-owned businesses by 70% -- an additional $227 million from FY2007 to FY2012.(4)

Mission: The Brown-Ulman Administration will foster the growth of minority and women-owned businesses and align priorities across agencies to maximize MBE participation in State contracts.

1. Promote Minority Business Inclusion in the Insurance Market
We will require the Maryland Insurance Administration (MIA) to enter into a memorandum of understanding (MOU) with regulated insurance carriers to promote minority-owned business inclusion in all aspects of the insurance market. This effort will be modeled upon the successful MOU established between the Maryland Public Service Commission and regulated utilities, which has helped to improve minority supplier access(5). The Governor's Office of Minority Affairs (GOMA) will advise MIA on attainable goals for minority participation in the insurance industry and encourage insurers to use best efforts to reach established goals.

2. Establish a Statewide Mentor-Protégé Program
We will establish a statewide volunteer mentor-protégé program to foster the growth of certified minority owned businesses(6). Under the program, prime contractors will serve as mentors to small MBEs, providing a variety of services and assistance designed to help small firms grow and thrive, including: business and financial management; engineering; safety; bonding; subcontracting; use of facilities and equipment; and joint venture formation(7).

GOMA will oversee mentor-protégé relationships to ensure that small businesses receive the assistance necessary to foster their independent growth. In order to incentivize ongoing relationships between firms, participants in the mentor-protégé program will receive bid preferences in State procurements(8).

3. Allow MBE Prime Contractors to Count Toward Minority Participation Goals
We will allow MBEs who bid as prime contractors to count their work toward fulfillment of MBE goals. Under current law, certified MBEs must subcontract with other MBEs to meet contract participation goals and cannot consider their own work in calculating minority inclusion. By updating this standard, we will encourage the growth of MBEs, while remaining true to the spirit of the MBE law.

We will also direct State agencies to review bonding standards, in order to ensure procurement practices maximize minority and small business access to contract opportunities while protecting the interests of the State.

4. Expand the Small Business Reserve Program
We will expand the reach of the Small Business Reserve program, which helps all small businesses, including MBEs, to bid as prime contractors. We will require all State agencies--currently the program includes only the largest State agencies--to participate in the Small Business Reserve program, expanding opportunities for small business procurement across Maryland. We will also commission a study on the efficacy of increasing the State's Small Business Reserve goal from 10% to a higher threshold, thereby delivering the benefits of State contracts to more small and minority owned companies.

Within the Small Business Reserve, we will also establish a 1% goal for micro business contracts -- aimed at supporting our smallest companies. To ensure that these funds help our smallest firms to grow, we will establish eligibility caps based upon the number of employees and net worth of business operators.

5. Increase Diversity Among State Investment Managers
We will increase the diversity of investment managers responsible for State funds. In cooperation with our agencies, we will expand outreach to minority and women-owned investment managers(9). This will require active marketing by GOMA and various State agencies at national and regional advocacy events, as well as hosting conferences here in Maryland. We will also create an "evergreen" account within the State Retirement Pension System's emerging manager program for the purposes of hiring more small fund managers, including minorities(10).

6. Enhance the Responsibilities of the Governor's Office of Minority Affairs (GOMA)
Facilitate Agency Goal Attainment
In order to encourage agency attainment of minority contracting goals, GOMA will work collaboratively with the Secretary of Budget and Management and agency heads during annual budget formation. GOMA will ensure each agency is keeping pace with minority participation goals and has the resources it needs within its procurement unit to achieve maximum minority representation in contracts. In order to enhance their effectiveness, minority liaisons housed within State agencies will report directly to GOMA, rather than to agency leadership.

Empower GOMA with Certification Authority
We will empower GOMA with MBE certification authority. In order to ensure that the mission of minority-owned business growth is aligned across State government, we will transfer MBE and federal DBE certification from the Department of Transportation to GOMA and provide the necessary resources to oversee the program. Through this process we will enhance our human capital investment in GOMA and in MBE certification services.

Modernize Minority Business Enterprise Certification
We will modernize MBE certification by investing in an entirely electronic, paperless, process that will streamline submission, review and approval of certifications. By modernizing this process, we will increase the supply of certified MBE firms across service categories improving overall goal attainment. We will also work with Baltimore City to facilitate dual-certifications for both the State and City, allowing more MBEs to participate in the many important projects emerging in Baltimore as well as Statewide contracts.

7. Increase Outreach to Uncertified Minority-Owned Businesses
We will increase outreach to uncertified minority-owned firms aimed at encouraging certification(11). This will include increased marketing, public programming, and coordination with local government MBE programs to identify companies that are certified by a county or municipality but that have not applied to the State program. Although certification is not a requirement for an MBE to do business with the State, the aim of this effort will be to coach businesses through the certification process and connect them to the resources necessary to participate in available State contracts.

8. Increase Transparency and Accountability
We will increase the transparency and accountability of minority contracting goal attainment by including MBE performance among our measured priorities on the StateStat website. By publishing and tracking State procurement results in real time, we will better understand emerging opportunities and challenges. Performance metrics for the program may include, among other factors: the number of certified firms; revenue targets for MBE firms; MBE prime contracting rates; and MBE graduation rates(12). We will also work with our agencies to increase contract forecasting, allowing more contractors to prepare for procurements in advance of request for proposals, which will promote overall participation.

Citations
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[1] Minority Business Enterprise Program Fiscal Year 2012 Annual Report Governor's Office of Minority Affairs, page 7
[2]Minority Business Enterprise Program Fiscal Year 2012 Annual Report Governor's Office of Minority Affairs, page 3
[3] Minority Business Enterprise Program Fiscal Year 2012 Annual Report Governor's Office of Minority Affairs, page 3
[4] Minority Business Enterprise Program Fiscal Year 2012 Annual Report Governor's Office of Minority Affairs, page 3
[5] Press Release: Maryland PSC Urges Utilities to Continue Supplier Diversity Efforts Maryland Public Service Commission, 7/1/11
[6] The State of Minority- and Women- Owned Business Enterprise: Evidence from Maryland Maryland Department of Transportation, page 563, 2/17/11
[7] New York State Finance Article, §147
[8] The State of Minority- and Women- Owned Business Enterprise: Evidence from Maryland Maryland Department of Transportation, page 563, 2/17/11
[9] Analysis of the Maryland State Retirement and Pension System's Asset Management Practices Governor's Office of Minority Affairs, page 33, 1/22/13
[10] Analysis of the Maryland State Retirement and Pension System's Asset Management Practices Governor's Office of Minority Affairs, page 35, 1/22/13
[11] The State of Minority- and Women- Owned Business Enterprise: Evidence from Maryland Maryland Department of Transportation, page 558, 2/17/11
[12] The State of Minority- and Women- Owned Business Enterprise: Evidence from Maryland Maryland Department of Transportation, page 564, 2/17/11

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