​BPW Advisory 2001-1

​BPW Advisory 2001-1

​Subject: 
MBE Participation Goals and Procurement Review Groups1

Date Revised:
June 8, 2017

Purpose:
This Advisory instructs State agencies on the Minority Business Enterprise (MBE) participation goals and subgoals as well as the process and structure for reviewing contract solicitations, proposed sole-source contracts, and contract renewal options in order to maximize opportunities for MBE firms to participate in State procurement contracts.

Background:
The State of Maryland strives to maximize the participation of minority and women-owned firms in State contracting through the MBE Program. Every two years, the Special Secretary of the Governor’s Office of Minority Affairs (GOMA), in consultation with the Secretary of Transportation and the Attorney General, establishes an overall Statewide MBE goal.2  Through this process, GOMA also issues the MBE subgoal directive.

To ensure that State agencies examine all opportunities to increase MBE participation, every agency must establish a Procurement Review Group to review procurement solicitations, proposals to exercise contract options, and proposals to award sole-source contracts when the resulting contract is expected to exceed $200,000​.

MBE Goal and Subgoals:
GOMA has set the State’s overall MBE goal at 29%.3   To reach this goal, agencies must target spending 29% of the total dollar value of their procurement contracts directly (via prime contractors) or indirectly (via subcontractors) with Maryland-certified MBE firms.  

GOMA’s MBE subgoal directive includes guidelines and a worksheet to assist State agencies in setting its subgoals.4  The chart below represents the current recommended subgoals for the industry categories:

​​​Industry Category​​ Subgoal​​​ ​ ​ ​
​​ ​Women African-American​ Asian American​ Hispanic​
Construction​ ​N/A ​7% ​4% ​N/A
Architectural/ Engineering & Construction Related Services​​ ​9% ​6% ​N/A ​2%
Maintenance​ ​N/A ​8% ​3% ​N/A
IT Services & IT Supplies​ ​8% ​7% ​N/A ​3%
Human, Cultural, Social & Education Services​ ​12% ​7% ​4% ​2%
​Supplies & Equipment ​10% ​6% ​5% ​N/A

Race Neutral Measures:
Each unit is strongly encouraged to meet the maximum feasible portion of its MBE goals by employing race-neutral measures.5  Race-neutral measures are methods that assist businesses without regard to their social, economic, racial or sexual composition. Some additional examples of race-neutral measures include:

  1. Using the Small Business Reserve procurement designation or the small business preference program. (See COMAR 21.11.01)
  2. Maintaining a database of qualified small businesses, including MBEs, in order to keep them informed of upcoming procurements.
  3. Relaxing bonding requirements, when permissible by law, including the use of irrevocable letters of credit, title to real property, and other forms of security described in COMAR 21.06.07.
  4. Dividing a large procurement into several smaller procurements, when feasible.
  5. Simplifying bidding requirements to the extent permitted by law.
  6. Advising businesses of what successful bidders are doing “right”.
  7. Using pre-solicitation conferences to clarify complex solicitations and to link subcontractors with prime contractors.
  8. Training small businesses on State procurement practices.
  9. Offering financial and technical assistance for small business development.​
 
Select MBE Provisions:
MBE Prime Self-Performance.  The MBE Program allows MBE prime contractors to count their own participation towards the achievement of MBE contract goals.  MBE primes may self-perform up to 50% of the established overall MBE goal and up to 100% of not more than one of the MBE subgoals.6 

Regular Dealers – Materials and Supplies.  Only 60% of the costs of materials and supplies provided by a certified MBE that meets the definition of a “regular dealer,” may be counted towards the MBE contract goal. Excluding broker fees, commissions, or transportation charges, the costs of materials and supplies provided by a certified MBE that is not a regular dealer may not be counted towards the MBE contract goal.7 

Dually-Certified MBE and VSBE Subcontractors.  If a solicitation contains an MBE goal and a Veteran-owned Small Business Enterprise (VSBE) goal, participation by a subcontractor dually-certified as an MBE and a VSBE may be counted toward either or both the MBE and VSBE contract goals up to the total committed percentage of contract work the subcontractor has been proposed to perform.8 

Liquidated Damages.  All contracts containing MBE participation goals are required to contain a liquidated damages provision that applies in the event that the contractor fails to comply in good faith with the provisions of the MBE requirements.9
 
Setting MBE Participation Goals:
Agencies are required to evaluate each procurement contract to determine the appropriate MBE participation goal.10   When appropriate, each solicitation must contain an MBE participation goal.  Each solicitation (IFB, RFP, or small procurement) must encourage MBE firms to respond to the solicitation.   The following are some factors to consider when establishing an MBE goal:
 
  1. Can the procurement reasonably be broken down into subcontracting opportunities?
  2. Are MBEs available in the primary and subcontracting category(ies) required in the procurement?
  3. Where are MBEs located if the goods or services must be provided locally?
  4. Can sole source and emergency contracts reasonably include MBE participation goals at the prime contractor level, subcontractor level, or both?

It is important to remember that the 29% statewide MBE participation goal is an overall goal. Individual contracts may contain MBE goals at, above or below the 29% goal provided that the annual total dollar value of a procurement unit’s contracts targets 29% MBE participation. 
If a contractor acquires MBE certification after a contract is awarded, MBE participation may be credited for that contractor’s work on a State contract beginning on the effective date of the MBE certification.   

The requirements to meet the statewide MBE participation goal and the subgoals are distinct and separate.  Setting the MBE goal for a particular procurement is done via a Procurement Review Group  - see below; MBE subgoals are set via the worksheet provided by GOMA with the MBE Subgoal Directive, as noted above, after the MBE goal is set with the Procurement Review Group.11
 
Procurement Review Group:
    A. The head of each procurement agency shall designate one or more standing procurement review groups. A Procurement Review Group must include the following members:

    1. The agency's chief procurement official or a senior-level procurement official designated to act in place of the chief procurement official; and
    2. The agency’s MBE liaison officer or a senior-level alternate designated to act in place of the MBE liaison officer.

    B. The Procurement Review Group shall meet as often as is necessary, but at least monthly.

    C. The Procurement Review Group shall review each:
    1. Proposed procurement solicitation, 
    2. Proposal to exercise contract options, and 
    3. Proposal to award sole-source contracts when the resulting contract is expected to exceed $200,000.

    D. The Procurement Review Group shall make recommendations to the agency head and the solicitation's procurement officer concerning specific MBE contract goals and appropriate procurement methods.

    E. The Procurement Review Group’s evaluation of each proposed procurement shall include review and assessment of the following, as relevant:
    1. The extent to which direct solicitation, subcontracting, race-neutral measures, or a combination thereof will most likely result in maximum MBE participation.

    2. Are MBEs and small businesses available to perform contracts at the prime contract level? Do enough MBEs exist at the prime contractor level to reasonably assure maximum opportunities for MBEs to compete for and potentially obtain the contract at that level?

    3. Are MBE subcontracting opportunities feasible?

    4. Does the base of potentially-available MBEs for the contract’s work components make the MBE subcontract goals attainable, taking into account the geographical proximity of MBEs to the work location?

    5. Does the number of small businesses (as defined in COMAR 21.01.02.01B(80)) warrant designating the procurement as a small business preference procurement under COMAR 21.11.01?

    6. Are the evaluation factors (when the solicitation is by competitive sealed proposals) designed to ensure that they do not unreasonably limit or inhibit participation by small businesses, including MBEs?  Should the solicitation include the economic-benefits evaluation factor under COMAR 21.05.03.03A(3)?

    7. Are the structure, specifications, and requirements of the solicitation designed to ensure that they do not unreasonably limit or inhibit participation by small businesses, including MBEs?  Inhibiting factors may include unnecessary or prohibitive bonding requirements, restrictive specifications, unnecessary or unreasonable performance parameters, and unnecessary or unreasonable experience requirements.  General policies for developing specifications are set forth in COMAR 21.04.01.

    8. Is it feasible to divide a complex procurement into separate procurements consistent with MBE and small business capacity?

    9. Sole-source contracts: Are there work components that can reasonably be subcontracted to MBEs and other small businesses?

    10. Renewal options: What are the benefits of exercising the option versus re-competing the contract?  Consider such factors as past performance, potential for cost reduction, and current opportunities for small business or MBE participation.

    F. The recommendations of the Procurement Review Group must be documented in a written determination. When requested, the agency shall provide a copy of the determination to the Board of Public Works.
     ______________________________________________________________________________

1 This Advisory combines former Advisory 2001-1 (MBE Participation) and 2001-2 (MBE Procurement Review Group).
2 State Finance and Procurement Article § 14-302(a)(1)(iv).
3 COMAR 21.11.03.01C(1).
5 COMAR 21.11.03.07
6 COMAR 21.11.03.12-1D
7 http://mgaleg.maryland.gov/2017RS/bills/sb/sb0309e.pdf  (The 60% rule takes effect on 10/01/2017).
8 COMAR 21.11.13.05C
9 COMAR 21.11.03.10E
10 State Finance and Procurement Article § 14-302(a)(3).


Questions:
MBE Program Information:
410.767.8232
877.558.0998
 
MBE Certification Information:
410.865.1269
800.544.6056