State lawmakers might repeal a rule that ensures Black and woman-owned businesses are awarded a set percentage of state contracts. The bill – which cleared the House last week – is polarizing the minority business community.
Since 2006, Maryland law has required state agencies to allocate 7 percent of contract funds to qualified Black businesses, 10 percent to women-owned organizations and 8 percent to other racial minority groups through the Minority Business Enterprise (MBE) Program.
But the law expires July 1, which prompted legislators to hastily renew the bill this session. Their new proposal amends several portions of the original legislation, most notably eliminating the percentage clauses for Blacks and women as long as state contractors outsource 25 percent of the total value of their contracts to some form of minority businesses. If enacted, the year-long legislation could set the stage for a more long-term proposal next session.
Some Black commerce leaders support the measure, insisting it solidifies the state’s commitment to combat inequality, but at least one, the president of the American Minority Contractors and Business Association, is opposed to the bill.
“When you lump all the different minorities together, the African Americans tend to lose out,” said Arnold Jolivet. He calls the legislation unconstitutional and testified against the measure before the Maryland Senate’s Education, Health and Environmental Matters committee earlier this month.
“As long as the contracting procurement agencies and the large scale contractors meet the 25 percent, they don’t have to use any African Americans at all and they would still be in compliance. I think that’s wrong,” he said.
Anthony W. Robinson, president of the Washington, D.C.-based non-profit Minority Business Enterprise Legal Defense and Education Fund, is supportive of the legislation.
The bill gives the state more flexibility by eliminating “quotas” for contractors and promoting even contract distribution among the minority groups, he said.
“We want to find a way to strengthen provisions so that all people who have been excluded from the process have the opportunity to participate,” said Robinson. “African Americans are discriminated against, but there are others groups, as well.”
Baltimore City Del. Mary Washington, a bill sponsor, shared his sentiments. “We’ve got to begin to build allies with other minority groups that have been discriminated against … If we don’t, we miss the opportunity to get more for everybody,” she said.
Wayne R. Frazier, president of the Maryland Washington Minority Contractors Association noted, in an article, that a changing federal landscape has made changes to the existing Maryland program advisable and supports this new legislation. He wrote, “ With so much uncertainty swirling around it appears that Governor Martin O’Malley is taking a very cautious path by recommending reauthorization of the MBE program for only one year as opposed to the customary five years, so as we suspect, to get his house in order to come back with an even stronger program.”
The legislation cleared the Maryland House 128-10 with overwhelming support from Black legislators. At least 24 other Black leaders sponsored the bill with Washington.
Luwanda W. Jenkins, special secretary of the Governor’s Office of Minority Affairs, said, “Given Maryland’s status as a national leader in state minority business programs, it is important to reassess our program to ensure that it maintains its strength, legal viability, and continues to generate business opportunities for Maryland’s minority business enterprises.”
According to a state study examining the MBE program, significant disparities and discrimination prevail in Maryland’s contracting market place. Since the program’s enactment, state contracts have failed to garner the required 25 percent minority participation. Most state projects in the last five years had less than 20 percent minority contractors.
Robinson says 80 percent of similarly “racially conscious” business programs around the country have been dismantled recently due to court rulings. “I support affirmative action and what the state is offering gives us the best opportunity to keep these programs within the court’s guidelines,” he said.
Other amendments to MBE through the new legislation include rules that the Governor’s Office of Minority Affairs must establish guidelines for state entities to allocate funds for sub groups, contractors must submit extensive proof that they were unable to attract qualified minority businesses before receiving pardons from the state, and state agencies must submit to Public Works and the Governor’s Office of Minority Affairs annual reports detailing pardons requested and granted.
A companion Senate bill cleared the Education, Health and Environmental Affairs committee earlier this month. That legislation mandates that the Assembly and Office of the Attorney General evaluate the MBE program and submit recommendations by Sept. 30, 2015.
The Presidents’ Roundtable, an organization of African-American CEOs from the Baltimore-Metropolitan area, provided a letter in support of the legislative action. Their letter stated, “While we acknowledge the successes of this program, we also recognize that it is by no means perfect and can be improved. As such, we believe the amendments, as proposed, will further strengthen the integrity of the program while at the same time provide the State and the affected stakeholders the much needed time to devise a practical and pragmatic approach to ensuring the continued inclusion of minority and woman-owned businesses in the Maryland procurement process.”