ANNAPOLIS – Small businesses will gain greater access to state contracting dollars when two bills passed in the General Assembly last spring take effect Oct. 1.
One bill requires state agencies to reserve 10 percent of their contracting bids for all small businesses, which include minority businesses.
Another bill requires state procurement contracts to note the expected participation of minority businesses at the time of bidding. Now contractors have 10 days following a contract award to name minority participants.
“This is the beginning of how the state will level the playing field for small businesses,” said Sharon R. Pinder, executive director of the Governor’s Office of Minority Affairs. “It is a great sign for all small businesses.”
The 10-percent reserve requirement, or Senate Bill 904, comes as a relief for small businesses that normally face an uphill battle when competing with larger companies over procurement contracts.
“This gives small businesses the opportunity to bid as a prime contractor, not just doing subcontract work,” said William Burns, the Maryland Chamber of Commerce’s director of communications.
Senate Bill 903, on minority business participation, will eliminate “subcontractor abuse,” such as fraud, Burns said.
Minority and small businesses have complained that prime contractors outsource a portion of a contract to them and use them to gain a successful bid, but later refuse to hire them, he said.
The bill also elevates the minority affairs office to a Cabinet-level position by creating a “special secretary.”
Pinder becomes special secretary Oct. 1.
The special secretary raises the prominence of small businesses in the state, said Everett Ross, director of Fair Practices and Procurement under the Department of Business and Economic Development.
“The special secretary will create wider enforcement and oversight of minority business liaisons in the state agencies and report on their cooperation,” Ross said.
Ellen Valentino, Maryland director of the National Federation of Independent Business, credits Gov. Robert Ehrlich administration, which sponsored the bills, for showing “a sincere commitment to continue pushing for policies and programs to enhance small and minority businesses’ ability to compete.”
Small, start-up and minority businesses will have a better chance to vie for state procurement contracts in “an often lucrative and closed arena,” Valentino said.
Charles Ramos, chief executive officer of C.R. Dynamics & Associates, commended the bills, but said he was skeptical that they would significantly alter the “hostile environment for small businesses.”
His 20-employee company won a contract to answer state tourism calls for the Department of Business and Economic Development two years ago after “several difficult years” of lobbying.
“Ehrlich has to drill them (ideas in the bills) down to the lower levels where the decisions are made, to level the playing field in reality,” Ramos said, referring to the state agencies such as the Department of Budget and Management that he said are reluctant to contract with small companies.
Currently, 98 percent of Maryland’s 150,000 businesses have fewer than 100 employees, according to the state chamber. And, small businesses employ 39 percent of Maryland’s civilian workforce.
The bills faced no legislative opposition. They passed both legislative chambers unanimously among those voting.
“Small business” refers to a business that is independently owned and operated and not dominant in its field of operation, according to Senate Bill 904. It cannot retain more than 50 workers in its wholesale operations and its gross income may not exceed an average of $2 million in the last three fiscal years.
The law defines “minority business” as a business that is at least 51 percent owned and controlled by members of racial minorities, individuals with physical or mental disabilities and women. The business owner’s net personal worth cannot amass more than $750,000.