After eight years with a Republican governor who frequently vetoed Democratic majority-led legislation in the Maryland General Assembly, some lawmakers are bullish that legislation to increase participation among minority and women-owned businesses with state contracts may become law.

There are several bills with the goal to level the playing field for historically disadvantaged businesses statewide.

The state has yet to reach its contracting goals with minority and women-owned businesses set back in 2013 under then-Gov. Martin O’Malley, a Democrat. Former Republican Gov. Larry Hogan served in the role between 2015 and early 2023.

During Hogan’s tenure as governor, 17% of all state contract spending went to minority and women-owned businesses in fiscal year 2021, short of the 29% goal, state data shows.

But Gov. Wes Moore, Maryland’s first Black governor, has decided that the effort is a priority for his administration, he told business owners during MBE night in Annapolis last week.

“The era of issuing MBE waivers in front of the Board of Public Works is over,” Moore said to a crowd of roughly 700 people in Annapolis last week. “We’re not just going to hold our contractors accountable, we’re also going to hold ourselves accountable.”

Moore said that for “too long” minority and women-owned business contracting goals were “just suggestions” and that “those days will be coming to an end.”

In mid-February, Moore signed an executive order to mandate all state agencies to report performance data for the state’s Minority and Business Enterprise program. It means that by roughly mid-April, each of the 70 agency program participants must send along contracting data since July 1, 2022.

Access to capital for businesses with state contracts 

Maryland State Sen. Arthur Carr Ellis, a Democrat who represents District 28, which includes Charles County, is banking that a bill which would create a $10 million revolving loan fund for small, minority and women-owned businesses to have access to capital to pay workers or purchase materials up front will offer an extra boost.

This is the second time the bill has been introduced.

“Say somebody has an electrical contracting company and they bid on and won a contract to rewire the state house here in Annapolis,” Ellis said about a hypothetical situation. “Say it’s a $1 million contract. That contractor has to go out and buy a lot of materials, they have to pay their employees, for weeks if not a month or two, doing the work, rewiring the state capitol, before they see the first check from the state.”

The goal would be for the state fund to offer a market rate loan in that situation of roughly $100,000 to offset the upfront costs, he said.

When the contractor is paid, the funds are repaid, and it can be loaned out again to a different business.

The Minority Business Enterprise Procurement Contract Financing Program would enable the Maryland Small Business Development Financing Authority to offer working capital to qualified businesses using money from the general fund. If passed by the House, Senate and signed into law by Gov. Moore, it would go into effect on Oct. 1.

Changing the calculation of MBE contracts 

Maryland State Sen. Antonio Hayes, a Democrat who represents District 40, which includes Baltimore City, introduced legislation that would require any contracts with Maryland Correctional Enterprises to be included in the overall state procurement pool when calculating minority and women-owned business contract participation.

Historically, contracts with the entity that leverages labor of incarcerated people is a preferred vendor. Other preferred vendors include Blind Industries and Services of Maryland and the Employment Works Program if a disability-owned business provides the service.

“Only if none of those entities produces or provides the desired supplies or services may a state agency issue a competitive procurement,” according to the bill’s analysis. 

As it stands, the state procurement process requires that all state agencies purchase furniture and office supplies manufactured using inmate labor unless the agency gets a waiver. The bill ‘creates an incentive for state agencies to increase the use of MBE’s on all other contracts to offset the mathematical decrease in MBE performance results.’

“That gives [Maryland Correctional Enterprises] an unfair advantage over a lot of small business owners, especially minority-owned businesses,” Hayes told WYPR. “In the case of [MCE] I don’t see them fitting in that category where they should get a preference.”

This is the third year Hayes has introduced the legislation and he’s bullish about the potential for the bill to pass.

“We already know that most state agencies are already not meeting their goals, but when they abstract the amount of money they are spending with [Maryland Correctional Enterprises], we as policymakers and others who are concerned about minority participation aren’t really getting a true picture of how deficient we are in meeting our MBE goals because that’s not even calculated,” he said.

Accountability measures for state workers 

State Sen. Hayes introduced another bill that would punish state workers who fail to meet state procurement contracting goals with historically marginalized business owners.

That bill has been introduced for the first time and it would require all state agencies to publish its procurement forecast online and would bar any procurement officers from merit-based pay increases or promotions during any fiscal year if that agency doesn’t meet the overall state minority and women-owned business enterprise goal.

“If there is no improvement in meeting the goal over three consecutive fiscal years, the agency must either terminate the employees’ employment or reassign them to a position that does not involve procurement,” according to the bill analysis.

During the most recent fiscal year of 2021, only three agencies statewide met the goal of 29% of contracts earmarked for minority and women-owned businesses.