Agenda Item 7
June 21,2011
Action
MEMORANDUM
June 17,2011
TO:
FROM:
SUBJECT:
County Council
Robert H. Drummer, Senior Legislative Attomeyb,
Worksession: Bill 9-11, Contracts and Procurement Minority Owned
Businesses - Amendments
fLt~J
Government Operations and Fiscal Policy Committee recommendation (3-0): approve the
Bill
as introduced.
Bill 9-11, Contracts and Procurement - Minority Owned Businesses - Amendments,
sponsored by the Council President at the request of the County Executive, was introduced on
April 5,2011. A public hearing was held on April 26 and a Government Operations and Fiscal
Policy (GO) Committee worksession was held on June 13.
Background
The Minority, Female, and Disabled Owned Businesses (MFD) Program is a remedial
program designed to eliminate discrimination against minority-owned businesses. The program
is operated by the Office of Business Relations and Compliance in the Department of General
Services. The Fiscal Year 2010 Annual Report provides the statistical breakdown of contract
awards to businesses owned by minority, female, and disabled persons. The report is available at
http://www.montgomerycountymd,gov/contentlDGS/Dir/OBRC/Resources/MFDIMFDAnnual
FYIO.pdf.
The goal of the program is to award an appropriate percentage of the dollar value of
County contracts to minority-owned businesses in proportion to their availability to perfonn
work under County contracts. The Chief Administrative Officer must annually set percentage
goals of the dollar value of eligible contracts for certified minority-owned businesses. The
Office of Procurement must encourage participation by minority-owned businesses in County
contracts by outreach and by setting appropriate subcontracting goals for certified minority­
owned businesses. The Director of the Department of General Services may waive minority­
owned business participation on a specific contract under appropriate circumstances.
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County Code §11B-61 requires the Executive to submit a report to the Council by July 1,
2012 evaluating the need to continue the program. Bill 9-11 would extend the deadline for
submission ofthis report by the Executive to July 1,2014. The Bill would also extend the sunset
date for the program from December 31,2012 to December 31,2014.
Public Hearing
There were no speakers at the April 26, 2011 public hearing.
June 13 GO Committee Worksession
The Committee reviewed the need for the disparity study and the estimated cost with
Executive Branch representatives and Council staff. The Committee recommended (3-0)
approval of the Bill as introduced.
Issues
1. How does the MFD program operate?
Eligible contracts valued at $50,000 or more are subject to the MFD program.
l
Solicitations
for eligible contracts require the contractor to subcontract a portion of the work to one or more
certified minority or women-owned businesses (MFD firms). MFD firms must be 51 % owned,
controlled, and managed by one or more members of a socially or economically disadvantaged
minority group. County Code §
11
B-58(c) incorporates the definition of "socially or economically
disadvantaged group" from the State procurement law. African Americans, Hispanic Americans,
Native Americans, Asian Americans, women, and mentally or physically disabled persons are
considered socially or economically disadvantaged minority groups.MFD firms must be certified
by the Maryland Department of Transportation to be eligible to participate.
The County MFD program is administered by the Office of Business Relations and
Compliance (OBRC) of the Department of General Services (DGS). Each prospective successful
contractor must meet with OBRC and provide a subcontracting plan listing MFD firms that the
contractor plans to use, along with the type of work and value of work to be performed. The
contractor may ask the Director of DGS to grant a full or partial waiver of the MFD subcontracting
requirement for good cause. The dollar value of eligible contracts receiving a waiver in FYlO was
$45,773,895. A contractor must document compliance with its MFD subcontracting plan before
receiving final payment. A contractor may modify its MFD plan only after approval by the Director
of DGS. The dollar value of contracts awarded to MFD firms in FYI0 was $90,735,536 or 15.6%
of the $581,711,209 subject to MFD goals. This represents an increase from the 12.56% of total
dollars subject to MFD goals awarded to MFD firms in FY09.
Code
§
IlB-59(b) exempts Council grants, utilities, and contracts with government agencies from the MFD
Program.
I
2
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2. What is the purpose of the Executive's Report to the Council?
The MFD Program authorizes a preference for certain minority and women-owned
businesses, based on race and gender of the owners of the business as a remedy for the effects of
past discrimination. The United States Supreme Court, in
City ofRichmond
v.
J.A. Croson Co.,
488 US 469 (1989), held that a government must demonstrate that a race conscious remedy for
past discrimination against minority-owned businesses is based on a compelling state interest and
is narrowly tailored to achieve this compelling state interest. Under
Croson
and the numerous
decisions following it, a government has a compelling state interest in providing a remedy for
discrimination if it can show evidence of discrimination. In other words, a remedy may only be
established if there is evidence of a problem. If there is evidence of discrimination, the
government must show that the program is narrowly tailored to remedy the discrimination
without unnecessarily burdening the rights of non-minority businesses. Finally, the remedy must
be used only until there is no longer evidence of discrimination.
Evidence of discrimination against minority or women-owned businesses can be either
statistical or anecdotaL A significant statistical disparity between the number of qualified
minority and women-owned businesses and the number of such businesses qualified and
available to perform the work required can be used to show discrimination. Underutilization
occurs when the percent· of contracts awarded to minority and women-owned businesses is
significantly less than the percent of minority and women-owned businesses qualified and
available in the relevant labor market. Overutilization is just the opposite. A disparity study
would conduct this type of statistical analysis for each category of minority or women-owned
business for each type of contract. Anecdotal evidence of discrimination can be used to
supplement statistical evidence, but is usually insufficient by itself.
The Executive's report to the Council required by Code §l1B-61(b) must evaluate "the
need to extend the minority-owned business purchasing program." This evaluation must include a
review of the evidence of discrimination affecting minority and women-owned businesses and
whether the MFD program is a narrowly tailored remedy for the discrimination found. Since the
MFD program must be a temporary remedy for discrimination, the law sunsets on December 31,
2012 unless the Council determines that the MFD program is still necessary to remedy the effects of
past discrimination. The Executive's disparity report is designed to assist the Council in making
this decision.
3. What is the cost to prepare a disparity report?
The County retained the law firm of Oriffin
&
Strong, P.C. (0
&
S) to conduct its most
recent disparity study in 2005. 0
&
S found statistically significant underutilization for some
groups on some categories of contracts coupled with overutilization for some groups in the same
category of contracts. The 0
&
S Summary of Disparity Analysis Findings is at ©5-10. DOS
Director David Dise told the Committee at the worksession that it would cost $600,000
to
$1,000,000 to retain a consultant to complete an updated disparity report.
It
would require 12 to 18
months to issue a request for proposals (RFP), select a consultant, and complete the disparity study.
The County Attorney's Office (OCA) is responsible for hiring and overseeing contractors to
3
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conduct a disparity study. The approved FY12 Budget does not contain an appropriation for this
study.
Committee recommendation
(3-0): approve the Bill as introduced.
This packet contains:
Bill 9-11
Legislative Request Report
Executive Memo
G
&
S Summary of Disparity Analysis Findings
Circle
#
1
3
4
5
F:\LAW\BILLS\II09 Contracts And Procurement-Minority-Arnendments\Action Memo.Doc
4
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Bill No.
9-11
Concerning: Contracts and Procurement
- Minority Owned Businesses ­
Amendments
Revised: March 30, 2011 Draft No. _1_
Introduced:
April 5, 2011
Expires:
October 5, 2012
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: December 31, 2014
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN
ACT to:
1)
2)
extend the deadline for submission to the Council by the Executive of a report that
evaluates the minority owned business purchasing program; and
extend the sunset date for the County's minority owned business purchasing
program.
By amending
Montgomery County Code
Chapter 11 B, Contracts and Procurement
Sections 11 B-61 and 11 B-64
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County} Maryland approves the following Act:
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BILL
No. 9-11
1
2
3
4
Sec.
1.
Sections IlB-61 and IlB-64 are amended as follows:
IlB-61.
Reports.
*
(b)
*
*
By July 1 [2012] 2014, the County Executive must submit a report to
the County Council evaluating the need to extend the minority owned
business purchasing program.
5
6
7
8
I1B-64. Sunset date.
This Article is not effective after December 31, [2012] 2014.
9
10
Approved:
11
Valerie Ervin, President, County Council
12
Date
Approved:
13
Isiah Leggett, County Executive
14
Date
This is a correct copy ofCouncil action.
15
Linda M. Lauer, Clerk of the Council
Date
@f:\laW\biIlS\1109contracts and procurement-minority-amendments\bill1.doc
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LEGISLATIVE REQUEST REPORT
Bill 9-11
Contracts and Procurement
-
Minority Owned Businesses
-
Amendments
DESCRIPTION:
This Bill would extend the time the County Executive has to submit a report
evaluating the need to continue the minority owned business purchasing
program. In addition, the Bill extends the sunset date for the minority owned
business purchasing program.
Additional time is required for the County Executive to submit a report to the
Counci1 evaluating the need to continue the minority owned business
purchasing program.
To extend the time the County Executive has to submit a report to the County
Council evaluating the need to continue the minority owned business
purchasing program and to extend the sunset date for the minority owned
business purchasing program.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
Department of General Services and the Office of the County Attorney.
FISCAL IMPACT:
To be requested.
ECONOMIC
IMPACT:
EVALUATION:
None expected.
Subject to the general oversight of the County Executive and the County
Council.
Not applicable.
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
Marc P. Hansen, County Attorney.
APPLICATION
None.
WITHIN
MUNICIPALITIES:
PENALTIES:
None.
F:\LAW\B1LLS\\\09 Contracts And Procurement-Minority-Amendments\LRR.Doc
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061245
OFFICE OF THE COuNTY EXECUTIVE
Isiah Leggett
County Executive
ROCKVILLE, MARYLAND 20850
MEMORANDUM
March 15, 2011
TO:
Valerie Ervin, President
Montgomery County Council
Isiah Leggett, County Executive
Proposed Legislation - Minority Owned Business Purchasing Program
FROM:
SUBJECT:
I am attaching for the Council's consideration a bill that would extend the time the
County Executive has to submit a report evaluating the need to extend the minority owned
business purchasing program.
In
addition, the bill extends the sunset date for the minority owned
business purchasing program. This bill is needed because additional time is required for the
County Executive to submit a report to the Council evaluating the need to extend the minority
owned business purchasing program.
I am also attaching a Legislative Request Report and Fiscal and Economic Impact
Statement for the bilL Thank you for your prompt consideration of this legislation. I look
forward to working with the Council as it considers this proposaL
IL:tjs
Attachments
cc:
Joseph Beach, Director, Office of Management and Budget
Kathleen Boucher, Assistant Chief Administrative Officer
David Dise, Director, Department of General Services
Marc Hansen, County Attorney
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'I
!
I.
~~~~
GRIFFIN
&
STRONG, P.C.,
ATTOR.NEYS AT LAW
PUBLIC POLlCY CONSULTANTS
II
11
MONTGOMERY COUN1Y, MAR-YLAND
DISPAR11Y STUDY
EXECUTNE SUMMARY
APRIL 28, 2005
235 PEACHTREE STREET,
N.E..
400
·ATIANTI\ GEORGIA 30303-1400
.
404584.9777·404.584.9730FACSfMlLE
@I
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B. SUMMARY OF DiSPARiTY ANALYSIS FINDINGS
The findings revealed the existence of disparities between utilization and
availability for the MFD groups analyzed for each procurement category and for
each source selection method included in the disparity study. The disparity
analysis was conducted for the total utilization (prime contracting
and
subcontr8cting combined). A listing of
underutifized
MFDs, by procurement
category and source selection method, is providea below.
1.
IFB
Contracts
The minorities listed in the chart below for each business category were
under-utilized
without regard to statistical significance. For details regarding
statistically significant under-utilization
or
over utilization,
please refer to the
summary chart.
Goods
Asian American
Hispanic American
Summary of IFB Contracts Disparity
Indice~
~ED)3r9UP~~G7£BiiSti:UC~~~"'"1clfiii1lJhiI::qr1ie:r~7-d, ~.~~~
African American
0.112·
~~;;;,£~,~:~.~):.~'~'f~:'!';:;~~."~:~~i~ :':~~~i~~:Se~JceJ!~
16.52"
0.53
0.50
0.26
0.53'
...
_ - -
....
Asian American
0.60'
..
,
0.00
0.82
4.17'"
0.5Z'
Hispanic
American
Native American
Female
2.92"
.
-
22.9Z',
-
3.71"
.
4.2Y"
3.11"
1.39""
2.25"
Disabled
All Groups
-
1.79*"
.
3.9r'
-
47.3S-
};fontgomery County, MD
Disparity Study Executive Summary
April
28,
2005
27
@~j
I .
I
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(') Indicates statistically significant under-utilization
(") Indicates statistically significant over-utirlzation
(-) Indicates no utiUzation and no availability
Note: The statistical test was not performed for Native American and Disabled in Construction, Goods (Utilization and
Availability are both zero and divislon of zero by zero
is
not defined). The test was not performed for Hispanic American,
NativeAmerican and Disabled in Professional Services for the same reason.
We could not tell whether or not the under utilization of Asian American in Professional Services was significant or not
because the number of contract was zero (no utilization) and technically, the test caonot be performed.
2.
RFP
Contracts
The minorities listed in the cha.rt below for each business category were
under-utilized
without regard to statistical significance. For details regarding
statistically significant
under~utiJization
or
over utilization,
please refer to the
summary chart.
Goods
Female
Summary of RFP Contracts Disparity Indices'
~.""'-::-~T·~~~'T"7'~;r.'~~~","~7·~"""""'"~~
~'~(:2 ··~f·_~· ~-~:~: :~~', :·<:':i1;~~::..f~2·~:··: ;·r~.~~2~·~iCeJf~
African American
0,002'
2.48"
4,10"
2.41"
~"~
'''''c
0",
''-~.Q~~'
'" ;;":":.'
;,.~Pp~~t~OI)/~
...
~'Qs .:::\~qf~u:~n~t~~'t:::.::.~\"r;;F
.
0.66'
..
2.59"
1.50"
1.52"
""-;---­
Asian American
1.13
0.85'
0.45'
0.12"
0.56'
1.sr*
Hispanic
American
Native American
Female
-
-
0,05'
-
0,69
-
3.35"
0.22'
2.21"
Disabled
All Groups
-
0.31'
-
1.82"
.
(.) Indicates statistically Significant under-utilization
r")
Indicates statisticaUy significant over-ulilization
0.70'
(-) Indicates no utilizatiQl'l aod no availability
Note: Whenever the ulilization and the avaiiabiRty are equal to zero, the disparity Index Is not computed (DI is de'Signated
by a dash) because the division
of
zero
by
zero is not defined, hence the statistical test is not performed.
Montgomery County, MD
Disparity Study Executive Summary
April
28.
2005
2R
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3. Mini-contracts
The minorities listed in this chart for each business category were
under­
utilized
without regard to statistical significance.
For
details regarding
statistically
significant under-utilization
or
over utilization,
please refer to the summary chart.
Hispanic American
Native American
F~male
Summary of
Mini-~~:mtracts
Disparity Indices
~r~~5iiS~.~--"~~C==
rt~"iC:2'::::?-~f~f~?~-~~;f, ~:~:Z:~L~~m
"'.: '.: ..
~,~:'." :)~~ ~s~tgri~
..:
.:~.;' t.:···~~2th.!3!.~~w1~~"~~~7.
0.15'
2.69"
j:,'-:':~~
African American
Asian American
0.70'
0.43'
0.44'
Hispanic American
0.70'
Native American
0.00
,
0.00
CLOO
Female
0.00
~
Disabled
15.36"
9.25"
1.49"
All Groups
0.58'
( ) Indicates statistically Significant under-utillZation
t')
Indicates statistically significant over-utilization
(-) Indicates no utinzation and no availabifrty
Note: We
could
not ten whether or not the u;;car utilization of Native American and
Fe.',ala in
Professional Services and
Other Services was significant or not because the number
of contract
was zero (no utilization) and technically. the test
cannot be performed.
The
number of Construction and Goods awards was
too
smaD
ror
this
source selection method
to
warrant
a
meaningful
analysis.
,
"
Montgomery County, MD
Disparity Study
Executive
Summary
April
28,
2005
29
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4. Small Purchase Contracts
The minorities listed in this chart for each business category were
under­
utilized
without regard to statistical significance. For details regarding
statistically
significant under-utilization
or
over utilization,
please refer to the summary chart.
Summary of Small Purchase Disparity Indices
m~~~~--""'~~"--~'i'C"-~~~'~
"':;",;c~·
.....
·~-:·"·atbei1j$ervjcmr-'"t'~
~
~Ql!9t'<·"·:"'::"~"
~~:~'::"::'{~
..,,-,.____....
:;'::£l:~;::'.j~;-«'~~£-
___
~~]:?'
.'"";
GtlddS£:'" ','"
0.00
African American
0.00
0.00
3.90"
0.00
1.83·'
5.05"
1.10
Asian American
0.51­
Hispanic American
0.00
Native American
0.00
Female
2.15-­
Disabled
0.00
All Groups
( ) Indicates statistically significant under-ubhzation
.
.0.18"
..
("oJ
Indicates statistically significant over-utilization
(-) Indicates no utilizalion and no availability
Note: The disparity index for aU groups in Other Services indicate almost parity
We could not tell whether or not the under utilization of Al\ican American and Asian American In Other Services. and
(African American. Hispanic American. Native American and Disabled in Goods) was signifICant or not. because
Ina
number
of
contract was zero (no utilization) and technically. the test cannot be performed.
The number of Construction and Professional Services awards was too Stllall for this source selection method to warrant
a meaningful analysis.
Montgomery County, MD
Disparity Study Executive Summary
April
28,
2005
30
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5. Direct Purchases Contracts
The minorities listed in this chart for each business category were
under­
utilized
without regard to statistical significance. For details regarding
statistically
significant under-utilization
or
over utilization,
please refer to the summary chart.
Goods
Other
Services
African American
Asian American
Hispan!c American
Native American
African American
Asian American
Hispanic
American
Native American
Female
Disabled
Summary of Direct Purchases Disparity Indices
~~'7::crO~~~':~~~-=~es~r~
~/~:.~ :~_~~>jr;:~:ii~.~:t~~~:.~;~.;i~~ti~~:~-::it.·~~i:~~~·~riIC~~Z~~~~
African
American
Asian
American
Hispanic
American
Native
American
Female
Disabled
0.18"
0.31"
0.38'
.,
0.03'
0.07"
0.S3"
0.00
0.40"
O.W
0.15"
0.71'
0.00
0.19"
0.39"
0.33"
0.00
0.09"
0.47"
O.SS"
O.OS·
0.94
2.30"
0,48"
0.B3"
0.S7"
1.39*"
0.39*
All Groups
0.2S'
(') IndIcates slatistically slgnmca:>t onder-utJlI:tation
(") Indicates statistically significant over-otillzation
H
Indi(;3ies no utilization and no availability
.
Note: We eculd not tell whether or not the under utilization of Native American in Construction, Goods and Professional
Services was significant or not, because 1he number of contract was zero (no utilization) and technically. the test cannot
be perform ed.
The
Female disparity index
(0.94)
indicates
thaI
it is ·getting close to parity" and we choosa not
to
perform
the
slatistical
test
j'v[ontgomery County. MD
Disparity Study
Execu/lve Summary
2005
31