GO Item 1
May 2, 2016
Worksession
4
MEMORANDUM
April 28, 2016
TO:
Government Operations and Fiscal Policy Committee
FROM:
SUBJECT:
Robert H. Drummer, Senior Legislative Attorney
~
Worksession 4: Bill 61-14, Contracts and Procurement - Local Business
Subcontracting Program
Expected attendees:
Cherri Branson, Director of Procurement
Pam Jones, Procurement
Grace Denno, Procurement
Bonnie Kirkland, Assistant CAO
Bill 61-14, Contracts and Procurement - Local Business Subcontracting Program,
sponsored by Lead Sponsor Council President at the request of the County Executive, was
introduced on November 25,2014. A public hearing was held on January 13 and Government
Operations and Fiscal Policy Committee worksessions were held on ,March 19, September 17 and
April 4, 2016.
Background
Bill 61-14 would establish a Local Business Subcontracting Program requiring 10% of the
dollars related to an initial procurement contract award that is estimated to be valued at more
than
$10 million to be subcontracted to a Local Business. The Bill would define a local business as a
for-profit business that
has
its principal place of business in the County. The Bill would also
require the Executive to adopt a regulation, by Method 2, further defining a local business and the
certification process. The Director of the Office of Procurement
I
or her designee would be
responsible for certifying a business as a local business. The Bill would also authorize the Director
to waive all or part of the local subcontracting requirements for a specific contract.
The Bill, as introduced, would take effect on July 1,2015 and apply to a solicitation for a
high dollar value contract issued after July 1,2015.
1
After
Bill 61-14 was introduced, the Office of Procurement became a principal office in the Executive Branch
independent of the Department of General Services.
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Public Hearing
The only witness at the public hearing, DGS Director David Dise, representing the
Executive, supported the Bill. (©13)
March 19, 2015 GO Worksession
Councilmember Rice attended the meeting in addition to the Committee members. DGS
Director David Dise, Assistant CAO Bonnie Kirkland, Grace Denno, DGS, and Pam Jones, DGS
represented the Executive Branch. Linda Price, Legislative Analyst and Robert Drummer, Senior
Legislative Attorney, represented the Council Staff. The Committee discussed the Bill with the
Executive Branch representatives. The Committee requested comments from the MFD Task Force
before making a decision.
September 17,2015 Worksession
Procurement Director Cherri Branson, Assistant CAO Bonnie Kirkland, Grace Denno,
Procurement, and Pam Jones, Procurement, represented the Executive Branch. Robert Drummer,
Senior Legislative Attorney, represented the Council Staff. The Committee discussed the need for
more infonnation on the percentage of large contracts already being subcontracted to local
businesses with the Procurement Staff and the recommendation from the MFD Task Force to not
enact the Bill at this time. Ms. Branson told the Committee that Procurement has not had the time
to analyze the need to help local businesses that size out ofthe LSBRP. The Committee requested
Procurement to do this analysis within the next 6 months.
April 4, 2016 Worksession
Procurement Director Cherri Branson, Assistant CAO Bonnie Kirkland, Grace Denno,
Procurement, and Pam Jones, Procurement, represented the Executive Branch. Robert Drummer,
Senior Legislative Attorney, represented the Council Staff. The Committee discussed the need for
more funded positions in the Office ofProcurement to implement this Bill and several Bills already
enacted. The Committee noted that the Executive's Recommended FYI7 Operating Budget only
adds 1 administrative specialist to the Office ofProcurement. Unfunded procurement laws include
Bill 29-14, Wage Reporting, Bill 49-14, Reciprocal Local Preference, Bill 5-15, Health Insurance
Preference, and Bill 43-15, Wage Requirements Amendments. The Committee supported the
Bill in concept, but decided to hold the Bill until the Executive submits a request for a supplemental
appropriation fully funding these Bills and Bill 61-14. After the April 4, 2016 worksession,
Procurement Director Cherri Branson sent the Committee a memorandum explaining how the
Office of Procurement can, after some reorganization, implement Bill 61-14 as well as all other
unfunded Bills described above with current staffplus the 1 additional administrative specialist in
the Executive's FY17 Recommended Budget. See ©24-26.
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Issues
1.
What is the fiscal and economic impact of the Bill?
The Office of Management and Budget (OMB) reports that the County currently has
approximately 85 contracts valued at more than $10 million for a total value of $2.4 billion. (©8­
12) Although OMB acknowledged that a bidder may increase the price of a bid due to the local
subcontracting requirements, OMB was unable to estimate the potential cost ofthese increased bid
prices. OMB estimated that the Bill would require the addition of 2 half-time employees to
implement the Program at an annual recurring cost of $79,220. The Executive's recommended
FY17 Operating Budget does not include these additional positions for the Office ofProcurement.
2
The Finance Department indicated that the Program would target approximately $270
million to local businesses, but they were unable to estimate the economic impact on County
businesses. The Fiscal and Economic Impact Statement does not estimate the amount of high
dollar value contracts currently being awarded to local businesses.
2. Would
Bill61~14
create a preference for County businesses that would trigger a reciprocal
preference against a County business when bidding in a different jurisdiction?
Md. State Finance and Procurement Code § 14-401 establishes a reciprocal preference for
a Maryland business against a business located in another State if that other State provides a
preference for a business located in that State. Section 14-401 provides that the State must provide
the Maryland business with the same preference offered to the out-of-State business in its own
State. According to a chart recently published by the State of Oregon, this type of reciprocal local
preference exists in 43 other States. See © 18-19. These defensive reciprocal preference laws are
designed to discourage local preference laws in other States.
Md. Local Gov't Art. § 1-402 authorizes a political subdivision of the State to give a
Maryland business a preference against a bidder from another State if the other State gives a
preference to its local businesses. Bill 49-14, Contracts and Procurement - Formal Solicitation ­
Reciprocal Local Preference, enacted on April 14, 2015, implements this State enabling act. Both
of these Maryland laws are designed to discourage local preferences in other States.
A local preference law that adds a percentage preference to a bid by a County business
against a business from another State would probably trigger a reciprocal local preference law
when a Maryland business places a bid in one of the 43 other States with a reciprocal local
preference law. While some States (or Counties in Maryland) may use the local subcontracting
program that would be established by Bill 61-14 to provide a preference for local businesses in
that State, it is likely that most would not. Bill 61-14 does not discriminate against non-local prime
bidders; it favors County-based subcontractors.
Executive's recommended FY17 Operating Budget would add only one administrative specialist to the Office
of Procurement.
2
The
3
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3. Do other Maryland Counties have a local preference for a County-based business?
Allegany, Caroline, Cecil, Frederick, Garrett, and Prince George's counties have a local
preference law benefitting local County-based businesses in certain types ofcontracts. The Prince
George's County Code §IOA-160 includes a 10% price preference for a County-based business.
Therefore, since Bill 49-14 took effect on January I, 2016, the County may be required to award
a contract to a County business that is within 10% of the low bid from a Prince George's County
business. Enactment of Bill 61-14 may trigger a 10% local subcontracting requirement on a
contract in another Maryland County or in another State.
4. Does the reciprocal preference in Bill 49-14 conflict with Bill 61-14?
Bill 49-14 creates a reciprocal local preference. Bill 61-14 would create a mandatory local
subcontracting program for high value contracts. Although they can both be implemented
together, they represent conflicting policy values. Bi1149-14 is a defensive reaction designed to
discourage State and local preferences that work against a County business. Bi1161-14 is a local
preference law designed to benefit a County business at the expense of a business located outside
of the County - including a business located in a different Maryland County.
5. Are County businesses underutilized on high value contracts?
Bill 61-14 would establish a mandatory subcontracting program for local businesses that
is similar to the current MFD subcontracting program. The MFD program is designed to remedy
the effects ofpast discrimination against businesses owned by women and certain minority groups.
As
discussed in the packet for Bill 48-14, the County hired a consultant to prepare a comprehensive
disparity study to determine ifMFD businesses were underutilized in County contracts and if that
underutilization can be attributed to discrimination on the basis of race, gender, or disability. A
mandatory subcontracting program for local businesses would not be based upon race or gender
and would therefore not be subject to the strict scrutiny test under the Equal Protection Clause of
the 14th Amendment. However, it would still be instructive to determine if County businesses are
underutilized on high value contracts before establishing a mandatory local subcontracting
program.
Council staff requested DGS for statistics on the number of high value contracts and the
portion of each contract that was subcontracted to a County business. See DGS Answers at ©14­
17. Unfortunately, DGS does not track data on local subcontractors. DGS told us that 23%
($167,688,239) of the $722 million in high value contracts were awarded to a County based prime
contractor. Several of these high value contracts were awarded to non-local businesses providing
group health insurance for County employees and retirees which may have no subcontracting
opportunities.
After the last worksession, Procurement reviewed the contracts valued at more than
$10,000,000 that were awarded in FY14 and FY15 and produced a chart showing each contract
awarded, the contract's eligibility for a local subcontracting requirement, and the actual local
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subcontracting promised. See ©21-23. Excluding contracts that would not be eligible for a local
subcontracting requirement under Bil161-14, the County awarded 9 contracts for a total value of
$186,186,744 during this time period. Four ofthe 9 contracts included local subcontracting greater
than 10%. The total amount subcontracted to local firms was $16,792,750 or 9%. We have no
information about what percentage of the relevant markets consist of local contractors, and
therefore, can draw no conclusions as to whether the achieved percentage represents
underutilization or over-utilization of local contractors.
6. The recommendation from the Minority Owned and Local Small Business Task Force.
The Minority Owned and Local Small Business Task Force recommended not enacting
Bill 61-14 for several reasons. See the June 3 memo from the Chair at ©20. The Task Force
pointed out that there is no evidence of underrepresentation of local subcontractors on large
contracts. They also argued that this new program would detract from the Local Small Business
Reserve Program, increase the complexity ofthe procurement system, and divert time and attention
of Procurement staff from increasing the use of local small businesses.
7. Does Procurement have sufficient staff to implement this Bill along with other recently
added responsibilities?
Here is a chart showing recently enacted procurement laws and the new positions that
should be added to implement the law.
Status
Enacted Legislation
Bill 14" 14 " Health Insurance Requirements
Bill 48-14 - Minority Owned Business Procedures
Bill 23-15 - Local Small Business Reserve
Amendments
Bill 29-14 " Wage Reporting
Bill 49-14 - Reciprocal Local Preference
Bill 5-15 - Health Insurance Preference
Bill 43-15 - Wage Requirements - Amendment
Funded
No Impact
No Impact
Unfunded
Unfunded
Unfunded
Unfunded
Pending
$101,468
$0
$0
$101,468
$85,626
$85,946
$288,468
$79,220
1.0
0.0
0.0
1.0
1.0
1.0
2.0
1.0
Expense
FfE Proc.
Pending Legislation
Bill 61"14 - Local Business Subcontracting Program
According to the fiscal impact statements, recently enacted procurement laws require 6
additional positions to implement. Only 1 of these 6 positions
was
funded in FYI6. The
Executive's recommended FYI7 Operating Budget would add only 1 new administrative specialist
position to the Procurement Staff. Bill 61-14 would require 2 half-time positions to implement.
Although the Office of Procurement would implement this Bill if it is enacted, it is likely to divert
their time and attention from their other responsibilities.
After the April 4, 2016 worksession, Procurement Director Chern Branson sent the
Committee a memorandum explaining how the Office of Procurement can, after some
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reorganization, implement Bill 61-14 as well as all other unfunded Bills described above with
current staff plus the 1 additional administrative specialist in the Executive's FY17 Recommended
Budget. See ©24-26.
8. Does Bill 61-14 conflict with the recommendations made
by
the Procurement Policies and
Regulations Task Force?
The Procurement Policies and Regulations Task Force made the following
recommendation:
1.
Clarify County procurement preferences.
The Task Force observed that it is difficult to reconcile competing preference
programs in a given procurement. Competing preferences would be reconciled
on a contract-by-contract basis. Procurement currently administers four
preference programs, which include a local tie-breaker preference, a reciprocal
local preference, a preference for small businesses certified as offering health
insurance; and an evaluation factor for purchases from minority owned
businesses. This is one example that reinforces the perceptions illustrated in
survey responses that County contracting is unfair and that the social
preference programs may have overcome business considerations in County
procurement. Accordingly, metrics must be developed to determine
if
desired
results are being achieved in preference programs, social policies, process
improvements, productivity and financial metrics.
A moratorium should be
placed on additional changes to County procurement process, to include additional
preferences or social responsibility programs and provisions, until those metrics are
established to determine
if
desired results are being achieved.
(emphasis added)
Bill
61-14
would add another preference to the already confusing procurement matrix.
9. Should the Council enact Bill 61-14?
County procurement often struggles with competing purposes. First, the County has an
obligation to County residents to obtain the best goods and services from contractors for the best
possible price. This is normally served by using an open competitive process for the award of a
County contract. The County sometimes attempts
to
use its contracting dollars to serve a different
public purpose.
For example, the County has a Local Small Business Reserve Program that reserves certain
contracts for local small businesses. The County Procurement Law also has a Minority Owned
Business Program. Bill 48-14 will add a new requirement for contracts awarded by a request for
proposals. The County has a Prevailing Wage Law that requires a County construction contractor
to pay at least the prevailing wage set by the State. Bill 29-14, requested by the Executive, will
require County service contractors to provide additional reports on wages paid to their employees.
The County Wage Requirements Law already requires most service contractors to pay all
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employees working on a County service contract at least a living wage, currently set at $14.15 per
hour. This Bill would add a new mandatory local business subcontracting requirement for high
value contracts.
Each of these procurement laws supports a strong public policy, but also runs counter to
the County's overall obligation to obtain the best goods and services for the best price. The
resulting procurement system is complicated and sometimes slow. It can be difficult to navigate.
However, each new procurement requirement adds an incremental layer of complexity.
Bill 61-14 raises some interesting policy questions. Is there a problem that needs a remedy?
We do not know! Will this make the solicitation of high value contracts more complex? Yes.
Procurement would have to certify businesses as a local business. Procurement would have to
respond to complaints about a business that was improperly certified or denied certification.
Procurement would have to audit contracts for compliance. Procurement would also have to
respond to requests for a full or partial waiver of the requirement. Does the Executive's FY17
recommended Operating Budget include the additional Procurement office staffmg needed to
complete these new tasks? According to the fiscal impact statements submitted for each of these
Bills, no. However, the Executive has now reversed course and concluded that all of these new
tasks can be completed with existing personnel plus the 1 additional administrative specialist in
the Executive's FY17 Recommended Operating Budget. Council staff is concerned that adding
this task to existing personnel will inevitably direct their attention away from some ofthe Office's
other priorities. Finally, bidders would have to begin to use the location of the business as part of
their recruiting process along with looking for MFD firms. It is difficult to see the potential
benefits of this program being worth the additional complexity it would create.
Council staff recommendation:
do not enact this Bill and request Procurement to begin
tracking information on subcontractors on high value contracts.
10. Effective date.
The Bill, as introduced, has an effective date of July
1,
2015. If the Council enacts this
Bill, the Bill must be amended to change the July 1 effective date.
This packet contains:
Bill 61-14
Legislative Request Report
Fiscal and Economic Impact Statement
Testimony of David Dise
DGS Answers to Council Staff Questions
Oregon Chart of Reciprocal Local Preference Laws
Minority Owned and Small Business Task Force Memo
Chart of Large Contracts Awarded in FY14 and FY15
Branson 4-20-16 Memorandum
Circle
#
1
7
8
13
14
18
20
21
24
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Bill No.
61-14
Conceming: Contracts and Procurement
- Local Business Subcontracting
Program
Revised: 11/20/14
Draft No. 3
Introduced:
November 25.2014
Expires:
May 25.2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ---'-!.N".,on"""e<--_ _ _ _ __
Ch. _ _ Laws of Mont. Co. _ __
I
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the Request of the County Executive
AN
ACT to:
(1)
(2)
(3)
(4)
increase the participation of local businesses in certain large County procurement
contracts;
establish a subcontracting goal for local businesses
in
certain large County
procurement contracts;
establish a Local Business Subcontracting Program for certain County procurement
contracts; and
generally amend the law governing County procurement.
By adding
Montgomery County Code
Chapter lIB, Contracts and Procurement
Article XVII. Local Business Subcontracting Program
Sections 11 B-78 through 11 B-83
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.
61-14
1
Sec.
1.
Sections IIB-7S, IIB-79, lIB-SO, IIB-SI, 11B-S2, and IIB-S3 are
added
!!§
follows:
Article XVII. Local Business Subcontracting Program
IIB-7S. Definitions.
2
3
4
5
6
In this Section, the following words have the meanings indicated:
Broker
means
~
person that provides goods or services (other than real estate,
7
8
9
10
11
investment, or insurance sales) on
~
pass-through basis as follows: .
ill
~
supplier of goods who:
fA)
does not own, operate, or maintain
~
place of business in
which goods of the general character required under the
contract are kept in stock in the regular course of
business;
@
12
13
does not regularly assume physical custody or possession
of goods of comparable character to those offered to the
County, or
14
15
16
17
18
(Q
exclusively acts as
the County; or
~
middleman in the sale of goods to
ill
~
supplier of services who does not regularly maintain the
19
capability, capacity, training, experience, and applicable
regulatory licensing to directly perform the principal tasks of
~
contract with the County and must provide the principal tasks
through
~
subcontract with
~
third party.
Contract Award
means the delivery
Qy
the County of
~
fully executed contract
20
21
22
23
24
to an offeror.
High Dollar Value Contract
means an initial Contract Award that is estimated
25
26
to exceed $10 million.
<3).
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BILL
No.
61-14
27
Local Business
means
~
for-profit business other than
~
broker that has its
28
29
principal place of business in the COWlty, as further defined
.Qy
Executive
Regulation, and that is certified
.Qy
the Director as
provisions of this Article.
~
Local Business Wlder the
30
31
32
Local Business Program Manager
means
~
person designated
.Qy
the Director
to administer and monitor the Local Business Subcontracting Program.
33
34
35
36
Local Business Subcontractor
means
contract with
~
~
Local Business that enters into
~
~
Contractor to perform work related to
High Dollar Value
Contract for that Contractor.
I1B-79. Goals; applicability.
37
38
W
Local Business Subcontracting Goals.
This subsection establishes the
following Local Small Business subcontracting goals:
39
40
ill
at least 10% ofthe contract dollars awarded for each High Dollar
Value Contract should be awarded to
~
Local Business; and
41
42
43
44
45
m
(hl
at least 10% of the total dollar value of all High Dollar Value
Contracts in the
Businesses.
~gregate
should
be
awarded to Local
Applicability.
The Local Business Subcontracting Program goals
ill2P!Y
to each High Dollar Value Contract except:
46
47
48
ill
grants or appropriations Wlder Section IIB-14
m
ill
ill
ill
will
and
{±l;.
cooperative procurements Wlder Section I1B-40;
public entity contracts Wlder Section IIB-41;
emergency procurements Wlder Section 11B-16; or
bridge contracts, Wlder Section
I1B-42, if the Director
49
50
51
52
53
determines in writing that compliance with this Article is
impractical or is outweighed
.Qy
the benefits to the COWlty of
entering into
~
bridge contract.
&-
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BILL No.
61-14
54
55
ttB-SO. Procedures.
ill}
The Director, at the time of
£!
solicitation, must publish notification to
businesses when the solicitation may result in
£!
High Dollar Value
Contract.
56
57
58
(Q)
The Director must encourage Local Business participation in applicable
High Dollar Value Contract opportunities by:
59
60
61
ill
adding
£!
provision in
£!
solicitation for
£!
High Dollar Value
Contract that requires
£!
Contractor to exercise good faith in its
effort to subcontract 10% of the dollar value of the contract to
one or more Local Businesses;
62
63
64
65
66
67
ill
requiring
£!
Contractor on
£!
High Dollar Value Contract to:
CA)
submit
£!
Local Business subcontracting plan describing
how the Contractor proposes to meet the 10% Local
Business Subcontracting Program goal;
68
69
70
.em
identify, before initial Contract Award, each Local
Business with which the Contractor intends to subcontract
and the projected dollar amount of each subcontract or
percentage of the contract dollar amount allocated to each
subcontract; and
71
72
73
(Q)
promptly notify the Using Department of any change in the
information required under
(A}
and
ill}
of this. subsection
during the contract term.
74
75
76
ill
(£)
requiring the Contractor to comply with Local Business
Subcontracting Program goals throughout the contract term.
77
78
A Contractor's failure to satisfy the requirements of the Local Business
Subcontracting Program, including
£!
failure to submit documentation
required
ill:
the Director to show compliance, may constitute
£!
breach of
79
80
o
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BILL
No. 61-14
81
82
83
the contract for which the County may withhold payment or impose
liquidated damages, in addition to any other remedies available to the
County.
84
85
@
The Director may waive all or part of the Local Business subcontracting
requirements for
~
specific contract under appropriate circumstances as
86
87
established
by
Executive Regulation.
ill
The Director may require each Contractor and Local Business that
participates in the Local Business Subcontracting Program to provide
information concerning utilization
by
the Contractor of Local
Businesses in
~
High Dollar Value Contract.
88
89
90
91
92
93
lIB-St.
Regulations.
The County Executive must adopt
this Article. The regulation must include:
~
regulation,
by
Method
~
to implement
94
95
96
97
98
99
W
monitoring procedures to assist
~
contract administrator and the Local
~
Business Program Manager to determine compliance
by
with the Local Business Subcontracting Program;
Contractor
(hl
certification requirements for
under this Article; and
~
business to qualify as
~
Local Business
!£l
procedures to certify or decertify
~
Local Business.
100
101
102
103
IIB-S2.
No Standing to Challenge Contract Award.
This Article does not give any person, including
~
Local Business, any right or
status, including standing, to challenge the award of
~
contract or subcontract arising
from the County procurement system. The provisions of this Article are enforceable
only through the oversight function of the Chief Administrative Officer or his
designee.
104
105
106
107
tIB-S3.
Penalty.
W
A person must not:
@
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BILL
No. 61-14
108
109
110
ill
fraudulently obtain or retain, attempt to obtain or retain, or aid
another person in fraudulently obtaining or retaining, or
attempting to obtain or retain, certification as
~
Local Business
for the purpose of this Article;
111
112
113
ill
willfully make
~
false statement to
~
County official or employee
for the purpose of influencing the certification of an entity as
Local Business; or
~
114
115
116
117
118
119
ill
fraudulently obtain, attempt to obtain, or aid another person in
fraudulently obtaining, or attempting to obtain, public monies to
which the person is not entitled under this Article.
(hl
A violation of this Article:
120
121
122
123
124
ill
ill
is
~
class A violation; and
may disqualify the violator from doing business with the County
for
YJ2
to
~
years.
Sec. 2. Effective Date
This Act takes effect on July
1, 2015
and applies to any High Dollar Value
Contract arising from a solicitation issued on or after July
1,2015.
125
126
Approved:
Nancy Floreen, President, COWlty Council
Date
127
128
Approved:
Isiah Leggett, County Executive
Date
G)
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LEGISLATIVE REQUEST REPORT
Bill 61- 14
Contracts and Procurement
-
Local Business Subcontracting Program
DESCRIPTION:
Establish a goal that 10% of the dollars related to an initial
procurement contract award that is valued above $10 million should
go to a local business.
Contracts that are over $10 million are exempted from the Local
Small Business Reserve Program (LSBRP). This Bill would reserve a
portion ofthose contracts dollars to local businesses.
Ibis Bill would establish a program to require each prime contractor
of a High Dollar Value Contract to subcontract to a Local Business to
perform and receive compensation for at least 10% of the value of the
initial Contract Award.
CEX, DGS, OCA, DED
DGS personnel cost to support this program: $153,000
No economic impact
To be requested.
To be requested.
Grace Denno and Pam Jones, DGS
Not applicable.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Violation of this program
may
cause liquidated damages assessment
against the contractor.
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ROCKVILLE, MARYlAND
MEMORANDUM
December 15,2014
TO:
George Leventhal, President, County Council
Jennifer
A.
Hughes,
Director,
Joseph F. Beach, Director, Dep
PElS for Council Bil161
~
14,
ofM nagement
.
~
Finance
FROM:
SUBJECT:
a~t
GlJUUgl;
LoiJ
Business Subcontracting Program
Please find attached the fiscal and economic impact statements for the
above~
referenced legislation.
JAH:fz
CC:
Bonnie Kirkland,
Assistant Chief Administrative Officer
Lisa Austin, Offices of the County Executive
Joy Nurmi, Special Assistant to the County Executive
Patrick Lacefield, Director, Public Iuformation Office
Joseph F. Beach., Director, Department of Fjnunce
David Platt,
Depal1ment ofFinance
David Disc, Director, Department ofGeneral Services
Erika
Lopez-Firm, Office of Management and Budget
Alex
Espinosa,
Office
of Management and Budget
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Fiscal Impact Statement
Council Bill
61-14, Local
Contracts and Procurement - Local Business
Subcontracting Program
1.
Legislative Summary
Contracts valued at over $10 million are currently exempt from the existing Local Small
Business Reserve Program
(LSBRP).
The proposed legislation establishes a goal for
a
Contractor
to
subcontract with local
businesses
in
an.
initial
contract award
that is
valued over
$10
million
and
fur
the local
business
to
receive compensation
of
at least
10% of
the value of:the
contract
award.
'There are approximately 85 contracts
v;..i.th
each over $10 million
in
value.
The
total
current value of
all
contracts over $10 million dollars
is
$2.4 billion. The legislation
stipulates
that
10% of the
dollars related
to an
initial
procurement contract
award
that is
valued
above
$10
milllon should go to Local Businesses.
2.
An estimate of changes in County revenues and expenditures regardless ofwhetber
the revenues or expenditures are assumed
in
tbe recommended or approved budget.
Includes source of information, assumptions, and methodologies
used.
No revenues are expected from the proposed legislation.
Expenditures related
to
the proposed legislation are difficult to estimate. There is a
potential for bidders or offerors to
build
their increased costs resulting from use ofIocal
subcontractors
into their rates
or
prices offered
to
the County. The cost increa.c;e to the .
County
cannot
be
estimated at this time.
3. Revenue and expenditure estimates covering
at
least the next 6 tlScal years.
See item #2.
4.
An actuarial analysis through the entire amortization period for each bill that would
affect retiree pension or group insurance costs.
111e
proposed legislation does not affect retiree pension or
group
insurance
costs.
5. An estimate of expenditures related to County's infonnation technology
(IT
systems),
including Enterprise Resource Planning
(ERP)
~'Ystems.
The proposed legislation's expenditures will not affect ERP systems.
6.
Later actions that may affect future revenue and expenditures
if
the bill autborizes
future spending.
The proposed legislation does not authorize future spending.
(j)
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7.
An
estimate of the staff time needed to implement the bill
OOS estimates
thai
one
(1.0) FIE is necessary
to
implement this legislation for a total
annual cost
of $79,220 per year
l
plus associated expenses of$5,468, for
a
total first-year
cost ofapproximately $84.688.
One half (0.5) .FTE is
far a
Local Business Program Manager (Grade 23) with a financial
background is needed to review vendors' eligibility, conduct site visits, validate
compliance, compile reports,
and
conduct outreach at $42,813 per year.
DGS
estimates
associated operating expenses for the position
at
$2,734.
2
One
balf(O.5)
FTE for a Procurement Specialist (under-filled
at Grade 16)
to
analyze
bid
and proposal submissions related
to
additional solicitation and contract compliance
requirements. coordinate 'With the Office ofBusiness Relations and Compliance (OBRC)
and Contract Administrators (CA) related to local business eligibility and applicability, to
issue, approve and track legally required determination and finding recommendations under
the
Procurement process,
to
report, as needed or required and
CA
training at $30,940 per
year.
DOS
estimates associated operating expenses for the position $2,734.
8.
An explanation of how the addition of new staff responsibilities would affect other
duties.
'Ibe
Program Manager
is
needed for
OBRC
to manage this new program to review
vendors' eligibility, conduct site
visits,
validate compliance, review reports, conduct
outreach; and provide training.
The Procurement
Specialist (Expeditor)
will solely focus on minimizing delays
that
the
new program
may
cause, The existing Procurement resources wiil not
be
able
to
cover
the
new additional
tasks
for this program, including: review bid/proposal submissions,
determine for variances
in
application oflaw, track and report, and train Contract
Administrators.
9.
An
estimate of costs when an additional appropriation is needed.
An
appropriation of $79,220 is needed in the first year of the proposed bill's
implementation. On-going personnel wou}.d require an appropriation of $79,220 for the 1.0
combined
F T E ' . .
..
.
10. A description of
any
variable that could affect revenue and cost estimates.
Assumes C<lmpensation
(salary
and benefits of25%)
at
the mid-point ofgrade.
1
Assumes a desktop computer with MS Office ($1,074 one-time), phone expenses ($660
per
year),
and initial
1
furniture ($1,000 one-time).
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There is a poiential for Bidders or Offerors to build their increased costs resulting from use
oflocal subcontractors into their rates or offers to the County. The cost increase to the
County cannot be estimated
at
this time.
11. Ranges of revenue or expenditures that are uncertain or difficult to project.
See item #2.
12.
If
a
bill
is
likely to have no fiscal impact, why that
is
the case.
Not applicable.
13.
Other
fIScal impacts or comments.
None
14. The fanawing contributed to and concurred with this analysis:
Grace Denno, Office ofBusiness Relations
and
Compliance, Department of General Services
Pam Jones, Office of Procurement, Department
of
General Services
Beryl Feinberg, Department ofGeneral Services
Angela Dizelos, Department of General Services
Erika Lopez-Finn, Office of Management and Budget
~5L14
Date
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Economic Impact Statement
Bill 61-14, Local Business Subcontracting Program
Background:
This
legislation would establish
a
goal that
ten
percent
(10%)
of
an
initial procurement
contract avvard above
$10
million should go to local businesses. Under the proposed
legislation, therefore, the prime contractor would subcontract
with
local businesses in
an initial award of the contract value over
$10
million and local businesses would
receive compensation for at least ten percent
(10%)
ofthe value ofthe contract.
1. The sources of
information~
assumptions, and methodologies used.
Source ofinfonnation
is
the Office of Business
Relations
and
Compliance (OBRC),
Department of General Services (DOS). According to OBRC, there were eighty­
four
(84)
contracts awarded with
it
value of over
$10
million.
'Ibe
total value of
these contracts was $2.37 billion. Based on the abO\'e data, approximately $237.0
million is targeted to be awarded or subcontracted to local businesses.
2. A
description of any variable that could affect the economic impact estimates.
The variables that could affect the economic impact estimaies are the number of
contracts awarded with a value of over $10 million and the difference
in
contracts
awarded to local businesses compared
to
previous years.
3.
The
Bill's
positive or negative
effec4
if any on employment, spending, saving,
investment, incomes, and property values in
the
County.
The legislation would have
an
economic impact on business revenues and
a
possible increase in local employment, incomes, and investments. However,
without specificity ofdata regarding employment and business expansion by the
local businesses and
baseline
data on
current
awards it
is
difficult to specifically
quantify the change in the economic impact.
4.
If
a
BiU
is
likely
to have no economic impact, why
is
that the case?
See paragraph #3.
5. The following contributed to or concurred with this
analysis:
David Platt and
Rob Hagedoorn, Department of Finance; and Grace Denno, Office of Business
Relations and Compliance, Department ofGeneral Services.
Page 1
ofl
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TESTIMONY ON BEHALF OF COUNTY EXECUTIVE ISIAH LEGGETT
ON LOCAL BUSINESS SUBCONTRACTING
BILL 61-14
January
13,2015
I am David Dise, Director of Montgomery County's Department of General Services.
I am pleased to testify on behalf of County Executive Isiah Leggett in support of Bill
61-14, Local Business Subcontracting Program, introduced November 21, 2014, by
then Council President Rice. Mr. Leggett thanks Councilmember Rice's support in
this effort to address the ongoing need to support and increase local business access to
County contracting opportunities.
This Bill establishes a local business subcontracting goal for companies acting as
prime contractors on large County contracts. The current Local Small Business
Reserve Program (LSBRP) reserves qualifying County contracts
under
$10 million to
local small business competition. This Bill will provide increased opportunity to all
Montgomery County based businesses by ensuring some measure of participation on
County contracts valued
over
$10 million, which includes contracts for engineering
and architectural design, construction services, insurance, health and human services,
IT commodities and services, trash/recycling collecting services, custodial services,
storm water management services, and transportation services.
In
FY15 to-date Montgomery County has contracted for $722 million in goods and
services through contracts over the $10 million threshold. While the percent of local
business participation in FY15 is 23%, the participation rate varies from year to year,
as it does with the type of contract; such as construction or professional services. This
legislation will ensure opportunity across
all
business categories as well as establish a
minimum participation rate to ensure continuity of opportunity in future years.
Montgomery County has a robust, active and responsive local business community.
These businesses employ local residents, provide good jobs, and are foundational to
the local economy. This bill will ensure more opportunities for local bus.inesses while :
maintaining healthy competition and ensuring the best value for the expenditure of
public funds.
County Executive Leggett applauds the Council's support and recognition ofthe. need
to support the local
bus~ess
community and strengthen the local economy through
this legislation.
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1. In your testimony at the public hearing you stated that 23% of the $722 million in contracts
valued at more than $10 million went to local businesses. Does the 23% include awards to a
local prime contractor or just subcontracts?
This 23% ($167,688,239) actually is the local vendors who are primes. we currently do not track
data on local subcontractors.
Here is the breakdown:
For FY15, 2 new'construction projects were awarded to local vendors for a total of $84,755,000 to local
businesses
Montgomery County Multi-
Agency Service Park Public
Safety Training Academy
Residential Road
- Primary award
Resurfaci~g
CONST
CONST
RFP
IFB
Hess Construction
+
Engineering Services,
Inc.
Francis O. Day Co., Inc.
14-Nov-14
24-Dec-14
$68,755,000.00
$16,000,000.00
For FY15, the routine contracts below were expired and re-awarded, at a total of $82,933,239
2. Please provide a list of each contract awarded in FY 14 valued at more than $10 million,
including the type of goods or services provided. For each contract, please provide the percent
of the contract subcontracted to local businesses and the overall amount of the contract
awarded to local businesses including the prime contractor.
We currently do not track local subcontracting information. Contracts awarded to local
businesses, as prime contractors, are highlighted in yellow in the chart below and represents 7%
of these dollars ($35.87m/$479.4m). The chart below lists all FY14 contracts over $10 million:
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Northbrook
Point-of-Service
Plans, Retiree
Plan
Indemn
Fully-Insured
Staff Model
Health
Maintenance
Organization
Medical Plan
Montgomery
County Public
Schools (MCPS)
Food Distribution
Relocation
Computer Aided
Dispatch (CAD)
Modernization
Group
Hospitalization and
Medical Services,
In
IL
21-Jan-14
1030769
1030766
Kaiser Foundation
Health Plan of the
Mid-Atlantic States,
Inc.
Owi
Mills
Rockville (does
not meet
County's
definition of
local
Bu
MD
21-Jan-14
MD
03-Feb-14
1027827
Costello
Construction Of
Maryland, Inc.
Motorola Solutions,
Columbia
MD
10-Se
.00
1040850
Sch
IL
27-Jun-14
28925629
Extended
Provider Option
1030767
Medical Plan
United HealthCare
Services, Inc.
Hartford
CT
03-Feb-14
1039448
North Potomac
Community
Recreation
Center
Dustin
Construction, Inc.
Washington Gas
Energy Services,
Inc.
18,932,000.00
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1035901
Self Insured PPO
Type Dental
Benefits and
Related
Adm inistrative
Services
Design, Build,
Operate and
Maintain two
CNG facilities at
the County
EMOC
Engineering
Services for
Transportation
Design
&
Plann
United Concordia
Companies, Inc.
d/b/a United
Concordia Dental
Hunt Val
MD
15-Jan-14
1033010
Integrys
Transportation
Fuels, d/b/a
Trillium CNG
Salt Lake
UT
28-Feb-14
1011775
Total
The Wilson T
Ballard
related (0% local su
Mill
MD
29-Mar-14
10,000,000.00
3. Please provide a total percent of subcontracts awarded to local businesses for FY 14 on these
high value contracts and a total percent of contracts awarded to local businesses as either a
prime or subcontractor.
We currently do not track local subcontractors. Data is currently available on local prime
contractors; see item 2 for FY14 data.
4. Please provide the same statistics for FY15.
Data is currently available for local prime contractors, see item 1.
5. What is the explanation for requiring 10% of each contract to be subcontracted to local
businesses as opposed to 5% or 20%1
Many subcontracting programs (Minority, Small or Local subcontracting programs) throughout
the country use 10% as a starting point. Since no study has been done in Montgomery County
on local subcontracting disparities, the County selected the 10% based common practice.
A survey was done on major construction projects for FY12 and FY13. It shows 28%-29% local
spending (see below):
Total Procurement
FY 12
FY 13
$762,811,116
$845,361,770
Local Prime+Sub
$220,034,639
$233,701,295
% local
29%
28%
Although construction projects count for the majority of the contracts over $10 million and
usually provide great opportunities for local subcontracting, there are other categories such as
"county employee health insurance", "prescription plan" and "dental benefits" which generally
have close to 0% subcontracting for local businesses; see
highlights under item 2. These
contracts (that have close to 0% local subcontracting opportunities) count for $299M, or 62% of
®
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the total contract amount in FY14. The rest ofthe contracts are construction and IT related,
count for $180M. Assuming construction and IT contracts provide 30% of local subcontracting
($S4M available for local subcontracting), for overall contracting amount it is 11%.
($54,OOOM/$479,OOOM)
6. What is the percent of local businesses compared to the total number of businesses in each
industry we award these high value contracts? Do you have any evidence of underutilization of
local businesses in these contracts based upon their availability in the marketplace?
In FY14, 2 out of 14 contracts over $10mm were awarded to local businesses. This represents 14%
of the contracts awarded.
Please let me know if you have any question.
Best Regards,
Grace Denno
Manager
1
Office of Business Relations and Compliance
Department of General Services
I
Montgomery County MD
255
Rockville Pike, Ste.
180
I
Rockville, MD
20850
P 240-777-9959
I
F 240-777-9952
grace .de nna@ ma ntga merycau ntymd.gav
www.montgomerycountymd.gov/OBRC
THINK BErORE YOll PRINT
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3116/2015
Procurement Services and Policy State
by
State Preference Data (as submitted
by
each state)
Find'
DAS Divisions
ContaetUs
About Us
State by State Preference Data (as submitted by each state)
Preference:
Reeiprocal Preference
Enterprise Goods and
Services Home
Proeurement Serviees
and Poliey Home
Preference is any advantage given to offerors in a competition for contract award which may be granted based on pre­
established criteria. These criteria are established by Law.
Law is mandatory; is defined by Statute, Rule, Statewide Policy, Executive Order; and is what gives you Preference
Authority. Use of the preference may be identified as either Mandatory or Discretionary.
Reciprocal Preference:
An advantage a state applies in order to match a preference given by another state.
For Example: A preference based on residency.
State
Preference
Law/Statute
TIe-Bid
Preference
Reciprocal
Preference
Preference Conditions
Including Law Citation
Date of Verification
@
hHp:IIwww.oregon.gov/DAS/EGS/ps/Pages/detaiLa_main..page.aspx
1/3
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3/1612015
Procurement Services and POlicy State by State Preference Data (as submitted by each state)
Nevada (NV)
New Hampshire
(NH)
New
Jersey
(NJ)
Yes
No
N/A
None
o
lIock t6
\h~
top
OREGON.GOV
Slate Directories
Agencies A to Z
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Oregon Revised Statutes
Oregon - an Equal Opportunity
Employer
About Oregon.gov
WEB SITE LINKS
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http://www.oregon.gov/DAS/EGS/pslPagesldetail_a_main-page.aspx
213
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MONTGOMERY COUNTY COUNCil
ROCKVILLE, MARYLAND
MINORITY OWNED
AND LOCAL SMALL
Bu~.~iwiNl:E
June 3, 2015
The Honorable George Leventhal
Council President
Montgomery County Council
Council Office Building
100 Maryland Avenue, 5
th
Floor
Rockville, MD 20850
Dear Council President Leventhal:
On behalf ofthe recently appointed Montgomery County Minority Owned and Local Small
Business Task Force, we take the following position as it relates to Bill 61-14. The proposed
legislation seeks to establish a Local Business Subcontracting Program requiring 10% of high
value contracts pegged at greater than $10 million to
be
subcontracted to local businesses.
Position
1.
It
is our understanding that the preparation and introduction ofMontgomery County
Council Bills occur as a result of identified and substantiated problem areas. Bill
61-14 appears not to
be
based on a rigorous analysis of relevant historical contract
data to warrant legislation of this magnitude. While occasional anecdotal evidence
is available,
it
does not rise to the level sufficient to enact legislation at this time.
2. It is further our position that Bill 61-14 detracts from the County's Local and Small
Business Reserve Program (LSBRP) by creating additional workload for the Office
of Procurement. Increased workload would take the fonn of local business
certification and tracking. Additionally, time and attention to the LSBRP would
lessen as a result.
ou for giving the Task Force an opportunity to express our views.
RECE 1VE
2t
n •••
ennan Taylor
'chair, Minority
Owned
and
Local
Small Business Task Force
Cc:
Councilmember Nancy Navarro, Chair, Government Operations and Fiscal Policy Committee
tOO MARYLAND AVENUE • ROCKVIL.LE, MARYLAND 20850
240/777-7900
• TTY 240/777-7914 •
FAX
240/777-7989
STELLA B. WERNER COUNCIL OFFICE BUILDING •
WWW.MONTGOMERYCOUNTYMD.GOV
C
PRINTED ON REeYe!..ED PAPER
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FY14 contracts over $10 million
Current Local
pa rtici pation
MD prime,'
17% local sub
Estimated
Amount
37,790,000.00
22,989,000.00
18,932,000.00
13,052,000.00
Lo'cal'
,'I,'
,
Su bcor)tracti rig, . . .
,
CONTRACT
#
1027827
1038489
------­
CONTRACT DE$C
Montgomery County Public Schools (MCPS)
Food Distribution Relocation
Dennis Avenue Health Center
North Potomac Community Recreation Center
Public Safety (PSTA)
&
Multi Agency Service
Park - Site Development
Health Care Services for Low Income,
Uninsured Adults (Montgomery Cares)
Prescription Plan
..._-----_...
Point-of-Service Plans, Retiree Indemnity Plan
Fully-Insured Staff Model Health Maintenance
Organization Medical Plan
~~---
VENDOR
Costello Construction Of
Maryland, Inc.
Walsh Construction
Company II, LLC
Dustin Construction, Inc.
Pleasants Construction,
Inc.
Primary Care Coalition of
Montgomery County
Maryland, Inc.
CaremarkPCS Health,
L. L.c.
Group Hospitalization and
Medical Services, Inc,
Kaiser Foundation Health
Plan of the Mid-Atlantic
States, Inc.
United HealthCare
Services, Inc.
United Concordia
Companies, Inc. d/b/a
United Concordia Dental
Motorola Solutions, Inc.
Washington Gas Energy
Services, Inc.
Integrys Tra nsportation
Fuels, d/b/a Trillium CNG
The Wilson T Ballard
Company
------­
construction ­
>lOo/rd 17 %)L
'.
:7
PA prime,
25% local sub
MD prime,
12% local sub
County prime.
18% local sub
No local
participation
. No local
participation
No local
participation
No local
participation
No local
participation
No local
participation
No local
participation
No local
partici.eation
No local
participation
MD prime, no
local sub
co nstruCtton
>10% (25%)
construction ­
>10% (12%)
construction ­
>10% (18%)
exempt: non­
profit
no opportunity:
health plan
no opportunity:
health plan
no opportunity:
health plan
no opportunity:
health plan
no opportunity:
health plan
rio opportunity:
Motorola
no opportunity:
utility
no opportunity:
fuel
the Bill applies,
has opportunity
1039448
1027826
1029292
1030764
.._------_.
1030769
22,819,812.48
123,000,000.00
81,000,000.00
!-.....
!---_...
FY14
1030766
1030767
-----------­
61,200,000.00
22,211,000.00
Self-Insured Extended Provider Option
Medical Plan
Self Insured PPO Type Dental Benefits and
Related Administrative Services
Computer Aided Dispatch (CAD)
Modernization
Firm Natural Gas Supply
Design, Build, Operate and Maintain two CNG
facilities at the County EMOC
Engineering Services for Transportation
Design
&
Planning
1035901
1040850
1033169
1033010
..
12,000,000.00
28,925,629.00
15,000,000.00
10,500,000.00
,10,000,000.00
~
1011775
@'Y15
contracts over $
million
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CONTRACT
#
CONTRACT DESC
Maintenance
&
Repair of Underground
Storm Water Management Facilities
VENDOR
STORM WATER
MANAGEMENT
Current Local
participation
County prime.
No local sub
Contract has
expired
Value
$17,160,DDD
Local subcontracting
--------­
98D3000105AA
1006859
ADA alteration for Various Montgomery
County Facility Projects
Turner Construction
Company
.,
10D6857
5346000009AA
ADA alteration for Vadous Montgomery
County Facility Projects
CABLE TV PROGRAMMING, MANAGEMENT
AND PRODUCTION SERVICES
Health Care Se,rvices for Low Income,
Uninsured
Adults(l\IIont~omery
Cares)
Public Entity Contract with Housing
Opportunities Commission to create and
develop affordable housing for low to
moderate individuals in the County ..
Standard Heavy Duty Single-Rear-Axle Dump
Trucks
w/18,OOO
Ib Frontand 23,000 lb.
Rear Capacity
800 MHZ Trunked Radio System, including
equipment, services and maintenance
National Capital Region NCR LlnX System
Kellogg Brown
&
Root
Services, Inc.
MONTGOMERY
COMMUNITY TV
Primary Care Coalition
of Montgomery County
Maryland, Inc.
VA Prime.
No local sub
No local
pa rticipation
No local
participation
rebid this year. Will
reserve under LSBRP.
I.ll
Task order based.
,
Estimated too high. Will'!:
$25,000,000 -
rebidtfiis year.
wiW----­
,",>
$25,000,000
.~:
construction
<
1D%,
(0%) has opportunity, '",
" i"
Task order based.
Estimateq too high. ill
i:C'"i~m
"
reserve under LSBRP
$19,117,000
exempt: non-profit
$10,897,055
exempt: non-profit
,
1029292
FY15
0649003006AA
HOUSING
OPPORTUNITIES COM
Potomac Mack Sales
&
Service, Inc.
Motorola Inc
Northrop Grumman
Systems Corporation
No local
pa rticipation
$16,901,110
exempt: public entity
1015061
7344000063AA
7474000122AA
MD prime, no
local subs
No local
participation
No local
pa rticipation
VA Prime.
No local sub
MD prime,
no local sub
VA Prime.
currently 5%
non-Idcal sub
$10,800,000
no opportunity: Dump
Truck
no opportunity:
Motorola
no opportunity:
pr0E>rieta
ry
Will rebid this year. will
reserve one zone under
LSBRP
Will rebid this year. will
reserve one zone under
LSBRP
Workers comp services
Has opportunity
$57,029,406
$14,000,000
$13,910,050
6506030178AB
Custodial Services - Zone I
LT Services, Inc.
CERTIFIED BUILDING
SERVICES
Managed Care
Innovations, LLC
;
j ';
$16,656,239
6506030178BB
Custodial Services Zone II
,
$35,697,455
---------------­
1049987
Self Insured Claims Administration Services
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FY14 and FY15 contracts with Local Subcontracting Opportunities
From the above 2 charts,
• Total 26 contracts over $10m.
o
4 construction contracts with>10% local participation (estimated by the PMs). Projects are on-going. The
#
may increase or decrease.
• 15 contracts don't present local participation opportunities (exempted, health insurance related, proprietary products/systems, etc.)
• 7 contracts have local participation opportunities, see the chart below:
-
. CONTRACT DESC
Maintenance
&
Repair of
Underground Storm Water
Management Facilities
ADA alteration for Various
Montgomery County
Facility Projects
ADA alteration for Various
Montgomery County
Facility Projects
Custodial Services - Zone I
VENDOR
STORM WATER
MANAGEMENT
Turner
Construction
Company
Kellogg Brown
& '
Root Services,
Inc.
LT Services, Inc.
CERTIFIED
BUILDING
SERVICES
Managed Care
Innovations, LLC
The Wilson T
Ballard Company
Current Local
participation
County prime.
No local sub
Contract has
expired
VA Prime.
No local sub
VA Prime.
No local sub
MDprime,
no local sub
VA Prime.
currently 5%
non-local sub
County prime,
no local sub
Value
Expiration
date
Local subcontracting opportunity?
Currently no subcontracting. Will re-bid this year.
Is
eligible for 61-14 with opportunity
Estimated value should be under $10m. Will rebid
this year. Will reserve under LSBRP .
Estimated value should be under $10m. Will rebid
this year. Will reserve under LSBRP
Will rebid this year. Will make 4 zones (unbundle)
and will reserve one zone under LSBRP, other 3
zones open to non-LSBRP. Will have opportunity
Will rebid this year. Will make 4 zones (unbundle)
and will reserve one zone under LSBRP, other 3 '
zones open to non-LSBRP. Will have opportunity
Currently 5% non-local sub. Workers comp services.
Has opportunity.
$17,160,000
6/24/2016
$25,000,000
6/13/2016
$25,000,000
$13,910,050
5/13/2016
Custodial Services Zone II
$16,656,239
5/13/2016
i
Self-Insured Claims
Administration Services
Engineering Services for
Transportation Design
&
Planning
$35,697,455
6/30/2017
(ext. 2022)
$10,000,000
3/28/2019
eligible for 61-14 with opportunity
-_
........
­
®
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OFFICE OF PROCUREMENT
Isiah
Leggett
County Executive
MEMORANDUM
April
20, 2016
Chern
Branson
Director
To:
Hon. Nancy Navarro, Chair, Government Operations and Fiscal Policy Committee
Hon. Hans Reimer, Member, Government Operations and Fiscal Policy Committee
Hon. Sidney Katz, Member, Government Operations and Fiscal Policy Committee
From: Cherri Branson,
~~
Director, Office of Procurement
Re:
Office of Procurement - Added responsibilities and resources
I appreciate the support expressed for Bill
61-14,
Contracts and Procurement - Local Business Subcontracting
Program at the Committee work session on April 4,
2016.
This memorandum responds to questions raised at the work session regarding the fiscal and organizational
. impact of Bill 61-14 and certain other bills passed overthe last two years on the Office of Procurement.
As
you may recall, Page 5 of the staff packet on Bill 61-14 included a chart delineating the estimated FTE impact
and related expense for 7 bills enacted in 2014 and
2015
along with the currently pending Bill 61·14. At
first
glance, the chart appears to indicate the need for 7 FTEs. During the last two years,
t~e
fiscal impact of each bill
was evaluated separately, independent of other bills, and external to a
con~ideration
offunctions currently
performed by county employees.
To accurately assess the overall impact of the bills, including Bill
61-14,
the County Executive asked the Office
Of
Procurement to review current staffing resources and evaluate the overall cumulative need for additional
resources. The Office reviewed the added responsibilities of the bills within its current administrative framework.
Viewing the added responsibilities in this manner allowed the Office to determine whether connections exist
between anticipated job functions and current job functions, as well as whether the alignment of functions may
create synergies. By viewing these added responsibilities in this task-specific manner, we believe that current
staff will be able to undertake the responsibilities aSSOciated with the lion's share of the anticipated work.
Attached you will find a chart that places the added responsibilities for the bills within our current administrative
, framework and delineates the type of tasks that we believe will be necessary for implementation.
Office of Procurement
25SRockvillePike,
Suite
180 • Rock:viIle,Maryland20850. 240-777-9900. 240-777-9956TIY. 240-777-9952 FAX
www.montgomerycQun1;yrnd.gov
montgomeryc:ountymd.govl311
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At this time, the Office believes it will be able to implement the seven bills on the chart staff packet chart (along
with 4 others that have not yet passed or have no impact on staffing needs) with current staff supplemented by
the new Administrative Specialist position included in the FY17 proposed Operating Budget and possibly one
other FTE, described below.
The need for a second FTE to implement Bill 43-15 (WRL protection for contractors covered by a collective
bargaining agreement) and Bill 5-15 (new health insurance preference), may exist but remains unclear for two
reasons. First, our existing private contractor who assists with WRL enforcement may be able to undertake some
of the work. While we can anticipate additional cost associated with the expansion of the contract
responsibilities, we have not yet obtained a cost estimate. Second, implementation of Bill 5-15 is a shared
responsibility with the Department of Health and Human Services (HHS). The Office of Procurement may be able
to use a technological solution for its responsibilities under the bill (calculating preferences).
As the Office undertakes implementation, the evaluation of the need for this FTE will continue. The Office of
Procurement will keep the GO Committee apprised.
I hope the above text and the attached chart address the questions you have raised. Please let me know
if
you
have any additional concerns.
Attachment
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~~~~---~~~
Bill
Bill Name
Added responsibilities
PBRC: auditing, Health Insurance knowledge, analyzing
bperations: added analysis, applications, reviews
lFull FIS:
11I1n;l()~:lY,m!lnlllllmernOllll!l'm!!'llllvlCOUN~IUR§lltllU!llFil.s/bIIll~!lI~IPatkelsa!!I~04H 7~.l!dr
PBRC: financing and auditing, data mining, investigating
Operations: added analysis, applications, reviews
lFull FIS:
1!I!1l;ll~.mllnltml!!ll!l'Cl!llIlll:!!!d Illlvg,;OU~CllJR~il1I!!l:esflIileSibilla!U:lleIl£tmi!l201
50414
7l!.l!df
iDBRC: validate certifications, apply and calculate preferences
!operations: added input and tracking processes
lFull FIS:
hl!Il;lIw\\lY,mOlll~!Y£!lI!lllxmd.gQ\'/\:QUNClldEn!lIlrceslFil~llLl!ilI120ISIPackel~!!l~!!m ~A
11l1(
PBRC: review
400+
quarterly reports, added CBA contractors
Operations: added processes, response to MPIA requests
lFull FIS:
1!l!1l;{{mm
Dl!!OIC!lOl~£Y~!lllu!nnd ~lCQlltltlIlR§lUr(:H.'flles!biIIQOISIPacGl~OI2!!Zl!2
6AIldr
~-
Postponed-­
OMB
approved FIS
0.5 +0.5
Revisited
proposal
Staff: Program Manager - gfade 25, managing both Living and Prevailing Wage
WRL • Employee
14-14
Health Care
WRL - Gender and
29·14
Race Reporting
WRL-Health
5·15
Insurance Preference
WRL enforcement
43·15
enhancement
PWL Apprenticeship
40-14
Training
Local Preference
- tie breaker
Reciprocal Local
Preference
Local Business
Subcontracting
LSBRP amendments
MFD sunset extension
MFD evaluation points IDBRC: review MFD plans. assign points, log and track
MFD sunset extension
Program
M~ager
- grade 23, managing outreach for
~rocurement
funded
0.5 + 0.5
0.5 + 0.5
funded
unfunded
0.5 + 0.5
I
i
unfunded
1+ 1
0.5+0.5
Current staff
will
absorb
the othel'
unfunded
Contractor cost
duties
Staff: Procurement Specialist - grade
23;
managing LSBRP
0
13~14
----------­
49-14
61-14
23"15
42-14
48-14
48 15
H
PBRC: keep records of all other jurisdictions' local preference
lFun FIS:
httl!'"":»3I,m!!g!&Qlll'[l$ilUII!j'md.20vICOUN~lURcs!lurceslFi!eslbillJ2014IPa~sa!.!W!4H
1E.ll!!r
PBRC: separate certification, Local subcontractor plan, track and
imonitor padicipation
ioperations: added analysis, applications, reviews
!FIS:
b!!Il:lI\\'ww.II!!l.III~IlDl~ImlIlIlI)'mllllllya;;OUNCILi&ml!t~il'~I~nd!!l,m/2016l1fi!!"!WlJll~Q3.!Idf
1
unfunded
0.5 + 0.5
submitted
0
~~~
Can be
absorbed by
the funded
1
Administrative
Specialist
Staff: Program Specialist grade 21, managing MFD
0
0
0
Absorbed
Staff:
and
com~liance
.Qrograms
,.