Agenda Item 4B
October 14, 2014
Action
MEMORANDUM
October 10,2014
TO:
FROM:
County Council
Robert
H.
Drummer, Senior Legislative
AtkJme~
Owned
SUBJECT:
Action:
Expedited Bill 42-14, Contracts and Procurement - Minority-
Businesses - Sunset Date - Amendments
Government Operations and Fiscal Policy Committee recommendation:
(3-0) enact
Bill with amendments.
Expedited Bi1142-14, Contracts and Procurement - Minority-Owned Businesses - Sunset
Date - Amendments, sponsored by the Council President at the request of the County Executive,
was introduced on September 16,2014. A Government Operations and Fiscal Policy Committee
worksession was held on September 29 ap.d a public hearing was held on October 7.
Bill 42-14 would establish the deadline for submission to the Council by the Executive of
a report that evaluates the minority owned business purchasing program. The Bill would also
extend the sunset date for the program until December 31, 2019.
Background
The Supreme Court in
City ofRichmond v.
J.
A. Croson Company,
488 U.S. 469 (1989),
established a framework for a local government to implement a program
that
provides a
preference for minority owned businesses. The Court held that there must be substantial
evidence of past or ongoing discrimination in order to show a compelling government interest to
justify the program. The Program must be narrowly tailored to remedy the past or ongoing
discrimination. For this reason, local governments that have this type of program must evaluate
the continuing need for
it
every few years. The County Executive submitted a Disparity Study to
the Council on July 1,2014 prepared by Griffin and Strong that supports the continuation of the
program.
2014 Disparity Study
In
May 2013, the County retained Griffin
&
Strong, P.C. (GSPC) to conduct a
comprehensive disparity study. GSPC examined and analyzed the procurement policies and
practices of the County and its prime contractors regarding the use of Minority, Female, and
Disabled owned businesses (MFD) on County contracts for goods and services. The goal was to
determine if there was a statistically significant disparity between the number of MFD firms in
the relevant market and the dollars awarded to MFD
firms
through County contracts. GSPC
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divided County contracts into 4 categories - Construction, Professional Services, Services, and
Goods.
GSPC conducted a quantitative analysis of the County's contracting history between July
1,2007 and June 30,2012. This analysis started with a detennination of the relevant geographic
market area for each of the 4 categories of procurement contracts. GSPC concluded that the
relevant market was the geographic area where 75-85% of the firms contracting with the County
are located. Within each relevant market, GSPC compared the percentage of firms in each race,
ethnicity, gender, and disability group that are qualified, willing and able to perform services
used by the County with the percentage of dollars spent by the County on firms in each MFD
group. GSPC used this analysis to determine if each MFD group was underutilized or
overutilized in each relevant market. GSPC looked at both prime contractor utilization and
subcontractor utilization.
GSPC further analyzed the results to determine if the underutilization observed was
statistically significant and if the imderutilization could be attributed to the MFD status of the
firms through both a regression analysis that controlled for other possible explanations, such as
business size or experience, and anecdotal evidence. A summary of the statistically significant
underutilization found by GSPC is at ©9-10. The complete report can be found at:
http://www.montgomerycountymd. govIcat/services/disparitystudy.html.
GO Committee Worksession
The Committee discussed Expedited Bill 42-14 at a September 29 worksession.
Council member Navarro suggested that the Council create 2 task forces, by resolution, to study
the procurement system and the MFD/Local Small Business Reserve Program and make
recommendations for improvements. Councilmember Navarro also moved to amend the Bill to
reduce the extension of the MFD Program from 5 years to 1 year in order to permit the Council
to consider possible amendments to the MFD and Procurement laws based upon the Task Force
recommendations. See Councilmember Navarro's memorandum at ©11-12.
The Committee (3-0) approved the Navarro amendment to reduce the extension to 1 year
along with 2 technical amendments subject to the upcoming public hearing.
Public
Hearing
DGS Director David Dise, testifying on behalf of the Executive at the October 7 public
hearing, supported the Bill. ©13. Herman Taylor, representing the Minority Business Economic
Council, Linda Moore (© 14-16), Julian Haffner (© 17-20), Leon Hollins, and Javel Wilson (©21 )
each testified in support of the BilL
2
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Issues
1.
How does the MFD program work?
Section 11 B-60 provides:
(a)
By September 30 of each year, the Chief Administrative Officer must set for the
following calendar year percentage goals of the dollar value of purchases subject
to this Article for each socially or economically disadvantaged group. The goals
must correspond to the availability of that group by source selection method and
purchasing category in the relevant geographic market area as determined by the
most recent report that the County Executive must submit to the County Council
under Section 11B-61(b) to perform work under County contracts. The Chief
Administrative Officer must set separate goals for each socially or economically
disadvantaged group in the County's purchases of goods, construction,
professional services, and other services. The Chief Administrative Officer must
not set goals for a socially or economically disadvantaged group unless the Chief
Administrative Officer determines that the value of purchases made during the
previous fiscal year from that group in each category of purchases under a
particular source selection method, compared with the availability of that group to
perform work in that category, shows a significant under-utilization of the group.
A prime contractor awarded a contract subject to the MFD program must subcontract a
defined percentage of the work to an MFD firm. The prime contractor must use one or more
MFD firms belonging to an MFD group for which the CAO has established a percentage goal for
that year. For example, if the CAO determines that Hispanic-American firms were not
underutilized in the past year, the CAO will not set a goal for Hispanic-American firms and a
prime contractor will not get credit for using a Hispanic-American firm toward the MFD goal for
that contract. The DGS Director may waive all or part of the MFD goals for a contract upon a
finding that the prime contractor was unable to find sufficient MFD firms after making a good
faith effort to do so.
2.
Does the Disparity Study support the extension of the law?
GSPC found a statistically significant underutilization of some MFD groups in each
procurement category that can be attributed to discrimination
in
the marketplace. Although
GSPC did not fmd a statistically significant underutilization for all MFD groups in each
category, they did fmd that African American owned firms were underutilized in each
procurement category each year of the study. GSPC concluded that the "evidence suggests that
absent affirmative measures the County would
be
a passive participant in a pattern of exclusion
ofMFD firms." See Study, page 235.
The Disparity Study supports the extension of the MFD program because GSPC found a
statistically significant underutilization due to the MFD status of the owner for some MFD
groups in each procurement category. The MFD program requires the CAO to compare the prior
year utilization for each MFD group in each procurement category each year with the availability
found in the Study before setting a goal for an MFD group. Committee recommendation (3-0):
approve the extension of the program, but amend the Bill to reduce the extension of the MFD
3
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Program from 5 years to 1 year in order to permit the Council to consider possible amendments
to the MFD and Procurement laws based upon the Task Force recommendations.
3. Technical amendments.
(a)
Relevant Geographic Market.
The definition of
relevant geographic market area
in the law refers to the 2005 Disparity
Study. The definition should refer to the most recent Disparity Study, which is now the 2014
Disparity Study described above. Committee recommendation
(3-0):
amend the definition of
relevant geographic market as follows:
lIB-58. Definitions.
*
(b)
*
*
Relevant geographic market area
means the geographic market area identified by
the County Executive in [[a]] the most recent report [[dated July 1, 2005]] that
evaluates the need to continue the program and is issued in accordance with
Section 11 B-61
(b).
(b)
Time Period Between Evaluations.
Section IIB-57(e) states that a 4-year period is reasonable to continue the Program
before evaluating it. This is inconsistent with the provision in the Bill that would require the
next Disparity Study to be completed in 5 years. To be consistent, §l1B-57(e) should be
amended to require a 5-year period. Committee recommendation
(3-0):
approve the change in
§ IIB-57(e) to a 5-year period. See line 5 at ©2.
This packet contains:
Expedited Bill 42-14
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
GSPC Summary of Findings
Councilmember Navarro Memorandum
Public Hearing Testimony
David Dise
Linda Moore
Julian Haffner
Javel Wilson
F:\LAW\BILLS\1442 Minority Owned Businesses - Amendments\Action Memo.Doc
Circle
#
1
3
4
5
9
11
13
14
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Expedited Bill No.
42-14
Conceming: Contracts and Procurement
- Minority-Owned Businesses ­
Sunset Date - Amendments
Revised: October 1, 2014 Draft No.
~
Introduced:
September 16, 2014
Expires:
March 16, 2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
_=--_ _
-:-:-~-:-:-:=::_:_::_
Sunset Date: December 31, [£2019112015
Ch. _ _, Laws of Mont Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
I) establish the deadline for submission to the Council by the Executive of a report that
evaluates the minority owned business purchasing program;
2) extend the sunset date for the County's minority owned business purchasing program;
and
3) generally amend the County's minority owned business purchasing program.
By amending
Montgomery County Code
Chapter 11 B, Contracts and Procurement
Sections lIB-57, IIB-58,IIB-61 and I1B-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 unqtJected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No.
42-14
1
2
3
See.
1.
Sections
llB-57, llB-58, llB-6l
and
llB-64
are amended as
follows:
llB-57.
Legislative findings and policy.
4
5
*
(e)
*
*
A [[four-year]] five-year period is a reasonable time to continue the
minority owned business purchasing program before evaluating it.
6
7
*
llB-58.
Definitions.
*
*
*
*
8
9
10
*
(b)
Relevant geographic market area
means the geographic market area
identified by the County Executive in [[a]] the most recent report
[[dated July 1, 2005]] that evaluates the need to continue the program
and is issued in accordance with Section IIB-61(b).
11
12
13
14
15
*
llB-61.
Reports.
*
*
*
16
17
18
*
(b)
*
By July 1, [2014] 2019, the County Executive must submit a report to
the County Council evaluating the need to extend the minority owned
business purchasing program.
19
20
21
llB-64.
Sunset date.
This Article is not effective after December 31, [2014] [[2019]] 2015.
See. 2. Expedited Effective Date.
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on January 1,2015.
22
23
24
~
~
W\BILLS\I442 Minority Owned Businesses· Amendments\BiII 2.Ooc
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LEGISLATIVE REQUEST REPORT
Expedited Bill 42-14
Contracts and Procurement Minority-Owned Businesses
-
Sunset Date
-
Amendments
DESCRIPTION:
Establishes the deadline for submission to the County Council of a
report that evaluates the. minority owned business purchasing
program and extends the sunset date for the program.
The Supreme Court in
City of Richmond
v.
J
A. Croson Company,
488 U.S. 469 (1989), established a framework for a local government
to implement a program that provides a preference for minority
owned businesses. According to the Court, there must be substantial
evidence of past or ongoing discrimination in order to justify the
program. For this reason, local governments that have this type of
program must evaluate the continuing need for it every few years.
The County Executive submitted a Disparity Study to the Council on
July 1, 2014, that supports the continuation of the program.
Fair opportunities for minority owned businesses to obtain County
contracts and business.
Office of the County Attorney, Department of General Services.
To be requested.
To be requested.
To be requested.
Not applicable.
Marc P. Hansen, County Attorney
240-777-6700
Not applicable.
PROBLEM:
GOALSAND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Not Applicable.
F:\LAw\BILLS\1442 Minority Owned Businesses· Amendments\LRR.Doc
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE. MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
August 12, 2014
TO:
Craig Rice, President
Montgomery County Council
Isiah Leggett, County Executive
Extension of Minority-Owned Business Purchasing Program
FROM:
SUBJECT:
In accordance with Section 11B-61(b) of the County Code, I transmitted to the
County Council the Montgomery County Disparity Study, which evaluated the need to extend
Montgomery County's Minority-Owned Business Purchasing Program.
The Disparity Study concluded that Montgomery County has "made great efforts
to establish a fine-tuned procurement process that is set up to provide equal access to all firms."
Nevertheless, the Disparity Study concluded that there is a "significant basis for an inference of
passive participation and discrimination andlor evidence ofpast discrimination against minority,
female, and disabled-owned businesses in Montgomery County." Therefore, work remains to be
done to eradicate the under-utilization of minority-owned businesses in Montgomery County's
procurement program.
Consequently, I am transmitting to the Counci1legisiation
to
extend the County's
Minority-Owned Business Purchasing Program.
In
addition, I have asked Executive staff to
review other recommendations made by Griffin
&
Strong, the consultants who prepared the
study to increase the effectiveness ofthe County's Minority-Owned Business Purchasing
Program.
I look forward to working with the Council to pass this important legislation
cc:
Timothy Firestine, Chief Administrative Officer
Marc Hansen, County Attorney
David Dise, Director, Department of General Services
Bonnie Kirkland, Assistant ChiefAdministrative Officer
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Fiscal Impact Statement
Bill
#-#,
Contracts and Procurement - Minority-Owned Business
~
Amendments
1. Legislative Summary
The proposed legislation establishes the deadline of July 1, 2019, for submission to the
County Council by the County Executive of a report that evaluates the
minority~wned
business purchasing program. The legislation would also extend the sunset date from
December 31,2004, to December 31,2019, for the County's
minority~wned
business
purchasing program.
2.
An
estimate of changes in County revenues and expenditures regardless of whether
the revenues or expenditures are assumed in the recommended or approved budget.
Includes source of information, assumptions, and methodologies used.
No revenues or expenditures are expected from the proposed legislation.
The Department of General Services does not
require
any additional resources to extend
this program for another
5
years. The current cost of this program to the County is
$251,883
per
year.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
See item #2.
4.
An
actuarial analysis through the entire amortization period for each biD that would
affect retiree pension or group insurance costs.
The legislation does not affect retiree pension or group insurance costs.
s.
Later actions that may affect future revenue and expenditures
if
the biD authorizes
future spending.
The legislation does not authorize future spending.
6.
An
estimate of the staff time needed to implement the bilL
Not applicable.
7. An explanation of how the addition of new staff responsibilities would affect other
duties.
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Fiscal Impact Statement: CE Bill- Local Business Subcontracting Program
Page 2 of2
Not applicable.
8. An estimate of costs when an additional appropriation is needed.
Not applicable.
9. A description of any variable that could affect revenue and cost estimates.
Not applicable.
10. Ranges of revenue or expenditures that are uncertain or difficult to project
Not applicable.
11. H
a bill is likely to have no fiscal impact, why that is the case.
The Department of General Services does not require any additional resources to extend
this program for another
5
years. The current cost of this program
to
the County
is
$
251,883 per year.
12. Other fiscal impacts or comments.
None
13. The following contributed to and concurred with this analysis:
Grace Denno. Office of Business Relations and Compliance, Department of General Services
Pam Jones, Office ofProcurement, Department of General Services
Erika Lopez-Finn, Office ofManagement and Budget
Naeem
Mia,
Office
of
Management and Budget
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I
;
Economic Impact Statement
BiD
Nt
Contraets and Proenrement -
MiIlority..()wn~
Business Amendments
M
!
Background:
This
legislation would establish the de8dline of July 1,2019, for submission
to
the
Co-pmy
Council by the County Executive ofa report
that
evaluates the minority-owned
business purchasing program. The legislation would also extend
the
sunset
date
from
December 31, 2014,
to
Deeember 31, 2019,
for
the County's minority"owned business
. purchasing
program.
1. The soorees of information, assumptions, and methodologies used.
Source ofinfonnation is the Office of Business Relations
and
Compliance,
Department of
General
Services. Infonnation
and
data
in
the preparation ofthe
economic impact
statem~nt
come from various annual reports from
the
Office of
Business Relations
and
Compliance.
2. A description of any variable that could affeet the economic impact estimates.
Th.e
variables
that
could affect
the
economic impact estimates
are
the
total
revenues/dollars subject
to
the
Minority. Female,
and
Disabled Person Owned
Business
Program.
(MFD)
and
the revenues/dollars spent to certified MFD
contractors.
Based
on
data
provided in the
MFD
annual reports from fiscal year 2011 to
fiscal
year 2013, the
average
total dollars subject to MFDrequirements was slightly above
$746.5 million and the average total dollars for MFD procurement
was
slightly above
$144.7
million or
19.4
percent.
3. The
Bm'.
positive or negative effect,
if
any on employment, spending, saving,
investment, incomes, and property values in the County.
The
extension of
the
minority--owned business purchasing program
(MFD)
would
have a positive economic effect ofbusiness income
to
m4tority~Wned
businesses.
Based on
data for
the
past three
fiscal
years through
FY2013,
the average number of
contractors
was
nearly
1,900
(including both prime and sub-contractors)
with
an
average contract award over
$77,000
per contractor.
The
bill could
also
have an
effect on employment by minority-owned contractors.
4.
If
a
Bm
is likely
to
have no economic impact, why
is
that the case?
The
bill
would
have
a positive economic impact on
minority~wned
businesses - see
paragraph
#3.
Page 1
of2 .
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Economic
Impad
Statement
Bill
#-#,
Contracts and Procurement - Minority-Owned. BusiDess - AmeDdments
5. The followiog contributed to or concurred
with
this
analysis:
David
Platt and Rob
Hagedoom, Finance;
Grace
Denno and
Alvin Boss,
Office
ofBusiness Relations
and
Compliance, DGS; Naeem
Mia,
Office of Management
and
Budget
e
o
h .
Beach.
Director
epartment ofFinance
1
1k::=:
.
Page 2
of2
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r'C
GRIFFIN&
\.J)
STRONG
I'C
n.
SUMMARY OF FINDINGS
The Study found a statistically significant
disparity
between
the number of available
MFDs
in the
relevant markets in each work category throughout the
tenn
and the utilization, measured by
dollars awarded by the County, of those same MFD groups. GSPC
also
determined that when the
disparity
was
broken down by each race/gender/ethnicity group, on average, over the entire
Study, the following significant underutilizations
were
found
Table
1:
Summary
of Statistically Significant l}nderutilization
in Pl'imc C'.ontrac.ting
Montgomery County, Maryland
Disparity Study
(Over
Entire
Study Period - July
1, 2007
through
June
30, 2012)
From P.O., DPO, and P-Card Purchases
Griffin
&Strong,
P.c. 2014
Construction
African American
Asian American
Professional
Services
Services
Goods
African American
AsianAmerican (DPO
and P-card purchases
only}
Hispanic American (DPO Hispanic American
Hispanic American
(DPO and P-card
(DPO
and
P-card
and P-card purchases
purchases only)
only)
purchases only)
Native American
Native American
Native American
(DPO
and
P-card
purchases only)
Female (pO and P-Card Female
Female
'DUl"'Chases
onlv)
Disabled (PO and P-
Disabled
Disabled
card only)
African American
Asian
American
African American
Asian American
Hispanic American
Native American
Female·
Disabled
With
regard
to subcontractors, GSPC found.that the following MFD groups in the following
business categories showed significant underutilization:
141 Page
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rc
Montgomery County, Maryland
Disparity Study
(Over Entire
Study
Period - July
1, 2007
through June
30, 2012)
From Prime Vendor Questionnaire
Construction
.African American
Asian American
Hispanic.American
Native.American
Female
Disabled
Gnffin
&
Strong,
P,C.
2014
\.JJ
GRIFflN&
STRONG
!'e
Table
2.:
Summary of Statistically Significant Undcrutilization in
SUb(:olltracting
Professional.
Services
African American
Hispanic American
Native American
Disabled
Services
.African.American
Asian American
Hispanic.American
Native.American
Disabled
.Goods
Asian .American
Hispanic American
Native American
Disabled
GSPC then tested the disparities for likely cause through a regression
analysis
and determined
that Montgomery County, Maryland may
be
an active or passive participant in past or present
discrimination in
its
vendor marketplace. Notwithstanding
this
general finding, the County
has
made some improvements in the inclusion of MFDs in
its
procurement process since the
last,
2005
Disparity Study and the enactment of the
Local
Small
Business Reserve Program in
all
areas
except Construction which decrease by a
minimal.1%.
Table 3:
Summary
ofMFD Prime Utilization Comparison Between
2001-03
and
2007-12
Montgomery County, Maryland
Disparity Study
FromP.O.s
Griffin
&
Strong, P.e.
2014
2001-200
3
2007'"'20:1.3
%
Change
%
%
26.01
8.94
31.95
7·13
- .10
+1.86
+12.34'
+·94
Construction
Professional Services
Services
Goods
26.11
7.08
19.61
6.19
Detaned findings are included in Section VIII of
this
report.
1
Substantial
increase
is
primarilydue
to
jump in Asian
American
utilization
from
.68 in
2001-3
to
1469 in
2007-2012.
.
15IPage
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
NANCY NAVARRO
COUNCILMEMBER, DISTRICT 4
CHAIR, GOVERNMENT OPERATIONS
&
FISCAL POLICY COMMITTEE
MEMORANDUM
September 26, 2014
TO:
FROM:
Councilmembers
Nancy Navarro, Chair
;Y!
/
Government Operations
8i
Fiscal Policy Committee
Procurement Process
&
Disparity Study
-/J/ltl
SUBJECT:
On Monday, the Government Operations
&
Fiscal Policy Committee will discuss three
items related to the County's procurement process. We will receive a briefing from the
Office of Legislative Oversight (OLO) regarding a survey of businesses, hear from
Griffin
&
Strong, P.C. and the County Attorney regarding the 2014 Disparity Study, and
review legislation proposed by the County Executive to extend the sunset date of the
Minority, Female, and Disabled-owned business program (MFD).
The overall theme ofthe OLO survey and Disparity Study is that the current procurement
process is not working for businesses. In general, businesses feel the procurement process
in Montgomery County is difficult to navigate, confusing, and lacks clear communication
between the County and prospective bidders. In particular, minority, female, and disabled
owned businesses are not bidding on contracts, in part, because they are not familiar with
procurement opportunities with the County.
OLO offers three recommendations based on the survey findings:
1. Ask the County Executive to strengthen and expand current outreach efforts­
particularly to Local Small Business Reserve Program (LSBRP) and MFD
businesses-to increase businesses' awareness of County contracting
opportunities.
2. Ask the County Executive to develop a consistent set of follow-up procures for
all bid submissions for County contracts to inform businesses about the status of
their bid.
STELLA B. WERNER COUNCIL OmCE BmwING • ROCKVILLE, MARYLAND 20850
(240) 777·7968' TTY (240) 777·7914
COUNCILMEMBER.NAVARR()(@MONTGOMERYCOlTh.'TYMD.GOV • WWW.COUNCILMEMBERNAVARRO.COM
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3. Ask the County Executive to closely examine the promotion and administration
of the Minority, Female, and Disabled-Owned Program.
Based on the 2014 Disparity Study, the County Executive is recommending Expedited
Bill 42-14. This legislation would extend the sunset of the current MFD program until
December 31, 2019 and require the County Executive to submit a new disparity study to
the Council by July 1,2019.
While I agree that the Council should extend the current MFD program temporarily so it
does not expire at the end of the year, I strongly oppose simply maintaining the status
quo. Montgomery County has had an MFD program for more than three decades, yet the
2014 Disparity Study found "statistically significant underutilization of some MFD
groups in each procurement category that can be attributed to discrimination in the
marketplace."
I
In light of the OLO survey and 2014 Disparity Study, I propose establishing two Task
Forces by Council Resolution.
First, the Procurement Reform Task Force would be comprised of business owners,
procurement experts, and County officials. The objectives of the Task Force would be to:
• Review and evaluate current procurement practices, office structure, and funding;
offer recommendations to increase outreach, streamlining and improved
processes;
• Review national industry standards and best practices for procurement; offer
recommendations to align County practices with best practices.
Second, the MFD Program Task Force would be comprised of minority, women, and
disabled-owned business owners and County officials, such as representatives from the
Department of General Services and the Office of the County Attorney. The objective of
this Task Force would be to:
• Review and evaluate the current MFD program; offer recommendations for
improvement;
Both task forces would work in parallel tracks during a similar time period. After they
complete their work, Council Staffwill integrate the reports into a single set of
recommendations for the GO Committee to consider in a comprehensive way.
On Monday, I propose the GO Committee recommends the appointment of these task
forces to the full Council. In addition, I support approving Expedited Bill 42-14, but
amending it to sunset the MFD program after one year---()n December 31, 2015. This will
provide the task forces with a full year to offer recommendations to the Council that will
enhance the current MFD program and improve the procurement process more generally.
Ihttp:((wwvv.montgomerycountymd.gov (council(Resources (Files (agenda (cm
12014114092912014
0929 GQ3.pdf
STELLA
B.
WERNER COUNCIL OFFICE BUILDING • ROCKVILLE, MARYLAND 20850
(240) 777-7968 •
TTY
(240) 777-7914
COUNCILMEMBER.NAVARRO@MONTGOMERYCOUNTYMD.GOV • WWW.COUNCILMEMBERNAVARRO.COM
@
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Testimony on behalf of County Executive Isiah Leggett
Bill 42-14,
Contracts and Procurement - Minority-Owned Businesses - Sunset
Da te - Amendments
October 7, 2014
I am David Dise, Director of Montgomery County's Department of General Services, and I am
here to testify on behalf of County Executive Isiah Leggett in support of Expedited Bill 42-14,
Contracts and Procurement Minority-Owned Businesses-Sunset Date, which extends the sunset
provision of the County's minority owned business purchasing program.
County Executive Leggett recently transmitted to the Council the 2014 Disparity Study prepared
by the
finn
of Griffin
&
Strong, PC. That report states that, "Montgomery County has made
great efforts to establish a fine-tuned procurement process that is set up to provide equal access
to all fIrms," adding that "the Local Small Business Reserve Program was a signifIcant attempt
to benefIt MFDs and all small business owners in obtaining contracts with the County."
However, the consultant's analysis indicates that with the exception of Hispanic American
owned businesses, what it terms "statistically signifIcant" underutilization of MFD businesses
still exists. The report acknowledges there may be a "disconnect" between the County's true
efforts and the perception of the business community and recommends several measures that
may serve to "bridge the gap between MFD availability and utilization in future years."
County Executive Leggett has made clear his commitment to expanding County 90ntracting
opportunities to small, local and minority businesses. Far from a "status quo" approach, he lead
efforts resulting in the creation of the Local Small Business Reserve, a program that ensures 20
percent of eligible County purchases of goods, services, and construction go to local small
businesses. He also has directed the unbundling of large contracts and required all County
departments to increase contracting opportunities to minority and local businesses and promote
business development so that minority sub-contractors may become prime contractors on County
contracts. Further, directors of county departments must report to the Executive annually on the
level of MFD and LSBRP contracting awarded by their department. The County Executive also
introduced legislation enacted in 2012 that created the Emerging Investment Managers Program
to provide equal opportunity for emerging investment managers to provide services to the Board
of Investment Trustees and the Consolidate Retirees Health Benefit Fund.
Nevertheless, it is clear that more work is required; particularly in making sure minority
businesses are more aware of contracting opportunities, are better prepared to submit successful
bids and proposals, and can do so in a procurement process that is not overly complex.
Overcoming the disparity evidenced through the recent study warrants an extension of the sunset
provision of the County Code. The Executive also supports Ms. Navarro's recommendation to
limit this extension to one year in order that a task force may be formed to review and evaluate
the MFD program.
Mr.
Leggett looks forward to the positive outcome resulting from this joint
effort among executive branch, legislative branch and private sector leaders.
Thank you for allowing me to testify today.
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Testimony for Public Hearing
Montgomery County Council
October 7,2014
Linda Moore, AAE
9632 Duffer way
Montgomery Village, MD 20886
Good afternoon Members of the Montgomery County Council. My name is
Linda Moore and I am President of Animer Consulting, LLC (Animer) a
management consulting firm located in Montgomery County, Maryland.
Animer is certified as a minority business (MBE) and an airport concession
disadvantaged business enterprise (ACDBE) by the Maryland Department
of Transportation (DOT). The firm is also registered with the Montgomery
County Local Small Business Reserve Program (LSBRP). Animer
specializes in people, program and business development.
I appreciate the opportunity to offer testimony in support of Expedited Bill
42-14, Contracts and Procurement - Minority Owned Businesses - Sunset
Date - Amendments. I am in favor of an extensive evaluation of the MFD
program with a focus on the procurement process and extending the
sunset date of the program until December 31, 2019. I would like to
suggest that the accomplishments and an updated plan for continuing to
improve the program be presented the Council annually.
I was delighted to learn that the Disparity Study prepared by Griffin &
Strong, P.C. and submitted by the County Executive to the County Council
on July 1,2014 supports the continuation of the program.
Having first hand experience in developing and administering small
business programs and first hand experience with the Montgomery County
procurement process, my comments will primarily focus on my firm's
experiences along with some suggestions for achieving better participation
by minority, female, and disabled business owners.
I have submitted proposals for three contracts with different departments in
Montgomery County.
The 'first time my firm was short-listed and
interviewed and not selected. A post award interview was requested and
was provided after many calls and months of waiting. There did not seem
to be an established procedure for these interviews and I did not find the
process very useful.
1
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The second proposal I submitted also resulted in being short-listed and
interviewed but not selected. It took numerous calls to determine that our
'firm was not selected. An interview was not requested.
The third proposal submitted by my firm resulted in a contract but no work.
What I want to highlight about this experience is that the insurance
requirement was beyond what my firm normally carried and due to the
nearly six months it took to get a signed contract, the policy had only six
months remaining when the opportunity for work was presented. The
decision to renew the coverage to be eligible for opportunities that had not
occurred in the first six months was not attractive option.
These three examples highlight some of policies, procedures and practices
that can be addressed in building a program of the caliber one would
expect from Montgomery County.
As a subject matter expert with first hand experience in developing,
administering and both local and federally funded projects, the success of
the program may benefit from review and consideration of the following:
Training for all stakeholders that touch the procurement process to ensure
that the goals of the program are communicated;
Review the procurement process and identify opportunities to make
contracting opportunities more accessible while meeting the necessary
requirements;
Standardize the process for post selection/award interviews with bidders/
proposers not selected/awarded a contract and monitor compliance;
Ensure that there is standardization and more depth to the policies and
procedures that impact businesses in the MFD program;
Conduct audit of standard procedures for soliCitations, notifications, post
award interview opportunities;
Increase the number of businesses eligible to partiCipate in the program;
Establish standardized compliance monitoring with monthly reporting by
contractors, suppliers and service providers; and
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Require more than pro forma documentation and acceptance of Good Faith
Efforts (GFE) when participation in contract opportunities by
MFD
businesses is not achieved .
. I commend the County Executive and County Council for retaining Griffin
&
Strong to conduct a comprehensive disparity study and for proposing
measures that will increase access to procurement opportunities in
Montgomery County government by businesses owned by minorities,
women and disabled individuals. These and other initiatives are necessary
to ensure that there
is
competition in public procurement.
Thank you for your valuable time and consideration.
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HAFFNER LAW
GROUP LLC
Creative Counsel for Creative Minds
4800 HAMPDEN LANE, SUITE 200
BETHESDA, MARYLAND 20814
HLG
(T) 202-27637621 (F) 301-576-8600 1 (E) .JULIANC!!HAFFNERLAWGROUP.CO
Julian Haffner Testimony
in
Support of Montgomery County Council Expedited
Bill 42-14
TO: Montgomery County Council
FROM: Julian
A.
Haffner, Esquire, Haffner Law Group LLC
DATE: October 7,2014
Good afternoon Mr. President and Council members, and thank
you for allowing me to share some thoughts on bill 42-14.
It is well known that small businesses are leaders in innovation and
drivers of the economy. Indeed small businesses create two thirds
of all net new private sector jobs, employing half of all working
Americans. According to the most recent data published by the
U.S. Census Bureau, minority-owned businesses now comprise
approximately 21 % of the 27 million U.S. businesses and that
number grows everyday. Consider, between 2002 and 2007, the
number of black-owned fIrms grew at
over/our times
the rate as
that of whites. Without question, this rapidly changing business
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Haffner Testimony
October 7, 2014
Page 2 of4
demographic profile mirrors our County's own changing
demographics. Simply stated, minority and women-owned
businesses playa pivotal role in supporting oUr county's economy,
and are and will continue to be an essential part of growing our
County's economic base.
Yet despite this growth, minority-owned businesses are faced with .
substantial hurdles which tend to impact them far more severely
than white-owned businesses including less access to financing,
increased offshoring, outsoUrcing, and global competition.
Therefore, as an African American business attorney representing
several minority small business owners, and as one who has
consciously chosen to locate my practice and family in this
wonderfully progressive County, it is extremely disappointing to
learn that despite a growing pool of eligible minority-owned
business candidates, minority businesses are being systematically
underutilized in this County. As the now infamous Griffm
&
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Haffner Testimony
October 7, 2014
Page 3 of4
Strong study points out, African American;"owned fmus were
underutilized in every procurement category in every year the
study was conducted, and that that underutilization was
attributable to discrimination in the marketplace.
While Montgomery County has certainly made great strides in its
efforts to establish a fine-tuned procurement process, the study
makes painfully clear that discrimination against black-owned
businesses is a reality Montgomery County.
In
a jurisdiction where
three-quarters of a billion dollars is spent annually, the systematic
or unintentional exclusion of black-owner firms is shameful and
unacceptable.
Accordingly, I would urge the Council to not only extend the MFD
program as provided in 42-14, but also commit to bring the full
power of government to bear to empower our MFD businesses.
Among other improvements, I would suggest:
Hiring more staff specifically to provide overall direction
to
the MFD Program
®
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Haffner Testimony
October 7, 2014
Page 4 of4
• Requiring Prime Contractors to engage in more external outreach to MFD
businesses
• Encouraging the active engagement with minority organizations
• Providing timely and detailed information to unsuccessful MFD bidders on why
such bidders were rejected .
• Providing MFDs with information regarding the most viable Purchase and
Procurement Categories
• Unbundling contracts wherever possible and identifying and eliminating
of other market entry barriers
• Encouraging the development of diverse contractors relationships; and
• Establishing substantial and verifiable Short-Term, Mid-Term and Long-Term
Goals for the utilization of MFD-owned businesses
I thank you for your time and attention and look forward to
working with you all to ensure the viability of and success of
our County's Minority owned business
in
the future.
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I::UlI
4~-14l,;ontractS
6 ...
rocurement
- MinOrity uwnea
Public Testimony
October 7,2014
~uslnesses
CONTACT: Javel "Jay" Wilson
ilwilson82@gmail.com
Good afternoon council members. My name is Jay Wilson and I am testifying today as a concerned
community advocate. Many of the findings in the Office of legislative Affairs (OlO) report 2014-11
gravely concern me. However I am hopeful you will take the necessary steps to address the
disparities in the number of Montgomery County procurement opportunities and contracts awarded to
minority, female and disabled owned firms, also known as MFD firms.
After reading the findings and suggestions in the report, I strongly encourage the council to consider
the following recommendations to address the contracting disparities:
1. Create specific measurable goals for the MFD program - One of the items mentioned in
the OlO report was that the MFD Program did not have specific goals for the percentage of
contracts awarded to minority businesses. Prior to 2005 the county had a 20% contract
allocation goal for minority owned businesses. I strongly believe if the MFD program had
tangible allocation and contract award goals the program would be more effective in serving
MFD businesses located in Montgomery County
2. Institute a bi-annual review of MFD outreach efforts by the Office of Business Relations
and Compliance of the Department of General Services - MFD businesses who responded
to the OlO survey consistently ranked the promotion of county business opportunities among
the lowest scores.
3. Establish timely bid follow up as a component of Department of General Services
employee evaluations - Businesses rated follow ups from the county with the lowest score in
the survey provided by the Office of legislative Oversight. Change is greatly needed in this
area.
The OlO report and related Montgomery County Disparity study conducted by Griffin & Strong show
that there is significant work that needs to be done to ensure Montgomery County has a more
equitable contracting and procurement process for MFD firms. Of particular note African American
owned firms are the only group that was underutilized in every procurement category. I am optimistic
that the council will take a thorough look at the potential recommendations and enact the necessary
changes.
Thank you for taking the time to hear my testimony and have a happy Tuesday.