GO Item 3
January 24, 2018
Worksession
MEM ORAN DUM
January 22, 2018
TO:
FROM:
Government Operations and Fiscal Policy Committee
Robert
H.
Drummer, Senior Legislative Attorney
SUBJECT:
Worksession:
Bill 37-17, Local Small Business Reserve Program -Eligib ility-
Arnendrnents
Expected attendees:
Cherri Branson, Director of the Office of Procurement
Grace Denno, Office of Procurement
rn
j~J
Bill 37-17, Local Small Business Reserve Program - Eligibility - Amendments, sponsored
by Lead Sponsor Council President at the request of the County Executive, was introduced on
November 14,2017. A public hearing was held on December 5.
Bill 37-17 would increase the aggregate dollar amount of County contracts awarded to a
business before the business is no longer eligible for a procurement under the Local Small Business
Reserve Program.
Background
The Local Small Business Reserve Program (LSBRP) was established by Bill 23-04,
Contracts and Procurement - Local Small Business Reserve Program, effective January 1, 2006.
The legislative intent of the program was to enhance the competitiveness of County-based small
businesses by creating a separate defined market in which small businesses could compete against
each other, not against larger firms, for County contracts; broaden the pool oflocal small vendors
doing business with the County; and encourage the County's economic growth by enhancing the
business climate for local small businesses.
Under current law, a local small business is no longer eligible for a procurement under the
LSBRP if the business has been awarded $10 million in the aggregate in County contracts and at
least 10 separate contracts, as either a prime contractor or a subcontractor, since the Program began
on January 1, 2006. Bill 37-17 would increase the aggregate dollar amount of County contracts a
local small business can receive before "graduating" from the Program from $10 million to $25
million. The County Attorne y's Office found no legal impediments to this Bill. See ©12-13.
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Public Hearing
Both witnesses at the public hearing supported the Bill. Cherrie Branson, Director of the
Office of Procurement, testifying on behalf of the Executive, supported the Bill as a necessary
amendment to the Local Small Business Reserve Program that would help certain small businesses
who have or who are about to "graduate" from the Program. See ©9-10. Georgette "Gigi"
Godwin, representing the Montgomery County Chamber of Commerce, also supported the Bill to
help local small businesses obtain County contracts. See
©
11.
Issues
1. How many local small businesses would be directly affected by the Bill?
Since the Program began in 2006, there have been 2 companies that have "graduated." In
May 2014, Colossal Contractors had received 16 County contracts with a cumulative dollar value
of $IO.I million. In June 2017, Highway and Safety Services, Inc. had received 12 contracts with
a cumulative dollar value over $30 million. Bill 37-17 would reinstate Colossal Contractors back
into the Program. Highway and Safety Services, Inc. would remain ineligible for new contracts
awarded under the LSBRP Program. The following 6 companies are over or approaching the $10
million threshold, but have not received 10 separate contracts:
Electric Advantage, Inc. $20 million, 4 contracts
EAi Security Systems, Inc. $10 million, 3 contracts
~T Stanley and Sons, Inc. $10.4 million, 3 contracts
Earn Contractors $10 million, 5 contracts
EEPEX, Inc. $9.9 million, 6 contracts
CDCI, Inc. $8.15 million, 5 contracts
See email response from Grace Denno at ©8.
According to the LSBRP FYI 7 Annual Report (©14-27), Procurement increased the
number of certified LSBRP vendors from 504 to 619 in FYI 7. In FYI 7, the County awarded 20
LSBRP contracts valued at $100,000 or more. Except for the 2 Security Services contracts
awarded to Bradley Technologies at $12.5 million and $13.8 million, each LSBRP contract was
valued at $1.55 million or less. Although an increase in the maximum dollar amount of total
contracts established in 2006 at $10 million is reasonable due to inflation, Bill 37-17 would
increase the maximum by 250%. The size of this increase represents a significant change in the
policy rather than an updating of dollar amounts due to inflation.
2. What is the purpose of the graduation provision?
The legislative intent of the LSBRP was to enhance the competitiveness of County-based
small businesses by creating a separate defined market in which small businesses could compete
against each other, not against larger firms, for County contracts; broaden the pool of local small
vendors doing business with the County; and encourage the County's economic growth by
enhancing the business climate for local small businesses. The graduation provision was designed
to ensure that the LSBRP was a temporary boost to a small business that would help the business
2
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grow to be able to compete for contracts (both County and non-County contracts) without the
sheltered market established under the LSBRP. The Program was not intended to become a
permanent part of a company's business plan. The success of the Program is demonstrated by the
growth of certified LSBRP vendors to 619 in FYI 7. Of these 619 vendors, only 2 have reached
the graduation threshold since 2006. None of the 6 firms that are close to graduation will reach
this threshold unless they receive at least 4 more LSBRP contracts.
3. Should the threshold be increased to $25 million?
This is a simple Bill that would make a significant change in the LSBRP. The 1 firm that
would be immediately reinstated back into the Program, Colossal Contractors, has received 16
County contracts for a total value of $10.1 million. At this rate, Colossal would become eligible
to receive approximately 24 more contracts before graduating again. Procurement Director
Branson, in her testimony about Colossal, stated that "it is too early to determine whether
graduation will have an adverse economic impact on this vendor, the business' economic viability
or the employees." See
©9-10.
Five of the
6
firms approaching the threshold have also received
contracts totaling approximately $10 million or less. Therefore, raising the threshold to $25
million would likely keep almost all the 619 vendors in the Program for the foreseeable future.
While this would help those firms, it might hurt smaller firms in the Program who are going to
compete against these firms for LSBRP contracts in the future.
If the purpose of the LSBRP is to permit small firms to compete against other small firms
for certain County contracts so they can grow enough to compete in an open market, raising the
threshold by 250% may stunt the growth of smaller firms who are forced to compete against these
larger firms that have already been awarded up to $25 million in County contracts. None of the
information submitted by the Executive supports a 250% increase in this threshold. For example,
adjusting the $10 million threshold to current dollars results in an approximate threshold of $12.36
million.
1
Council staff recommendation:
amend the Bill to increase the threshold from
$10
million to between $12 million and $13 million.
This packet contains:
Bill 37-17
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
Grace Denno email response to questions
Public Hearing Testimony
Cherrie Branson
Georgette "Gigi" Godwin
County Attorney Bill Review
LSBRP FYI 7 Annual Report
F:\LAW\BILLS\1737 Local Small Business Reserve Program\GO Memo.Docx
Circle#
1
3
4
5
8
9
11
12
14
This adjustment is based on the average annual rate of inflation for all items in the Washington-Baltimore CPI-All
Urban Consumers.
1
3
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37-17
Bill No.
Business
Small
Concerning: Local
Reserve Program - Eligibility -
Amendments
Revised: November
3, 2017
Draft No.1
November
14. 2017
Introduced:
May
14. 2019
Expires:
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ----'-"No=n-=e'--- -----
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the request of the County Executive
AN ACT
to:
(1)
increase the aggregate dollar amount of County contracts awarded to a business before
the business is no longer eligible for a procurement under the Local Small Business
Reserve Program; and
generally amend the law governing the Local Small Business Reserve Program.
(2)
By amending
Montgomery County Code
Chapter 11B, Contracts and Procurement
Section 11 B-67
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 unqffected by bill
The County Council for Montgomery County, Maryland approves the following Act:
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BILL No. 37-17
1
2
Sec. 1.
Section llB-67 is amended as follows:
llB-67. Procedures
*
(
e)
3
4
*
*
A local small business is no longer eligible for a procurement under this
Article if the business has been awarded [$10 million] $25 million in the
aggregate in County contracts and at least 10 separate contracts, as either
a prime contractor or a subcontractor, beginning January 1, 2006. The
Director must provide written notice to the business when it is no longer
eligible.
5
6
7
8
9
10
Approved:
11
Hans D. Riemer, President, County Council
Date
12
Approved:
13
Isiah Leggett, County Executive
Date
14
This is a correct copy ofCouncil action.
15
Megan Davey Limarzi, Esq., Clerk of the Council
Date
f:\law\bills\ 1737 local small business reserve program\bill 1.docx
0
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LEGISLATIVE REQUEST REPORT
Bill37-17
Local Small Business Reserve Program
-
Eligibility
-
Amendments
DESCRIPTION:
The Bill would amend eligibility for the Local Small Business Reserve
Program by increasing the aggregate dollar amount of County
contracts awarded to a business before it is no longer eligible for a
procurement under the Program.
Some local small businesses have become ineligible for the Program
due to the dollar amount of County contracts awarded to them.
These amendments will increase the aggregate dollar amount of County
contract awards, so the Local Small Businesses can stay in the Program
longer.
County Executive, Procurement, Office of County Attorney
No fiscal impact
No economic impact
NIA
NIA
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITIDN
MUNICIPALITIES:
PENALTIES:
Grace Denno, PRO
Richard Melnick, OCA
NIA
Not changed. A violation of the Program may constitute a material
breach of the contract. The County may exercise any available
remedy, including termination for default.
F:\LAW\BILLS\1737 Local Small Business Reserve Program\LRR.Docx
(j)
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett ·
County Executive
MEMOR ANDUM
November 1, 2017
Roger Berliner, President, County Council
_,,,,Q
Isiah Leggett, County Executive
TO:
FROM:
SUBJECT:
_,R
~._,____
Local Small Business Reserve Program Legislation Amendments
In accordance .with Section 313 of the County Charter and Section 11 B of the
Montgomery County Code, I am forwarding the attached Local Small Business Reserve Program
Legislation amendments. The purpose of these amendments is to:
increase the dollar amount of County Contracts awarded, above which a
business is no longer eligible for a procurement under the Local Small
Business Reserve Program; and
generally amend the law regarding the Local Small Business Reserve
Program.
I recommend prompt passage of this legislation so the local businesses will
benefit from
this
amendment.
Attachments
Cc:
Bonnie Kirkland, Assistant Chief Administrative Officer
Cherri Branson, Director, Office of Procurement
Grace Denno, Office of Procurement
Michael Brown, Office of Procurement
montgomerycoun tymd.gov/311
(~31;J-·
Qil.J\ili\llM•MY
240-773-3556 TTY
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Fiscal Impact Statement
Bill XX-XX - Local Small Business Reserve Program Amendments
1. Legislative Summary
The Bill amends the Local Small Business Reserve Program to increase the dollar
amount of County contracts awarded from $10 million to $25 million; above which a
business is no longer eligible for a procurement under the 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 additional County revenues; or additional expenses, are expected to be generated or
incurred from the proposed legislative changes.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
Not applicable.
4. An actuarial analysis through the entire amortization period for each bill that would
affed retiree pension or group insurance costs.
Not applicable.
5. An estimate of expenditures related to County's information technology (IT)
systems, including Enterprise Resource Planning (ERP) systems.
No additional Information Technology related expenses are required due to the proposed
legislative changes.
·
6. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future spending.
The proposed legislation does not require or authorize additional future expenditures.
7.
An
estimate of the staff time needed to implement the bill.
No additional staff or personnel costs are needed.
8. An explanation of how the addition of new staff responsibilities would affect other
duties.
Not applicable.
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9. An estimate of costs when an additional appropriation is needed.
Not applicable.
10. A description of any variable that could affect revenue and cost estimates.
:I
i-,
Not applicable.
11. Ranges of revenue or expenditures that are uncertain or difficult to project.
Not applicable.
12.
If
a bill
is
likely to have no f1Scal impact, why that is the case.
See response #2.
13. Other fiscal impacts or comments.
This Bill is structured to help small businesses gain and retain fiscal strength for long
term success, which helps buttress County economic development.
14. The following contributed to and concurred with this analysis:
Grace Denno, Office of Procurement
Bryan Hunt, Office of Management and Budget
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Economic Impact Statement
Bill ##-17, Local Small Business Reserve Program
-
Amendments
__
Bacgi-~un~=----·-.
____ ..... _
The
Bill
.amends
the
Local
Small Business Reserve Progl'am to:
(1) · inc~e the doll~·
amount
of County Contracts awarded, above which
a
business
·-- · --is no longer eligible for a procurement under the Local Small Business
Rese1ve
Program;
(2) generally amend the
law
regarding the Local Small Business Reserve· Program..
.. I
1. The
sources
of
information, assumptions, and methodologies used.
Source of information is the Division of Business Relations and Compliance
(DBRC),
Office of Procurement.
2. A description of
any
variable that could affect the economic impact
estimates.
The only variable
that
could affect the economic impact is the number of vendors ·
who currently are at or below the
$10
million threshold under the cw·rent program·
· and may exceed the current threshold and the number of vendors who were
· eliminated by exceeding the thl'eshold and eligible
for
reinstatement. However,
data
on the nutnber are uncertain.
3.
_
The Bill's positive or negative- effect,
if
any on employment, spending,
saving,
investment, incomes, a~d property values in the County.
The Bill will enable more
Local
Small Business to
stay
in
the program
for a
longer
period of time before they graduate from the program. Therefore, the legislation
.W!>uld.
haye a
positive economic impact
by
maintaining those vendors who would
exceed by expanding their current business and exceed the current threshold of
$10
million. Secondly, the legislation would enable those vendors who
were
eliminated
from
the
program
because they exceeded that threshold to be reinstated into the -
program.
4.
If
a BiUisUkely to have no economic impact, why
is
that the case?
The positive economic impact cannot be estimated with
any
degree of specificity at
this
time.
·
5. The following contributed to or eoneurred with this analysis:
David Platt, Finance; Grace Denno, Division of Business Relations and Compliance,
Office of Procurement
~--
Al
exan
dre
.
pmosa,
Direc
tor
.
C
Department of Finance
A7ffe
'
-1/ulr,
-Date
·0f
fi
I
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Drummer, Bob
From:
Sent:
To:
Cc:
Subject:
Denno, Grace
Wednesday, November 08, 2017 4:38 PM
Drummer, Bob
Kirkland, Bonnie; Branson, Cherri
RE: Local Small Business Reserve Program Legislation Amendments
Bob,
Sorry for the delayed reply. Here is the information you requested.
We have "graduated" 2 contractors:
The first vendor (Colossal Contractors) to reach graduation was "graduated" in May 2014. Prior to graduation,
this vendor had received 16 County contracts with a cumulative dollar value of $10.1 million. Since graduation,
the vendor has submitted bids to four LSBRP solicitations and five non-LSBRP solicitations. Due to graduation,
the vendor was ineligible to bid on the LSBRP solicitations. The vendor's bids on the non-LSBRP solicitations
were not successful. Thus, the vendor did not successfully win any contracts with the County from those nine
solicitations. In 2014, at the time of graduation, the vendor had 48 employees and had an average annual
revenue of $6.3 million (2012-2014). Currently the vendor has 48 employees and average annual revenue is
$11.5 million (2014-2016). However much of the vendor's current revenue is attributable to on-going LSBRP
contracts with the county which were in effect until April 2017. After April 2017, the vendor will not receive
revenue from LSBRP contracts. It is too early to determine whether graduation has had an adverse economic
impact on this vendor. However, it is clear that the graduation has adversely affected the vendor's ability to
competitively compete for new contracts with the County. If the amendment to the LSBRP law is enacted, this
vendor can re-apply to the LSBRP. The Office of Procurement will provide the vendor information on changed
eligibility rules and the application procedure.
The second vendor (Highway and Safety Services, Inc.) graduated in June 2017. Graduation for this vendor was
triggered because the vendor received 12 contracts with a cumulative dollar value over $30 million. The vendor
will continue with the ongoing LSBRP and non-LSBRP contracts. It is too early to determine whether
"graduation" will have any negative impact on the vendor. A $25 million graduation trigger will not reinstate
this vendor's eligibility for the LSBRP program because the vendor has received County contracts cumulatively
valued at more than $25 million.
Below is a list of contractors approaching the $10 million threshold, but have not received 10 contracts.
Electric Advantage, Inc. $20 million, 4 contracts
EAi Security Systems, Inc. $10 million, 3 contracts
CT Stanley and Sons, Inc. $10.4 million, 3 contracts
Earn Contractors $10 million, 5 contracts
EEPEX, Inc. $9.9 million, 6 contracts
CDCI, Inc. $8.15 million, 5 contracts
Best Regards,
Grace Denno, CPM, MSIT
1
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TESTIMONY ON BEHALF OF COUNTY EXECUTIVE ISIAH LEGGETT ON
BILL 37-17, LOCAL SMALL BUSINESS RESERVE PROGRAM- ELIGIBILITY
AMENDMENTS
December 5, 2017
Good afternoon. I am Cherri Branson, Director of Montgomery County's Office
of Procurement and I am here on behalf of County Executive Isiah Leggett to encourage
the Council's favorable consideration of this bill to amend the graduation requirements
for the Local Small Business Reserve Program.
Montgomery County is home to a robust local small business community. Nearly
95% of county businesses are considered small businesses. Over the past 11 years, the
Local Small Business Reserve Program (LSBRP) has allowed local small businesses to
gain greater access to Montgomery County's procurement opportunities. In FYI 7, the
County spent $93.4 million with local small businesses, an amount equal to 24.88% of
eligible spending-a testament to the significant role this program plays in the local
economy.
Montgomery Count Code Sec. 11B-67(e) is the legislative basis for the graduation
requirement in the LSBRP.
It
provides that a local small business is no longer eligible
for a procurement under this Article if the business has been awarded $10 million in the
aggregate in County contracts and at least 10 separate contracts, as either a prime
contractor or a subcontractor, beginning January 1, 2006. The Director must provide
written notice to the business when it is no longer eligible.
It
should be noted that the State and neighboring counties have similar reserved
"small" or "local" business programs. However, they do not have a graduation trigger
based on dollar value of contracts awarded.
The Montgomery County LSBRP is currently in its 11th year of the operation.
Vendors are beginning
to
reach this 10/10 "graduation" point. The first vendor reached
this graduation point three years ago, in 2014. The second vendor reached graduation in
June of 2017. A review of our records indicates that more vendors may become eligible
for graduation within the next year or so.
The first vendor
to
reach graduation was "graduated" in May 2014. Prior to
graduation, this vendor had received 16 County contracts with a cumulative dollar value
of $10.1 million. Since graduation, the vendor has submitted bids on four LSBRP
solicitations and five non-LSBRP solicitations. The vendor was not successful in winning
any contracts with the County from those nine solicitations.
In
2014, at the time of
graduation, the vendor had 48 employees and had an average annual revenue of $6.3
million (2012-2014). Currently the vendor has 48 employees and average annual revenue
is $11.5 million (2014-2016); however, much of that revenue is attributable to the fact
that the vendor had on-going LSBRP contracts with the county until April 2017. After
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April 2017, the vendor will not receive any revenue from LSBRP contracts. Therefore, it
is too early to determine whether graduation will have an adverse economic impact on
this vendor, the business' economic viability or the employees. We do know that
graduation has adversely affected the vendor's ability to be awarded new contracts with
the County.
The second vendor graduated in 2017. Graduation for this vendor was triggered
because the vendor has received 12 contracts with a cumulative dollar value of over $25
million. The vendor will continue work on ongoing contracts but it is too early to
determine whether "graduatio n" will have any negative impact on the vendor, the
business' economic viability or the employees.
Given the significance of the local small business sector in the county's economy
and the growth in the dollar value of eligible contracts, a graduation requirement that
requires a vendor to be "graduate d" from the program upon attaining contract awards
with a cumulative value of $10 million may undermine continued growth of the program
and diminish interest among eligible vendors. While the County has not graduated a
significant number of businesses, as the years move forward, contract values increase,
governme nt departments overcome their skepticism about the program, and local small
businesse s increase participation rates, there is a strong likelihood that the graduation rate
will rise accordingly.
If the law is not amended, we may be setting the stage for removal of LSBRP
eligibility before a business is capable of competing in an unsheltered market-a nd if so,
the likelihood of the failure of these small businesses after "graduation" from the
program looms as a real possibility. Therefore, we recommen d that the LSBRP law be
amended to allow the dollar value of the contracts to remain a cumulative calculation, but
increase the dollar value that triggers "graduatio n" to a higher amount. For instance, if
the cumulative dollar value of contracts was changed to $25 million, many more vendors
would be able to stay in the program until they can adequately compete in an open market.
As I stated earlier, Montgom ery County has a robust, active and responsive small
business community. These businesses employ local residents, provide good jobs, and
make real contributions to the local economy. It is clear that local small businesses have
benefited from the LSBRP. The program provides fair yet robust competition among
businesse s to ensure the public benefits from best value for the dollar spent under county
contracts. In addition, the LSBRP provides an economic opportunity that every local
small business can benefit from now and in the future. This investment back into the
local economy, certainly a help in difficult times, is an ongoing need for every small
business struggling to get a foot-hold in the marketplace, and an equally ongoing benefit
to the County.
Thank you for the opportunity to testify today on this important issue.
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e-:.,
BUSINESS
ADVOCACY
Dusty Rood, Chair
Leslie Ford-Weber, Chair-Elect
Jim Young, Immediate Past Chair
Georgette "Gigi" Godwin, President
&
CEO
BiU37-17, Local Small BusinessHeserve Program - Eligibility-Amendments
December 5, 2017
SUPPORT
The Montgomery County Chamber of Commerce, as the voice of Montgomery County business,
supports Bil! 37-17: Local Small Business Reserve Program - Eligibility-Amendments. The
Montgomery County Local Small Business Reserve Program (LS8RP) allows many small
businesses in our County to compete for valuable County contracts, which helps their
companies grow and strengthens our local economy.
The County's program has been very successful. Since the program's initial adoption in 2008
and continuation in 2012, the program has grown and most County departments have diligently
achieved their goal of 20% of procurements being set aside for small business competition.
These individual contracts have ranged from smaller service agreements to contracts worth
millions to small businesses. The County's LSBRP program is model for other counties in
Maryland who look to support their local small businesses and a similar program is used at the
state level.
MCCC has been deeply involved in the issue of supporting ongoing success of small businesses
as they grow and diversify. Thr~ugh the MCCC GovConNet Council, MCCC has embarked on an
advocacy effort at the federal level - the Mid-Size Initiative Pathway to Growth. We advocate
for expanding the runway for small business to further support and solidify their success as they
grow.
This is important at the local level as well. This legislation increases the graduation threshold
from the LSBRP program from $10m to $2sm: This modest change is appropriate for today's
marketplace and will allow vendors to stay in the program Jonger to continue to provide the
County with much needed goods and services.
We believe the expansion of the LSBRP is appropriate and will support Montgomery County
businesses participating in County procure_ment.
MCCC supports Bill 37-17 and encourages the County Council to pass the legisl~tion and
maintain this model for enhancing the local small business economy. ·
Montgomery County Chamber of Commerce 51 Monroe Street, Suite 1800, Rockville, MD 20850
@
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,
Isiah Leggett
County Executive
Marc P. Hansen
County Attorney
OFFICE OF THE COUNTY ATTORNEY
MEMORANDUM
TO:
Cherri Branson, Director
Office of Procurement
Edward Lattner, Chief
Division of Government Operations
Megan Greene
Associate County Attorney
January 19, 2018
Bill 37-17, Local Small Business Reserve Program- Eligibility- Amendments
VIA:
FROM:
DATE:
RE:
I.
Background
Article XV of the Montgomery County Code establishes the Local Small Business Reserve
Program (LSBRP). The intent of the legislation is to support the local economy by requiring Using
Departments to award a minimum of twenty percent (20%) of their combined dollar value of
contracts to local small business, subject to certain statutory exceptions.
Section 11B-67(e) of the Code provides, in pertinent part, that "[a] local small business is
no longer eligible for [the program] if the business has been awarded $10 million in the aggregate
in County contracts and at least 10 separate contracts, as either a prime contractor or a
subcontractor, beginning January 1, 2006." These eligibility requirements are reiterated in
COMCOR l lB.65.01.05(±). This provision has been unchanged since the LSBRP took effect on
January 1, 2006.
The County Executive has proposed Bill 37-17, which would amend Section 11B-67(e) by
increasing the aggregate dollar amount a local small business may receive from the County before
losing its eligibility for the LSBRP. The proposed Bill would amend the Section as follows:
"A local small business is no longer eligible for [the program] if the business has
been awarded
$25 million
in the aggregate in County contracts and at least 10
101 Monroe Street,
3
rd
@
Floor, Rockville, Maryland 20850-2540
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Cherri Branson
January 19, 2018
Page2
separate contracts, as either a prime contractor or a subcontractor, beginning
January
1,
2006." (Amendment in bold underline).
The proposed Bill makes no further changes to the existing law.
II.
Issues Presented
OCA was asked to conduct a comprehensive review and analysis of proposed Bill 37-17
for legality. This included, but was not limited to, assessing whether the Bill was vague, any
potential impact the Bill may have on the County's liability exposure, and whether the Bill is
constitutional.
III.
Analysis
The proposed Bill is not vague. The proposed change is straight-forward.
The proposed Bill is constitutional. There is no State or Federal law which restricts the
County's ability to increase the dollar "cap" of the LSBRP or which conflicts with the proposed
Amendment. Notably, the State of Maryland has its own Small Business Preference Program and
Small Business Reserve Program. MD Code Ann.,
State Finance and Procurement,
§14-501,
et
seq.,
and COMAR, Title 21, Subtitle 11. The Maryland program does not have any financial cap
on eligibility for the program, but there is nothing in the statute which:
(1)
requires the County to
implement its own programs; or (2) prohibits the County from placing restrictions on its program.
It does not appear likely that the proposed Amendment will have any appreciable impact
on the County's liability exposure. The plain language is easy to apply.
IV.
Conclusion
There are no legal barriers to the passage of proposed Bill 37-17.
If the proposed Bill is passed, it is recommended that COMCOR llB.65.01.05(±) be
similarly amended for clarity and consistency.
cc:
Bonnie Kirkland, Assistant CAO
Marc P. Hansen, County Attorney
Robert H. Drummer, Senior Legislative Attorney
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0FFICE0FTHECOUNTYEXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett
County &ecutive
MEMORANDUM
November 20, 2017
TO:
FROM:
SUBJECT:
---
FYI 7 Annual Report: Local Small Business Reserve Program (LSBRP)
As
you will note, page 9 of the LSBRP annual report includes a comparison table
In accordance with
1lB-61
of the Montgomery County Code,
I
am pleased to
attach the annual activity report for the Local Small Business Reserve Program (LSBRP) for
FY17.
summarizing procurement expenditures to LSBRP businesses.
In
FYl 7, 24.88% of all eligible
procurement expenditures were awarded to LSBRP businesses. This percentage represents $93.4
million in encumbered dollars
towards
LSBRP Businesses.
This
report
and the previous
LSBRP
annual reports are posted on
the Office
of
Procurement website: htt;p://www.montgomerycountymd.gov/PRO/Reports.html. Reports for
previous fiscal years can be found on our website, which
may
serve as useful reference.
c:
Timothy L. Firestine, Chief Administrative Officer
Cherri Branson,
Director,
Office of Procurement
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montgomerycou ntymd.gov/311. -~DiilNMFIFII/ 240-773-3556 TTY
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Local Small Bu sin ess
Re ser ve Pro gra m
r-,;~
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FYl 7
Annu al
Repo rt
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Montgo mery County 's
Local Small Busine ss Reserve- Progra m
l\1cssage from the County
ExccutiYc
Nearly 95% of Montgome ry County's companies are considered small
businesses. Combined, they are
a
strong and powerful engine driving
the
Montgome ry County economy. The vitality of our economy and the success
of local businesses is one ofmy top priorities. In December 2008, I
announced economic stimulus measures that included eleven action items to
sustain and enhance the viability of the business comrri:unity. ,
The Local Small Business Reserve Program (LSBRP) is one measure that
· helps sustain economic growth. Passage of the Local Small Business Reserve Program was the
result of cooperatio n between my office, the County Council and stakeholders in the business
communit y. Under the LSRBP program, Montgome ry County Governme nt's departmen ts
and
agencies must commit to allocate 20% of their purchases of
goods
and services from the small
business community. In FYI 7, the County spent $93.4 million
with
local small businesses,
an
amount equal
to
24.88% of total eligible spending for LSBRP.
Please talce a few minutes to read this report. If you are a small business owner who is not
registered as an LSRBP, please visit the http://www .montgom erycountym d.gov/dbrc website
to determine your eligibility. If you are eligible, please register your business. We want to
work with you.
Messag e from the Directo r
I
The Local Small Business Reserve Program helps ensure that public
tax
dollars expended by the county government are reinvested into the local
economy. Since its inception in FY09, the LSBRP has increased the
. number
and
value of contract awards to local small businesses. The
Office of Procureme nt
is
dedicated to promoting and improving this
program.
In
FYl 7, we took additional steps to strengthen the Program. by
enhancing our outreach efforts. We hosted· our first annual Procureme nt Forum and welcomed
400 participants. We also developed a Procureme nt Pocket Guide
to
make it easier for small
businesses to understand the County's Procureme nt.process es and requirements. These
outreach efforts have provided the LSRBP vendors informatio n they need to compete for
·
contractin g opportunities.
This
year's LSBRP Annual Report reflects a consistent level of participation in the program
since its inception. I look forward
to
increasing our efforts
and
strengthening linkages between
the business cbmniunit y and county departmen ts to support growth
in
County contract activity
with local small businesses .
If
you have comments or questions about the report, the LSRBP
program, or
any
of the Office of Procureme nt's upcoming outreach activities, please contact us
·
at
dbrc@mon tgomeryco untymd.go v .
LSBRP -FY17
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Montgomery County's
Local
Small Business Reserve Program
Executive Summar_\
In
FYl 7, the Local Small Business Reserve Program continued to show growth. The County
spent $93
.4
million with local small businesses. This amount comprises 24.88% of total
eligible spending for LSBRP.
As
an indication of increased contracting opportunities for local
small businesses
that
participate in the program, a second LSBRP vendor reached the statutory
limit (cumulative awards of 10 contracts with a dollar value of $10 million since 2006) and
was graduated from the program. The Program hosted several open house events targeted at
specific industry sectors to give local small and minority businesses an opportunity for face-to-
face interaction with key
staff
from County departments and with prime contractors.
Montgomery County is home to an active and responsive local small business community.
Nearly
95%
of Montgomery County's companies are considered small businesses. Local small
businesses employ local residents and provide valuable employment opportunities. Through
the LSBRP, local businesses provide goods and services to local government and local
tax
dollars are reinvested in the community. In addition to assuring the reinvestment in the local
economy, businesses who have contracts under the LSBRP program are required to pay a
living wage, further contributing to quality of
life
and economic stability
within
the county.
The LSBRP's investment in the local economy is not only a vital resource that directly benefits
the economic viability of those businesses
that
have contracts through the program but it also
indirectly benefits other local businesses. The
tax
dollars used to support LSBRP are an
important driver in the local economy.
In FYI 7, we are continuing our focus on
fully
certifying LSBRP
vendors and increased the number of
fully
certified LSBRP vendors
from 504 to 619. Certified vendors are encouraged to display the
"LSBRP Certified" logo on their websites· and marketing materials.
Back
0
round
e,
The accomplishments outlined in this report result from several initiatives to stimulate
economic growth through local contracting.
In
FY09, a partial governmental reorganization
was implemented creating the Department of General Services and the Office of Business
Relations and Compliance. The County Executive and County Council enacted new legislation
and Executive Regulations to expand the County's ability to increase contracting with local
businesses:·
l.
Local Small Business Reserve Bill #3-09 (April 30, 2009) - Established the DGS
Director as the evaluator of a business• s capacity to contractually perform
2. County Executive Regulation #2-09
(April
28, 2009) - Doubled the earnings and
employee thresholds for small businesses
LSBRP-FY17
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Montgomery County's
Local Small Business Reserve Program
3. Contracts
&
Procurement Amendments Bill #45-09 (April 1, 2010)-Made it easier for
small businesses to compete for contracts
4. County Executive Regulation #19-09AM (March 23,2010) ~-Revised Procurement
Regulations
5. Expedited Bill #7-15
(March 26,
2015) --- Established the Office of Procurement
as
a
Principal Office of the Executive Branch.
6.
Expedited Bill #23-15 (May 23, 2015) - Amended LSBRP eligibility criteria for
small
businesses in the service sector.
7.
County Executive Regulation #6-15 (June 30, 2015) '-- Amendment
to
the LSBRP
Program
Eligibility
Requirements
Montgomery County actively seeks local businesses
to
compete for contracting opportunities
with the County Government through the Local
Small
Business Reserve Program. The
County's
commitment
to maintain
a
viable and business :friendly environment is clearly
demonstrated through aggressive engagement and recruiting of eligible businesses and
legislation th.at requires a
minimum
of 20 percent of eligible purchases of goods, services and
construction by the government
to
be
made with local
small
businesses. Businesses
may
apply.
to the LSBRP
by
using our online vendor database
at
www.mcipcc.net Businesses may
participate
in
the program if they are independently owned, have an economic operational base
in Montgomery County, and meet the following sales or employee thresholds:
<
JJusi~ess Type
·
.
.
.Wholesale.
.· Service*
:
·
·
p;io,:Three
Yiar's
Employee
·
·
Avg~
Sqles/
:
.
·Limit
·.
·
$5
million :
:30 ·
,$5
rriillion ·.· .
..
30 · ·
-OR
<100,·. · ·
· :':so ...:-
>; :
· 40.
11-----.. . . --~
·.· $lffnilllfon.·
·'< ·
· · ·
~
14;1mliiqµ,
·r.
a,
$~fmillion .... :
•services vendor threshold was increased in FY16
LSBRP-FY17
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I 1·
Montgo mery County 's
Local Small Busine ss Reserv e Progra m
Continu ed lnnova th c Practice s
Among local municipalities, Montgomery County's Local Small Business Reserve Program
continues to
be
a model of legislation, operation and outreach. Innovative practices used to
implement the LSBRP law include:
• Ongoing training for department Contract Administrators on Procurement Compliance
Programs including LSBRP, MFD and wage compliance programs.
• Developed a "Pocket Guide to Doing Business with Montgomery County" for vendors.
• Initiated annual Procurement Forum to keep-vendors updated with the latest
·
procurement information.
• Participating quarterly meetings with compliance officers from other jurisdictions,
.
agencies and municipalities in the State.
• Distributed weekly newsletters to local small businesses to advertise active solicitations,
upcoming contracting opportunities and networking events.
• Developed a social network platform and increased use of social media in
communicating with local small businesses.
• Increased participation in industry association meetings and chamber matchmaking and
networking sessions
to
promote the LSBRP program.
• Improved intranet functionality
to
reduce paper work for Contract Administrators and
Procurement Specialists.
• Improved on-line forms and reporting tools for county departments.
• Encourage vendors to get fully certified prior to bid submission
to
stream.line the award
review process and to eliminate uncertainty
in
award eligibility.
The Office of Procurement was established as a principal Office of the Executive Branch in
2015, becoming a cabinet-level entity within the Executive Branch of Montgomery County
government.
In
addition to fulfilling the procurement function, the new organizational
structure provided renewed focus on the Division of Business Relations and Compliance
(DBRC) -
the
office which
ensures
vendor compliance with wage laws and contracting
programs designed to increase participation of MFD and local small businesses within county
contracting programs.
Suppor t and
AdvocaC )'
The Division of Business Relations and Compliance provides individualized information and
assistance to individuals and companies seeking opportunities
to
do business with Montgomery
County government Interested companies are welcome to schedule one-on-one appointments
with DBRC staff to learn about the County's contracting needs, compliance programs, and
Procurement processes. DBRC also offers training on how
to
use online tools
to
find valuable
contracting information,
and
provides referrals
to
appropriate departmental contract
administrators.
LSBRP-FY17
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Montgom ery County's
Local Small Business Reserve Program
Additionally, DBRC functions as an internal advocate and liaiso~ connecting the local
business community with county departments to facilitate information exchange and
contracting resource development. DBRC sends out weekly newsletters
to
advertise upcoming
LSBRP opportunities
as
well
as
newly posted LSBRP solicitations.
!Vf arkcting and Outreach
DBRC hosts and attends many networking events. These events help provide direct access to
and interface with local small and/or minority businesses. Through panel discussions, seminars
and match-makin g sessions, vendors have an opportunity
to
gain detailed and individualized
information regarding procurement processes and requirements, learn about specific
procurement opportunities and obtain business development information.
Targeted events hosted
by
the Office of Procurement during
FYI 7
to help inform small and
minority vendors about County contracting opportunities included:
Sept 26, 2016-Russia n Delegation Visit
Oct
5,
2016 -
1
st
Annual Procurement Forum
Oct 26, 2016- MDOT Certification and Procurement Workshop (with
African
American
Chamber of Commerce)
Feb
1,
2017 -
Panama
Delegation Visit
March 8, 2017 -- MDOT Certification and Procurement Workshop (with African American
Chamber of Commerce)
Mar 14, 2017 - Columbian Delegation Visit
May
2, 2017 - SBA
8(a)
Certification
and
Procurement Workshop (with
African
American
Chamber of Commerce)
Networking Events:
In
FYl 7, the Office of Procurement, DBRC and
the
Division p_f
Procurement Operations participated as panelists or key speakers in the following events:
July
21, 2016 - Minority Business Econ,omic Council 2nd
annual
conference
Aug
25,
2016-The Women Power Conference
Sept
14, 2016-46th
Annual
Legislative
Conference
by
Congressional Black Caucus
Foundation, Inc.
LSBRP -FYl
7
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Montgomery County's
Local Small Business Reserve Program
Sept 28, 2016 -- Gaithersburg Chamber of Commerce networking event
Oct 28, 2016
~
Pro Biz Conference
Nov 17, 2016 -Maryland Washington Minority Company Association (MWMCA) 2017
Economic Summit
March 9, 2017 - Treasury Industry Day
March 16, 2017 - Women Owned Businesses Certification Workshop by
Maryland
Women's Business Center
March 31, 2017 - Super Match Maker Conference by Capital Region Minority· Supplier
Development Council (CRMSDC)
March 31, 2017 - Women Business Owners Expo by WSSC
April 18, 2017 - 8th Annual Minority Business Expo by Greater Washington Hispanic
Chamber
April 19, 2017 -- 27th Annual Government Procurement Conference by Federal Business
Council
May 12, 2017 -- MWMCA Annual Spring Expo
May 24, 2017 -- CRMSDC MBE Academy Workshop
June 8, 2017 -- SSA Small Business Procurement Conference
June 15, 2017 _._ AMEX Open Business Summit
June 20, 2017 -- WMATA Procurement Fair
June 20, 2017 - 11th Annual Caribbean American Heritage Month Proclamation
LSBRP-FY17
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Montgomery County's
Local Small Business Reserve Program
FYI 4 - FY 17 Comparative Program !Vlcasurcs
Contracts Awarded to LSBRP
(Based on Contract Execution Date)
TABLE 2 - Major contracts (over $100,000)
awarded
in
FYI 7
to
LSBRP (sorted
by
dollar amount)
.
;
OEPT ·
DOT
Sheriff
DGS
DGS
OHR
DGS
DGS
DGS
DGS
REC
DGS
DGS
DGS
DOT
DOT
DOT
FRS
DGS
DOT
DOT
,Vendor
Bradley Technologies, Inc.
Bradley Technologies, Inc.
CT Stanley & Son, Inc.
CEEPCO Contracting LLC
ATHENA Consulting LLC
Professional Hispanic
Contractors, Inc.
E.A.R.N Contractors, Inc.
Kiara's Landscaping, Inc.
.
,
.:·:·
>
A!riolJnt ·.
·Descr:iption
.
$13,792,604
Security Guard Services
$12,500,000
County-Wide Security Guard Services
$1,556,142
Snow Removal at County Facilities..: Groups 3 and 8
$910,000
Time and Material Custom Millwork
$900,000
Temporary Administrative Support Services
$681,440
Snow Removal at County Facilities- Groups
6
and 7
.
..
:,
E.A.R.N Contractors, Inc
Mimar OBA Crown Trophy
Duane, Cahill, Mullimeaux
&
Mullineaux, PA
Universal Designers
&
Consultants Inc
OLBN, Inc.
SFMS, LLC
E.A.R.N Contractors, Inc
Professional Hispanic
Contractors, Inc.
DrinkMore Delivery Inc.
D&D Installations, LLC
Atlantic Machinery Inc
Aquafree Facilities
Services Inc
Snow Removal at County Facilities- Groups 4 and 5
Snow Removal at County Facilities- Groups 1 and 2
time and material carpentry and painting services
first rotating basis
Trophies, Awards, Plaques, Ribbons, and Engraving
ADA consulting services for various County Facility
Projects
ADA consulting services for various county facility
projects first task order
ADA consulting task order based second
Snow Removal at County Parking Facilities
- Groups
2
and 6
Snow Removal at County Parking Facilities
- Group 3
Snow Removal at County Parking Facilities
- Groups 4 and 8
Bottled Water and Dispensers
Office Relocation and other Moving
&
Hauling
Services
Furnish Closed Circuit Television Pipe Inspection
Unit.
Window Cleaning Services at County Parking
Facilities
$483,924
$480,244
$420,000
$360,000
$350,000
$350,000
. $350,000
$200,000
$200,000
$200,000
$200,000
$144,100
$117,091
$100,000
. LSBRP-FY17
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Montgom ery County's
Local Small Business Reserve Program
Procurement Awards in FYl
7:
The following performance indicators reflect both transaction activity as well as payments to
businesses. DBRC tracks payments made
to
local businesses as well as contract awards.It
should be noted that payments for work performed may lag behind contract awards by
6
to
12
months and some contract awards may have multi-year terms. ·
I
I
!Total
~ocutetnent
Dollars
d
121
-year companson on
EI" "bl
e
LSBRP A
wars
T
a
bl
e
3
:
4-
Procurement Awards, FY14-FY17
FY16
FY15
·
FY14
II
II
l!MiDion
sJI
%
!Eligtble{pr LSBRP Procurement
....
--···-··
...
11$2~9.17 ll30.5% 1!$a12.52
n2s.a%
11$312.19 u2a.1% U$375.45.ll33.a1%
!PtoQUr&ment Expenditure to·LSBRPl!$73;
71
Jl24.6%
11$74.78 1~3.9%
11$75.70
1124.3% 11$93.4 ll24.aa%
II
$980.77
·
%
IIMillion
$1,175.89
sll
II
l!Million
sll
II
%
FY17
%
$1,108.76
II
Million
sll
II
II
II
$1,171.39
I
I
I
I
I
j
'.
I
The "eligible" spending
against
which annual performance is measured is based on the portion
of solicitations awarded to LSBRP vendors out of all eligible solicitations, the balance of
which are considered open
to
non-LSBRP businesses.
A Closer Look at Exempted
LSBRP
Awards
Highlighted in Table 4 are categories significantly impacting the overall availability of annual
contracting dollars to local small businesses, or any other businesses:
(1)
Pre-existing Contracts
and
(2)
Procurements exceeding
$10
million.
1.
Pre-existing Contracts
(highlighted
in
YELLOW in Table
4)-
Many County contracts
are
for terms that exceed
a
single 12-month period, often extending for three
to
five
years. Therefore,
a
contract is
counted
only once in the year of the award,
and
is not
counted in the following years. In FYI 7 this "pre-existing contract" category
equals
$669
million, accounting
for
71 %
of contract expenditures.
2.
Procurements exceeding $10 million
(highlighted i n ~
in
Table
4)-
Legislation
creating the LSBRP initiative requires
that
all contracts valued under $10 million
will
be
reserved for competition among local small businesses unless specific exemption
criteria apply. The majority of these contracts are construction projects such
as
constructions of libraries, community centers, recreation centers, etc.
In
FYl
7,
the
County awarded $228 million in contracts valued over $10 million, accounting for
almost 24% of
all
contracting dollars awarded
in
FYI 7.
These two categories combined for $897 million, or 95% of all LSBRP exemptions
in
FYl 7.
This spending distribution
is
further
illustrated
in the following tables.
LSBRP-FY17
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Montgo mery County 's
Local Small Busine ss Reserv e Progra m
In
addition to Pre-existing Contracts and Procurements Exceeding $10 million, approximately
in Table 4) were for contracts for which no
$33 million
in
exemptions (highlighted
competition
was
possible since the contracts were with; (a) other public entities,
(b)
specific
companies because of grant requirements, or (c) were non-:competitive awards such as
con-tracts with an Original Equipmen t Manufacturers, sole licensed service providers, or other
non-competitive basis approved
by
the County's Contract Review Committee.
,.
Table 4: 4-year comparison on LSBRP Exemptions
(in
million
$)
FY14
%
in-
0%
FY15
%
0%
$
FY16
FY17
0
Q.95%:,:•
100%
FY17 LSBRP
exemptions
Procurement
Exceeds $10 million,
$228,604,00 0, 25%
Pre-existing
Contract,
$669,060,000,
71%
Public Entity or
Emergency
Procuremen t,
$2,520,000 ,
0%
No LSBRP vendor
deemed qualified,
$10,580,000.00
I
1%
Non-competitive
contract,
$21,280,000,
i%
Conflicts with law or
grant, $9,600,000,
1%
Fignre 1: FY17 Exempted Awards breakdown
LSBRP-FY17
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Montgomery County,s
Local
Small Business Reserve Progx-am
Procurement Awards Summary
AB
shown in Table
5,
a total $93.4 million was awarded to LSBRP contractors in FYI 7. Of
that,
$68.l
million of
the
County's
FYl 7
competitive contract opportunities (highlighted in
YELLOW in Table
5) could be
considered available
for
LSBRP competition. These are
opportunities in
which
it would be reasonably assumed that sufficient competition
exists
to
support
a
competitive solicitation under the LSBRP as program enrollment increases and
resources can be further devoted to identifying
companies
qualified to meet County
requirements.
Table 5: FY17 Procurement Awards Summary
Awarded
LSBRP
Potential
Market
Categories
Exemption YIN
Not
Exempted
. $99,033,346
$93,408,171
$177,710,364
$68,093,236
Conlllcls
wHh
law
Exempted
from
or grant
14
261
4592
$9,592,636
$21,277,878
LSBRP
Exemptand
Awarded non
LSBRP
Non-competitive
contract
Pre-existing
Contract
Procurement
$1,009,733,646
$941,640,410
$931,056,628
$669,060,828
$228,604,038
$2,521,248
Exceeds$10
million
154
30
Public
Entity
or
Emergency
Procumment
Total
$1,108,766,992
LSBRP-FY17
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Montgom_ery Count y's
Local Small Busin ess Reser ve Progr am
As illustrate d
in
Figure 2, of the $177. 7 million potential LSBRP .opportunities, $93 .4 million
($25.3 m
+
$68.1 m), or 52.74%,
was
awarded to local small business es.
Thj.s
shows that
4 7.26% of $177.7 million
may
present potentia l contracting opportun ities for the LSBRP
vendors. New local,_ small business es may seek to examine the potentia l for expansio n or
establish ment
in
these untapped areas.
Potetial LSBRP Market Place
~"
Exempt,
EHgible, Awarded
LSBRP,
$25,314 ,93~---: ;if
Awarded
non
LSBRP
: - -
$10,583,782.
1%
Figure 2: Procurement awards available to LSBRP competition
.... 1
I
A total of$93.4 million
was
awarded to LSBRP contractors as prime contractors
in
FY17. As
shown
in
Figure 3, over the last 7 years, awards to LSBRPs have greatly expande d.
Total Awards to LSBRP
$96,
7
49,607$96,270,979
$88,549,258
$87,505,425
FV14
FY17
Figure 3: 7 year comparison on Procurem ent awards to LSBRP vendors
LSBRP-FY17
Page 12
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!
i
I
Montgomery County's
Local Small Business Reserve Program
LSBRP Awards
by
Department
Table 6: Department spending with LSBRP vendors
in
FYl7
c-:-.,,--,,···---'''·""''1';
,~~,,,":~~~~--~~--c,,;i,,:~,e o'.}'l:~01:-~~'ir:~~~~
.
, ·~
: 1-;_·:i-~
~
;~:~J.f~~11:~
1t~1n1
r~:::~-:~~1~~~:___~
1
~l:*.~:1filbjJ&~~
Board of Investment Trustees
Circuit Court
Community Engagement Cluster
Community Use of Public Facilities
Deoartment of Correction and Rehabilitation
Countv Council
Deoartment of Homeland Security
P~oartment of Environmental Protection
Department of Finance
Deoartment of Fire
&
Rescue Services
Deoartment of General Services
Department of Health
&
Human Services
Deoartment of Housin!l
&
Communitv
Affairs'
Office of Human Resources
Deoartment of Liquor Control
Department of Permlttino Services
.Department of Police-
Public Information Office
Department of Public Libraries
E>epartment of Recreation
Sheriff'
Officca
Department of Technoloav Services
Department of Transportation
$995,130
$32,154
$132,128
$175,245
$1,852,231
$145,516
$196,613
$3,089,323
$204,317
$2,583,470
$33,347,799
$8,151,704
$611,557
$167,776
$3,604,983
$384,015
$2,516,803
$129,540
$86,883
$948 337-
$487,900
$6,161,072
$22,218,230
14
23
27
79
82
84
54
53
48
51
52
64
34
11
97
93
55
24
14
51
96
89
61
Table 7: Number of Departments that met/did not meet the 20% goal
#
of Deoartments that met reQuirement
#
of Deoartments that did not meet requirement
FY14
17
FY15
19
5
FY16
15
8
FY17
20
3
23
7
24
Total
24.
23
Concluding Insights
Montgomery County
is
home to an active and responsive local small business community.
Nearly 95% of Montgomery County's companies are considered
small
businesses. Local small
businesses employ local residents, provide good jobs with livable wages, and are a significant
driver of the local economy. Local small businesses have benefitted from the
Local
Small
Business Reserve Program. The program provides
fair
competition among local businesses to
ensure the best value for the dollar spent on county contracts.
'The
LSRBP
is
an investment in
the local economy which provides ongoing benefits
to
the
small
business community.
LSBRP-FY17
Page 13
@
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GO Item 3
January 24, 2018
Worksession
MEM ORAN DUM
January 22, 2018
TO:
FROM:
Government Operations and Fiscal Policy Committee
Robert
H.
Drummer, Senior Legislative Attorney
SUBJECT:
Worksession:
Bill 37-17, Local Small Business Reserve Program -Eligib ility-
Arnendrnents
Expected attendees:
Cherri Branson, Director of the Office of Procurement
Grace Denno, Office of Procurement
rn
j~J
Bill 37-17, Local Small Business Reserve Program - Eligibility - Amendments, sponsored
by Lead Sponsor Council President at the request of the County Executive, was introduced on
November 14,2017. A public hearing was held on December 5.
Bill 37-17 would increase the aggregate dollar amount of County contracts awarded to a
business before the business is no longer eligible for a procurement under the Local Small Business
Reserve Program.
Background
The Local Small Business Reserve Program (LSBRP) was established by Bill 23-04,
Contracts and Procurement - Local Small Business Reserve Program, effective January 1, 2006.
The legislative intent of the program was to enhance the competitiveness of County-based small
businesses by creating a separate defined market in which small businesses could compete against
each other, not against larger firms, for County contracts; broaden the pool oflocal small vendors
doing business with the County; and encourage the County's economic growth by enhancing the
business climate for local small businesses.
Under current law, a local small business is no longer eligible for a procurement under the
LSBRP if the business has been awarded $10 million in the aggregate in County contracts and at
least 10 separate contracts, as either a prime contractor or a subcontractor, since the Program began
on January 1, 2006. Bill 37-17 would increase the aggregate dollar amount of County contracts a
local small business can receive before "graduating" from the Program from $10 million to $25
million. The County Attorne y's Office found no legal impediments to this Bill. See ©12-13.
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Public Hearing
Both witnesses at the public hearing supported the Bill. Cherrie Branson, Director of the
Office of Procurement, testifying on behalf of the Executive, supported the Bill as a necessary
amendment to the Local Small Business Reserve Program that would help certain small businesses
who have or who are about to "graduate" from the Program. See ©9-10. Georgette "Gigi"
Godwin, representing the Montgomery County Chamber of Commerce, also supported the Bill to
help local small businesses obtain County contracts. See
©
11.
Issues
1. How many local small businesses would be directly affected by the Bill?
Since the Program began in 2006, there have been 2 companies that have "graduated." In
May 2014, Colossal Contractors had received 16 County contracts with a cumulative dollar value
of $IO.I million. In June 2017, Highway and Safety Services, Inc. had received 12 contracts with
a cumulative dollar value over $30 million. Bill 37-17 would reinstate Colossal Contractors back
into the Program. Highway and Safety Services, Inc. would remain ineligible for new contracts
awarded under the LSBRP Program. The following 6 companies are over or approaching the $10
million threshold, but have not received 10 separate contracts:
Electric Advantage, Inc. $20 million, 4 contracts
EAi Security Systems, Inc. $10 million, 3 contracts
~T Stanley and Sons, Inc. $10.4 million, 3 contracts
Earn Contractors $10 million, 5 contracts
EEPEX, Inc. $9.9 million, 6 contracts
CDCI, Inc. $8.15 million, 5 contracts
See email response from Grace Denno at ©8.
According to the LSBRP FYI 7 Annual Report (©14-27), Procurement increased the
number of certified LSBRP vendors from 504 to 619 in FYI 7. In FYI 7, the County awarded 20
LSBRP contracts valued at $100,000 or more. Except for the 2 Security Services contracts
awarded to Bradley Technologies at $12.5 million and $13.8 million, each LSBRP contract was
valued at $1.55 million or less. Although an increase in the maximum dollar amount of total
contracts established in 2006 at $10 million is reasonable due to inflation, Bill 37-17 would
increase the maximum by 250%. The size of this increase represents a significant change in the
policy rather than an updating of dollar amounts due to inflation.
2. What is the purpose of the graduation provision?
The legislative intent of the LSBRP was to enhance the competitiveness of County-based
small businesses by creating a separate defined market in which small businesses could compete
against each other, not against larger firms, for County contracts; broaden the pool of local small
vendors doing business with the County; and encourage the County's economic growth by
enhancing the business climate for local small businesses. The graduation provision was designed
to ensure that the LSBRP was a temporary boost to a small business that would help the business
2
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grow to be able to compete for contracts (both County and non-County contracts) without the
sheltered market established under the LSBRP. The Program was not intended to become a
permanent part of a company's business plan. The success of the Program is demonstrated by the
growth of certified LSBRP vendors to 619 in FYI 7. Of these 619 vendors, only 2 have reached
the graduation threshold since 2006. None of the 6 firms that are close to graduation will reach
this threshold unless they receive at least 4 more LSBRP contracts.
3. Should the threshold be increased to $25 million?
This is a simple Bill that would make a significant change in the LSBRP. The 1 firm that
would be immediately reinstated back into the Program, Colossal Contractors, has received 16
County contracts for a total value of $10.1 million. At this rate, Colossal would become eligible
to receive approximately 24 more contracts before graduating again. Procurement Director
Branson, in her testimony about Colossal, stated that "it is too early to determine whether
graduation will have an adverse economic impact on this vendor, the business' economic viability
or the employees." See
©9-10.
Five of the
6
firms approaching the threshold have also received
contracts totaling approximately $10 million or less. Therefore, raising the threshold to $25
million would likely keep almost all the 619 vendors in the Program for the foreseeable future.
While this would help those firms, it might hurt smaller firms in the Program who are going to
compete against these firms for LSBRP contracts in the future.
If the purpose of the LSBRP is to permit small firms to compete against other small firms
for certain County contracts so they can grow enough to compete in an open market, raising the
threshold by 250% may stunt the growth of smaller firms who are forced to compete against these
larger firms that have already been awarded up to $25 million in County contracts. None of the
information submitted by the Executive supports a 250% increase in this threshold. For example,
adjusting the $10 million threshold to current dollars results in an approximate threshold of $12.36
million.
1
Council staff recommendation:
amend the Bill to increase the threshold from
$10
million to between $12 million and $13 million.
This packet contains:
Bill 37-17
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
Grace Denno email response to questions
Public Hearing Testimony
Cherrie Branson
Georgette "Gigi" Godwin
County Attorney Bill Review
LSBRP FYI 7 Annual Report
F:\LAW\BILLS\1737 Local Small Business Reserve Program\GO Memo.Docx
Circle#
1
3
4
5
8
9
11
12
14
This adjustment is based on the average annual rate of inflation for all items in the Washington-Baltimore CPI-All
Urban Consumers.
1
3
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37-17
Bill No.
Business
Small
Concerning: Local
Reserve Program - Eligibility -
Amendments
Revised: November
3, 2017
Draft No.1
November
14. 2017
Introduced:
May
14. 2019
Expires:
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ----'-"No=n-=e'--- -----
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the request of the County Executive
AN ACT
to:
(1)
increase the aggregate dollar amount of County contracts awarded to a business before
the business is no longer eligible for a procurement under the Local Small Business
Reserve Program; and
generally amend the law governing the Local Small Business Reserve Program.
(2)
By amending
Montgomery County Code
Chapter 11B, Contracts and Procurement
Section 11 B-67
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 unqffected by bill
The County Council for Montgomery County, Maryland approves the following Act:
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BILL No. 37-17
1
2
Sec. 1.
Section llB-67 is amended as follows:
llB-67. Procedures
*
(
e)
3
4
*
*
A local small business is no longer eligible for a procurement under this
Article if the business has been awarded [$10 million] $25 million in the
aggregate in County contracts and at least 10 separate contracts, as either
a prime contractor or a subcontractor, beginning January 1, 2006. The
Director must provide written notice to the business when it is no longer
eligible.
5
6
7
8
9
10
Approved:
11
Hans D. Riemer, President, County Council
Date
12
Approved:
13
Isiah Leggett, County Executive
Date
14
This is a correct copy ofCouncil action.
15
Megan Davey Limarzi, Esq., Clerk of the Council
Date
f:\law\bills\ 1737 local small business reserve program\bill 1.docx
0
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LEGISLATIVE REQUEST REPORT
Bill37-17
Local Small Business Reserve Program
-
Eligibility
-
Amendments
DESCRIPTION:
The Bill would amend eligibility for the Local Small Business Reserve
Program by increasing the aggregate dollar amount of County
contracts awarded to a business before it is no longer eligible for a
procurement under the Program.
Some local small businesses have become ineligible for the Program
due to the dollar amount of County contracts awarded to them.
These amendments will increase the aggregate dollar amount of County
contract awards, so the Local Small Businesses can stay in the Program
longer.
County Executive, Procurement, Office of County Attorney
No fiscal impact
No economic impact
NIA
NIA
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITIDN
MUNICIPALITIES:
PENALTIES:
Grace Denno, PRO
Richard Melnick, OCA
NIA
Not changed. A violation of the Program may constitute a material
breach of the contract. The County may exercise any available
remedy, including termination for default.
F:\LAW\BILLS\1737 Local Small Business Reserve Program\LRR.Docx
(j)
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.
::
,-_._,_··. ·':·
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-------
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett ·
County Executive
MEMOR ANDUM
November 1, 2017
Roger Berliner, President, County Council
_,,,,Q
Isiah Leggett, County Executive
TO:
FROM:
SUBJECT:
_,R
~._,____
Local Small Business Reserve Program Legislation Amendments
In accordance .with Section 313 of the County Charter and Section 11 B of the
Montgomery County Code, I am forwarding the attached Local Small Business Reserve Program
Legislation amendments. The purpose of these amendments is to:
increase the dollar amount of County Contracts awarded, above which a
business is no longer eligible for a procurement under the Local Small
Business Reserve Program; and
generally amend the law regarding the Local Small Business Reserve
Program.
I recommend prompt passage of this legislation so the local businesses will
benefit from
this
amendment.
Attachments
Cc:
Bonnie Kirkland, Assistant Chief Administrative Officer
Cherri Branson, Director, Office of Procurement
Grace Denno, Office of Procurement
Michael Brown, Office of Procurement
montgomerycoun tymd.gov/311
(~31;J-·
Qil.J\ili\llM•MY
240-773-3556 TTY
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Fiscal Impact Statement
Bill XX-XX - Local Small Business Reserve Program Amendments
1. Legislative Summary
The Bill amends the Local Small Business Reserve Program to increase the dollar
amount of County contracts awarded from $10 million to $25 million; above which a
business is no longer eligible for a procurement under the 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 additional County revenues; or additional expenses, are expected to be generated or
incurred from the proposed legislative changes.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
Not applicable.
4. An actuarial analysis through the entire amortization period for each bill that would
affed retiree pension or group insurance costs.
Not applicable.
5. An estimate of expenditures related to County's information technology (IT)
systems, including Enterprise Resource Planning (ERP) systems.
No additional Information Technology related expenses are required due to the proposed
legislative changes.
·
6. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future spending.
The proposed legislation does not require or authorize additional future expenditures.
7.
An
estimate of the staff time needed to implement the bill.
No additional staff or personnel costs are needed.
8. An explanation of how the addition of new staff responsibilities would affect other
duties.
Not applicable.
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9. An estimate of costs when an additional appropriation is needed.
Not applicable.
10. A description of any variable that could affect revenue and cost estimates.
:I
i-,
Not applicable.
11. Ranges of revenue or expenditures that are uncertain or difficult to project.
Not applicable.
12.
If
a bill
is
likely to have no f1Scal impact, why that is the case.
See response #2.
13. Other fiscal impacts or comments.
This Bill is structured to help small businesses gain and retain fiscal strength for long
term success, which helps buttress County economic development.
14. The following contributed to and concurred with this analysis:
Grace Denno, Office of Procurement
Bryan Hunt, Office of Management and Budget
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Economic Impact Statement
Bill ##-17, Local Small Business Reserve Program
-
Amendments
__
Bacgi-~un~=----·-.
____ ..... _
The
Bill
.amends
the
Local
Small Business Reserve Progl'am to:
(1) · inc~e the doll~·
amount
of County Contracts awarded, above which
a
business
·-- · --is no longer eligible for a procurement under the Local Small Business
Rese1ve
Program;
(2) generally amend the
law
regarding the Local Small Business Reserve· Program..
.. I
1. The
sources
of
information, assumptions, and methodologies used.
Source of information is the Division of Business Relations and Compliance
(DBRC),
Office of Procurement.
2. A description of
any
variable that could affect the economic impact
estimates.
The only variable
that
could affect the economic impact is the number of vendors ·
who currently are at or below the
$10
million threshold under the cw·rent program·
· and may exceed the current threshold and the number of vendors who were
· eliminated by exceeding the thl'eshold and eligible
for
reinstatement. However,
data
on the nutnber are uncertain.
3.
_
The Bill's positive or negative- effect,
if
any on employment, spending,
saving,
investment, incomes, a~d property values in the County.
The Bill will enable more
Local
Small Business to
stay
in
the program
for a
longer
period of time before they graduate from the program. Therefore, the legislation
.W!>uld.
haye a
positive economic impact
by
maintaining those vendors who would
exceed by expanding their current business and exceed the current threshold of
$10
million. Secondly, the legislation would enable those vendors who
were
eliminated
from
the
program
because they exceeded that threshold to be reinstated into the -
program.
4.
If
a BiUisUkely to have no economic impact, why
is
that the case?
The positive economic impact cannot be estimated with
any
degree of specificity at
this
time.
·
5. The following contributed to or eoneurred with this analysis:
David Platt, Finance; Grace Denno, Division of Business Relations and Compliance,
Office of Procurement
~--
Al
exan
dre
.
pmosa,
Direc
tor
.
C
Department of Finance
A7ffe
'
-1/ulr,
-Date
·0f
fi
I
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Drummer, Bob
From:
Sent:
To:
Cc:
Subject:
Denno, Grace
Wednesday, November 08, 2017 4:38 PM
Drummer, Bob
Kirkland, Bonnie; Branson, Cherri
RE: Local Small Business Reserve Program Legislation Amendments
Bob,
Sorry for the delayed reply. Here is the information you requested.
We have "graduated" 2 contractors:
The first vendor (Colossal Contractors) to reach graduation was "graduated" in May 2014. Prior to graduation,
this vendor had received 16 County contracts with a cumulative dollar value of $10.1 million. Since graduation,
the vendor has submitted bids to four LSBRP solicitations and five non-LSBRP solicitations. Due to graduation,
the vendor was ineligible to bid on the LSBRP solicitations. The vendor's bids on the non-LSBRP solicitations
were not successful. Thus, the vendor did not successfully win any contracts with the County from those nine
solicitations. In 2014, at the time of graduation, the vendor had 48 employees and had an average annual
revenue of $6.3 million (2012-2014). Currently the vendor has 48 employees and average annual revenue is
$11.5 million (2014-2016). However much of the vendor's current revenue is attributable to on-going LSBRP
contracts with the county which were in effect until April 2017. After April 2017, the vendor will not receive
revenue from LSBRP contracts. It is too early to determine whether graduation has had an adverse economic
impact on this vendor. However, it is clear that the graduation has adversely affected the vendor's ability to
competitively compete for new contracts with the County. If the amendment to the LSBRP law is enacted, this
vendor can re-apply to the LSBRP. The Office of Procurement will provide the vendor information on changed
eligibility rules and the application procedure.
The second vendor (Highway and Safety Services, Inc.) graduated in June 2017. Graduation for this vendor was
triggered because the vendor received 12 contracts with a cumulative dollar value over $30 million. The vendor
will continue with the ongoing LSBRP and non-LSBRP contracts. It is too early to determine whether
"graduation" will have any negative impact on the vendor. A $25 million graduation trigger will not reinstate
this vendor's eligibility for the LSBRP program because the vendor has received County contracts cumulatively
valued at more than $25 million.
Below is a list of contractors approaching the $10 million threshold, but have not received 10 contracts.
Electric Advantage, Inc. $20 million, 4 contracts
EAi Security Systems, Inc. $10 million, 3 contracts
CT Stanley and Sons, Inc. $10.4 million, 3 contracts
Earn Contractors $10 million, 5 contracts
EEPEX, Inc. $9.9 million, 6 contracts
CDCI, Inc. $8.15 million, 5 contracts
Best Regards,
Grace Denno, CPM, MSIT
1
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TESTIMONY ON BEHALF OF COUNTY EXECUTIVE ISIAH LEGGETT ON
BILL 37-17, LOCAL SMALL BUSINESS RESERVE PROGRAM- ELIGIBILITY
AMENDMENTS
December 5, 2017
Good afternoon. I am Cherri Branson, Director of Montgomery County's Office
of Procurement and I am here on behalf of County Executive Isiah Leggett to encourage
the Council's favorable consideration of this bill to amend the graduation requirements
for the Local Small Business Reserve Program.
Montgomery County is home to a robust local small business community. Nearly
95% of county businesses are considered small businesses. Over the past 11 years, the
Local Small Business Reserve Program (LSBRP) has allowed local small businesses to
gain greater access to Montgomery County's procurement opportunities. In FYI 7, the
County spent $93.4 million with local small businesses, an amount equal to 24.88% of
eligible spending-a testament to the significant role this program plays in the local
economy.
Montgomery Count Code Sec. 11B-67(e) is the legislative basis for the graduation
requirement in the LSBRP.
It
provides that a local small business is no longer eligible
for a procurement under this Article if the business has been awarded $10 million in the
aggregate in County contracts and at least 10 separate contracts, as either a prime
contractor or a subcontractor, beginning January 1, 2006. The Director must provide
written notice to the business when it is no longer eligible.
It
should be noted that the State and neighboring counties have similar reserved
"small" or "local" business programs. However, they do not have a graduation trigger
based on dollar value of contracts awarded.
The Montgomery County LSBRP is currently in its 11th year of the operation.
Vendors are beginning
to
reach this 10/10 "graduation" point. The first vendor reached
this graduation point three years ago, in 2014. The second vendor reached graduation in
June of 2017. A review of our records indicates that more vendors may become eligible
for graduation within the next year or so.
The first vendor
to
reach graduation was "graduated" in May 2014. Prior to
graduation, this vendor had received 16 County contracts with a cumulative dollar value
of $10.1 million. Since graduation, the vendor has submitted bids on four LSBRP
solicitations and five non-LSBRP solicitations. The vendor was not successful in winning
any contracts with the County from those nine solicitations.
In
2014, at the time of
graduation, the vendor had 48 employees and had an average annual revenue of $6.3
million (2012-2014). Currently the vendor has 48 employees and average annual revenue
is $11.5 million (2014-2016); however, much of that revenue is attributable to the fact
that the vendor had on-going LSBRP contracts with the county until April 2017. After
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April 2017, the vendor will not receive any revenue from LSBRP contracts. Therefore, it
is too early to determine whether graduation will have an adverse economic impact on
this vendor, the business' economic viability or the employees. We do know that
graduation has adversely affected the vendor's ability to be awarded new contracts with
the County.
The second vendor graduated in 2017. Graduation for this vendor was triggered
because the vendor has received 12 contracts with a cumulative dollar value of over $25
million. The vendor will continue work on ongoing contracts but it is too early to
determine whether "graduatio n" will have any negative impact on the vendor, the
business' economic viability or the employees.
Given the significance of the local small business sector in the county's economy
and the growth in the dollar value of eligible contracts, a graduation requirement that
requires a vendor to be "graduate d" from the program upon attaining contract awards
with a cumulative value of $10 million may undermine continued growth of the program
and diminish interest among eligible vendors. While the County has not graduated a
significant number of businesses, as the years move forward, contract values increase,
governme nt departments overcome their skepticism about the program, and local small
businesse s increase participation rates, there is a strong likelihood that the graduation rate
will rise accordingly.
If the law is not amended, we may be setting the stage for removal of LSBRP
eligibility before a business is capable of competing in an unsheltered market-a nd if so,
the likelihood of the failure of these small businesses after "graduation" from the
program looms as a real possibility. Therefore, we recommen d that the LSBRP law be
amended to allow the dollar value of the contracts to remain a cumulative calculation, but
increase the dollar value that triggers "graduatio n" to a higher amount. For instance, if
the cumulative dollar value of contracts was changed to $25 million, many more vendors
would be able to stay in the program until they can adequately compete in an open market.
As I stated earlier, Montgom ery County has a robust, active and responsive small
business community. These businesses employ local residents, provide good jobs, and
make real contributions to the local economy. It is clear that local small businesses have
benefited from the LSBRP. The program provides fair yet robust competition among
businesse s to ensure the public benefits from best value for the dollar spent under county
contracts. In addition, the LSBRP provides an economic opportunity that every local
small business can benefit from now and in the future. This investment back into the
local economy, certainly a help in difficult times, is an ongoing need for every small
business struggling to get a foot-hold in the marketplace, and an equally ongoing benefit
to the County.
Thank you for the opportunity to testify today on this important issue.
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e-:.,
BUSINESS
ADVOCACY
Dusty Rood, Chair
Leslie Ford-Weber, Chair-Elect
Jim Young, Immediate Past Chair
Georgette "Gigi" Godwin, President
&
CEO
BiU37-17, Local Small BusinessHeserve Program - Eligibility-Amendments
December 5, 2017
SUPPORT
The Montgomery County Chamber of Commerce, as the voice of Montgomery County business,
supports Bil! 37-17: Local Small Business Reserve Program - Eligibility-Amendments. The
Montgomery County Local Small Business Reserve Program (LS8RP) allows many small
businesses in our County to compete for valuable County contracts, which helps their
companies grow and strengthens our local economy.
The County's program has been very successful. Since the program's initial adoption in 2008
and continuation in 2012, the program has grown and most County departments have diligently
achieved their goal of 20% of procurements being set aside for small business competition.
These individual contracts have ranged from smaller service agreements to contracts worth
millions to small businesses. The County's LSBRP program is model for other counties in
Maryland who look to support their local small businesses and a similar program is used at the
state level.
MCCC has been deeply involved in the issue of supporting ongoing success of small businesses
as they grow and diversify. Thr~ugh the MCCC GovConNet Council, MCCC has embarked on an
advocacy effort at the federal level - the Mid-Size Initiative Pathway to Growth. We advocate
for expanding the runway for small business to further support and solidify their success as they
grow.
This is important at the local level as well. This legislation increases the graduation threshold
from the LSBRP program from $10m to $2sm: This modest change is appropriate for today's
marketplace and will allow vendors to stay in the program Jonger to continue to provide the
County with much needed goods and services.
We believe the expansion of the LSBRP is appropriate and will support Montgomery County
businesses participating in County procure_ment.
MCCC supports Bill 37-17 and encourages the County Council to pass the legisl~tion and
maintain this model for enhancing the local small business economy. ·
Montgomery County Chamber of Commerce 51 Monroe Street, Suite 1800, Rockville, MD 20850
@
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,
Isiah Leggett
County Executive
Marc P. Hansen
County Attorney
OFFICE OF THE COUNTY ATTORNEY
MEMORANDUM
TO:
Cherri Branson, Director
Office of Procurement
Edward Lattner, Chief
Division of Government Operations
Megan Greene
Associate County Attorney
January 19, 2018
Bill 37-17, Local Small Business Reserve Program- Eligibility- Amendments
VIA:
FROM:
DATE:
RE:
I.
Background
Article XV of the Montgomery County Code establishes the Local Small Business Reserve
Program (LSBRP). The intent of the legislation is to support the local economy by requiring Using
Departments to award a minimum of twenty percent (20%) of their combined dollar value of
contracts to local small business, subject to certain statutory exceptions.
Section 11B-67(e) of the Code provides, in pertinent part, that "[a] local small business is
no longer eligible for [the program] if the business has been awarded $10 million in the aggregate
in County contracts and at least 10 separate contracts, as either a prime contractor or a
subcontractor, beginning January 1, 2006." These eligibility requirements are reiterated in
COMCOR l lB.65.01.05(±). This provision has been unchanged since the LSBRP took effect on
January 1, 2006.
The County Executive has proposed Bill 37-17, which would amend Section 11B-67(e) by
increasing the aggregate dollar amount a local small business may receive from the County before
losing its eligibility for the LSBRP. The proposed Bill would amend the Section as follows:
"A local small business is no longer eligible for [the program] if the business has
been awarded
$25 million
in the aggregate in County contracts and at least 10
101 Monroe Street,
3
rd
@
Floor, Rockville, Maryland 20850-2540
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Cherri Branson
January 19, 2018
Page2
separate contracts, as either a prime contractor or a subcontractor, beginning
January
1,
2006." (Amendment in bold underline).
The proposed Bill makes no further changes to the existing law.
II.
Issues Presented
OCA was asked to conduct a comprehensive review and analysis of proposed Bill 37-17
for legality. This included, but was not limited to, assessing whether the Bill was vague, any
potential impact the Bill may have on the County's liability exposure, and whether the Bill is
constitutional.
III.
Analysis
The proposed Bill is not vague. The proposed change is straight-forward.
The proposed Bill is constitutional. There is no State or Federal law which restricts the
County's ability to increase the dollar "cap" of the LSBRP or which conflicts with the proposed
Amendment. Notably, the State of Maryland has its own Small Business Preference Program and
Small Business Reserve Program. MD Code Ann.,
State Finance and Procurement,
§14-501,
et
seq.,
and COMAR, Title 21, Subtitle 11. The Maryland program does not have any financial cap
on eligibility for the program, but there is nothing in the statute which:
(1)
requires the County to
implement its own programs; or (2) prohibits the County from placing restrictions on its program.
It does not appear likely that the proposed Amendment will have any appreciable impact
on the County's liability exposure. The plain language is easy to apply.
IV.
Conclusion
There are no legal barriers to the passage of proposed Bill 37-17.
If the proposed Bill is passed, it is recommended that COMCOR llB.65.01.05(±) be
similarly amended for clarity and consistency.
cc:
Bonnie Kirkland, Assistant CAO
Marc P. Hansen, County Attorney
Robert H. Drummer, Senior Legislative Attorney
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0FFICE0FTHECOUNTYEXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett
County &ecutive
MEMORANDUM
November 20, 2017
TO:
FROM:
SUBJECT:
---
FYI 7 Annual Report: Local Small Business Reserve Program (LSBRP)
As
you will note, page 9 of the LSBRP annual report includes a comparison table
In accordance with
1lB-61
of the Montgomery County Code,
I
am pleased to
attach the annual activity report for the Local Small Business Reserve Program (LSBRP) for
FY17.
summarizing procurement expenditures to LSBRP businesses.
In
FYl 7, 24.88% of all eligible
procurement expenditures were awarded to LSBRP businesses. This percentage represents $93.4
million in encumbered dollars
towards
LSBRP Businesses.
This
report
and the previous
LSBRP
annual reports are posted on
the Office
of
Procurement website: htt;p://www.montgomerycountymd.gov/PRO/Reports.html. Reports for
previous fiscal years can be found on our website, which
may
serve as useful reference.
c:
Timothy L. Firestine, Chief Administrative Officer
Cherri Branson,
Director,
Office of Procurement
•..
.-._;~.
·3·.1-:
':·
montgomerycou ntymd.gov/311. -~DiilNMFIFII/ 240-773-3556 TTY
@
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Local Small Bu sin ess
Re ser ve Pro gra m
r-,;~
~
,.,,
,-~
j§!iQi-·
FYl 7
Annu al
Repo rt
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Montgo mery County 's
Local Small Busine ss Reserve- Progra m
l\1cssage from the County
ExccutiYc
Nearly 95% of Montgome ry County's companies are considered small
businesses. Combined, they are
a
strong and powerful engine driving
the
Montgome ry County economy. The vitality of our economy and the success
of local businesses is one ofmy top priorities. In December 2008, I
announced economic stimulus measures that included eleven action items to
sustain and enhance the viability of the business comrri:unity. ,
The Local Small Business Reserve Program (LSBRP) is one measure that
· helps sustain economic growth. Passage of the Local Small Business Reserve Program was the
result of cooperatio n between my office, the County Council and stakeholders in the business
communit y. Under the LSRBP program, Montgome ry County Governme nt's departmen ts
and
agencies must commit to allocate 20% of their purchases of
goods
and services from the small
business community. In FYI 7, the County spent $93.4 million
with
local small businesses,
an
amount equal
to
24.88% of total eligible spending for LSBRP.
Please talce a few minutes to read this report. If you are a small business owner who is not
registered as an LSRBP, please visit the http://www .montgom erycountym d.gov/dbrc website
to determine your eligibility. If you are eligible, please register your business. We want to
work with you.
Messag e from the Directo r
I
The Local Small Business Reserve Program helps ensure that public
tax
dollars expended by the county government are reinvested into the local
economy. Since its inception in FY09, the LSBRP has increased the
. number
and
value of contract awards to local small businesses. The
Office of Procureme nt
is
dedicated to promoting and improving this
program.
In
FYl 7, we took additional steps to strengthen the Program. by
enhancing our outreach efforts. We hosted· our first annual Procureme nt Forum and welcomed
400 participants. We also developed a Procureme nt Pocket Guide
to
make it easier for small
businesses to understand the County's Procureme nt.process es and requirements. These
outreach efforts have provided the LSRBP vendors informatio n they need to compete for
·
contractin g opportunities.
This
year's LSBRP Annual Report reflects a consistent level of participation in the program
since its inception. I look forward
to
increasing our efforts
and
strengthening linkages between
the business cbmniunit y and county departmen ts to support growth
in
County contract activity
with local small businesses .
If
you have comments or questions about the report, the LSRBP
program, or
any
of the Office of Procureme nt's upcoming outreach activities, please contact us
·
at
dbrc@mon tgomeryco untymd.go v .
LSBRP -FY17
Page 2
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Montgomery County's
Local
Small Business Reserve Program
Executive Summar_\
In
FYl 7, the Local Small Business Reserve Program continued to show growth. The County
spent $93
.4
million with local small businesses. This amount comprises 24.88% of total
eligible spending for LSBRP.
As
an indication of increased contracting opportunities for local
small businesses
that
participate in the program, a second LSBRP vendor reached the statutory
limit (cumulative awards of 10 contracts with a dollar value of $10 million since 2006) and
was graduated from the program. The Program hosted several open house events targeted at
specific industry sectors to give local small and minority businesses an opportunity for face-to-
face interaction with key
staff
from County departments and with prime contractors.
Montgomery County is home to an active and responsive local small business community.
Nearly
95%
of Montgomery County's companies are considered small businesses. Local small
businesses employ local residents and provide valuable employment opportunities. Through
the LSBRP, local businesses provide goods and services to local government and local
tax
dollars are reinvested in the community. In addition to assuring the reinvestment in the local
economy, businesses who have contracts under the LSBRP program are required to pay a
living wage, further contributing to quality of
life
and economic stability
within
the county.
The LSBRP's investment in the local economy is not only a vital resource that directly benefits
the economic viability of those businesses
that
have contracts through the program but it also
indirectly benefits other local businesses. The
tax
dollars used to support LSBRP are an
important driver in the local economy.
In FYI 7, we are continuing our focus on
fully
certifying LSBRP
vendors and increased the number of
fully
certified LSBRP vendors
from 504 to 619. Certified vendors are encouraged to display the
"LSBRP Certified" logo on their websites· and marketing materials.
Back
0
round
e,
The accomplishments outlined in this report result from several initiatives to stimulate
economic growth through local contracting.
In
FY09, a partial governmental reorganization
was implemented creating the Department of General Services and the Office of Business
Relations and Compliance. The County Executive and County Council enacted new legislation
and Executive Regulations to expand the County's ability to increase contracting with local
businesses:·
l.
Local Small Business Reserve Bill #3-09 (April 30, 2009) - Established the DGS
Director as the evaluator of a business• s capacity to contractually perform
2. County Executive Regulation #2-09
(April
28, 2009) - Doubled the earnings and
employee thresholds for small businesses
LSBRP-FY17
Page3
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Montgomery County's
Local Small Business Reserve Program
3. Contracts
&
Procurement Amendments Bill #45-09 (April 1, 2010)-Made it easier for
small businesses to compete for contracts
4. County Executive Regulation #19-09AM (March 23,2010) ~-Revised Procurement
Regulations
5. Expedited Bill #7-15
(March 26,
2015) --- Established the Office of Procurement
as
a
Principal Office of the Executive Branch.
6.
Expedited Bill #23-15 (May 23, 2015) - Amended LSBRP eligibility criteria for
small
businesses in the service sector.
7.
County Executive Regulation #6-15 (June 30, 2015) '-- Amendment
to
the LSBRP
Program
Eligibility
Requirements
Montgomery County actively seeks local businesses
to
compete for contracting opportunities
with the County Government through the Local
Small
Business Reserve Program. The
County's
commitment
to maintain
a
viable and business :friendly environment is clearly
demonstrated through aggressive engagement and recruiting of eligible businesses and
legislation th.at requires a
minimum
of 20 percent of eligible purchases of goods, services and
construction by the government
to
be
made with local
small
businesses. Businesses
may
apply.
to the LSBRP
by
using our online vendor database
at
www.mcipcc.net Businesses may
participate
in
the program if they are independently owned, have an economic operational base
in Montgomery County, and meet the following sales or employee thresholds:
<
JJusi~ess Type
·
.
.
.Wholesale.
.· Service*
:
·
·
p;io,:Three
Yiar's
Employee
·
·
Avg~
Sqles/
:
.
·Limit
·.
·
$5
million :
:30 ·
,$5
rriillion ·.· .
..
30 · ·
-OR
<100,·. · ·
· :':so ...:-
>; :
· 40.
11-----.. . . --~
·.· $lffnilllfon.·
·'< ·
· · ·
~
14;1mliiqµ,
·r.
a,
$~fmillion .... :
•services vendor threshold was increased in FY16
LSBRP-FY17
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I 1·
Montgo mery County 's
Local Small Busine ss Reserv e Progra m
Continu ed lnnova th c Practice s
Among local municipalities, Montgomery County's Local Small Business Reserve Program
continues to
be
a model of legislation, operation and outreach. Innovative practices used to
implement the LSBRP law include:
• Ongoing training for department Contract Administrators on Procurement Compliance
Programs including LSBRP, MFD and wage compliance programs.
• Developed a "Pocket Guide to Doing Business with Montgomery County" for vendors.
• Initiated annual Procurement Forum to keep-vendors updated with the latest
·
procurement information.
• Participating quarterly meetings with compliance officers from other jurisdictions,
.
agencies and municipalities in the State.
• Distributed weekly newsletters to local small businesses to advertise active solicitations,
upcoming contracting opportunities and networking events.
• Developed a social network platform and increased use of social media in
communicating with local small businesses.
• Increased participation in industry association meetings and chamber matchmaking and
networking sessions
to
promote the LSBRP program.
• Improved intranet functionality
to
reduce paper work for Contract Administrators and
Procurement Specialists.
• Improved on-line forms and reporting tools for county departments.
• Encourage vendors to get fully certified prior to bid submission
to
stream.line the award
review process and to eliminate uncertainty
in
award eligibility.
The Office of Procurement was established as a principal Office of the Executive Branch in
2015, becoming a cabinet-level entity within the Executive Branch of Montgomery County
government.
In
addition to fulfilling the procurement function, the new organizational
structure provided renewed focus on the Division of Business Relations and Compliance
(DBRC) -
the
office which
ensures
vendor compliance with wage laws and contracting
programs designed to increase participation of MFD and local small businesses within county
contracting programs.
Suppor t and
AdvocaC )'
The Division of Business Relations and Compliance provides individualized information and
assistance to individuals and companies seeking opportunities
to
do business with Montgomery
County government Interested companies are welcome to schedule one-on-one appointments
with DBRC staff to learn about the County's contracting needs, compliance programs, and
Procurement processes. DBRC also offers training on how
to
use online tools
to
find valuable
contracting information,
and
provides referrals
to
appropriate departmental contract
administrators.
LSBRP-FY17
PageS
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Montgom ery County's
Local Small Business Reserve Program
Additionally, DBRC functions as an internal advocate and liaiso~ connecting the local
business community with county departments to facilitate information exchange and
contracting resource development. DBRC sends out weekly newsletters
to
advertise upcoming
LSBRP opportunities
as
well
as
newly posted LSBRP solicitations.
!Vf arkcting and Outreach
DBRC hosts and attends many networking events. These events help provide direct access to
and interface with local small and/or minority businesses. Through panel discussions, seminars
and match-makin g sessions, vendors have an opportunity
to
gain detailed and individualized
information regarding procurement processes and requirements, learn about specific
procurement opportunities and obtain business development information.
Targeted events hosted
by
the Office of Procurement during
FYI 7
to help inform small and
minority vendors about County contracting opportunities included:
Sept 26, 2016-Russia n Delegation Visit
Oct
5,
2016 -
1
st
Annual Procurement Forum
Oct 26, 2016- MDOT Certification and Procurement Workshop (with
African
American
Chamber of Commerce)
Feb
1,
2017 -
Panama
Delegation Visit
March 8, 2017 -- MDOT Certification and Procurement Workshop (with African American
Chamber of Commerce)
Mar 14, 2017 - Columbian Delegation Visit
May
2, 2017 - SBA
8(a)
Certification
and
Procurement Workshop (with
African
American
Chamber of Commerce)
Networking Events:
In
FYl 7, the Office of Procurement, DBRC and
the
Division p_f
Procurement Operations participated as panelists or key speakers in the following events:
July
21, 2016 - Minority Business Econ,omic Council 2nd
annual
conference
Aug
25,
2016-The Women Power Conference
Sept
14, 2016-46th
Annual
Legislative
Conference
by
Congressional Black Caucus
Foundation, Inc.
LSBRP -FYl
7
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Montgomery County's
Local Small Business Reserve Program
Sept 28, 2016 -- Gaithersburg Chamber of Commerce networking event
Oct 28, 2016
~
Pro Biz Conference
Nov 17, 2016 -Maryland Washington Minority Company Association (MWMCA) 2017
Economic Summit
March 9, 2017 - Treasury Industry Day
March 16, 2017 - Women Owned Businesses Certification Workshop by
Maryland
Women's Business Center
March 31, 2017 - Super Match Maker Conference by Capital Region Minority· Supplier
Development Council (CRMSDC)
March 31, 2017 - Women Business Owners Expo by WSSC
April 18, 2017 - 8th Annual Minority Business Expo by Greater Washington Hispanic
Chamber
April 19, 2017 -- 27th Annual Government Procurement Conference by Federal Business
Council
May 12, 2017 -- MWMCA Annual Spring Expo
May 24, 2017 -- CRMSDC MBE Academy Workshop
June 8, 2017 -- SSA Small Business Procurement Conference
June 15, 2017 _._ AMEX Open Business Summit
June 20, 2017 -- WMATA Procurement Fair
June 20, 2017 - 11th Annual Caribbean American Heritage Month Proclamation
LSBRP-FY17
Page7
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Montgomery County's
Local Small Business Reserve Program
FYI 4 - FY 17 Comparative Program !Vlcasurcs
Contracts Awarded to LSBRP
(Based on Contract Execution Date)
TABLE 2 - Major contracts (over $100,000)
awarded
in
FYI 7
to
LSBRP (sorted
by
dollar amount)
.
;
OEPT ·
DOT
Sheriff
DGS
DGS
OHR
DGS
DGS
DGS
DGS
REC
DGS
DGS
DGS
DOT
DOT
DOT
FRS
DGS
DOT
DOT
,Vendor
Bradley Technologies, Inc.
Bradley Technologies, Inc.
CT Stanley & Son, Inc.
CEEPCO Contracting LLC
ATHENA Consulting LLC
Professional Hispanic
Contractors, Inc.
E.A.R.N Contractors, Inc.
Kiara's Landscaping, Inc.
.
,
.:·:·
>
A!riolJnt ·.
·Descr:iption
.
$13,792,604
Security Guard Services
$12,500,000
County-Wide Security Guard Services
$1,556,142
Snow Removal at County Facilities..: Groups 3 and 8
$910,000
Time and Material Custom Millwork
$900,000
Temporary Administrative Support Services
$681,440
Snow Removal at County Facilities- Groups
6
and 7
.
..
:,
E.A.R.N Contractors, Inc
Mimar OBA Crown Trophy
Duane, Cahill, Mullimeaux
&
Mullineaux, PA
Universal Designers
&
Consultants Inc
OLBN, Inc.
SFMS, LLC
E.A.R.N Contractors, Inc
Professional Hispanic
Contractors, Inc.
DrinkMore Delivery Inc.
D&D Installations, LLC
Atlantic Machinery Inc
Aquafree Facilities
Services Inc
Snow Removal at County Facilities- Groups 4 and 5
Snow Removal at County Facilities- Groups 1 and 2
time and material carpentry and painting services
first rotating basis
Trophies, Awards, Plaques, Ribbons, and Engraving
ADA consulting services for various County Facility
Projects
ADA consulting services for various county facility
projects first task order
ADA consulting task order based second
Snow Removal at County Parking Facilities
- Groups
2
and 6
Snow Removal at County Parking Facilities
- Group 3
Snow Removal at County Parking Facilities
- Groups 4 and 8
Bottled Water and Dispensers
Office Relocation and other Moving
&
Hauling
Services
Furnish Closed Circuit Television Pipe Inspection
Unit.
Window Cleaning Services at County Parking
Facilities
$483,924
$480,244
$420,000
$360,000
$350,000
$350,000
. $350,000
$200,000
$200,000
$200,000
$200,000
$144,100
$117,091
$100,000
. LSBRP-FY17
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l·-
Montgom ery County's
Local Small Business Reserve Program
Procurement Awards in FYl
7:
The following performance indicators reflect both transaction activity as well as payments to
businesses. DBRC tracks payments made
to
local businesses as well as contract awards.It
should be noted that payments for work performed may lag behind contract awards by
6
to
12
months and some contract awards may have multi-year terms. ·
I
I
!Total
~ocutetnent
Dollars
d
121
-year companson on
EI" "bl
e
LSBRP A
wars
T
a
bl
e
3
:
4-
Procurement Awards, FY14-FY17
FY16
FY15
·
FY14
II
II
l!MiDion
sJI
%
!Eligtble{pr LSBRP Procurement
....
--···-··
...
11$2~9.17 ll30.5% 1!$a12.52
n2s.a%
11$312.19 u2a.1% U$375.45.ll33.a1%
!PtoQUr&ment Expenditure to·LSBRPl!$73;
71
Jl24.6%
11$74.78 1~3.9%
11$75.70
1124.3% 11$93.4 ll24.aa%
II
$980.77
·
%
IIMillion
$1,175.89
sll
II
l!Million
sll
II
%
FY17
%
$1,108.76
II
Million
sll
II
II
II
$1,171.39
I
I
I
I
I
j
'.
I
The "eligible" spending
against
which annual performance is measured is based on the portion
of solicitations awarded to LSBRP vendors out of all eligible solicitations, the balance of
which are considered open
to
non-LSBRP businesses.
A Closer Look at Exempted
LSBRP
Awards
Highlighted in Table 4 are categories significantly impacting the overall availability of annual
contracting dollars to local small businesses, or any other businesses:
(1)
Pre-existing Contracts
and
(2)
Procurements exceeding
$10
million.
1.
Pre-existing Contracts
(highlighted
in
YELLOW in Table
4)-
Many County contracts
are
for terms that exceed
a
single 12-month period, often extending for three
to
five
years. Therefore,
a
contract is
counted
only once in the year of the award,
and
is not
counted in the following years. In FYI 7 this "pre-existing contract" category
equals
$669
million, accounting
for
71 %
of contract expenditures.
2.
Procurements exceeding $10 million
(highlighted i n ~
in
Table
4)-
Legislation
creating the LSBRP initiative requires
that
all contracts valued under $10 million
will
be
reserved for competition among local small businesses unless specific exemption
criteria apply. The majority of these contracts are construction projects such
as
constructions of libraries, community centers, recreation centers, etc.
In
FYl
7,
the
County awarded $228 million in contracts valued over $10 million, accounting for
almost 24% of
all
contracting dollars awarded
in
FYI 7.
These two categories combined for $897 million, or 95% of all LSBRP exemptions
in
FYl 7.
This spending distribution
is
further
illustrated
in the following tables.
LSBRP-FY17
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Montgo mery County 's
Local Small Busine ss Reserv e Progra m
In
addition to Pre-existing Contracts and Procurements Exceeding $10 million, approximately
in Table 4) were for contracts for which no
$33 million
in
exemptions (highlighted
competition
was
possible since the contracts were with; (a) other public entities,
(b)
specific
companies because of grant requirements, or (c) were non-:competitive awards such as
con-tracts with an Original Equipmen t Manufacturers, sole licensed service providers, or other
non-competitive basis approved
by
the County's Contract Review Committee.
,.
Table 4: 4-year comparison on LSBRP Exemptions
(in
million
$)
FY14
%
in-
0%
FY15
%
0%
$
FY16
FY17
0
Q.95%:,:•
100%
FY17 LSBRP
exemptions
Procurement
Exceeds $10 million,
$228,604,00 0, 25%
Pre-existing
Contract,
$669,060,000,
71%
Public Entity or
Emergency
Procuremen t,
$2,520,000 ,
0%
No LSBRP vendor
deemed qualified,
$10,580,000.00
I
1%
Non-competitive
contract,
$21,280,000,
i%
Conflicts with law or
grant, $9,600,000,
1%
Fignre 1: FY17 Exempted Awards breakdown
LSBRP-FY17
Page 10
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Montgomery County,s
Local
Small Business Reserve Progx-am
Procurement Awards Summary
AB
shown in Table
5,
a total $93.4 million was awarded to LSBRP contractors in FYI 7. Of
that,
$68.l
million of
the
County's
FYl 7
competitive contract opportunities (highlighted in
YELLOW in Table
5) could be
considered available
for
LSBRP competition. These are
opportunities in
which
it would be reasonably assumed that sufficient competition
exists
to
support
a
competitive solicitation under the LSBRP as program enrollment increases and
resources can be further devoted to identifying
companies
qualified to meet County
requirements.
Table 5: FY17 Procurement Awards Summary
Awarded
LSBRP
Potential
Market
Categories
Exemption YIN
Not
Exempted
. $99,033,346
$93,408,171
$177,710,364
$68,093,236
Conlllcls
wHh
law
Exempted
from
or grant
14
261
4592
$9,592,636
$21,277,878
LSBRP
Exemptand
Awarded non
LSBRP
Non-competitive
contract
Pre-existing
Contract