Governor Wes Moore’s executive order signed six months ago to “underscore his administration’s commitment to strengthening participation, compliance and accountability for Maryland’s Minority Business Enterprise program,” (MBE) represents the first order related to minority business enterprise issued by a Maryland governor in state history.
That history is 45 years in the making. MBE was established in 1978. But why does Governor Moore feel the need to pursue this course of action? Why now? Black Business Month is not only a time to celebrate the accomplishments of African Americans in commerce and industry, it is a time to assess, reassess, strategize, coordinate, execute and expand. Black Business Month is a time to take stock.
As a plan implemented nearly a half century ago to assure the participation of vendors who have been historically underrepresented, often marginalized as competitors for procurement opportunities with the State of Maryland, MBE was developed with certain reporting requirements to allow monitoring.
The move is intended to provide the governor with critical data necessary to evaluate whether the State of Maryland’s Minority Business Enterprise program is performing satisfactorily and in compliance with the benchmarks set forth in a revision of the original plan in 2013 by former governor Martin O’Malley, the goal of achieving 29 percent of the state’s procurement contracts to people of color and women.
What motivated Governor Moore to take this unprecedented action? It may be that Mr. Moore inherited an MBE program that was grossly out of compliance because his predecessor, Larry Hogan, did not prioritize inclusivity of minorities and women where doling out lucrative state contracts were concerned. How could this possibly have happened?
In the past several years, not all state agencies have consistently reported minority and women-owned business data as required by law, an analysis of state records by Baltimore-based National Public Radio affiliate, WYPR, showed. Beyond that, the state has yet to meet the revised goals set back in 2013 for reporting the status of benchmarks measuring procurement contracts with historically marginalized individuals, data reveals.
In the year before Larry Hogan assumed the governorship of Maryland, 2014, the state’s MBE program achieved 27 percent, coming within two percentage points of meeting its legal obligation. Within six months of taking office in January 2015, the state of Maryland discontinued counting payments to nonprofits under its minority and women-owned business contracting parameters, which coincidentally or not, reduced its compliance to 26 percent.
For the duration of Larry Hogan’s tenure, the state would not exceed an MBE procurement rate exceeding 21 percent, achieved in 2017, and bottomed out at 14 percent in 2020. For some reason, under the Hogan administration, the reporting requirement for the 17 state agencies participating in MBE procurement contracting who are mandated by statute to report their compliance, was mostly suspended.
The COVID-19 pandemic is not an excuse for the state’s lapse in MBE compliance because it was not private contractors in-general who lost the government’s business, only women and minorities. Moreover, the loss of MBE business was also not attributable to simply not being reported. According to a February 2023 statement by Governor Moore’s office: “We believe the unreported data has a negligible impact on the MBE Program’s overall performance data as reported here.”
So why was there such a precipitous decline in the state’s procurement contracts to women and people of color, and why was agency reporting of MBE compliance basically suspended under Hogan? Speculation for Hogan’s policies are all over the map, however, a sub headline in a July 2020 article in Politico suggests: “Hogan portrays himself as a moderate who cares about minorities, but his decisions tell a different story…”
Whatever the underlying reason, the loss of state business designated for Maryland’s minorities and women is colossal. Consider these losses:
- In fiscal year 2017, the State procured $7.57 billion in goods and services from private vendors, allocating 21 percent to MBE’s, a loss of $605.6 million, 27.6 percent.
- In fiscal year 2018, the State procured $8.35 billion in goods and services from private vendors, allocating 15 percent to MBE’s, a loss of $1.169 billion, 49.3 percent.
- In fiscal year 2019, the State procured $8.4 billion in goods and services from private vendors, allocating 17.9 percent to MBE’s, a loss of $1.156 billion, 38.3 percent.
- In fiscal year 2020, the state procured $19 billion in goods and services from private vendors, allocating 14 percent to MBE’s, a loss of $2.85, 51.7 percent.
- In fiscal year 2021 the State procured $8.0 billion in goods and services from private vendors, allocating 17 percent to MBE’s, a loss of $2.184, 41.4 percent.
Total loss of state business to MBE’s under Larry Hogan between 2017 and 2021, $ 7,965,000,000.