BPW Advisory 2005-1 Small Business Reserve Program

Purpose: To establish the process by which:

  • Designated procurement units award not less than 10% of the unit’s total dollar value of goods, supplies, services, maintenance, construction, construction-related services, architectural services and engineering service contracts directly to small businesses.
  • Certain bids or proposals are reserved for participation by small businesses only.​

Authority: The Small Business Reserve Program in State Procurement Law mandates that at least 10% of the dollar value of procurements made by designated procurement units be from small businesses at the prime contract level. This amount is a mandate, not a goal. Sections 14-501 – 14-505, State Finance and Procurement Article, Maryland Code.

Exclusions:

  • Where governing federal law or federal grant provisions conflict with this Small Business Reserve Program, the procurement is excluded from these requirements.
  • Procurements from Maryland Correctional Enterprises, Blind Industries and Services of Maryland, and community service providers (COMAR 21.11.05) and from Maryland Vending Facilities Program for the Blind (COMAR 21.11.09) are excluded from these requirements.
  • The value of excluded procurements is not included in the procurement dollar base from which the 10% reserve is calculated.
  • Definitions:

    The designated procurement units are:

    1. State Treasurer
    2. Department of Information Technology
    3. Department of Business and Economic Development
    4. State Department of Education
    5. Department of the Environment
    6. Department of General Services
    7. Department of Health and Mental Hygiene
    8. Department of Housing and Community Development
    9. Department of Human Resources
    10. Department of Juvenile Services
    11. Department of Labor, Licensing, and Regulation
    12. Department of Natural Resources
    13. Department of State Police
    14. Department of Public Safety and Correctional Services
    15. Department of Transportation
    16. Maryland Port Commission
    17. Maryland Insurance Administration
    18. State Lottery Agency
    19. State Retirement Agency
    20. Maryland Stadium Authority
    21. Morgan State University
    22. University System of Maryland
    23. Maryland Transportation Authority

    Small business means a for-profit business, other than a broker, certified by the Department of General Services as a small business that meets the following criteria:

    • Independently owned and operated.
    • Not a subsidiary of another business.
    • Not dominant in its field of operation.
    • AND

    • Its wholesale operations did not employ more than 50 persons.
    • Its retail operations did not employ more than 25 persons.
    • Its manufacturing operations did not employ more than 100 persons.
    • Its service operations did not employ more than 100 persons.
    • Its construction operations did not employ more than 50 persons.
    • The architectural and engineering services of the business did not employ more than 100 persons.
    • OR

    • The gross sales of the wholesale operations of the business did not exceed an average of $4,000,000 in its most recently completed three fiscal years.
    • The gross sales of the retail operations of the business did not exceed an average of $3,000,000 in its most recently completed three fiscal years.
    • The gross sales of the manufacturing operations of the business did not exceed an average of $2,000,000 in its most recently completed three fiscal years.
    • The gross sales of the service operations of the business did not exceed an average of $10,000,000 in its most recently completed three fiscal years.
    • The gross sales of the construction operations of the business did not exceed an average of $7,000,000 in its most recently completed three fiscal years.
    • The gross sales of the architectural and engineering services of the business did not exceed an average of $4,500,000 in its most recently completed 3 fiscal years.

    Small business reserve means procurements for which awards are reserved, or limited, to certified small businesses.

Small Business Reserve — Procedures:
    1. Qualified Expenditures. For purposes of calculating 10% of the dollar value of procurements, include only procurement expenditures that are subject to the Small Business Reserve Program (qualified expenditures). For example, the following expenditures are not qualified as they either are not "procurements" under the State Procurement Law or the Procurement Law excludes them from the Small Business Reserve program:
      • Procurements from a preference provider (Maryland Correctional Enterprises, Blind Industries and Services of Maryland, community service providers, and the Maryland Vending Facilities Program for the Blind).
      • Procurements governed by federal law or federal grant provisions that conflict with the Small Business Reserve Program.
      • Grant expenditures as defined in COMAR 21.01.02.01(B)(46).
      • Pass-through payments (e.g., employee health benefits, employee retirement contributions, employee travel payments), although the administrative and management fees expended to process such payments are included.
      • Expenditures excluded under §11-203 of the State Finance and Procurement Article (see COMAR 21.01.03.01).

      Caveat: A designated procurement unit that is exempt from Division II of the State Finance and Procurement Law calculates its total dollar value of qualified expenditures by including those procurements that are governed by the unit's procurement policies and procedures adopted pursuant to Sections 11-203 or 12-401 of the State Finance and Procurement Article.

    2. Expenditure Plans. Each designated procurement unit shall prepare a:
      • Fiscal year procurement-expenditure forecast reflecting anticipated expenditures under contracts to be awarded in the fiscal year and expenditures under current contracts; and
      • plan allocating 10% of the total anticipated expenditures under these contracts to certified-small businesses. Expenditures in a current fiscal year under a multiyear contract awarded in a prior fiscal year must be included in the forecast and will be counted toward both total procurement dollars and small business reserve dollars, as applicable.  The unit shall use its approved budget, record of historical spending patterns, and the DGS small business bidders’ list to develop the plan. Procurements conducted by any method may be designated as small business reserve procurements.
    3. Procurement Review Groups. Designated procurement units should expand the responsibilities of their MBE procurement review groups (see BPW Advisory 2001-2) to include a concurrent review of procurement solicitations for potential designation as small business reserve procurements. The University System of Maryland, Morgan State University and the Departments of General Services, Transportation, and Public Safety and Correctional Services procurement review groups should review solicitations also for possible designation as small business preference procurements under COMAR 21.11.01.
    4. Public Notice. Notice of a solicitation for a small business reserve procurement over $25,000 must comply with COMAR 21.05.02.04 (Public Notice) and state that the procurement is reserved for award to certified small businesses only.
    5. Solicitation Content. Each small business reserve solicitation must include the 2005-1 notice attachment.pdfNotice to Bidders/Offerors that is attached to this Advisory.
    6. Web Site. A procurement officer may verify that a bidder or offeror is a certified small business by checking the eMaryland Marketplace https://emaryland.buyspeed.com/bso.
    7. Certification Requirement. A bidder or offeror that is not DGS-certified as a small business and that submits a bid or proposal reserved for a small business is not entitled to award unless DGS certifies the business before award. A business that is not certified may apply for certification by accessing the eMaryland Marketplace Website at https://emaryland.buyspeed.com/bso. The procurement officer must verify with DGS that the business has been certified and added to the small business bidders’ list. Following that verification, the procurement officer may award the contract. If a bidder or offeror fails to become certified or is otherwise ineligible to participate in a procurement designated as a small business reserve procurement, the bid or proposal is rejected on the grounds that the bidder or offeror is not responsible. The procurement officer must verify with DGS that the business has been certified and added to the small business bidders’ list. Following that verification, the procurement officer may award the contract. If a bidder or offeror fails to become certified or is otherwise ineligible to participate in a procurement designated as a small business reserve procurement, the bid or proposal is rejected on the grounds that the bidder or offeror is not responsible.
    8. Records and Reporting. Each designated procurement unit shall maintain a record of small business reserve contract payments and submit a report for the preceding fiscal year to the Board of Public Works and the Governor’s Office of Minority Affairs no later than September 30. The report shall contain information on the operation and effectiveness of the small business reserve program, the amount and percentage of total procurement dollars paid to certified small businesses, and any other information that COMAR, the Board of Public Works, or the Governor’s Office of Minority Affairs requires.
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Questions may be addressed to:
Governor’s Office of Minority Affairs
6 St. Paul Street, Ste 1502
Baltimore, Maryland  21202
410.767.8232​