Baltimore officials said Monday they intend to increase the contracts awarded to small businesses in an effort to boost the economic spinoff from city spending.
New policies to be introduced before the Board of Estimates this week would give preference in awarding contracts to small businesses and firms that can demonstrate their local economic impact. The rules are designed to help small and women- and minority-owned businesses compete against bigger, more established firms that might otherwise submit lower or more qualified bids.
City agencies also have been directed to increase procurement from small businesses by 5 percent over the current year. Mayor Stephanie Rawlings-Blake, who has worked to position her administration as friendly to small businesses, called the order and proposed policies together "a significant step forward" to supporting local firms.
"I've listened to our minority- and women-owned business community. I've listened to small businesses and residents, and they say they want to see a bigger impact for the dollars that we spend on city contracts," Rawlings-Blake said Monday at a news conference to launch Minority Enterprise Development Week.
Rawlings-Blake said she is not worried that the changes will drive up city costs, saying they will be balanced out by increased local spending and taxes.
"When you take a look at this in a comprehensive way … it is recycling money and growing our economy," she said.
The proposed rules for Board of Estimates spending awards were developed after a 2013 review of minority- and women-owned business policies and come amid broader focus on economic inclusion in the city in the wake of the April riots. In September, the Johns Hopkins University announced goals for its own build-, hire- and buy-local initiative, which it said targets small local firms and was developed in response to the unrest.
One of the city's proposed policies would allow the spending board to approve bids up to 10 percent more expensive than the lowest offer if they come from firms that qualify as federal HUBZone small businesses — meaning they are located in a "historically underutilized" area and draw at least 35 percent of their employees from the zone, among other requirements. The proposal applies to services provided in federal HUBZones, which represent more than 15,000 acres in Baltimore — much of the city.
The second proposal would allow Baltimore to add points to proposals from firms that can demonstrate their economic benefit to the city, through hiring and subcontracting of local, women- or minority-owned businesses or participation in programs such as youth summer employment initiatives.
It's not clear how big an effect the new small-business policies would have.
There are about 12,000 small businesses in the city, of which about half are located in federal HUBZones, officials said.
City officials said they do not know how many contracts now go to small businesses, how much those contracts are worth or to what extent they expect those numbers to change with the new rules.
Attorney Robert Fulton Dashiell, who served on the advisory council that put together the 2013 report and is a longtime minority advocate, said the proposals are a good step but that more needs to be done to improve the city's procurement environment, such as standardizing practices and making awards more transparent.
The advisory council report also suggested relaxing bonding requirements and working to increase access to capital for those businesses.
"The three things the mayor announced today are helpful … but again, I'm hopeful that it is her intent ultimately and eventually to implement the host of other recommendations that came out of the committee," Dashiell said.
The new policies will work in tandem with the goals for women and minority hiring that Baltimore sets for its contracts, said Christine Bivens of the mayor's Office of Minority and Women-owned Business Development.
About 25 percent of the nearly $2.5 billion awarded between 2007 and 2012 went to minority- and women-owned businesses, representing nearly $613 million, according to a study completed for the city last year by NERA Economic Consulting.
About 75 percent of city contracts in those years went to firms in the Baltimore metro area, with nearly half of the dollars going to businesses located in the city, it found.
Pless B. Jones Sr., president of the Maryland Minority Contractors Association, said he supports the proposals, even if current procedures already take some of the same factors into account.
"We have to come up with something so that local contractors can get a lot of the local work, so I think that's a great start," he said. "We should use every tool necessary."
Rawlings-Blake said she did not think more aggressive action was needed at this point.
"You have to have a start, and in order for this to work, you have to put in the infrastructure to support these commitments," she said. "If we can get to our goals with the executive order, I think that's sufficient, but if we need more, we'll certainly do more."