Maryland's minority business program is such a shambles that it can't reliably estimate how much business the state does with non-white firms, Gov. Martin O'Malley said yesterday, promising renewed efforts to steer government work to groups that have suffered from discrimination.
The governor told the Maryland-Washington Minority Contractors Association that although the number of minority- and women-owned firms registered with the state has increased in recent years, it appears that minorities' share of state business might actually have declined.
He said the state's best guess is that firms owned by African-Americans get about 5 percent to 7 percent of state contracts.
"That's where we start. That's not where we end. We are going to do a much better job as we go forward," said O'Malley, who made minority contracting a major focus when he was mayor of Baltimore.
"When I come back to you in a year, I will be able to, as I did as mayor, tell you exactly where we are. We have a lot of work to do. We have done it on a smaller scale [in Baltimore]. Now we have an opportunity to do it on a larger scale for the whole state."
O'Malley spoke at the contractors association's annual meeting yesterday.
He outlined several ways he plans to increase the share of contracts going to minority businesses, including better tracking of statistics, information sharing between state and local governments to spread best practices, lobbying for the establishment of a federal minority business center in Maryland, and working to include minorities in business opportunities that result from the transfer of military personnel to Maryland.
Former Gov. Robert L. Ehrlich Jr.'s handling of the Minority Business Enterprise program has been under scrutiny in recent months after reports in The Sun showing that the state fast-tracked the certification of a firm headed by a Republican strategist with close ties to the administration.
An audit by the state Department of Transportation, which manages the MBE program, found other cases in which firms were improperly fast-tracked.
Another Sun report showed problems in the minority contracting program at Baltimore-Washington International Thurgood Marshall Airport. Some minorities say that airport managers have set them up to fail by requiring them to make investments and pay rent they can't afford, and a third have left the MBE program in the past few years.
Two have sued the airport, the concessions management company and the state. Other businesses owned by minorities appear not to have had minority managers, including two that the state now says might have been improperly certified for the MBE program to begin with.
Maryland has set goals for minority participation in state contracts since 1978. The state's legacy in spreading business to firms that had been shut out of government work has been at the forefront of public dialogue in the state since the death last week of Parren J. Mitchell, who was Maryland's first black congressman and who successfully pushed for federal minority business programs in the 1970s.
The governor got a strongly positive reaction from the minority contractors, who filled the catering hall at Martin's West in Woodlawn for their breakfast meeting. The group's president, Wayne Frazier, endorsed Ehrlich in 2002 but backed O'Malley last year. Frazier appeared giddy when he took the podium after the governor's speech.
"You heard him say he's coming back next year to give some numbers, man," Frazier said.
"Twenty-five? Thirty-five? Forty-five? Should I go higher?" he said to the governor, attempting to goad him on like an auctioneer. "We're doing The Price is Right."
The state's goal is set by statute at 25 percent.
Ehrlich had the backing of many minority contractors when he took office in 2002, but he lost some support during his term, particularly after musing at a Board of Public Works meeting about when Maryland's minority contracting program would end. Early in his term, he created a program that steers 10 percent of contracts at most state agencies to small businesses, but not necessarily minority businesses.
Ehrlich trumpeted gains in minority contracting during his term, but a 2005 report from his own Office of Minority Affairs conceded that those conclusions were "best guesses based on partial data known to be of questionable accuracy."
Sharon Pinder, who headed the Office of Minority Affairs under Ehrlich, acknowledged that there is room for improvement in data reporting but said that it improved greatly during her tenure. A state audit at the end of Gov. Parris N. Glendening's administration found that agencies over-reported their numbers by as much as 40 percent, she said.
Minority businesses did get a greater share of state contracts under Ehrlich, but there's still a long way to go, Pinder said.
"The success of this program comes when we achieve parity, and the focus and concentration should be on that," she said. "There is tremendous opportunity to improve because we just aren't there."
Anirban Basu, an economist with the Sage Policy Group who helped analyze MBE data for the Ehrlich administration, said the quality of the data improved during the course of the Ehrlich administration, making it possible to at least gauge relative progress, if not to get an absolute sense of how much money goes to minority firms. Basu said he has not worked with the Baltimore MBE program and can't say how accurate its data was under O'Malley.
Luwanda Jenkins, who heads the Governor's Office of Minority Affairs for O'Malley and held the same post during Glendening's first term, said the Ehrlich administration did succeed in standardizing the reporting format for MBE statistics, which improved collection.
But the numbers are only compiled annually and reported six months after the fiscal year ends, she said. Her office is now working to incorporate MBE statistics into StateStat, O'Malley's computerized government performance management system, so tracking can be done in real time.
"That will make a significant difference in our ability to proactively manage the MBE activity and to work collaboratively with those agencies that are not on track to meet the minimum goal," Jenkins said.
But Basu said the real problem with the data is that the state relies heavily on contractors to report accurately. "The government can know the contract into which it's entered," Basu said. "The question is whether the prime contractor used those MBE subcontractors and did they pay the MBE contractors. That's the part that's hard to collect."
Stella M. Miller, who learned the contracting business as a secretary and worked her way up to founding her own firm, said that's exactly the problem she has encountered. Miller, the contractors association's businessperson of the year for 2006, called O'Malley's commitment "awesome" and said the state's minority business program has been troubled for years by lax oversight.
She said she has frequently discovered that prime contractors list her firm with the state to get their minority participation numbers up without ever hiring her to do the job.
"Have the agencies enforce the laws as they exist," said Miller, president of Harford County-based Stella May Contracting. "Have somebody come down and say, 'If you put their name on there, why are they not on the job?'"
Jenkins said that state agencies audit contract compliance, but more needs to be done. She said that O'Malley's focus on the issue will prompt greater vigilance by state agencies and that her office will step up its efforts to ensure compliance.
Del. Dan K. Morhaim, a Baltimore County Democrat and leading procurement law expert in the General Assembly, said the governor can accomplish much of the goal for increasing minority business just by publicly displaying his commitment to the issue. Morhaim said he will propose legislation next year to further the cause, including measures to further centralize the posting of state contracting opportunities.
"Number one, the state gets more competition so it gets better bids and better contracts, and number two, it encourages minority businesses to compete for state contracts," Morhaim said.
Arnold Jolivet, who won the contractors' association's lifetime achievement award yesterday, said it didn't much matter what O'Malley said beyond the fact that he showed up and said enforcing the program is important to him.
"Nobody has any doubt that he will because he did a tremendous job in the city," said Jolivet, the president of the American Minority Contractors and Businesses Association.
"There's a great belief and anticipation in the minority business community that he's going to be good for the program because he believes in it, and you can't enforce anything you don't believe in. There's no way he's going to come back here with bad numbers."
Sun reporter Meredith Cohn contributed to this article.