Bill Summary – FastDemocracy

SB 598
                                  Department of Legislative Services
                                             Maryland General Assembly
                                                   2021 Session
                                         FISCAL AND POLICY NOTE
                                               Third Reader
Senate Bill 598               (Senators Smith and Carozza)
Education, Health, and Environmental Affairs       Health and Government Operations
     Procurement – Office of Small, Minority, and Women Business Affairs – Small
       Business Reserve Program and Veteran–Owned Small Business Enterprise
                                      Program
This bill repeals the statewide goal that at least 1% of the value of procurement contracts
be made to veteran-owned small business enterprises (VSBEs) and instead requires the
Special Secretary of the Governor’s Office of Small, Minority, and Women Business
Affairs (GOSBA) to adopt a statewide goal by regulation. The bill includes various
provisions to align management of the VSBE preference program with existing preference
program management structures and makes conforming changes. Finally, it establishes an
Advisory Committee on VSBEs within GOSBA.
                                                      Fiscal Summary
State Effect: General fund expenditures increase by $67,500 in FY 2022 to implement
the bill; out-year expenditures reflect annualization and ongoing expenses. No effect on
revenues.
    (in dollars)               FY 2022                FY 2023               FY 2024                FY 2025               FY 2026
 Revenues                                $0                    $0                     $0                    $0                     $0
 GF Expenditure                      67,500                79,500                 81,900                84,800                 87,800
 Net Effect                       ($67,500)             ($79,500)              ($81,900)             ($84,800)              ($87,800)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: None.
Small Business Effect: Potential meaningful.
                                         Analysis
Bill Summary:
Management of the Veteran-owned Small Business Enterprise Program
The bill (1) integrates the definition of a VSBE into the definition of “small business”;
(2) clarifies the definition of “veteran” to specify that verification of active-duty service
does not have to come only from the Maryland Department of Veterans Affairs (MDVA);
and (3) specifies that VSBEs are for-profit businesses.
The bill also specifies that contract goals for VSBEs must be based on both prime
contracting and subcontracting opportunities for VSBEs, as determined through analysis
of a contract’s scope of work. It makes corresponding changes to the responsibilities of the
Special Secretary.
Advisory Committee
The Special Secretary of GOSBA serves as chair of the committee, which must meet at
least twice annually, and GOSBA must provide staff to the committee. The committee must
(1) review GOSBA’s annual report to the Legislative Policy Committee on the VSBE
program, which is mandated under current law, to identify areas for improvement and
recommend actions to achieve those improvements and (2) ensure that a continuous
oversight and improvement structure exists for the program.
Current Law: Unless the requirement is in conflict with any federal program, State
agencies must structure their procurement procedures to try to achieve an overall minimum
of 1% of their total procurement spending to be made directly or indirectly to VSBEs.
Chapter 740 of 2018 establishes that, for the purpose of determining whether a business is
a VSBE under State procurement law, a “veteran” is an individual who is verified by
MDVA as having served on active duty in the armed forces of the United States. It also
transferred authority for administering the State’s VSBE preference program from the
Board of Public Works to GOSBA.
State Expenditures: The bill aligns management of the VSBE preference program with
the management structure of the Minority Business Enterprise (MBE) Program and the
Small Business Reserve (SBR) Program. As noted above, current law already assigns
responsibility for managing the VSBE preference program to GOSBA, as it does for the
MBE and SBR programs. Unlike the VSBE program, however, GOSBA has a compliance
manager assigned to each of the other two programs. As the bill aligns management of
SB 598/ Page 2
VSBE with the structure of the other two programs, GOSBA requires a compliance
manager dedicated to the VSBE program to carry out the bill’s provisions.
Therefore, general fund expenditures increase by $67,548 in fiscal 2022, which accounts
for the bill’s October 1, 2021 effective date. This estimate reflects the cost of hiring
one compliance manager to oversee and administer the VSBE preference program in
GOSBA. It includes a salary, fringe benefits, one-time start-up costs, and ongoing
operating expenses.
          Position                                                          1.0
          Salary and Fringe Benefits                                   $61,967
          Operating Expenses                                             5,581
          Total FY 2022 State Expenditures                             $67,548
Future year expenditures reflect a full salary with annual increases and employee turnover
and ongoing operating expenses.
Small Business Effect: Although the bill’s provisions are largely procedural and
administrative, they likely result in State agencies giving greater attention, under the more
rigorous supervision provided by GOSBA, to meeting the State’s VSBE participation goal.
To the extent they do, VSBEs may experience increased opportunities to participate in
State procurement.
                                Additional Information
Prior Introductions: None.
Designated Cross File:       HB 790 (Delegate P. Young) - Health and Government
Operations.
Information Source(s): Department of General Services; Governor’s Office of Small,
Minority, and Women Business Affairs; Department of Commerce; Department of
Veterans Affairs; Department of Legislative Services
Fiscal Note History:      First Reader - February 15, 2021
rh/ljm                    Third Reader - March 20, 2021
Analysis by: Michael C. Rubenstein                      Direct Inquiries to:
                                                        (410) 946-5510
                                                        (301) 970-5510
SB 598/ Page 3
Statutes affected: 
Text - First - Procurement – Office of Small, Minority, and Women Business Affairs – Small Business Reserve Program and Veteran–Owned Small Business Enterprise Program: 14-501 State Finance and Procurement, 14-601 State Finance and Procurement, 14-602 State Finance and Procurement, 14-603 State Finance and Procurement, 14-604 State Finance and Procurement, 14-604.1 State Finance and Procurement, 9-301 State Government, 9-304 State Government
Text - Third - Procurement – Office of Small, Minority, and Women Business Affairs – Small Business Reserve Program and Veteran–Owned Small Business Enterprise Program: 14-501 State Finance and Procurement, 14-601 State Finance and Procurement, 14-602 State Finance and Procurement, 14-603 State Finance and Procurement, 14-604 State Finance and Procurement, 14-604.1 State Finance and Procurement, 9-301 State Government, 9-304 State Government