Chapter 3 – Small Local Business Enterprise Procurement Requirements

“Commercially useful function” means the performance by a business enterprise of real and distinct work for which the business enterprise has the skill, expertise, and actual responsibility to perform, manage, and supervise, as determined by an evaluation of:

A firm does not perform a commercially useful function if its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of meaningful and useful SLBE participation, when in similar transactions in which SLBE firms do not participate, there is no such role performed.

that is independent and directly owned by individuals only; and

whose day-to-day management is direct and independent of the influence of any other business that cannot itself qualify under the SLBE eligibility requirements.

“Professional services” means any non-construction, non-architectural, or non-engineering services that require highly specialized training or licensed credentials to perform, such as legal, accounting, scientific, technical, insurance, investment management, medical, or real estate services.

The term “professional services” as used in this chapter is not intended to be restricted to those professional services that are exempted from formal advertising requirements pursuant to Article VI, § 11, of <cite data-doc="City of Baltimore, Md., Charter">the City Charter</cite> or competitive bidding requirements pursuant to Article VII, § 17, of <cite data-doc="City of Baltimore, Md., Charter">the City Charter</cite>.

The purpose of this chapter is to establish a race- and gender-neutral remedy for ongoing effects of past discrimination in the marketplace by providing a variety of procurement tools for the City that will ensure that all segments of its local business community have a reasonable and significant opportunity to participate in City contracts for construction, architectural, and engineering services, professional services, services, and materials, supplies, and equipment.

The SLBE Program also furthers the City’s public interest to foster effective broad-based competition from all segments of the vendor community, including minority business enterprises, small business enterprises, and local business enterprises. This policy is, in part, intended to further the City’s compelling interests in both ensuring that it is neither an active nor passive participant in private sector marketplace discrimination, and in promoting equal opportunity for all segments of the contracting community to participate in City contracts.

The SLBE Program also provides additional avenues for the development of new capacity and new sources of competition for City contracts from the growing pool of small and locally based businesses. This capacity building will increase the quality of bidding on City contracts and lower prices for City contracts over the long term.

architectural and engineering;

construction;

professional services;

services; and

materials, supplies, and equipment.

Each GSC is chaired by the Chief or the Chief’s designee.

The Chief determines the number of members on each GSC at the time of its establishment.

Each GSC must include representatives from the Office and from the primary contracting agencies and end-user agencies for the committee’s industry category.

The Chief must appoint the remaining members of the GSC from the City’s procurement personnel and other City departments affected by this Program.

For its industry category, each GSC must:

In making its decisions, the GSC must consider:

the progress towards achieving the goals established for awards to certified SLBE and certified Emerging SLBE firms;

both dollars awarded and expended through the SLBE Program; and

the progress towards achieving the stated Program objectives, including:

be an independently owned and operated business enterprise that is not a broker, that is not a subsidiary of another business, and that is not dominant in its field of operation;

have owners who are actively involved in day-to-day management and control of the business;

perform a commercially useful function;

not have employed more than 50 full-time persons at any time during the last 3 years;

have annual gross revenues, as averaged over its most recent past 3 fiscal years or, if the business has not existed for 3 years, over the course of the existence of the business, of not more than:

have a principal place of business in Baltimore City;

have:

in the year preceding the date of the initial certification application, not have received more than $1,000,000 in City contract payments as a result of contract awards from the City achieved through an open competitive bidding process.

A business firm is not eligible to become a certified SLBE if it is owned by:

A business firm that has graduated from the SLBE Program under § 28-109 {“Graduation[, etc.]”} is no longer eligible to participate in the SLBE Program even if it otherwise meets all other eligibility criteria.

a completed certification or recertification application in the form required by the Office;

all supporting documentation required by the Office; and

a signed affidavit stating that it meets all of the SLBE eligibility criteria set forth in § 28-105 {“Eligibility for SLBE Program”}.

After receiving an SLBE certification or recertification application, the Office must review all enclosed forms, affidavits, and documentation to make a prima facie determination as to whether the applicant satisfies the SLBE eligibility requirements as set forth in this chapter.

If, after the review required by this section, the Office finds that the applying firm satisfies the SLBE eligibility requirements as set forth in this chapter, the Office must grant the firm certified SLBE status.

If an applicant is determined to be ineligible for certification as an SLBE, the Chief must send a letter to the applicant stating the basis for the denial of eligibility.

Applicants determined to be ineligible are not eligible to submit a new application until at least 1 year after the date of the notice of denial of eligibility.

Joint ventures must be certified on a bid-by-bid basis.

A joint venture seeking certification is not itself subject to the size limitations imposed by § 28-105(a)(4) and (a)(5).

Each individual business participating in the joint venture must be a certified SLBE in order for the joint venture to receive the benefits of the SLBE Program.

the firm complies with all of the SLBE criteria set forth in § 28-105 {“Eligibility for SLBE Program”};

the firm has been in existence for less than 5 years;

the firm has no more than 5 full-time employees; and

the firm’s annual gross revenues, as averaged over the life of the firm, are less than $1 million.

a completed application for certification or recertification in the form reqauired by the Office;

all supporting documentation required by the Office; and

a signed affidavit stating that it meets all of the eligibility criteria set forth in subsection (a) of this section.

After receiving an Emerging SLBE certification or recertification application, the Office must review all enclosed forms, affidavits, and documentation to make a prima facie determination as to whether the applicant satisfies the Emerging SLBE eligibility requirements as set forth in this chapter.

If, after the review required by this section, the Office finds that the applying firm satisfies the Emerging SLBE eligibility requirements as set forth in this chapter, the Office must grant the firm certified Emerging SLBE status.

If an applicant is determined to be ineligible to participate as an Emerging SLBE, the Chief must send the applicant a letter stating the basis for the denial of eligibility.

Applicants determined to be ineligible are not eligible to submit a new application for Emerging SLBE certification for 1 year after the date of the notice of denial of eligibility.

Applicants determined to be ineligible for certification as an Emerging SLBE may still be eligible for certification as an SLBE.

An SLBE firm must be permanently graduated from the SLBE Program after it has received a cumulative total of $5 million of City-funded prime contract or subcontract payments in at least 5 separate contracts since its initial certification as an SLBE firm.

An SLBE firm must be permanently graduated from the SLBE Program after its 3 fiscal year average gross sales exceeds the size standard eligibility requirements.

fails to perform a commercially useful function under a contract; or

allows its certified SLBE status to be fraudulently used for the benefit of a non-SLBE firm or the owners of a non-SLBE firm so as to provide the non-SLBE firm or firm owners benefits from affirmative procurement initiatives to which they would not otherwise be entitled.

An Emerging SLBE firm must be permanently graduated from Emerging SLBE status after it has received a cumulative total of $2.5 million of City-funded prime contracts or subcontract payments in at least 5 separate contracts since its initial certification as an Emerging SLBE firm.

An Emerging SLBE firm must be permanently graduated from Emerging SLBE status once its 3 year average annual gross sales exceeds $2 million.

An Emerging SLBE firm must be temporarily suspended from Emerging SLBE status by the Chief for the balance of any fiscal year after it has received, as a contractor or subcontractor on City-funded contracts, a cumulative total of $750,000 in payments for that fiscal year.

An Emerging SLBE firm suspended under this subsection may still be eligible to continue participating in affirmative procurement initiatives as an SLBE firm for the remainder of the fiscal year.

This section is not intended to require or allow the City to terminate a contract or fail to renew a contract solely due to the finding that a firm’s SLBE or Emerging SLBE status is permanently graduated or temporarily suspended during the contract term, including all renewal options originally available.

Bids or proposals submitted by an SLBE or Emerging SLBE prior to graduation or suspension may be awarded as if the firm retained its SLBE or Emerging SLBE status.

An SLBE or Emerging SLBE may not participate as an SLBE or Emerging SLBE on new bids during a period in which it has been permanently graduated or temporarily suspended, and will not receive any preference for which it may have previously been qualified.

If SLBE or Emerging SLBE status is revoked under subsection (c) of this section, the Board of Estimates may, upon recommendation by the contracting agency, terminate or fail to renew an impacted contract, if the Board of Estimates determines that termination or non-renewal is in the best interests of the City.

be in writing;

include the reasons for the determination; and

be sent to the affected business enterprise.

An aggrieved party has a right to protest an adverse determination and seek administrative review.

To obtain administrative review, the aggrieved party must submit a written protest to the Chief within 7 days of receipt of the adverse determination.

The protest must specify the reasons and factual grounds of the protest and be accompanied by any supporting documents.

review the protest and all relevant supporting documents; and

render a written decision that includes the reasons for the decision.

After all departmental remedies have been exhausted, the aggrieved applicant may request a hearing before a panel of independent hearing officers, with 1 member of the panel being appointed by the President of the City Council and the other members of the panel being appointed by the City Solicitor.

The hearing officer must be knowledgeable of Baltimore City procurement laws and procedures, including this subtitle.

Subject to applicable federal and state law, as well as <cite data-doc="City of Baltimore, Md., Charter">the City Charter</cite>, and applicable regulations, policies, and procedures, the Board of Estimates, on the recommendation of the contracting agency, may waive or reduce the bonding or insurance requirements for public works contracts, depending on the type of contract and whether the contracting agency determines that the bonding or insurance requirements would deny an SLBE, or Emerging SLBE, an opportunity to perform a contract that the SLBE or Emerging SLBE has shown itself otherwise capable of performing.

From time to time the Chief shall make written suggestions to a contracting agency relating to concerns about bidding restrictions caused by bonding or insurance requirements on solicitations issued by that agency.

Subject to applicable federal and state law, as well as <cite data-doc="City of Baltimore, Md., Charter">the City Charter</cite>, and applicable regulations, policies, and procedures, the Board of Estimates, on the recommendation of the Department of Finance, may waive or reduce the bonding or insurance requirements, depending on the type of contract and whether the Department determines that the bonding or insurance requirements would deny an SLBE or Emerging SLBE an opportunity to perform a contract that the SLBE or Emerging SLBE has shown itself otherwise capable of performing.

From time to time the Chief shall make written suggestions to the Director of Finance relating to concerns about bidding restrictions caused by bonding or insurance requirements on solicitations issued by the Department of Finance.

the award to the SLBE would result in a total contract cost that is, on an annual basis, more than $25,000 higher than the low bid;

if the total contract cost would exceed the City’s budgeted funding for the contract; or

the total contract cost is determined by the contracting agency, with concurrence from the agency receiving the primary benefit of the contract, to be so high in price as to be not reasonable.

would exceed the City’s budgeted funding for the contract; or

is determined by the contracting agency, with concurrence from the agency receiving the primary benefit of the contract, to be so high in price as to be not reasonable.

If the contractor is a certified SLBE or certified Emerging SLBE, then the contractor is entitled to count the dollar value of the work performed by its own forces towards satisfaction of the mandatory subcontracting goal for that contract.

An SLBE or Emerging SLBE contractor may not subcontract more than 49% of the contract value.

An SLBE or Emerging SLBE subcontractor may not further subcontract more than 10% of its portion of the contract value to a vendor who is not an SLBE or Emerging SLBE.

For a contract bid out under this section, a prospective bidder must submit, at the time of bidding, a form providing the name of the SLBE or Emerging SLBE subcontractor or subcontractors and describing both the percentage of subcontracting by the SLBE or Emerging SLBE and the work to be performed by the SLBE or Emerging SLBE.

At the time of bidding, a bidder may request a full or partial waiver of this mandatory subcontracting requirement from the Chief for good cause, by submitting an SLBE unavailability certification to the Chief along with adequate documentation of good faith efforts to obtain SLBE participation, in the form required by the Office.

whether the requestor of the waiver has made good faith efforts to subcontract with qualified and available SLBEs or Emerging SLBEs;

whether subcontracting would be inappropriate or not provide a commercially useful function under the circumstances of the contract; and

whether there are no certified SLBE or certified Emerging SLBE firms that are qualified and available to provide the goods or services required.

In the absence of a waiver, failure of a contractor’s bid or proposal to satisfy the mandatory SLBE subcontracting goal renders its bid or proposal non-responsive.

In the absence of a waiver, failure of a contractor, in the performance of the contract, to attain a mandatory subcontracting goal for SLBE participation is grounds for termination of existing contracts with the City, debarment from performing future City contracts, or any other remedies available under the terms of its contract with the City or under the law.

A Contractor commits a material breach of contract if it fails to notify and obtain written approval from the Chief in advance of any negative change in usage of a designated SLBE or Emerging SLBE subcontractor, including any:

The Chief and a contracting agency may select certain contracts that have a contract value of $250,000 or less for award to a certified SLBE, or a joint venture with a certified SLBE, through the Sheltered Market Program.

The Chief and a contracting agency may select certain contracts that have a value of $50,000 or less for award to a certified Emerging SLBE firm through the Sheltered Market Program.

whether there are at least 3 certified SLBEs or certified Emerging SLBEs that are available and capable to participate in the Sheltered Market Program for that contract;

the degree of underutilization of the SLBE and Emerging SLBE contractors in the specific industry categories; and

the extent to which the City’s SLBE and Emerging SLBE contractor utilization goals are being achieved.

a responsive and responsible bid or response is not received for the contract; or

the apparent low bid is determined by the contracting agency, with concurrence from the agency receiving the primary benefit of the contract, to be so high in price as to be not reasonable or not within the City’s budgeted funding for the contract.

A finding made regarding the number of available certified SLBE’s or Emerging SLBE’s in determining whether a contract should be bid through the Sheltered Market Program for purposes of subsection (b) of this section does not create a presumption that any bidder is a responsible bidder for purposes of subsection (c) of this section.

The determination of a contracting agency, or the City’s prequalification process, that a bidder is not a responsible bidder for purposes of subsection (c) of this section is final and conclusive.

Contracts reserved for Competitive Business Development Demonstration Projects are subject to a Request for Proposals process open only to joint ventures between an established firm, or experts in the relevant industry, and a certified SLBE firm.

The scope of work for the selected joint venture must include teaching a hands-on curriculum to SLBE firms that have expressed an interest in diversifying into the relevant industry, in addition to performing the customary functions of the contract.

The curriculum required by paragraph (2) of this subsection must teach skills required to qualify for future City contracts and to successfully compete in the industry, including both: