New MBE Law Limits Participation by Suppliers and Brokers

Ally D'Ovidio

Earlier this year, the General Assembly made changes to the counting rules for MBE participation.

Last week ABC spoke with officials from the Governor’s Office for Minority Affairs to get clarification on just what, exactly, has changed and how those changes will impact procurement.

We were told the intent of the changes were to bring Maryland’s MBE participation regulations more in line with that of the Federal government.

We think these changes may increase uniformity among the various procurement offices in interpretation of MBE counting rules.

According to GOMA, the only real change in the MBE regulations will limit participation by Wholesale Merchant Suppliers to 60 percent of the overall goal.

Based on several conversations with general contractor members, that limit has been in place for some time at various agencies. But like many of the MBE participation regulations, they are not uniformly enforced or applied across all agencies. And as a result, there are a number of agencies who have not imposed a cap on supplier participation.

Wholesale Trade Agents and Brokers (see definition from NAICS Manual below*)

We also want to call to your attention that we expect, as a result of the uniform enforcement of the “60-Percent-Rule”, agencies will strictly enforce existing participation rules by Brokers (NACIS Code: 425120).

GOMA told us that participation by Brokers has always been limited to their fee (or mark-up) in sourcing and delivering supplies. But what we have heard from many of our members, is that distinction between Wholesale Merchant Supplier and Broker has rarely, if ever, been made or enforced and as a result, this could have a pretty significant impact on a prime’s ability to meet participation goals.

We need to hear from our general contractor and specialty contractor members on what, if any, impact they believe this law will have their ability to meet participation goals.

If we do discover that these changes could have a significant, negative impact, we will then put together a plan to see if we can get this law changed or at least modified.

*425120 Wholesale Trade Agents and Brokers

This industry comprises wholesale trade agents and brokers acting on behalf of buyers or sellers in the wholesale distribution of goods. Agents and brokers do not take title to the goods being sold but rather receive a commission or fee for their service. Agents and brokers for all durable and nondurable goods are included in this industry.

Illustrative Examples: Independent sales representatives; Manufacturers’ sales representatives