State Treasurer Dereck E. Davis voted against an emergency contract Wednesday because the state labor department waived requirements that a portion of the contract is used to hire women- or minority-owned businesses.
Despite Davis’ protest vote, his colleagues on the powerful state spending board, Gov. Wes Moore and Comptroller Brooke Lierman, approved the contract 2-1.
The vote allows the Maryland Department of Labor to hire a vendor to create bookkeeping software that would track temporary loans of up to $700 for some federal employees in the event of a government shutdown. The program, created by the General Assembly, provides temporary funds to federal employees who must work without pay during a shutdown.
Davis said that although he liked the loan program, he couldn’t vote yes because the labor department didn’t push the company to fulfill the state’s minority business participation requirement.
“What I need is for our agencies to fight for these MBE [minority business enterprise] goals the way they would fight for their budgets before the appropriations committee,” he said, referencing the House of Delegates committee that approves the annual state budget.
The labor department signed the contract in September when it seemed imminent that a handful of conservative Republicans in the U.S. Congress was set to bring the federal government to a halt. When the shutdown didn’t happen, the delay should have given the labor department enough time to pressure the vendor to meet the goal, Davis said.
“You have to be willing to call their bluff,” Davis said to several labor department staff members who attended the meeting by teleconference. “You have to be willing to say to them, ‘You will lose this contract if you can’t meet this goal.’” Labor Secretary Portia Wu did not attend.
A senior policy advisor for the labor department said the agency had to move quickly and this vendor had the required experience to get the job done. Submittable Holdings Inc. of Missoula, Montana, the contract winner, was also the lowest of three bidders.
“This was the best option available,” said Rachel Brash, who addressed some of Davis’ questions on behalf of the labor department.
After the meeting, the labor department deferred further questions to the governor’s office.
All three state officials — all Democrats and all members of demographic groups included in the minority business requirements — pledged their commitment to boosting the share of minority business participation in state contracts during their first spending board meeting in January.
After Davis held the floor for around 10 minutes to explain his vote and question labor department staffers, Lierman applauded the treasurer’s demands for more minority business participation and said she agreed with him. Lierman also shamed members of Congress for putting the incomes of hundreds of thousands of Marylanders at risk.
But on her reason for voting yes, Lierman said, “There’s an enormous amount of work that we cannot do in-house, we do not have the resources or the staff, and so it is essential that we make sure that we provide people with loans to live off of in case this unfortunate event happens.”
Moore thanked Lierman for “pushing the urgency of this moment” but said nothing during the meeting in response to Davis’ comments on minority business participation, nor did the governor explain his reasons for approving the contract with the exemption.
Moore spokesperson Brittany Marshall wrote in a statement that the governor “shares the Treasurer’s concerns about increasing MBE awards, compliance, and accountability” and emphasized that “executive agencies are fully aware and committed to meeting the Governor’s and the Board of Public Works’ expectation that MBE goals are appropriately set based on existing laws, regulations, and policies.”
“In some cases, such as this particular emergency procurement, the nature of the emergent situation requires agencies to move quickly to safeguard public welfare,” Marshall wrote. “The vendor selected is an out-of-state company that has experience in building similar platforms, could meet the time constraints outlined, and identified a non-MBE subcontractor to support the work as required in the emergency procurement.”
Since Moore took office 10 months ago, the state has “advanced over half a billion dollars in contract awards to certified minority and women owned businesses through the Board of Public Works, signed an executive order on MBE reporting data; and in the near future, will be appointing the first-ever MBE ombudsman for the state of Maryland, whose sole focus will be to assist MBEs navigate through issues and challenges in state procurement,” Marshall wrote.
After the meeting, Lierman said Maryland had no choice but to contract out the loan program because the state government “has been so depleted over the [last] few years.”
“But for the dire emergency that we are facing, because of the looming federal shutdown, a waiver would not be acceptable,” she said.
Lierman served as a Baltimore City delegate when a law passed by the General Assembly mandated the loan program in 2019, but said the program is “one of many” that haven’t been “stood up” since it became law.
“There was no other way to do it but to contract it out, because we do not have the staff that is needed to cut all these checks and balance all these books,” Lierman said. “But I completely agree with the treasurer that waivers are unacceptable.”