Montgomery set-aside program draws mixed reviews -- Gazette.Net


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Montgomery County’s small-business reserve program has performed so well that it shouldn’t have to face renewal every three years by the County Council, some officials say.

Although business owners who have won contracts applaud the program, others say it needs some changes, such as making the process more accessible. The program has a goal of awarding 20 percent of the value of eligible county contracts to small businesses based in the county.

“We have heard from some members that the eligibility process and bidding process are burdensome for a small business,” said Marilyn Balcombe, president and CEO of the Gaithersburg-Germantown Chamber of Commerce.

However, the chamber does favor a proposal by County Executive Isiah Leggett (D) to do away with the sunset provision that requires the council’s review, Balcombe said.

Some business owners who have won contracts through the program agree it shouldn’t carry a sunset provision.

“We believe in the program. It’s been very beneficial,” said Anne Boyle, partner and director of strategy with Nana Design.

The Silver Spring graphic design company won a contract in 2010 to develop a website for the county’s Department of Environmental Protection that highlights environmental programs. The contract to maintain and market the website has been extended through November 2013.

The reserve program already is reviewed regularly by the county’s Office of Legislative Oversight, said Grace Denno, acting manager for the Office of Business Relations and Compliance. Denno’s agency, under the county Department of General Services, oversees the program.

The program started in 2006, with a sunset provision for 2009. It then was renewed through 2012.

“We have to go through a lot of paperwork to prepare for the [council’s] review,” Denno said. “We have not heard any objection to this proposal” to eliminate the sunset provision.

The program certainly has grown since its inception, although awards fell off some in fiscal 2011. Some $58.2 million in county contracts was awarded to local small businesses in fiscal ’11, down from $67.5 million in fiscal ’10 but up from $33.3 million in fiscal 2009.

Denno said the decline in 2011 stemmed from fewer contracting dollars being eligible for the program that year. In fiscal ’10, $295.7 million in contracts was eligible under the program for small companies to bid on, compared with $159.1 million in fiscal ’11, according to county figures.

Councilman George L. Leventhal (D-At large) of Takoma Park, one of the original sponsors of legislation that established the program, said he has not yet taken a position on whether to remove the sunset provision.

“It’s a big success,” Leventhal said of the program. “It’s opening up opportunities for county contracts.”

A public hearing before the County Council on the proposal is scheduled for 1:30 p.m. on Sept. 18.

Most contracts still exempt

In a 2009 review, the Office of Legislative Oversight found that the program failed to meet the “legislative goals identified when the program was established.”

Some 94 percent of county contracts that could be awarded in fiscal 2007 was exempt from the program due to reasons such as being a pre-existing or non-competitive contract, or the lack of a local small business judged to be qualified for the job.

That percentage fell slightly to 92 percent in fiscal ’08 and has continued to fall. In fiscal ’11, the exempt percentage of awarded contracts was about 84 percent.

Officials made changes in 2009 that included expanding the size and revenue limits of businesses that can qualify for the program, and requiring the director of the county’s Department of General Services to approve departments’ decisions to exempt contracts. The three-year sales average limit for retail, wholesale and service businesses is $5 million annually, with $14 million the limit for construction and manufacturing companies.

Montgomery’s program was based on the state small-business reserve program that began in 2004.

Staff writer Kate S. Alexander contributed to this report.

kshay@gazette.net