Annapolis, MD—Gov. Robert L. Ehrlich Jr. signed legislation yesterday requiring Maryland agencies to send at least 10 percent of state purchasing contracts to small businesses, a move aimed at expanding the amount of public work done by minority-owned firms.

Ehrlich (R) called the new law a "significant step in the right direction to level the playing field for Maryland businesses."

The measure was one of several changes to the law intended to strengthen the state's 30-year-old minority business enterprise program, a program that Ehrlich described as "phony" because it has failed to deliver a significant amount of work to minority-owned companies.

A recent audit showed that Maryland agencies had been over-reporting their compliance in fulfilling minority contracts by as much as 40 percent.

Among the changes Ehrlich signed into law yesterday are rules forcing state contractors to follow through on pledges made during the bidding process to use minority-owned subcontractors, and the creation of a "yellow pages" that will allow state agencies to seek out small businesses for specific projects.

The governor also created a Cabinet-level position to oversee the program.

The new special secretary for the Office of Minority Business Affairs, Sharon R. Pinder, said yesterday that the changes mark a "historic first step that will, over time, create a legacy of wealth for minority businesses and for all Maryland citizens."

Pinder said her office will triple in size and will help enforce the new rules, including making certain that the state meets it target.

The reforms come after heavy lobbying from Lt. Gov. Michael S. Steele (R), who headed a study commission of business leaders that made 50 recommendations for ways to improve the program. Steele handed the suggestions to the governor at the beginning of the year.

At a signing ceremony yesterday, Steele said the new rules will give a needed boost to "the one- , two- , 10- and 15-person shops that are becoming the backbone of the new economy."

"This is a huge moment for Maryland and Maryland business," he added.

Small-business leaders who attended the ceremony said they were thrilled with the changes, largely because it will enable them to compete for millions of dollars in state procurement contracts that had previously gone to larger companies that, through economies of scale, were able to offer lower bids.

"What it's going to mean is more money for us," said Shelonda Stokes, co-chairwoman of the study commission with Steele and owner of a small Baltimore multimedia firm. "That's what this was about."

Robert L. Wallace, president of BiTH Group Inc., a Columbia technology firm, said that while the law offers guarantees for small businesses, minorities will be the disproportionate beneficiaries because most of the state's 82,000 minority-owned and 128,000 women-owned firms fall into that category.

"You're giving these companies, many of which are new, enough runway to become competitive," Wallace said.

The new rule -- establishing a 10 percent requirement for purchasing contracts -- does not affect the existing minority business enterprise law, which sets a target of 25 percent of all state contracts going to businesses owned by minorities and women.

The measure was one of dozens of bills signed by the governor in Annapolis yesterday, including a bill aimed at cutting the red tape involved in cleaning up polluted industrial sites that, once cleaned, can be redeveloped, and one that extends paid leave for state employees who are on active military duty.

*article taken from The Washington Post, written by Matthew Mosk