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Audit faults agencies on MBE goals, oversight

Two state agencies are being criticized for failing to set and oversee minority business goals for construction and procurement at Maryland’s casinos.

A report released Tuesday highlights concerns raised by the Office of Legislative Audits about the failure of the Maryland Lottery and Gaming Control Agency and the Governor’s Office of Minority Affairs to set minority participation goals at the four facilities currently in operation — Hollywood Casino Perryville, Casino at Ocean Downs, Maryland Live Casino and Rocky Gap Casino Resort.

Among the auditors’ findings:

* The lottery and gaming agency failed to amend its original minority business participation goals after the original goals were found to be constitutionally infirm.

* The Governor’s Office on Minority Affairs failed to monitor and report on minority participation, and the gaming commission failed to verify those reports.

* The minority affairs office and gaming commission each failed to report on the efforts of casinos to meet their minority participation goals.

“Although some preliminary actions were taken, the Maryland Lottery and Gaming Control Commission had not established amended minority participation goals for each video lottery terminal licensee as recommended by the attorney general of Maryland,” the auditor’s report stated. “Therefore, MLGCC was unable to evaluate the performance of licensees in achieving minority participation goals.”

In 2008, the Video Lottery Facility Location Commission set minority participation goals of 25 percent for Allegany, Cecil and Worchester Counties, and 35 percent for Anne Arundel County and the city of Baltimore.

Those goals were nullified by a September 2011 opinion from the Office of the Maryland Attorney General because of constitutional issues. The attorney general advised that amended goals be set for each individual facility, based on the availability of minority-owned businesses to perform the work at each venue, and that waivers be available if a licensee was unable to meet the goals after a good-faith effort.

Amended goals have not been set, and the agency has not established a waiver system, the audit noted.

Meanwhile, the licensees have been providing data that is “accurate” but “incomplete,” Legislative Auditor Thomas J. Barnickel III wrote in a letter to the Joint Audit Committee. The lottery and gaming agency “had not established procedures to verify the data compiled and reported by” the Governor’s Office of Minority Affairs, Barnickel wrote.

Identical concerns were raised by auditors in a June 2013 review.

Both agencies, in separate responses, agreed with the findings of the auditor — just as they had in the previous report.

Carole Everett, a spokeswoman for the Maryland Lottery and Gaming Control Agency, said in an email that changes have been implemented since the first audit was released in June 2013, including a revision of the goal-setting process that was based on the attorney general’s opinion.

“The revised process was first applied to the construction phase of the Horseshoe Baltimore Casino,” Everett wrote. “We will soon be applying the revised process to amend the MBE operations goals at the four existing casinos and establish the MBE goals for MGM National Harbor.”

Stephen L. Martino, director of the Maryland Lottery and Gaming Control Agency, was out of the country and unavailable for comment, Everett said.

The commission and agency were given the opportunity to respond to the audit report before it was released Tuesday.

In a written response dated May 9, Martino told auditors that his agency agreed with the findings and was working to establish goals. He noted that his agency and the Governor’s Office of Minority Affairs had set participation goals for the Horseshoe Baltimore Casino.

Martino also wrote that “in the very near future,” his agency and others “will be finalizing goals and subgoals for the architect and engineering phase of Maryland Live Casino. In addition, MLGCC will be establishing the MBE goals and subgoals for the MGM Casino project” with assistance from the Governor’s Office of Minority Affairs and the Maryland Department of Transportation.

Maryland Live opened to the public in June 2012.

The agency’s response went on to say that “if the need arises,” minority business participation goals will be developed “for the four existing casinos.”

In response to other concerns, the agency’s response noted that “to the extent possible, MLGCC will continue to spot check” the Governor’s Office of Minority Affairs on participation data and that the agency would continue to require licensees to document efforts to recruit minority-owned businesses.

Zenita Wickham Hurley, special secretary at the Governor’s Office of Minority Affairs, sent a similar letter concurring with the findings. As in the 2013 audit, her office vowed to improve efforts to track minority business participation and ensure that goals were being met.