MSBCA continues to uphold Maryland MBE laws and regulations

Those who engage in business with the State of Maryland know the importance of compliance with minority business enterprise goals.  The most recent opinion of the Maryland State Board of Contract Appeals, in AGovX, MSBCA No. 3309 (May 8, 2025), is another in a line of cases that have consistently held that, under Maryland laws and regulations, MBE compliance errors at bid or proposal submission require rejection of the submission.

In AGovX, a request for proposals for computer services set an MBE goal of 25%.  AGovX submitted a proposal that listed itself as an MBE and counted itself for 12.5% of the MBE goal total.  AGovX identified another MBE business as a subcontractor that would achieve the other 12.5% of the goal.  AGovX’s only problem was that, when it submitted its proposal, it was a certified SBE, but not an MBE.

After receiving notice that the procuring agency intended to award a contract to it, AGovX attempted to cure its mistake. It submitted a form stating that the work of the MBE subcontractor would achieve the entire 25% of the goal.  The procurement officer, at some point, accepted this correction. Ultimately, however, the procurement officer determined that AGovX’s proposal was not reasonably susceptible for award, and the agency rescinded the notice of intent to award a contract to AGovX.  AGovX promptly protested and appealed the denial to the MSBCA.

Because the facts of the case were not disputed, both AGovX and the agency filed motions for the case to be decided as a matter of law.  In its May 8^th opinion, the Board agreed with the agency, granting the agency’s motion to dismiss the appeal and denying AGovX’s motion for summary decision.

Under COMAR, the evaluation of a proposal for MBE compliance is to be made as of the time of submission. COMAR further provides that failures to accurately complete and submit MBE utilization affidavits and MBE participation schedules require a determination that “the proposal is not reasonably susceptible of being selected for award unless the inaccuracy is determined to be the result of a minor irregularity that is waived or cured … .” The Board decided this case following its precedent “that MBE compliance errors at bid or proposal submission are not minor irregularities that can be cured.” In other words, such an error at submission rendered the proposal “not reasonably susceptible for award.”

It did not matter that the procurement officer, at one point, believed that he had the discretion to allow AGovX to revise its MBE submissions.  As the Board stated, “A PO’s mistaken belief that she has discretion to permit correction of a material deficiency in an MBE submission does not, in fact, confer discretion.”  Maryland’s laws and regulations required the procurement officer to rescind the intent to award the contract to AGovX once he realized that the MBE error rendered the proposal not reasonably susceptible to award.

Those seeking to do business with the State need to understand that MBE accuracy at the time of submission is of paramount importance.  Based on the Board’s ruling, procurement officers will have little discretion to fix errors after opening, especially those that impact compliance.

Barry L. Gogel is the managing partner of the Baltimore office of Rifkin Weiner Livingston, LLC, and practices before the Maryland State Board of Contract Appeals. Along with his colleagues at the firm, he writes a regular column on procurement legal issues. He can be contacted at [email protected].