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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0232*
SENATE BILL 232
P2 6lr1334
By: Senator Salling
Introduced and read first time: January 15, 2026
Assigned to: Budget and Taxation
A BILL ENTITLED
AN ACT concerning 1
State Procurement – Preferences – Historically Underutilized Business Zone 2
Businesses 3
FOR the purpose of requiring a unit to structure procurement procedures to meet certain 4
federal procurement standards; establishing certain overall percentage goals of the 5
unit’s total dollar value of procurement contracts to be made directly or indirectly 6
with historically underutilized business zone businesses in certain years; requiring 7
the Governor’s Office of Small, Minority, and Women Business Aff airs to adopt 8
regulations establishing a certain certification process and a certain percentage price 9
preference; establishing penalties for certain violations; and generally relating to 10
procurement preferences for historically underutilized business zone businesses. 11
BY repealing and reenacting, with amendments, 12
Article – State Finance and Procurement 13
Section 14–501 14
Annotated Code of Maryland 15
(2021 Replacement Volume and 2025 Supplement) 16
BY adding to 17
Article – State Finance and Procurement 18
Section 14–1101 through 14 –1105 to be under the new subtitle “Subtitle 11. 19
Historically Underutilized Business Zone Business Participation” 20
Annotated Code of Maryland 21
(2021 Replacement Volume and 2025 Supplement) 22
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 23
That the Laws of Maryland read as follows: 24
Article – State Finance and Procurement 25
14–501. 26
2 SENATE BILL 232
(a) In this subtitle the following words have the meanings indicated. 1
(b) “Certification agency” has the meaning stated in § 14–301 of this title. 2
(c) “Economically disadvantaged individual” has the meaning stated in § 14–301 3
of this title. 4
(d) “Small business” means: 5
(1) a certified minority business enterprise, as defined in § 14 –301 of this 6
title, that meets the criteria specified under item [(3)] (4) of this subsection; 7
(2) a veteran–owned small business enterprise, as defined in § 14 –601 of 8
this title, that meets the criteria specified under item [(3)] (4) of this subsection; [or] 9
(3) A HISTORICALLY UNDER UTILIZED BUSINESS ZO NE BUSINESS, AS 10
DEFINED IN § 14–1101 OF THIS TITLE, THAT MEETS THE CRITERIA SPECIFIED UNDER 11
ITEM (4) OF THIS SUBSECTION; OR 12
[(3)] (4) a business, other than a broker, that meets the following criteria: 13
(i) the business is independently owned and operated; 14
(ii) the business is not a subsidiary of another business; 15
(iii) the business is not dominant in its field of operation; and 16
(iv) 1. A. the wholesale operations of the business did not 17
employ more than 50 persons in its most recently completed 3 fiscal years; 18
B. the retail operations of the business did not employ more 19
than 25 persons in its most recently completed 3 fiscal years; 20
C. the manufacturing operations of the business did not 21
employ more than 100 persons in its most recently completed 3 fiscal years; 22
D. the service operations of the business did not employ more 23
than 100 persons in its most recently completed 3 fiscal years; 24
E. the construction operations of the business did not employ 25
more than 50 persons in its most recently completed 3 fiscal years; and 26
F. the architectural and engineering services of the business 27
did not employ more than 100 persons in its most recently completed 3 fiscal years; or 28
SENATE BILL 232 3
2. A. the gross sales of the wholesale operations of the 1
business did not exceed an average of $4,000,000 in its most recently completed 3 fiscal 2
years; 3
B. the gross sales of the retail operations of the business did 4
not exceed an average of $3,000,000 in its most recently completed 3 fiscal years; 5
C. the gross sales of the manufacturing operations of the 6
business did not exceed an average of $2,000,000 in its most recently co mpleted 3 fiscal 7
years; 8
D. the gross sales of the service operations of the business did 9
not exceed an average of $10,000,000 in its most recently completed 3 fiscal years; 10
E. the gross sales of the construction operations of the 11
business did not exceed an average of $7,000,000 in its most recently completed 3 fiscal 12
years; and 13
F. the gross sales of the architectural and engineering 14
services of the business did not exceed an average of $4,500,000 in its most recently 15
completed 3 fiscal years. 16
(e) “Small business reserve” means those procurements that are limited to 17
responses from small businesses under § 14–502(c) of this subtitle. 18
SUBTITLE 11. HISTORICALLY UNDERUTILIZED BUSINESS ZONE BUSINESS 19
PARTICIPATION. 20
14–1101. 21
IN THIS SUBTITLE , “HISTORICALLY UNDERUTI LIZED BUSINESS ZONE 22
BUSINESS” MEANS A BUSINESS THAT: 23
(1) MEETS THE STANDARDS ADOPTED BY THE U.S. SMALL BUSINESS 24
ADMINISTRATION IN 13 C.F.R. 126, SUBPART B AND ANY SUBSEQUENT R EVISION 25
OF THAT REGULATION; AND 26
(2) MAINTAINS A PRINCIPAL PLACE OF BUSINESS IN THE STATE THAT 27
IS IN A HISTORICALLY UNDERUTILIZED BUSINESS ZONE. 28
14–1102. 29
(A) (1) A UNIT SHALL STRUCTURE PROCUREMENT PROCEDUR ES TO 30
MEET THE STANDARDS ADOPTED BY THE U.S. SMALL BUSINESS ADMINISTRATION 31
4 SENATE BILL 232
IN SUBPART 19.13 OF THE FEDERAL ACQUISITION REGULATION, AS PROVIDED IN 1
48 C.F.R. CHAPTER 1. 2
(2) THE OVERALL PERCENTAGE GOAL OF THE UNIT’S TOTAL DOLLAR 3
VALUE OF PROCUREMENT CONTRACTS TO BE MADE DIRECTLY OR INDIRECTLY WITH 4
HISTORICALLY UNDERUTILIZED BUSINESS ZONE BUSINESSES IS: 5
(I) 1% IN 2026 AND 2027; 6
(II) 2% IN 2028; AND 7
(III) 3% IN 2029 AND EACH YEAR THEREAFTER. 8
(3) THE GOVERNOR’S OFFICE OF SMALL, MINORITY, AND WOMEN 9
BUSINESS AFFAIRS SHALL ADOPT R EGULATIONS THAT ESTA BLISH, CONSISTENT 10
WITH SUBPART 19.13 OF THE FEDERAL ACQUISITION REGULATION, AS PROVIDED 11
IN 48 C.F.R. CHAPTER 1: 12
(I) A PROCESS FOR THE CE RTIFICATION OF HISTO RICALLY 13
UNDERUTILIZED BUSINESS ZONE BUSINESSES , INCLUDING THE VERIFI CATION OF 14
ELIGIBILITY THROUGH THE FEDERAL SYSTEMS FOR AWARD MANAGEMENT; AND 15
(II) A PERCENTAGE PRICE P REFERENCE FOR PROCUR EMENT 16
CONTRACTS MADE DIRECTLY OR INDIRECTLY WITH HISTORICALLY UNDERUTILIZED 17
BUSINESS ZONE BUSINESSES. 18
(B) THE PROVISIONS OF THI S SUBTITLE DO NOT AP PLY TO A UNIT ’S 19
PROCUREMENT PROCEDURES TO THE EXTE NT THAT ANY UNIT DET ERMINES THAT 20
THOSE PROVISIONS ARE IN CONFLICT WITH AN APPLICABLE FEDERAL PROGRAM. 21
14–1103. 22
THE GOVERNOR’S OFFICE OF SMALL, MINORITY, AND WOMEN BUSINESS 23
AFFAIRS SHALL: 24
(1) ADOPT REGULATIONS TO IMPLEMENT THIS SUBTITLE; 25
(2) ESTABLISH PROCEDURES FOR T RACKING AND REPORTIN G 26
PARTICIPATION OF HIS TORICALLY UNDERUTILI ZED BUSINESS ZONE BU SINESSES 27
UNDER THIS SUBTITLE; AND 28
(3) ON OR BEFORE DECEMBER 1 EACH YEAR , REPORT TO THE 29
LEGISLATIVE POLICY COMMITTEE ON: 30
SENATE BILL 232 5
(I) THE NUMBER AND DOLLA R VALUE OF CONTRACTS 1
AWARDED TO HISTORICALLY UNDERUTILIZED BUSINESS ZONE BUSINESSES UNDER 2
THIS SUBTITLE , INCLUDING THE TOTAL DOLLAR VALUE OF PAYM ENTS MADE TO 3
HISTORICALLY UNDERUT ILIZED BUSINESS ZONE BUSINESSES UNDER EXI STING 4
CONTRACTS; AND 5
(II) AN EVALUA TION OF THE EFFECTIV ENESS OF 6
PARTICIPATION AMONG HISTORICALLY UNDERUT ILIZED BUSINESS ZONE 7
BUSINESSES UNDER THIS SUBTITLE. 8
14–1104. 9
(A) A PERSON MAY NOT: 10
(1) KNOWINGLY AND WITH I NTENT TO DEFRAUD , FRAUDULENTLY 11
OBTAIN OR ATTEMPT TO OBTAIN, OR AID ANOTHE R PERSON IN FRAUDULE NTLY 12
OBTAINING OR ATTEMPT ING TO OBTAIN , PUBLIC MONEY , PROCUREMENT 13
CONTRACTS, OR FUNDS EXPENDED UNDER A PROCUREMENT CONTRACT TO WHICH 14
THE PERSON IS NOT ENTITLED UNDER THIS ARTICLE; 15
(2) KNOWINGLY AND WITH I NTENT TO DEFRAUD , FRAUDULENTLY 16
REPRESENT PARTICIPATION OF A HISTORICALL Y UNDERUTILIZED BUSINESS ZONE 17
BUSINESS IN ORDER TO OBTAIN OR RETAIN A BID PREFERENCE OR A PROCUREMENT 18
CONTRACT; 19
(3) WILLFULLY AND KNOWIN GLY MAKE OR SUBSCRIB E TO ANY 20
STATEMENT, DECLARATION, OR OTHER DOCUMENT THAT IS FRAUDULENT OR FALSE 21
AS TO ANY MATERIAL M ATTER, WHETHER OR NOT THAT FALSITY OR FRAUD IS 22
COMMITTED WITH THE KNOWLEDGE OR CONSENT OF THE PERSON AUTHORIZED OR 23
REQUIRED TO PRESENT THE DECLARATION, STATEMENT, OR DOCUMENT; 24
(4) WILLFULLY AND KNOWINGLY AID, ASSIST IN, PROCURE, COUNSEL, 25
OR ADVISE THE PREPARATION OR PRESENTATION OF A DECLARATION, STATEMENT, 26
OR OTHER DOCUMENT TH AT IS FRAUDULENT OR FALSE AS TO ANY MATE RIAL 27
MATTER, REGARDLESS OF WHETHER THAT FALSITY OR FRAUD IS COMMITTED WITH 28
THE KNOWLEDGE OR CON SENT OF THE PERSON AU THORIZED OR REQUIRED TO 29
PRESENT THE DECLARATION, STATEMENT, OR DOCUMENT; 30
(5) WILLFULLY AND KNOWINGLY FAIL TO FILE ANY DECLARATION OR 31
NOTICE WITH THE UNIT THAT IS REQUIRED BY THIS SUBTITLE; OR 32
6 SENATE BILL 232
(6) ESTABLISH, KNOWINGLY AID IN THE ESTABLISHMENT OF , OR 1
EXERCISE CONTROL OVER A BUSINESS FOUND TO HAVE VIOLATED A PROVISION OF 2
ITEMS (1) THROUGH (5) OF THIS SUBSECTION. 3
(B) (1) A PERSON WHO VIOLATES ANY PROVISION OF SUBSECTION (A) OF 4
THIS SECTION IS GUILTY OF A MISDEMEANOR AND ON CONVICTION IS SUBJECT TO A 5
FINE NOT EXCEEDING $1,000 OR IMPRISONMENT NOT EXCEEDING 6 MONTHS OR 6
BOTH. 7
(2) IN ADDITION TO THE PENALTIES UNDER PARAGRAPH (1) OF THIS 8
SUBSECTION, A PERSON WHO VIOLATES ANY PROVISION OF SUBSECTION (A) OF THIS 9
SECTION IS: 10
(I) FOR THE FIRST OFFENSE, LIABLE FOR A CIVIL PENALTY OF 11
NOT LESS THAN $10,000 AND NOT EXCEEDING $30,000; AND 12
(II) FOR A SUBSEQUENT OFFENSE, LIABLE FOR A CIVIL PENALTY 13
OF NOT LESS THAN $30,000 AND NOT EXCEEDING $50,000. 14
(3) A PERSON WHO VIOLATES ANY PROVISION OF SUBSECTION (A) OF 15
THIS SECTION SHALL P AY ALL COSTS AND ATT ORNEY’S FEES INCURRED BY T HE 16
PLAINTIFF IN A CIVIL ACTION BROUGHT UNDER THIS SUBTITLE. 17
(C) THE BOARD SHALL PROHIBIT A BUSINESS OR PERSON WHO FAILS TO 18
SATISFY THE PENALTIE S, COSTS, AND ATTORNEY ’S FEES IMPOSED UNDER 19
SUBSECTION (B) OF THIS SECTION FROM FURTHER CONTRACTING WITH THE STATE 20
UNTIL THE PENALTIES ARE SATISFIED. 21
(D) (1) A UNIT SHALL REPORT AL L ALLEGED VIOLATIONS OF THIS 22
SECTION TO THE BOARD. 23
(2) THE BOARD SUBSEQUENTLY SH ALL REPORT ALL ALLEGED 24
VIOLATIONS OF THIS SECTION TO THE OFFICE OF THE ATTORNEY GENERAL, WHICH 25
SHALL DETERMINE WHET HER TO BRING A CIVIL ACTION AGAINST A PER SON OR 26
BUSINESS FOR A VIOLATION OF THIS SECTION. 27
14–1105. 28
IN ADDITION TO THE PE NALTIES UNDER § 14–1104(B) OF THIS SUBTITLE, A 29
PERSON THAT WILLFULL Y MISREPRESENTS A BU SINESS AS A HISTORIC ALLY 30
UNDERUTILIZED BUSINE SS ZONE BUSINESS FOR PURPOSES OF OBTAININ G OR 31
RETAINING A CONTRACT OR SUBCONTRACT MAY BE SUBJECT TO: 32
SENATE BILL 232 7
(1) SUSPENSION OR DEBARMENT UNDER TITLE 16 OF THIS ARTICLE; 1
OR 2
(2) CIVIL PENALTIES UNDE R THE MARYLAND FALSE CLAIMS ACT 3
UNDER TITLE 8 OF THE GENERAL PROVISIONS ARTICLE. 4
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 5
October 1, 2026. 6