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ROBERT L. EHRLICH, JR., Governor SB. 324
The Honorable Thomas V. Mike Miller, Jr.
President of the Senate
State House
Annapolis, MD 21401
Dear Mr. President:
In accordance with Article II, Section 17 of the Maryland Constitution, today I have
vetoed Senate Bill 324 - Procurement - Payment Security and Performance Security.
Senate Bill 324 exempts contractors from providing a payment and performance
security for State construction contracts under $200,000. Current law exempts
contractors with contracts under $100,000, which is consistent with about 30 states
and the federal government.
As Governor, I have made job creation and economic growth a hallmark of my
Administration. Since small and minority businesses are the engines that drive our
economy, it is important that we continue to encourage and protect these
entrepreneurs.
While I believe Senate Bill 324 is intended to help small businesses, it has the
potential of having the opposite effect. To wit, many small and minority businesses
establish themselves in the marketplace by becoming subcontractors on State
construction contracts. When operating as a subcontractor, most small businesses
lack the capital and resources necessary to remain solvent should a general
contractor default on its payments, thereby leaving no recourse for the subcontractor.
Simply put, subcontractors need the confidence that payment security bonds provide
in order to bid competitively for portions of State contracts.
Further, as a member of the Board of Public Works, I am a steward of taxpayer dollars
spent on State contracts. It is a responsibility I take most seriously. It is my obligation
to provide security and expediency to State construction projects, both of which are a
function of performance and payment bonds issued to protect the State of Maryland.
We appreciate the General Assembly's assistance and cooperation in passing
legislation to support small, minority and emerging businesses, especially those
legislative items based on recommendations from the Governor's Commission on
Minority Business Enterprise Reform. We welcome the General Assembly to work
with us on this and other issues that will have a positive impact on the business
community.
For the above stated reasons, I have vetoed Senate Bill 324.
Very truly yours,
Robert L. Ehrlich, Jr.
Governor
Senate Bill No. 324
AN ACT concerning
Procurement - Payment Security and Performance Security
—Subcontractors
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