Audit Report Finds Two State Agencies Failed to Set and Monitor Minority Business Goals


A recent report released by the Office of Legislative Audits (OLA) found that during the 2012 calendar year, the Maryland Lottery and Gaming Control Agency (MLGCA) and the Governor’s Office of Minority Affairs (GOMA) had failed to set minority participation goals for construction and procurement at four of Maryland’s casinos currently in operation.  Those operational casinos include Casino at Ocean Downs, Hollywood Casino Perryville, Maryland Live Casino, and Rocky Gap Casino Resort.  

According to the report, the Maryland Lottery and Gaming Control Commission (MLGCC), which serves as an advisory board to the MLGCA, failed to establish amended minority participation goals at four of the video lottery terminal (VLT) licensees.  As a result, the MLGCC was unable to review the performance of licensees in meeting the minority participation requirements.  The report also stated that the GOMA inadequately monitored and reported on minority participation of the VLT licensees.  For instance, no verification was made by the GOMA on whether or not licensees had actually used Minority Business Enterprise (MBE) contractors for ongoing operations.  Also, the MLGCC failed to verify the reported information by the GOMA to ensure accuracy.  Finally, the report found that both the GOMA and the MLGCC failed to report on the efforts by licensees to achieve minority participation goals, as required by State law. 

Originally in December 2008, the Video Lottery Facility Location Commission outlined the minority participation goals into specific percentages for each county in which a VLT licensee was operating.  However, in September 2011, the Office of the Maryland Attorney General decided the goals should be amended due to constitutionality issues.  The MLGCC was advised to set separate goals for each individual licensee based on the proposed contract work and the availability of minority-owned businesses to perform the work.  It was also decided that waivers be available to licensees for instances when they are unable to meet the goals after making a good faith effort.  Nevertheless, as of March 11, 2014, the MLGCC has not established amended goals for any of the four VLT licensees, and no waiver system has been implemented.

The recent audit report from the OLA reflects identical concerns that were raised in the preceding audit report, dated June 18, 2013.  Just as with the preceding report, the MLGCC and the GOMA each provided separate but similar responses, ultimately agreeing with the findings contained within the report. 

According to the MLGCC’s response, the MLGCC has been collaborating with the GOMA and the Maryland Department of Transportation (MDOT) to try and establish an MBE goal-setting process that would meet the requirements found in State procurement law and State gaming law.  The response stated the MLGCC, along with the GOMA and the MDOT, had already set minority participation goals for the construction phase of the Horseshoe Baltimore Casino project.  Also, the agencies would soon be finalizing goals for the architect and engineering phase of the Maryland Live Casino, as well as MBE goals for the MGM Casino project.  Regarding the four existing casinos in operation, the MLGCC stated “[i]f the need arises, MLGCC and GOMA will develop amended MBE participation goals and subgoals,” and they would “consider a Licensee’s submission of an MBE waiver of the respective amended MBE participation goal, when so stated.”  As for the other concerns raised in the report, the MLGCC agreed to continue spot checking the GOMA on the MBE participation data, as well as continuing the requirement of VLT licensees to document their outreach efforts in achieving MBE participation goals.  The GOMA responded similarly, vowing to improve their overall efforts in tracking MBE participation in conjunction with the MLGCC, and to ensure MBE participation goals are met.

To read the Office of Legislative Audits’ complete report, click here.    

 

Sources:

Sears, Bryan P. “Audit faults agencies on MBE goals, oversight.” The Daily Record  21 May 2014: 3A. Print.

Video Lottery Operation Licensees - Minority Business Participation Performance Audit – May 2014: http://www.ola.state.md.us/Reports/Performance/VLT-MBP14.pdf