Livingston Procurement Law
Procurement Alert
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Maryland Procurement Alert Vol. I, 2011
 
No Overhead And Profit Unless The Contract Says So.

The MSBCA dismissed a claim appeal for a contractor's overhead and profit mark-ups as not permitted under the terms of the contract.

In December 2007, the Maryland Port Administration ("MPA") issued a Request for Proposals ("RFP") for certain services at the Baltimore World Trade Center including repair services. The RFP included a specification that all required repair costs were to be borne by the contractor at no additional cost to MPA, and that the costs of all repairs must be approved by MPA prior to payment.

The RFP also included a Force Account Work provision. Where the contractor was required to perform work for which the contract did not provide unit prices, the contractor would receive labor costs equal to "actual wages" for the labor involved in the work, "actual costs" for materials used, and no additional allowance for superintendence. The Force Account Work provision set forth that the contractor would be permitted a "reasonable amount as overhead and profit" on such work performed by its own forces and its subcontractors or suppliers.

The proposal of Meridian Management Corp., Inc. ("Meridian's") set forth hourly rates for plumbing, electrical and mechanical repair work, and these rates included Meridian's overhead and profit. Section "O" of Meridian's technical proposal set forth that the most recent edition of the "R.S. Means" construction cost catalog was to be used to determine "the cost of materials and supplies and overhead." Meridian argued that this provision of Section "O" applied to work performed by Meridian's forces, whereas work performed by specialty subcontractors would be passed on to MPA.

During discussions, MPA requested Meridian confirm that invoicing for additional work would not include a mark-up fee other than a 5% fee allowable for tenant-requested renovations. Meridian responded by stating that it would not mark up any work performed under the "Leasing Services provisions of the contract," but was silent as to repair services.

During performance of the contract, Meridian included a 20% overhead and profit mark-up on invoices to MPA for repairs performed by both Meridian and its subcontractors. MPA rejected this 20% mark-up, and Meridian filed a claim therefor.

The MSBCA determined that the prices for plumbing, electrical and mechanical repair work were set forth in Meridian's price proposal, and therefore were not subject to "a reasonable [markup] as overhead and profit" under the Force Account Work provision. The MSBCA held that the RFP provided only for mark-up of subcontractors performing emergency repair.

The MSBCA also set forth that Meridian should have notified MPA during discussions that it intended to add a mark-up on repair services when MPA requested confirmation that such a mark-up would not occur. While the MSBCA set forth that "the government has an obligation to use consistent language in its contract documents to avoid any confusion," the confusion with regard to whether mark-up would be permitted did not rise to the level of showing that Meridian was entitled to collect the mark-up from MPA by a preponderance of the evidence.

Practice Suggestion: Justice Oliver Wendell Holmes said men who do business with the federal government "must turn square corners." The same is true on Maryland State contracts.

Meridian Management Corp., Inc., MSBCA No. 2678 (Oct. 10, 2010)

 
 

 
 
Missing Certain Deadlines Means Certain Dismissal by MSBCA.

In the appeal of Letke Security Contractors, Inc. MSBCA 2750 (2011), the MSBCA reiterated its long-standing policy to reject any bid protest appeal concerning "improprieties in the solicitation" unless the bid protest was filed prior to the submission of the bid or initial proposal. State Highway Administration ("SHA") solicited for bidders to remove graffiti from various SHA structures. SHA did not select the bidder, who filed a protest.

The bid protester complained that the solicitation provided directions that were not clear, especially the specifications concerning the area estimated for the required services and the amount of work likely to be required. When it was merely a prospective bidder, Letke had the chance to complain about these allegedly vague specifications, but failed to do so. The allegations should have been raised prior to bid opening because they dealt with improprieties in the solicitation, not complaints about the formation of a contract. This is a fundamental principle of government procurement law in Maryland. Pursuant to COMAR 21.10.02.03A "A bid protest based upon alleged improprieties in the solicitation that are apparent before bid opening... shall be filed before bid opening."

Practice Suggestion: Be advised: The MSBCA does not permit bidders to wait and see if they don't win, then try to protest about problems in the original solicitation. Most procurement officers will deny such a bid protest as untimely and the MSBCA is nearly certain to uphold the denial.

 
 

 
 
General Assembly - Bill Information and Status.

HOUSE BILLS

HB 12 Status as of March 29, 2011: Bill is in Senate - First Reading Education Health and Environmental Affairs
Synopsis: Prohibiting a public employer, under specified circumstances, from knowingly buying, furnishing, or requiring an employee to buy or acquire for use while on duty specified uniforms and other equipment unless the uniforms or equipment are manufactured in the United States; requiring the Board of Public Works to adopt specified regulations; and applying the Act prospectively.
Senate: Education Health and Environmental Affairs (Heard: March 22, 2011)

HB 456 Status as of March 29, 2011: Bill is in the Senate - Third Reading Passed (128-10) in House.
Synopsis: Extending the Minority Business Enterprise program until July 1, 2012; repealing the requirement that procurement procedures seek to award 7 percent and 10 percent of a unit's total dollar value of contracts to African American-owned and women-owned businesses respectively; requiring the Governor's Office of Minority Affairs, in consultation with specified others, to establish guidelines, including possible subgoals; etc.
Procurement - Minority Business Participation
House: Health and Government Operations (Heard: March 2, 2011, 1:00 p.m.)

HB 466 Status as of March 29, 2011: Bill is in Senate - First Reading Education Health and Environmental Affairs
Synopsis: Requiring the Board of Public Works, in consultation with the Department of General Services, to adopt regulations to require that a bidder or offeror responding to a solicitation for a service contract for janitorial services delineate its costs by specified categories including labor, cleaning supplies and projected hours; and providing for an exception.
Senate: Education Health and Environmental Affairs (Heard: March 29, 2011)

HB 641 Status as of March 29, 2011: Bill is in the House - First Reading Environmental Matters
Synopsis: Establishing the WSSC Procurement Oversight Committee; providing for the membership, terms, and duties of the Committee; requiring the Washington Suburban Sanitary Commission to submit, on or before December 1, 2011, a written report to the Committee demonstrating compliance with a specified minority business enterprise law; stating the findings of the General Assembly; and requiring the Committee to report to specified delegations to the General Assembly on or before January 1, 2013.
Washington Suburban Sanitary Commission - Procurement and Minority Business
Enterprises - WSSC Procurement Oversight Committee MC/PG 113-11
House: Environmental Matters (No Hearing Scheduled)

HB 753 Status as of March 29, 2011: Bill is in the House - First Reading Health and Government Operations
Synopsis: Requiring specified State and local entities to register and participate in a federal work authorization program and post specified information on a Web site; prohibiting specified State or local entities from entering into specified contracts with contractors that are not registered or authorized with a federal work authorization program; requiring specified State or local entities to require contractors to submit affidavits with specified information; etc.
Procurement - Use of Federal Work Authorization Programs
House: Health and Government Operations (Heard: March 16, 2011, 1:00 p.m.)

HB 1209 Status as of March 29, 2011: Bill is in the Senate - First Reading Budget and Taxation passed House (114-19)
Synopsis: Adding maintenance and ongoing service delivery to the requirements that VLT contenders or licensees shall meet regarding minority business participation; extending a termination date for specified provisions of law relating to minority participation in facility operations; and providing a termination date for specified duties of the state commission and the Governor's Office of Minority Affairs relating to the monitoring, reporting, and taking action on specified activities.
VLT - Minority Business Participation
Modifications and Sunset Extension
House: Ways and Means (Heard: March 15, 2011, 1:00 p.m.)

HB 1330 Status as of March 29, 2011: Bill is in House - Re-referred to Economic Matters
Synopsis: Requiring specified individuals performing work on public work projects to complete construction safety training; requiring contractors, before beginning work on a public work contract, to provide a certification to a public body indicating that each individual working on the site has completed the construction safety training course within the past 5 years.
House: Economic Matters (Heard: March 29, 2011)


SENATE BILLS

SB 555 Status as of March 29, 2011: Bill is in the Senate - First Reading Education Health and Environmental Affairs
Synopsis: Requiring Board of Public Works regulations that implement the Minority Business Enterprise Program to provide for a written public explanation of a determination by a unit of the availability for specified purposes of certified minority business enterprises; requiring the regulations to provide for the disclosure of each waiver of obligations under the Minority Business Enterprise Program and the reason for each waiver; continuing until July 1, 2013, the Minority Business Enterprise Program; etc.
Minority Business Enterprise Participation - Disclosure and Termination Extension
Senate: Education Health and Environmental Affairs (Heard: March 3, 2011, 1:00 p.m.)

SB 558 Status as of March 29, 2011: Bill is in the House - Passed (46-0) in Senate
Synopsis: Requiring a bidder or offeror to immediately notify a specified unit of State government if, after submission of a bid or proposal and before the award of a specified contract, the bidder or offeror determines that a certified minority business enterprise identified in the MBE participation schedule has become or will become unavailable; authorizing a bidder or offeror to submit a written request to a unit to amend an MBE participation schedule under specified circumstances; etc.
Minority Business Enterprise Program - Amendments to MBE Participation Schedule and Termination Extension
Senate: Education Health and Environmental Affairs (Heard: March 3, 2011, 1:00 p.m.)

SB 616 Status as of March 29, 2011: Bill is in the Senate - First Reading Budget and Taxation
Synopsis: Providing that, if a capital project receives more than $5,000,000 in federal and State funds, the recipients of the funds and their contractors and subcontractors shall award contracts to business concerns that provide prospects for specified low-income individuals; requiring the Department of General Services to adopt regulations; stating the intent of the General Assembly; etc.
Senate: Budget and Taxation (Heard: March 11, 2011, 1:00 p.m.)

 
 

 
 
Frequent Information Technology Questions

Article By Columnist: William M. Bowser, President
Procurement Services Consulting, LLC

Two of the most frequent questions Procurement Services Consulting, LLC receives from businesses interested in bidding on the Maryland Department of Information Technology (DoIT) Request for Proposals are, "How can I find the DoIT bid projects and more importantly, when will DoIT re-compete the current contracts?"

DoIT, as with all Maryland State agencies, are posting bid prospects on a publicly accessible website. You can find them by following the DoIT website link to procurement. On this site, a list of all DoIT's currently master contracts are posted by their title. From DoIT's All Master Contracts, there are links to the various categories of equipment and services master contracts. For example, clicking on the link, "COTS Software Master Contract" will present information regarding everything associated with the operation of the current software contract.

More importantly, from COTS Software page, you can observe the details of the current contract including the term of the current contract which began on October 1, 2007 and expires September 30, 2012. You can also see that the Request for Proposals that resulted in these awards was released on January 9, 2007. A little math applied to the RFP issue date and the contract award date reveals that the RFP project was about nine months in duration. For planning purposes, your firm can then estimate that DoIT will re-compete the RFP around January 2012. Knowing this, you can begin planning accordingly for the next project on COTS software. This research on the COTS software contract can generally be applied to just about any DoIT current contract. So, you can make judgments as to allocating your firm's resources in preparation of the next IT project of interest to you.

An important planning note: Download the current RFP for the contract for which you are interested in competing. Begin reviewing the material within the RFP so you can get a feeling for how much effort will be necessary and what resources you will need. Don't forget to have your attorney look at the current terms and conditions now. This act alone will improve efficiency during proposal preparation time. Planning now for the next RFP will solve potential problems before proposal preparation time or help you determine your firm's ability to even submit. Typically, proposal preparation time for many of these RFP is 30 to 45 days. This is not much time and you need to make sure you are ready for all of the problems that may arise. For help in preparing your proposal, give PSC a call or e-mail us.

 
 

 
Statistically Speaking
 

 

 

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