Livingston Procurement Law
Procurement Alert
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Maryland Procurement Alert Summer 2010
 
Governor Appoints New Member to the Maryland State Board of Contract Appeals (MSBCA) MORE

Procurement-Related Bills signed by the Governor: Selected legislation relating to procurement passed during the 2010 legislative Session, and signed by the Governor into law. Please note the varying effective dates. MORE

General Obligation Bonds for Capital Projects – Required Reports MORE

Procurement – Minority Business Enterprises – Certification Process MORE

State Procurement – Minority Business Enterprises – Electronic Certification Process MORE

Procurement – Small Business Reserve Program – Sunset Extension MORE

Procurement – Veteran-Owned Business Enterprise Participation MORE

Public-Private Partnerships – Oversight MORE

Task Force on the Minority Business Enterprise Program and Equity Investment Capital MORE

Procurement – Minority Business Enterprises – Review of Application for Certification and Notice to Applicant MORE

Green Maryland Act of 2010 MORE

Procurement – Multi-Year Contracts for Renewable Energy – Termination Clauses MORE

Procurement – Minority Business Enterprise Program – Report MORE

Sovereign Immunity Does Not Insulate School Board for Legal Responsibility On Contract Claims. School Boards cannot hide behind sovereign immunity. MORE

 
 

 
Governor Appoints New Member to the Maryland State Board of Contract Appeals (MSBCA).

The Honorable Ann Marie Doory has been appointed to the Maryland State Board of Contract Appeals.  She will fill the seat left by Michael Burns, whose term expired. The Board consists of three members, appointed by the Governor to five-year terms with Senate advice and consent. The Governor also names the chair.

Delegate Doory has been a member of the Maryland House of Delegates since 1987.  She is the Vice Chair of the Ways and Means Committee and prior to that she was Vice Chair of the Judiciary Committee and the Economic Matters Committee. She is also a member of the Rules and Executive Nominations Committee and a member of the Spending Affordability Committee.  Delegate Doory also is a member of the National Conference of State Legislatures (law and criminal justice committee), the Advisory Committee for the University of Baltimore School of Law, and various other civic associations. She attended St. Mary’s Academy in Leonardtown, and received her Bachelor of Arts in Political Science from Towson University in 1976.  She received her J.D. from the University of Baltimore School of Law in 1979. She is a resident of Baltimore City.

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Recent Procurement-Related Bills Signed By The Governor:

Below is a list of selected legislation relating to procurement passed during the 2010 legislative Session, and  signed by the Governor into law. Please note the varying effective dates.

HB 209 (Chapter 398) General Obligation Bonds for Capital Projects – Required Reports

This bill requires any hospital or institution of higher learning (1) not already subject to the State’s Minority Business Enterprise (MBE) program’s reporting requirement and (2) that receives at least $500,000 for a capital project from the sale of State general obligation (GO) bonds to submit a report to the Governor’s Office of Minority Affairs (GOMA) by December 31 of each year that such GO bond funds are received and the following year. The report must detail the extent to which the recipient has used, or will use, any part of the State funds it receives for a capital project for contracts with MBE firms or for MBE outreach efforts. By July 1 of each year, GOMA must report to specified committees of the General Assembly on the information contained in those reports.

This bill takes effect October 1, 2010 and will remain effective for 3 years – terminating September 30, 2013.

HB 250 (Chapter 230)/SB 130 (Chapter 229) Procurement – Minority Business Enterprises – Certification Process

This bill requires that regulations governing the State’s Minority Business Enterprise (MBE) program include provisions that promote and facilitate certification of MBEs certified by the U.S. Small Business Administration (SBA) or a county that uses a certification process that is substantially similar to the process used by the Maryland Department of Transportation (MDOT). The Board of Public Works (BPW) must report annually on the number and identity of MBEs certified through that process.

This bill takes effect October 1, 2010

HB 251 (Chapter 232)/SB 131 (Chapter 231) State Procurement – Minority Business Enterprises – Electronic Certification Process

This bill requires the Board of Public Works to include in regulations governing the State’s Minority Business Enterprise (MBE) program provisions that promote and facilitate the electronic submission of some or all of an application seeking certification as an MBE.

This bill takes effect October 1, 2010

SB 71 (Chapter 22) Procurement – Small Business Reserve Program – Sunset Extension

This departmental bill reauthorizes the Small Business Reserve (SBR) program for six years, until September 30, 2016.

This bill takes effect July 1, 2010

Bills awaiting signature by the Governor:

HB 359/SB 171 Procurement – Veteran-Owned Business Enterprise Participation

These bills establish a procurement preference program in which, beginning July 1, 2012, each State entity tries to award 0.5% of the value of its procurement contracts to businesses owned and operated by service-disabled veterans.

This bill takes effect October 1, 2010

HB 1370/SB 979 Public-Private Partnerships – Oversight

This bill defines a “public-private partnership” (P3) and establishes a framework of P3 reporting requirements and oversight procedures for State entities. The bill establishes a Joint Legislative and Executive Commission on Oversight of Public-Private Partnerships. The Maryland Department of Transportation (MDOT), Department of General Services (DGS), and Department of Legislative Services (DLS) must provide staff support for the commission. The commission must submit a concluding report by December 1, 2011, providing findings and recommendations to the Governor and the General Assembly.

The bill takes effect June 1, 2010, and provisions concerning the commission terminate June 30, 2012.

SB 2/HB 222 Task Force on the Minority Business Enterprise Program and Equity Investment Capital

This bill establishes a Task Force on the Minority Business Enterprise (MBE) Program and Equity Investment Capital, jointly staffed by the Department of General Services (DGS) and the Maryland Department of Transportation (MDOT). The task force must report its recommendations to the Governor and the General Assembly and develop draft legislation by December 1, 2010.

The bill takes effect June 1, 2010, and terminates May 31, 2011

SB 546/HB 923 Procurement – Minority Business Enterprises – Review of Application for Certification and Notice to Applicant

These bills require the Board of Public Works (BPW) to develop regulations requiring that the Maryland Department of Transportation (MDOT) complete its review of an application for minority business enterprise (MBE) certification and notify the applicant within 90 days of receiving a complete application. The regulations must also authorize MDOT to extend only once the notification requirement by not more than 60 days after providing the applicant with a written notice and explanation of the extension.

These bills take effect October 1, 2010

SB 693/HB 1164 Green Maryland Act of 2010

This bill promotes the use of environmentally preferable purchasing throughout State government through a variety of study and reporting requirements and the establishment of the Maryland Green Purchasing Committee. It also increases the percentage of paper bought by the Department of General Services (DGS) that must be recycled from 40% to 90%.

These bills take effect October 1, 2010

SB 791 Procurement – Multi-Year Contracts for Renewable Energy – Termination Clauses

This bill authorizes the Board of Public Works (BPW), on the recommendation of the Secretary of General Services, to waive the requirement for a mandatory termination clause for a multi-year State contract to procure Tier 1 or Tier 2 renewable energy for the State. In determining whether to grant a waiver, BPW must consider the effects of its decision on the ability of the energy vendor to obtain financing for the renewable energy generation project.

This bill takes effect October 1, 2010

SB 849 Procurement – Minority Business Enterprise Program – Report

This bill requires that the minority business enterprise (MBE) directory maintained by the Maryland Department of Transportation (MDOT) provide, for each MBE in the directory, a list of contracts awarded to that MBE and a description of each contract. It also requires that annual reports submitted by each State procurement unit to the Governor’s Office of Minority Affairs (GOMA) include the number and names of certified MBEs that participated as prime contractors or as subcontractors on procurement contracts awarded by the unit.

This bill takes effect October 1, 2010

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Sovereign Immunity Does Not Insulate School Board for Legal Responsibility On Contract Claims.

The Maryland Court of Special Appeals (“COSA”) issued a reported opinion, which affects contractors who do business with school boards in the State of Maryland.

The school board of Worcester County (“Board”) awarded a contract to perform the sitework portion of the construction of a new elementary school in Ocean City.  The project was scheduled to be completed in December 2005 but because of delays, the contractor completed the sitework in May 2006.

Upon completion of the sitework, disputes arose regarding the amounts owed to the contractor.  The contractor filed a suit in Circuit Court seeking $1,157,000.  Of that amount, the contractor claimed that the Board owed it $361,000 under the contract and the remaining amounts were for proposed change orders (“PCOs).  The contractor also alleged delay damages.  The Board initially filed an Answer generally denying the Complaint, but later, after discovery, filed amended answers claiming recoupment and sovereign immunity.  In its Amended Answer, the Board alleged that the contract precluded the contractor from claiming delay damages against the Board.

There was a trial on the merits and the parties concluded the trial by explaining their positions on the amounts the Board owed.  The contractor alleged it was owed $540,000 under the contract and $795,000 for PCOs — minus a credit of $120,000 for work that was removed.  The Board claimed it was entitled to a recoupment of $505,487 for work that the contractor never performed.  Further, the Board concluded that the contractor was only entitled to $1,961,913, for agreed upon PCOs.

The Circuit Court judge made a “compromise” decision.  The judge entered a judgment of $1,100,000 in favor of the contractor without further explanation.  The Board filed an appeal to COSA.  On appeal, the Board claimed that the doctrine of sovereign immunity barred it from paying any judgment over $100,000, or the limits of its surety.

The COSA interpreted a “no-damages-for-delay” clause, which provided:  “Extension of time shall be Contractor’s sole remedy for delay.”  This provision, according to the COSA, precluded delay damages.  The contractor contended that the damages it claimed were not delay damages.  Instead, they could be attributed to other things, such as changed conditions, differing site conditions, etc.  COSA determined that those arguments were factual arguments but that the Circuit Court did not find any facts in this regard.  These trial level flaws, in addition to the fact that COSA could not determine what the trial court’s judgment was based on, were reasons to remand the case back to the Circuit Court.

Practice Suggestion: Contractors should be aware of contract provisions that bar delay damages.  If damages can be classified another way, contractors should ensure that those arguments are documented in the event of dispute.

 

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