RECENT MARYLAND LEGISLATION AFFECTING PROCUREMENT

Establishment of State Policy on Public-Private Partnerships

Effective July 1, 2013, House Bill 560, enacted as Chapter 5, requires certain agencies (most notably, the Departments of Transportation and General Services) to adopt regulations and processes for the development, solicitation, evaluation, award and delivery of public-private partnerships. While setting forth requirements for the solicitation of public-private partnerships, Chapter 5 includes no procedures for protesting the agency's determination regarding a "shortlisting" of offerors, nor the eventual determination of award.

Pursuant to Chapter 5, public-private partnership agreements may last as long as 50 years, unless the Board of Public Works finds that the term should be longer. Chapter 5 also subjects public-private partnerships to the Minority Business Enterprise program, including participation goals set by the agency in consultation with the Governor's Office of Minority Affairs and Office of the Attorney General.

On July 23, 2013, the Department of Transportation promulgated emergency regulations at COMAR 11.01.07 implementing the Public-Private Partnership Program.

Elimination of Not-for-Profit Entities Promoting Disabled Individuals from Minority Business Enterprise

House Bill 48, enacted as Chapter 605, presents two significant changes to Maryland Procurement Law. First, effective July 1, 2015, Chapter 605 eliminates from the definition of "Minority Business Enterprise" ("MBE") non-profit entities organized to promote the interests of physically or mentally disabled individuals. This removes from future participation in the MBE program 171 firms that received approximately one-third of the State's MBE expenditures in recent years.

Second, effective July 1, 2013, the law requires any State "maintenance contract that has a component for housekeeping or janitorial services" to include a requirement that the prime contractor procure "janitorial products" from Blind Industries and Services of Maryland, where available.

Contractors Must Use American Goods On Public Work Projects

Effective October 1, 2013, House Bill 191/Senate Bill 47, enacted as Chapter 438, requires a contractor or subcontractor to "use or supply American manufactured goods" in the performance of constructing or maintaining a public work. Chapter 438 allows agencies to exempt procurements from this requirement where American manufactured goods are unreasonably more expensive than non-American goods, American goods are not reasonably available, or their quality is substantially less than foreign goods.

This new law may lead to dispute over whether construction firms may utilize foreign-manufactured machinery in constructing public works such as roads, bridges and buildings.

Prevailing Wages Must Be Paid On All WSSC Public Works Contracts Over $500,000

Effective October 1, 2013, House Bill 650, enacted as Chapter 630, requires the State's prevailing wage rates be applied to all Washington Suburban Sanitary Commission ("WSSC") public works contracts over $500,000. Previously, these prevailing wage provisions affected only those WSSC public works contracts that were at least 50% funded by the State.

Minority Business Enterprise Program And Disparity Study Extended For Additional Year

Pursuant to House Bill 1353 and Senate Bill 188, enacted as Chapters 200 and 201, the effective sunset date of the Minority Business Enterprise ("MBE") program (set forth in State Fin. & Proc. §§ 14-301 through 14-305) has been extended one additional year to July 1, 2017. Chapters 200 and 201 also add an additional year to the deadline for the State's next Disparity Study — last published on February 17, 2011 — to September 30, 2016. This deadline extends beyond the five-year effectiveness of disparity studies set forth by the U.S. Commission on Civil Rights (See http://www.usccr.gov/pubs/DisparityStudies5-2006.pdf).

Maximum Retainage Reduced To 5%

Effective July 1, 2013, Senate Bill 140, enacted as Chapter 23, reduces the maximum percentage of retainage for a construction contract to 5% of the total contract amount for the entire duration. Previously, public bodies could retain 10% of the contract amount until half of the contract was completed, at which point the maximum retainage would be 5%.