# Montgomery County Code — Part II. Local Laws, Ordinances, Resolutions, Etc.

## Chapter 11B. Contracts and Procurement.

### Article V. Contract Formation.

**Sec. 11B-22. Contracts.**

  (a)   Any type of contract which promotes the best interests of the County may be used; however, compensation must not be based on cost plus a percentage of cost.  A cost-reimbursement contract may be used if the Director determines that a cost-reimbursement contract is likely to be less costly to the County than any other type of contract or that it is impracticable to obtain the goods, services, or construction required except under a cost-reimbursement contract.  Under a cost-reimbursement contract, compensation may be based on cost plus a fixed fee or an incentive fee.

  (b)   Each contract must be documented and authorized by a County official authorized by regulation to bind the County to a contract.

  (c)   A construction contract awarded under a competitive sealed bid must not prohibit the payment to a contractor of actual and direct damages that result from a delay in completing the project within contractual time limits if the delay is caused by the County unless the County acted to:

    (1)   protect the public health or safety; or

    (2)   conform to law.

**Sec. 11B-23. Multi-term contracts.**

  (a)   Specified period. Unless otherwise provided by law or regulation, a contract for goods, services, or construction may be entered into for any period of time deemed to be in the best interest of the County.  The term of the contract and conditions of extension should be included in the solicitation, if any.  At a minimum, appropriated funds must be available for the first fiscal period at the time of entering the contract sufficient to defray the cost to which the County would become obligated under the contract.  Payment and performance obligations for succeeding fiscal periods must be subject to the availability and appropriation of funds.

  (b)   Determination prior to use. Before using a multi-term contract, the Director must determine that:

    (1)   estimated requirements over the period of the contract are reasonably firm and continuing; and

    (2)   the contract will serve the best interests of the County by encouraging effective competition or otherwise promoting economies in County procurement.

  (c)   Termination due to unavailability of funds in succeeding fiscal periods. When funds are not appropriated or otherwise made available to support continuation of performance in a subsequent fiscal period, the contract must be terminated without further cost to the County.

  (d)   Contract price increase provision. A multi-term contract for residential solid waste, recycling, or yard waste collection and disposal must include a price increase provision for each year of the contract beginning after the end of the first year of the contract. A price increase provision must require the County to increase the contract price by an amount sufficient to compensate the contractor for an increase in wages paid to the employees performing work on a covered contract to the extent the increase in wages does not exceed the last general wage increase approved by the County for members of the service, labor, and trades bargaining unit established in Section 33-105(a)(1). A price increase provision must:

    (1)   require the contractor to document that the increase in wages supporting the requested contract price increase are paid to the employees working on the contract during the year; and

    (2)   permit the Director to audit the contractor’s payroll records to validate the increase in wages.

    This subsection does not prohibit a contract provision that would permit an increase in the contract price due to an increase in costs incurred by the contractor other than an increase in wages paid to the contractor’s employees performing work on the contract.

**Sec. 11B-24. Encumbrance of funds.**

  A contract is not valid until the Director of Finance certifies that the unencumbered balance in the appropriation is sufficient to defray the cost to which the County would become obligated under the contract.

**Sec. 11B-25. Voidable contracts; claims.**

  A purchase or contract made in a manner contrary to the Charter, this Chapter, or regulations is voidable at the option of the County.  However, a person who supplies goods, services, or construction in good faith to the County at the direction of a County employee may file a claim to receive compensation for goods, services, or construction accepted by the County.  Compensation must not exceed a fair and reasonable price for the benefit received by the County.  The violation which leads to the necessity for a claim must occur through no fault of the person making the claim.

**Sec. 11B-26. Cost and pricing analysis.**

  The Director must use cost and price analysis for County contracts and contract modifications as provided in regulation.