# Public Utilities (GPU)

## Title 20. Procurement

### Subtitle 1. Water and Sewer Procurement Contracts

#### Section 20-101

(a) In this subtitle the following words have the meanings indicated.

(b) "Design/build contract" means a contract that provides for both architectural and engineering design services and construction services as a part of a single contract.

(c) "Evaluated bid price" means the price of a bid after adjustment in accordance with objective measurable criteria.

(d) "Facilities construction contract" means a contract that provides services for the construction of:

  (1) a water or wastewater treatment plant;

  (2) a water or wastewater pumping station and related force mains in the pumping station site limits;

  (3) a water storage facility;

  (4) a wastewater storage facility;

  (5) a building for Commission purposes; or

  (6) a pipeline.

(e) "Objective measurable criteria" means standards that enable the Commission to compare the economy, effectiveness, or value of the subject of the bids.

#### Section 20-102

This subtitle applies only to:

(1) design/build contracts; and

(2) construction contracts.

#### Section 20-103

If the Commission decides to proceed with the design or construction of a water supply or sanitary sewer system, the Commission shall comply with the requirements of this subtitle.

#### Section 20-104

(a) The Commission shall provide an opportunity for a hearing before proceeding with the design or construction of a water supply or sanitary sewer system.

(b) Subject to subsection (c) of this section, the Commission:

  (1) shall advertise in newspapers and technical media that the Commission considers appropriate for bids or proposals for design or construction services for any part of a water supply or sanitary sewer system; and

  (2) may readvertise any part of the services needed if the Commission considers the prices quoted in response to a prior advertisement to be unreasonable.

(c)

  (1) Subject to paragraph (2) of this subsection, the Commission may use day labor to complete any part of the design or construction of a water supply or sanitary sewer system.

  (2) Notwithstanding Sec. 20-105(a) of this subtitle, the Commission may spend up to $15,000 for day labor for any part of construction services without advertising for or receiving bids or proposals.

(d)

  (1) Except as provided in paragraph (2) of this subsection, the Commission may enter into any type of contract under this subtitle that promotes the best interest of the Commission.

  (2) The Commission:

    (i) may not enter a cost-plus-percentage-of-cost contract; and

    (ii) shall prohibit a cost-plus-percentage-of-cost subcontract under a contract with the Commission.

(e) The Commission may only enter into a design/build contract for a facilities construction contract with costs exceeding $2,000,000.

(f) The Commission may reject any bid or proposal.

(g)

  (1) The Commission may require a contract to be secured by bonds, penalties, and conditions.

  (2) Security authorized under this subsection is enforceable in any court of competent jurisdiction.

(h) The Commission:

  (1) may adopt regulations to establish a prequalification process for bidders or offerors; and

  (2) shall adopt regulations to govern discussions held with offerors under Sec. 20-105(c)(3) of this subtitle.

#### Section 20-105

(a) The Commission shall award contracts by:

  (1) competitive sealed bids in accordance with subsection (b) of this section; or

  (2) competitive sealed proposals in accordance with subsection (c) of this section.

(b)

  (1) If a contract is awarded based on competitive sealed bids, the Commission shall seek bids by issuing an invitation for bids.

  (2) Subject to paragraphs (3) through (5) of this subsection, an invitation for bids shall:

    (i) include the contract specifications, including the expected degree of minority business enterprise participation provided under Subtitle 2 of this title; and

    (ii) state whether the contract will be awarded based on the lowest bid price or the lowest evaluated bid price.

  (3) If a contract will be awarded based on an evaluated bid price, the invitation for bids shall include the objective measurable criteria by which the lowest evaluated bid price will be determined.

  (4) The Commission shall award contracts based on competitive sealed bids to the responsible bidder who submits the lowest bid price or lowest evaluated bid price, as appropriate.

  (5) If the Commission determines that an initial preparation of specifications for price bids is impractical, the invitation for bids may:

    (i) include a request for an unpriced technical offer or sample; and

    (ii) direct a bidder to submit:

      (1) a sealed price bid with the unpriced technical offer or sample; or

      (2) a price bid after the Commission:

      (A) evaluates the technical offer or sample; and

      (B) finds that the offer or sample is acceptable under the criteria set forth in the invitation for bids.

  (6) If an invitation for bids includes a request for an unpriced technical offer or sample, the Commission shall:

    (i) consider the price bid of a bidder whose technical offer or sample is acceptable;

    (ii) return unopened the price bid of a bidder whose technical offer or sample is unacceptable; and

    (iii) award the contract to the responsible bidder whose technical offer or sample is acceptable and who submits the lowest bid price or lowest evaluated bid price, as specified in the invitation for bids.

(c)

  (1) If a contract is awarded based on competitive sealed proposals, the Commission shall seek proposals by issuing a request for proposals.

  (2) A request for proposals shall include:

    (i) a statement describing the scope of the contract, including the expected degree of minority business enterprise participation provided under Subtitle 2 of this title;

    (ii) the factors, including price, that will be used in evaluating proposals; and

    (iii) the relative importance of each factor.

  (3) After receipt of proposals, but before the contract is awarded, the Commission may conduct discussions with an offeror to:

    (i) obtain the best price for the Commission; and

    (ii) ensure full understanding of the requirements of the Commission, as set forth in the request for proposals and in the proposal.

  (4) The Commission:

    (i) shall treat all responsible offerors fairly and equally; and

    (ii) may allow each responsible offeror to revise the offeror's initial proposal and submit a best and final offer.

  (5) The Commission shall award a contract based on competitive sealed proposals to the responsible offeror who submits the proposal or best and final offer that the Commission determines is the most advantageous to the Commission, considering the evaluation factors set forth in the request for proposals.

### Subtitle 2. Minority Business Enterprise Preferences

#### Section 20-201

(a) In this subtitle the following words have the meanings indicated.

(b) "Minority business enterprise" has the meaning stated in Sec. 14-301 of the State Finance and Procurement Article.

(c) "Office" means the Office established under Sec. 20-203 of this subtitle.

#### Section 20-202

The General Assembly finds the following: 

(1) the General Assembly wishes to provide all citizens of Maryland with equal access to business formation and business growth opportunities;

(2) the elimination of discrimination against minority- and women-owned businesses is of paramount importance to the future welfare of the community served by the Commission;

(3) the Commission has procured, received, accepted, and carefully reviewed a disparity study commissioned by the Commission and finds that the disparity study provides a strong basis in evidence demonstrating persistent discrimination against minority- and women-owned businesses;

(4) based on its review of the disparity study:

  (i) there are substantial and statistically significant adverse disparities that are strong evidence of discrimination against minorities and nonminority women in wages, business formation, business owner earnings, and access to capital in the same geographic markets and industry categories in which the Commission does business;

  (ii) the Commission would become a passive participant in private sector racial and gender discrimination if it eliminated its remedial efforts, including the operation of the minority business enterprise utilization program established under Sec. 20-204 of this subtitle;

  (iii) there remain substantial and statistically significant adverse disparities that are consistent with discrimination against minorities and nonminority women in the Commission's own procurement despite the Commission's assertive efforts to curtail that discrimination;

  (iv) there are substantial and statistically significant adverse disparities that are consistent with discrimination against businesses owned by minorities and nonminority women in all major industry categories in which the Commission procures goods and services;

  (v) there is ample evidence that discrimination in the private sector has depressed business formation and business growth among minority and nonminority women entrepreneurs in the geographic markets and industry categories in which the Commission does business; and

  (vi) there is powerful and persuasive qualitative evidence, both statistical and anecdotal, of discrimination against minority and nonminority women business owners in both the public and private sectors in the geographic markets and industry categories in which the Commission does business;

(5) as a result of ongoing discrimination and the present day effects of past discrimination, minority- and women-owned businesses combined continue to be significantly underutilized relative to their availability to perform work in all of the procurement categories in which the Commission does business;

(6) minority prime contractors also are subject to discrimination and confront especially daunting barriers in attempting to compete with very large and long-established nonminority companies;

(7) despite the fact that the Commission has employed, and continues to employ, numerous and robust race-neutral remedies, including aggressive outreach and advertising, training and education, a small local business program, and other efforts, there is a strong basis in evidence that discrimination persists even in public sector procurement where these efforts have been employed;

(8) this subtitle ensures that race-neutral efforts will be used to the maximum extent feasible and that race-conscious measures will be used only where necessary to eliminate discrimination that was not alleviated by race-neutral efforts;

(9) this subtitle continues and enhances efforts to ensure that the Commission limits the burden on nonminority businesses as much as possible by ensuring that all goals are developed using the best available data and that waivers are available when contractors make good faith efforts;

(10) this subtitle ensures that the operation of the minority business enterprise utilization program established under Sec. 20-204 of this subtitle is consistent with the disparity study data and is narrowly tailored to the compelling interests of the State; and

(11) Commission efforts to support the development of competitively viable businesses owned by women and minorities will assist in reducing discrimination and creating jobs for all citizens of Maryland.

#### Section 20-203

(a) There is an Office established within the Commission that shall be responsible for administering programs established under this subtitle and Subtitle 3 of this title.

(b) The Commission shall adopt regulations establishing the name of the Office.

(c) The Office shall be headed by a Director.

(d) The Office shall:

  (1) administer each Commission program that is created to remedy discrimination against minority business enterprises and promote the participation of local small businesses that do business with the Commission, including:

    (i) the minority business enterprise utilization program under Sec. 20-204 of this subtitle; and

    (ii) the business participation program established under Subtitle 3 of this title;

  (2) promote and coordinate the plans, programs, and operations of the Commission to remedy discrimination against minority business enterprises and the effects of discrimination;

  (3) promote activities and the use of the resources of the Commission, local governments, and private entities to remedy discrimination against minority business enterprises and the effects of discrimination; and

  (4) ensure compliance with certified minority business enterprise subcontract participation goals under Sec. 20-206 of this subtitle.

#### Section 20-204

(a)

  (1) By resolution and adopting regulations, the Commission shall establish a minority business enterprise utilization program to remedy discrimination against minority business enterprises in contracts awarded by the Commission if the Commission determines that:

    (i) there is a strong basis in evidence that minority business enterprises are subject to discrimination; and

    (ii) a program is necessary to remedy the effects of this discrimination.

  (2) The Office shall administer the program established under this subsection.

(b) Regulations that establish the program under subsection (a) of this section shall include provisions that:

  (1) recognize the certification of minority business enterprises by the State certification agency designated under Sec. 14-303(b) of the State Finance and Procurement Article and the regulations adopted under Title 14, Subtitle 3 of the State Finance and Procurement Article;

  (2) recognize any other certification program that the Commission determines, under Sec. 20-205 of this subtitle, substantially duplicates the requirements of the State certification agency;

  (3) provide for the graduation of a minority business enterprise from the program if the Commission determines that the minority business enterprise no longer requires the assistance or benefits offered by the program;

  (4) at the time of submission, require a bid or proposal based on a solicitation with an expected degree of minority business enterprise participation to include proof of a certified minority business enterprise commitment by stating:

    (i) the potential subcontract opportunities available in the prime procurement contract; and

    (ii) the number of minority business enterprises that have certified, under the penalties for perjury, that the minority business enterprise has entered into an agreement with the bidder or offeror to provide goods or services under specific terms outlined in the certification;

  (5) require each prime contractor to submit to the Commission monthly reports containing information required by the Office;

  (6) require each prime contractor to provide prompt notification to the Commission before the termination of a contract with a minority business enterprise;

  (7) require each prime contractor to:

    (i) maintain participation from minority business enterprises that is consistent with the participation referenced under item (4)(ii) of this subsection; or

    (ii) provide justification for the inability of the prime contractor to maintain the participation;

  (8) provide for minority business enterprise participation through contract-specific goals;

  (9)

    (i) authorize the waiver of all or part of the program for a specific contract if the Commission determines that applying the program to the contract would conflict with the law or the overall objectives and responsibilities of the Commission; and

    (ii) require the Commission to report annually to the Montgomery County and Prince George's County Senate and House Delegations to the Maryland General Assembly on any waivers granted under this subsection;

  (10) except as provided in item (11) of this subsection, allow for a system of granting a price preference of up to the lesser of 5% or $50,000 to minority business enterprises in evaluating bids or proposals, including the availability of a good faith waiver provision for a preference;

  (11) subject to subsection (d) of this section, establish a sheltered market program in which bidding on procurement contracts designated by the Commission as appropriate is restricted to certified minority business enterprises;

  (12) require the solicitation document accompanying each solicitation to set forth the regulations that establish the program;

  (13) require the geographic location and the principal place of business of the minority business enterprise to be a consideration for participation in the program, including requiring Montgomery County businesses and Prince George's County businesses to each have a targeted percentage of at least 40% of any contracts; and

  (14) authorize the Commission to:

    (i) refuse to recognize the certification of a business found to be in violation of the purposes of the program; and

    (ii) permanently bar an active principal of a violating business from future participation in the program.

(c) Before accepting an alternative certification program under subsection (b)(2) of this section, the Commission shall examine the alternative program to ensure that:

  (1) the alternative program complies with the guidelines established under Sec. 20-205 of this subtitle; and

  (2) the principal owner of an eligible minority business enterprise is in not more than one certified business that is participating in the Commission minority business enterprise utilization program under this section.

(d)

  (1) The sheltered market program established in subsection (b)(11) of this section may not be used until all less restrictive remedies under subsection (b) of this section and race-neutral remedies, including assistance with bonding requirements, financing, or bidding procedures for small firms, have been used and determined to be ineffective.

  (2) If at least three certified minority business enterprises bid on a contract under the sheltered market program, the Commission shall award the contract to the lowest bidder.

  (3) If fewer than three certified minority business enterprises bid on a contract under the sheltered market program, the contract shall be awarded under subsection (b)(10) of this section.

#### Section 20-205

(a) To participate in the contract-specific goals and preferences authorized under this subtitle, a business must:

  (1) be certified by a certification agency in accordance with Title 14, Subtitle 3 of the State Finance and Procurement Article and the regulations adopted under that subtitle;

  (2)

    (i) be certified by any certification agency; and

    (ii) submit all additional documentation necessary for the Office to determine that the business meets the requirements of Title 14, Subtitle 3 of the State Finance and Procurement Article and the regulations adopted under that subtitle; or

  (3) be certified under a certification program that the Commission determines substantially duplicates the requirements for a State certification agency under Title 14, Subtitle 3 of the State Finance and Procurement Article and the regulations adopted under that subtitle.

(b) To substantially duplicate the requirements for a State certification agency under Title 14, Subtitle 3 of the State Finance and Procurement Article and the regulations adopted under that subtitle, a certification program shall, at a minimum, have certification requirements that are at least as narrowly tailored as the State's requirements in Title 14, Subtitle 3 of the State Finance and Procurement Article and the regulations adopted under that subtitle with respect to:

  (1) business ownership and control;

  (2) business size standards;

  (3) business owner personal net worth; and

  (4) business owner social and economic disadvantage.

(c) If the Office determines that a business seeking to participate in the minority business enterprise utilization program established under Sec. 20-204 of this subtitle has a certification that does not substantially duplicate the requirements in Title 14, Subtitle 3 of the State Finance and Procurement Article and the regulations adopted under that subtitle, the Office may:

  (1) request and evaluate documentation and evidence necessary to determine whether the business may be authorized to participate in programs under this subtitle; and

  (2) following the evaluation under item (1) of this subsection, authorize a business to participate in programs under this subtitle.

#### Section 20-206

(a) The Office shall verify that a certified minority business enterprise listed in a schedule of participation is actually performing work and receiving compensation as established in the schedule.

(b) To facilitate the Office completing its duties under subsection (a) of this section, a contractor shall:

  (1) allow the Office to inspect any relevant matter, including records and the job site;

  (2) allow the Office to interview subcontractors and employees of the contractor;

  (3) ensure that subcontractors comply with Commission regulations;

  (4) include in the agreement with the certified minority business enterprise subcontractor a requirement that the subcontractor submit a monthly report to the Commission that:

    (i) identifies the prime contract; and

    (ii) lists payments received from the contractor in the previous month and invoices sent to the contractor that have not been paid; and

  (5) submit a monthly report to the Commission that lists:

    (i) unpaid invoices that are more than 30 days old received from certified minority business enterprise subcontractors; and

    (ii) the reason payments have not been made.

(c)

  (1)

    (i) On completion of a contract or before final payment or release of retainage, the Commission may require a prime contractor on a contract having a minority business enterprise subcontracting goal to submit to the Commission a final report of all payments made to or withheld from minority business enterprise subcontractors.

    (ii) The final report shall be in affidavit form and under the penalties for perjury.

  (2) Each solicitation shall contain notice of the requirements of this subsection.

(d)

  (1) On a finding that a contractor is noncompliant, the Commission shall notify the contractor in writing of the findings and state the required corrective action.

  (2) A noncompliant contractor shall:

    (i) initiate the corrective action within 10 days after receiving the written notice; and

    (ii) complete the corrective action within the time specified by the Commission.

(e) If the Commission finds that a prime contractor is in material noncompliance with minority business enterprise contract provisions and the prime contractor fails to take the corrective action required by the Commission, the Commission may:

  (1) terminate the contract;

  (2) refer the prime contractor to the relevant person for appropriate action; or

  (3) initiate any other specific remedy identified in the contract.

#### Section 20-207

(a) By October 31 of each year, the Commission shall issue a report to the Montgomery County and Prince George's County Senate and House Delegations to the Maryland General Assembly concerning:

  (1) the implementation and administration of the minority business enterprise programs under this subtitle for the fiscal year ending on the preceding June 30; and

  (2) appropriate recommendations concerning the programs.

(b)

  (1) The Commission may conduct an impartial fact-finding study in connection with a minority business enterprise program for consistency with applicable law.

  (2) The Commission shall report the findings of a study completed under this subsection to the Montgomery County and Prince George's County Senate and House Delegations to the Maryland General Assembly.

#### Section 20-208

This subtitle shall be of no effect and may not be enforced after July 1, 2028.

### Subtitle 3. Local Small Business Enterprise Program

#### Section 20-301

(a) In this subtitle the following words have the meanings indicated.

(b) "Disabled veteran-owned business" means a business that is at least 51% owned and controlled by one or more individuals certified by the U.S. Department of Veterans Affairs as having a service-connected disability regardless of the disability rating.

(c) "Local business" means a business with:

  (1) a principal place of business in Montgomery County or Prince George's County; or

  (2) at least 25% of the employees of the business domiciled in Montgomery County or Prince George's County.

(d) "Local small business" means a business that qualifies as both:

  (1) a local business; and

  (2) a small business.

(e) "Maryland-based business" means a business that has its principal place of business in the State.

(f) "Program" means the business participation program established under Sec. 20-302 of this subtitle.

(g) "Small business" means a business that meets criteria established by regulations adopted in accordance with Sec. 14-203 of the State Finance and Procurement Article.

(h) "Veteran-owned business" means a business that is at least 51% owned and controlled by one or more individuals who are veterans as defined in 38 U.S.C. Sec. 101.

#### Section 20-302

(a) By resolution or adopting regulations, the Commission may establish a business participation program in accordance with this subtitle.

(b) The Office established in accordance with Sec. 20-203 of this title shall administer the program.

#### Section 20-303

The purpose of the program is to assist businesses eligible to participate in the program, with preference being given to local small businesses and local businesses, by:

(1) establishing a sheltered market or other appropriate preference; or

(2) facilitating the award of Commission construction contracts or procurement contracts for goods and services to eligible businesses.

#### Section 20-304

(a) The following businesses are eligible to participate in the program:

  (1) a local business;

  (2) a small business;

  (3) a local small business;

  (4) a Maryland-based business;

  (5) a disabled veteran-owned business that is:

    (i) a local business;

    (ii) a small business;

    (iii) a local small business; or

    (iv) a Maryland-based business; and

  (6) a veteran-owned business that is:

    (i) a local business;

    (ii) a small business;

    (iii) a local small business; or

    (iv) a Maryland-based business.

(b) The Commission shall adopt:

  (1) any other eligibility criteria the Commission determines to be necessary or appropriate for the promotion of the businesses specified under subsection (a) of this section; and

  (2) administrative procedures for conducting the program.

(c) An eligible business may qualify to participate in the program without regard to the race, ethnicity, or gender of the participants in the business.

(d) The Commission shall establish criteria for graduation from the program for an eligible business that the Commission determines no longer requires the assistance or benefits offered by the program.

(e) The Commission shall review the eligibility criteria and administrative procedures of the program each year to assess their effectiveness in furthering the purposes of the program.

(f) The Commission may accept as a registered vendor eligible to participate in the program any business that:

  (1) is a registered vendor through a vendor registration process in another jurisdiction; or

  (2) self-certifies as a vendor in accordance with regulations adopted by the Commission.

(g) Nothing in this section may be construed to require a solicitation issued by the Commission to include every category of eligible business.

### Subtitle 4

#### Section 20-401

The Commission may adopt regulations to promote in the Commission's contracts workforce engagement and local economic benefits within the Commission's service district, including establishing definitions and standards for contractor good faith efforts regarding:

(1) local hiring and recruitment;

(2) skills training, pre-apprenticeship, and apprenticeship participation or support; and

(3) data reporting on workforce residency or local economic activity.

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Md. Code Ann., Pub. Util. (as displayed at mgaleg.maryland.gov, October 16, 2026)