# State Finance and Procurement (GSF)

## Title 13. Source Selection -- State Procurement Contracts

### Subtitle 2. Procedural Requirements

#### Section 13-201

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

(b) "Change order" means a written order that:

  (1) is signed by the procurement officer; and

  (2) directs the contractor to make changes that the procurement contract authorizes the procurement officer to order without the consent of the contractor.

(c) "Contract modification" means a written alteration that:

  (1) affects specifications, delivery point, date of delivery, period of performance, price, quantity, or other provisions of a procurement contract; and

  (2) is accomplished by mutual action of the parties to the procurement contract.

(d) "Cost-reimbursement contract" means a procurement contract under which the State reimburses a contractor for fees and other costs that are:

  (1) recognized as allowable and allocable under the regulations of the Board on price and cost principles; and

  (2) within a stated ceiling.

#### Section 13-202

(a) After a solicitation is issued and until a recommendation is made by a procurement officer, a procurement officer may disclose to a person outside the Executive Department only:

  (1) whether a decision has been made regarding a solicitation; and

  (2) information that is available to the public under Title 4, Subtitles 1 through 5 of the General Provisions Article.

(b) After a solicitation is issued, a procurement officer shall record and include in the procurement file the following information from an inquiry from a source outside the Executive Department:

  (1) the date and time of the inquiry;

  (2) the name and affiliation of the person making the inquiry; and

  (3) the substance and nature of the inquiry.

(c) A procurement officer shall maintain a file on each procurement that includes:

  (1) a record of all inquiries required to be recorded under subsection (b) of this section;

  (2) all written solicitations by an agency or unit;

  (3) all offers received;

  (4) all internal and external correspondence regarding the procurement;

  (5) written documentation from the procurement officer describing efforts to confirm the information in the affidavits submitted by the successful bidder or offeror; and

  (6) the final contract.

#### Section 13-205

(a) A unit:

  (1) shall draft specifications to encourage maximum practicable competition without modifying the requirements of the State; and

  (2) may not draft specifications to favor a single prospective bidder or offeror.

(b) A unit shall require a prospective bidder or offeror of supplies or construction to state in the bid or offer:

  (1) whether the procurement will or may include recycled materials; and

  (2) the types, amounts, and application of recycled materials that the bidder or offeror intends to include in the procurement.

#### Section 13-206

(a)

  (1) A procurement officer shall reject a bid or proposal if the procurement officer determines that:

    (i) the bid is nonresponsive or the proposal is unacceptable; or

    (ii) the bidder or offeror is not responsible.

  (2) The procurement officer shall include a determination under this subsection in the procurement file.

(b) If, with the approval of the Board, a unit determines that it is fiscally advantageous or otherwise in the best interests of the State, the unit may:

  (1) cancel an invitation for bids, a request for proposals, or other solicitation; or

  (2) reject all bids or proposals.

(c) A procurement officer may determine that a person is not a responsible bidder or offeror for:

  (1) unreasonable failure to supply information promptly in connection with a determination of responsibility under subsection (a) of this section; or

  (2) any other reason indicating that the person does not have:

    (i) the capability in all respects to perform fully the requirements for a procurement contract; or

    (ii) the integrity and reliability that will ensure good faith performance.

#### Section 13-207

(a) Except as otherwise provided in this section, a procurement officer may not require a bidder or offeror to provide bid security on a procurement contract if the procurement officer expects the price to be less than or equal to the small procurement amount specified in Sec. 13-109 of this title.

(b)

  (1) A procurement officer shall require a bidder or offeror to provide bid security on a procurement contract for construction if:

    (i) the price is expected to exceed the small procurement amount specified in Sec. 13-109 of this title; or

    (ii) required by federal law or a condition of federal assistance requires the security.

  (2) The amount of bid security required for a procurement contract for construction shall be:

    (i) at least 5% of the bid or price proposal; or

    (ii) if the bid or price proposal states a rate but not a total price, an amount determined by the procurement officer.

(c)

  (1) A procurement officer may require a bidder or offeror to provide bid security on a procurement contract for services, supplies, or construction related services if the price of the procurement contract is expected to exceed the small procurement amount specified in Sec. 13-109 of this title.

  (2) A procurement officer shall require a bidder or offeror to provide bid security on a procurement contract for services, supplies, or construction related services if federal law or a condition of federal assistance requires the security.

  (3) The amount of bid security required for a procurement contract for services, supplies, or construction related services shall be an amount determined by the procurement officer. If a bid or proposal states a rate but not a total price, the procurement officer shall determine the dollar amount of the bid security.

(d) Bid security under this section shall be:

  (1) a bond provided by a surety company authorized to do business in the State;

  (2) cash; or

  (3) another form of security allowed by regulation.

#### Section 13-208

(a) Except as provided under subsection (b) of this section, if a procurement officer requires bid security, the procurement officer shall reject a bid or proposal that is not accompanied by proper security.

(b) A procurement officer may accept a bid or proposal that is accompanied by bid security in less than the amount required if:

  (1) the procurement officer determines that:

    (i) the deficiency in the amount is insubstantial; and

    (ii) acceptance of the bid or proposal would be in the best interests of the State; and

  (2) the procurement officer further determines that:

    (i) the bid or proposal was the only one submitted and there is no time for rebidding;

    (ii) the bid security became inadequate as a result of the correction of a mistake in the bid or proposal or as a result of a modification in the bid or proposal in accordance with applicable regulations, and the bidder or offeror increased the amount of bid security to required limits within 48 hours after the correction or modification; or

    (iii) after consideration of the risks involved and the difference between the lowest bid and the next lowest bid, it would be fiscally advantageous to the State to accept the lowest bid or proposal.

#### Section 13-209

Whenever a bidder or offeror withdraws a bid or proposal, action may be taken against the bid security unless:

(1) there is a mistake in the bid or proposal; and

(2) the procurement officer allows the bidder or offeror to withdraw before the procurement contract is awarded.

#### Section 13-210

(a)

  (1) If a procurement officer decides to conduct a pre-bid conference to explain the requirements of a procurement that is expected to exceed $100,000, as soon as practicable after the conference concludes, the procurement officer shall have written minutes of the conference prepared.

  (2) The minutes of a pre-bid conference are public records and shall be open to public inspection during ordinary business hours.

(b)

  (1) Subject to Title 4 of the General Provisions Article:

    (i) a summary of the final evaluation of a proposal shall be open to public inspection;

    (ii) after an award, all proposals shall be open to public inspection; and

    (iii) at and after bid opening, the contents of a bid and any document submitted with the bid shall be open to public inspection.

  (2) Except as otherwise provided in this section, Title 4 of the General Provisions Article shall govern any request for the disclosure of information related to a procurement.

(c) A procurement officer may deny public access to the advisory or deliberative records of an evaluator of a proposal if the records would not be available by law to a private party in litigation with the unit.

(d)

  (1) Before bid opening:

    (i) bids shall remain sealed; and

    (ii) the State may not disclose the name of a bidder.

  (2) Before the closing date for proposals, a procurement officer may not disclose the name of a person who has submitted a proposal.

  (3) Before awarding a procurement contract based on competitive sealed proposals, the State may not disclose the contents of a proposal to any person other than a person responsible for evaluating or reviewing the proposal.

(e) Subsections (b)(1), (c), and (d) of this section do not affect the authority of the Board of Contract Appeals or a court of competent jurisdiction to:

  (1) decide that information is discoverable in an administrative or judicial proceeding; and

  (2) compel disclosure.

#### Section 13-211

(a) In this section, "procurement official" means a procurement officer or an individual who participates in the drafting of specifications for procurement.

(b) During the conduct of a procurement, a competing contractor, or any officer, employee, representative, agent, or consultant of any competing contractor, may not knowingly:

  (1) make any offer or promise of future employment or business opportunity to, or engage in any discussion of future employment or business opportunity with, any procurement official of the agency conducting the procurement;

  (2) offer, give, or promise to offer or give any money, gratuity, or other thing of value to any procurement official of the agency conducting the procurement; or

  (3) solicit or obtain from any officer or employee of an agency conducting the procurement, before the award of a contract, any proprietary or source selection information regarding the procurement.

#### Section 13-212

(a) Each invitation for bids or request for proposals for a contract that will involve the selection of a consultant who is to assist the unit in the formation, award, or execution of any State contract shall require that a bidder or offeror provide to the unit an affidavit that discloses any actual or potential conflict of interest of which the bidder or offeror knows, or can reasonably be expected to know, in accordance with regulations adopted under this section.

(b) The Board shall adopt regulations concerning the disclosure and evaluation of conflicts of interest under this section.

#### Section 13-212.1

(a) Except as provided in subsection (d) of this section, an individual who assists an executive unit in the drafting of specifications, an invitation for bids, a request for proposals for a procurement, or the selection or award made in response to an invitation for bids or a request for proposals, or a person that employs the individual during the period of assistance, may not:

  (1) submit a bid or proposal for that procurement; or

  (2) assist or represent another person, directly or indirectly, who is submitting a bid or proposal for that procurement.

(b) For purposes of subsection (a) of this section, assisting in the drafting of specifications, an invitation for bids, or a request for proposals for a procurement does not include:

  (1) providing descriptive literature, such as catalogue sheets, brochures, technical data sheets, or standard specification "samples", whether requested by an executive unit or provided unsolicited;

  (2) submitting written or oral comments on a specification prepared by an executive unit or on a solicitation for a bid or proposal when comments are solicited from two or more persons as part of a request for information or a prebid or preproposal process;

  (3) providing specifications for a sole source procurement made in accordance with Sec. 13-107 of this title;

  (4) providing architectural and engineering services for:

    (i) programming, master planning, or other project planning services; or

    (ii) the design of a construction project if:

      (1) the design services do not involve lead or prime design responsibilities or construction phase responsibilities on behalf of the State; and

      (2)

        (A) the anticipated value of the procurement contract at the time of advertisement is at least $2,500,000 and not more than $100,000,000; or

      (B) regardless of the amount of the procurement contract, the payment to the individual or person for the design services does not exceed $500,000;

  (5) for a procurement of health, human, social, or educational services, comments solicited from two or more persons as part of a request for information, including written or oral comments on a draft specification, an invitation for bids, or a request for proposals; or

  (6) providing information that does not provide an unfair competitive advantage for any bidder or offeror.

(c) A unit that receives comments as described in subsection (b)(2) and (5) of this section shall retain:

  (1) any written comments; and

  (2) a record of any oral comments.

(d)

  (1) The prohibitions established under subsection (a) of this section apply from the date of issuance of the first invitation for bids or request for proposals for which the specifications were initially drafted until the later of:

    (i) 2 years from the date of issuance; or

    (ii) the selection or award of a procurement contract in response to the issuance of the invitation for bids or request for proposals or a reissuance of the invitation for bids or request for proposals for which the specifications were initially drafted.

  (2) The prohibitions established under subsection (a) of this section do not apply to a subsequent invitation for bids or request for proposals for which the specifications are reused after the initial prohibition is no longer applicable in accordance with paragraph (1) of this subsection.

#### Section 13-213

(a) In accordance with Title 10, Subtitle 1 of the State Government Article, the Board shall adopt regulations on price and cost principles based on generally accepted accounting principles.

(b) The principles adopted by the Board shall be used:

  (1) as guidelines for negotiations on:

    (i) estimated costs or fixed prices;

    (ii) price adjustments for contract modifications and change orders; and

    (iii) settlements of terminated procurement contracts;

  (2) to establish the allowability of costs under procurement contract provisions for the reimbursement of costs; and

  (3) in any other situation that requires the establishment of the estimated or incurred costs of performing a procurement contract.

#### Section 13-214

(a)

  (1) Subject to Sec. 13-215 of this subtitle and subsection (b) of this section, a unit may enter into a procurement contract based on any method of pricing that will promote the best interests of the State.

  (2) If practicable, a unit shall give preference to a fixed-price form of procurement contract.

(b)

  (1) A unit may not enter into a cost-plus-a-percentage-of-cost procurement contract.

  (2) A contractor who is subject to a cost-reimbursement contract may not enter into a cost-plus-a-percentage-of-cost subcontract.

#### Section 13-215

(a) A unit may not enter into a cost-reimbursement contract unless the procurement officer determines that:

  (1) a cost-reimbursement contract is likely to be less costly to the State than any other type of contract; or

  (2) except for leases of real property, the kind or quality of procurement that the unit requires could not be obtained practicably under any other type of contract.

(b) A unit may not enter into a procurement contract that is wholly or partly a cost-reimbursement contract unless the procurement officer determines that the accounting system of the contractor:

  (1) will allow timely development of all necessary cost data in the form required by the specific type of procurement contract under consideration; and

  (2) is adequate to allocate costs in accordance with generally accepted accounting principles.

(c) A cost-reimbursement contract shall provide that costs, including costs for subcontractors, will be reimbursed only if the costs are allowable and allocable under:

  (1) the procurement contract; or

  (2) the regulations of the Board on cost principles.

(d) A contractor under a cost-reimbursement contract shall give notice to and, as required under the contract, obtain approval from a procurement officer before the contractor enters into:

  (1) a cost-reimbursement subcontract; or

  (2) any subcontract involving more than:

    (i) $25,000; or

    (ii) 5% of the estimated cost of the procurement contract.

#### Section 13-216

(a) Except as provided in subsection (b) of this section, a procurement officer may not require a contractor to provide a performance bond, payment bond, or other security on a procurement contract for construction, construction related services, services, or supplies if the price of the procurement contract is less than or equal to the small procurement amount specified in Sec. 13-109 of this title.

(b) A procurement officer shall require a contractor to provide a performance bond, payment bond, or other security if federal law or a condition of federal assistance requires the security.

(c) If the price of a procurement contract for construction exceeds the small procurement amount specified in Sec. 13-109 of this title for construction, a procurement officer shall require a contractor to provide security as required under Title 17, Subtitle 1 of this article.

(d) A procurement officer may require a contractor to provide a performance bond or other security on a procurement contract for supplies, services, or construction related services if:

  (1) circumstances warrant security; and

  (2) the price of the procurement contract exceeds the small procurement amount specified in Sec. 13-109 of this title.

(e)

  (1) The Board shall adopt regulations to establish separate surety bond forms for procurement officers to use to require security for:

    (i) fixed-price contracts; and

    (ii) multiyear contracts.

  (2) The form for multiyear contracts shall provide for annual and renewable contracts.

#### Section 13-217

(a) In this section, "multi-year contract" means a procurement contract that requires appropriations for more than 1 fiscal year.

(b)

  (1) A unit may enter into a multi-year contract subject to:

    (i) standards established by the Board; and

    (ii) regulations adopted by the primary procurement unit that is responsible for the type of procurement involved.

  (2) A multi-year contract shall be subject to review and approval by that primary procurement unit.

(c) A multi-year contract may not be approved unless each unit reviewing the multi-year contract determines that:

  (1) the estimated requirements of the State:

    (i) cover the period of the multi-year contract;

    (ii) are reasonably firm; and

    (iii) are continuing; and

  (2) the multi-year contract will serve the best interests of the State by encouraging effective competition or otherwise promoting economy in State procurement.

(d)

  (1) If money sufficient for the continued performance of a multi-year contract is not appropriated for any fiscal year, the multi-year contract terminates automatically on the earlier of:

    (i) the last day of the fiscal year for which money last was appropriated; or

    (ii) the date provided in the termination clause of the procurement contract.

  (2) If the multi-year contract is terminated under this subsection, the unit shall reimburse the contractor for the reasonable value of any nonrecurring costs that were:

    (i) incurred as a result of the multi-year contract; but

    (ii) not amortized in the price of the supplies or services delivered under the multi-year contract.

  (3) The cost of termination under this subsection may be paid from any appropriation available for that purpose.

(e) Except as provided in subsection (f) of this section, each multi-year contract, including a lease of real property, shall include an automatic termination clause that:

  (1) is not inconsistent with the requirements of subsection (d) of this section; and

  (2) discharges both parties to the multi-year contract from future performance of that contract, but not from their existing obligations.

(f)

  (1) On the recommendation of the Secretary of General Services, for a multi-year contract to procure energy generated from a Tier 1 renewable source or a Tier 2 renewable source, as defined in Sec. 7-701 of the Public Utilities Article, the Board may waive the requirement to include:

    (i) an automatic termination clause under subsection (e) of this section; or

    (ii) a termination for convenience clause required under Sec. 13-218(a)(2) of this subtitle.

  (2) In determining whether to grant a waiver under paragraph (1) of this subsection, the Board shall consider the effect of imposing the following clause requirements on the ability of the energy supplier to obtain financing for the renewable energy generation project that produces the energy that the State is contracting to procure:

    (i) the termination clause requirement under subsection (e) of this section; and

    (ii) the termination for convenience clause requirement under Sec. 13-218(a)(2) of this subtitle.

#### Section 13-218

(a) Each procurement contract shall include clauses covering:

  (1) termination for default;

  (2) termination wholly or partly by the State for its convenience if the head of the primary procurement unit determines that termination is appropriate;

  (3) variations that occur between estimated and actual quantities of work in a procurement contract;

  (4) liquidated damages, as appropriate;

  (5) specified excuses for nonperformance;

  (6) except for real property leases, the unilateral right of the State to order in writing:

    (i) changes in the work, if the changes are within the scope of the procurement contract; and

    (ii) a temporary stop or delay in performance;

  (7) the obligation of the contractor to comply with the political contribution reporting requirements under Title 14 of the Election Law Article, to which the contractor may be subject as required under Sec. 17-402 of this article;

  (8) nonvisual access for information technology as required under Sec. 3.5-311 of this article; and

  (9) the authorization of a contractor to request a contract modification to provide an equitable adjustment to compensate the contractor for increases in the cost of and time for contract performance due to changes in State law applied by the procurement unit.

(b) In addition to the clauses required under subsection (a) of this section, a procurement contract for construction shall include:

  (1) a clause providing for contract modification if the condition of a site differs from the condition described in the specifications; and

  (2) a clause covering the requirements for notice of contract claims, submission of contract claims, and resolution of contract claims under Sec. 15-219 of this article.

(c) Each procurement contract shall include a clause that gives to the parties notice that preexisting regulations apply to the procurement contract in accordance with Sec. 11-206 of this article.

(d) At any time after the parties enter into a procurement contract they may include additional clauses in the procurement contract, by consent, without consideration.

(e) A clause required under this section for contract modification of or change orders to a procurement contract for construction shall:

  (1) make each contract modification or change order that affects the price of the procurement contract subject to:

    (i) prior written approval from the unit and any other person responsible for the procurement contract; and

    (ii) prior certification by the fiscal authority responsible for the unit about:

      (1) the availability of money; and

      (2) the effect of the contract modification or change order on the project budget or the total construction cost; and

  (2) prohibit the contract modification or change order if the certification by the fiscal authority discloses that the contract modification or change order will increase the cost beyond budgeted and available money, unless:

    (i) sufficient additional money is made available; or

    (ii) the scope of the project is adjusted to allow completion within the project budget.

(f) In accordance with Sec. 13-217(f) of this subtitle, the Board may waive the inclusion of a termination for convenience clause required under subsection (a)(2) of this section.

(g) A contract described under Sec. 11-203(a)(1)(xviii)1 or (xx) of this article shall include clauses requiring the nonprofit entity to:

  (1) subcontract the performance of historic preservation, archaeology, and conservation services to third-party firms;

  (2) competitively procure any subcontracted services in a transparent manner in accordance with applicable State law, including the minority business enterprise requirements under Title 14, Subtitle 3 of this article;

  (3) provide annual reports to the unit on partnership outcomes and expenditures, including minority business enterprise subcontracting utilization; and

  (4) maximize opportunities for community engagement related to the historic preservation, archaeology, or conservation service opportunity.

#### Section 13-218.1

(a) In this section, "service contract" has the meaning stated in Sec. 13-401 of the State Personnel and Pensions Article.

(b)

  (1) At least 60 days before the issuance of a solicitation for a service contract that is not exempt under Sec. 13-403(c) or Sec. 13-404(b) of the State Personnel and Pensions Article, the unit shall provide the exclusive representative of the employees who may be affected by the service contract with:

    (i) written notice of:

      (1) work that is being proposed for contracting; and

      (2) contracting procedures, requirements, timetables, and employee rights as provided in Title 13, Subtitle 4 of the State Personnel and Pensions Article; and

    (ii) a reasonable opportunity to meet and discuss alternatives to the proposed service contract.

  (2)

    (i)

      (1) Except as provided in subsubparagraph 2 of this subparagraph, this paragraph applies to a solicitation for a service contract for janitorial services.

      (2) This paragraph does not apply to a service contract for janitorial services under Title 14, Subtitle 1 of this article.

    (ii) In consultation with the Department of General Services, the Board shall adopt regulations concerning a solicitation for a service contract for janitorial services to require that a bidder or offeror delineate its costs by category, including:

      (1) labor;

      (2) cleaning supplies; and

      (3) projected man-hours to satisfactorily complete the service.

(c) A violation of this section does not constitute grounds to challenge or appeal an award of a procurement or the process through which the procurement was conducted.

#### Section 13-219

(a) This section is broadly applicable to all procurements by the State.

(b) Each contract for procurement shall include a nondiscrimination clause as provided in this section.

(c) The nondiscrimination clause shall:

  (1) prohibit discrimination in any manner by the contractor against an employee or applicant for employment because of sex, sexual orientation, gender identity, disability, race, age, color, creed, or national origin;

  (2) require the contractor to include a similar clause in every subcontract except a subcontract for standard commercial supplies or raw materials; and

  (3) require each contractor and subcontractor subject to this clause to post conspicuously a notice that sets forth the provisions of the clause in a place that is available to employees and applicants for employment.

(d) If the nondiscrimination clause is omitted from a contract or subcontract subject to this section, the State may declare the contract to be void. In that event, the contractor is entitled to the reasonable value of work that has been performed and materials that have been provided.

(e) If a contractor willfully fails to comply with the requirements of the nondiscrimination clause and the contract is partly executory, the State may compel the contractor to continue to perform under the contract, but the State:

  (1) is liable for no more than the reasonable value of work performed and materials provided after the date on which the breach of contract was or should have been discovered; and

  (2) shall deduct any money that has been paid under the contract from the money that becomes due under item (1) of this subsection.

(f) If a subcontractor willfully fails to comply with the requirements of a nondiscrimination clause, the contractor may void the subcontract. In that event, the contractor is liable for no more than the reasonable value of work performed or materials provided.

(g)

  (1) Any person, including an employee or prospective employee, who has information about a violation of this section or a nondiscrimination clause may inform the Board.

  (2) The Board:

    (i) shall cause an immediate investigation of the charge; and

    (ii) if it concludes that the charge is true, may invoke any remedy available by law.

#### Section 13-220

(a) In this section, "established catalog price" means the price included in the most current catalog, price list, schedule, or other form that:

  (1) is regularly maintained by the manufacturer or supplier of an item;

  (2) is published or available for inspection by customers; and

  (3) states:

    (i) prices at which sales are currently or were last made to the general buying public; or

    (ii) discounted prices at which sales are currently or were last made to local, State, or federal governmental units.

(b) This section applies to all procurements by units except:

  (1) a procurement for which the price will be established by competitive sealed bidding; or

  (2) a lease of real property or an amendment to a lease of real property.

(c) An offeror or contractor shall submit cost and price information for a procurement contract, change order, or contract modification if the price:

  (1) is expected to exceed $100,000 or a smaller amount set by the procurement officer; and

  (2) is not:

    (i) based on adequate price competition;

    (ii) based on the established catalog or market price of commercial items sold in substantial quantities to a significant number of buyers; or

    (iii) set by law.

(d) An offeror or contractor required to submit cost and price information shall certify that, to the best knowledge of the offeror or contractor, the information is:

  (1) accurate;

  (2) complete; and

  (3) current as of a specific date that:

    (i) has been determined by the procurement officer and the offeror or contractor; and

    (ii) occurs before the conclusion of price discussions.

(e) Each procurement contract, change order, or contract modification for which a cost and price certificate is required shall contain a provision that the price, including profit or fee, shall be reduced to exclude any significant price increases in a component that result because the contractor provided cost or price information that, as of the date specified under subsection (d)(3) of this section, was inaccurate, incomplete, or not current.

#### Section 13-222

(a) For a State procurement contract for $10,000 or more, except as provided in subsection (c) of this section, at the time a bid or proposal for any State procurement contract is submitted, the bidder or offeror shall certify to the procurement officer that:

  (1) the bidder or offeror has paid all taxes, unemployment insurance contributions, reimbursement payments, and interest not barred by limitations and payable to the Comptroller, the Department of Assessments and Taxation, or the Maryland Department of Labor or has provided for payment in a manner satisfactory to the unit responsible for collection; and

  (2) if the bidder or offeror is a vendor of tangible personal property, the bidder or offeror possesses a valid sales and use tax license under Title 11, Subtitle 7 of the Tax - General Article.

(b) Before a unit awards any procurement contract for $100,000 or more, the unit shall verify through the Office of the Comptroller:

  (1) that all taxes, unemployment insurance contributions, reimbursement payments, and interest not barred by limitations and payable by the contractor to the Comptroller, the Department of Assessments and Taxation, and the Secretary of Labor are paid or that payment has been provided for in a manner satisfactory to the unit responsible for collection; and

  (2) if the contractor is a vendor of tangible personal property, that the contractor possesses a valid sales and use tax license under Title 11, Subtitle 7 of the Tax - General Article.

(c) The Board may waive the requirements of this section if the Board determines that:

  (1) the procurement is essential or in the best interests of the State; and

  (2) there is no other known source for the procurement at a reasonable cost.

(d) In any solicitation, a unit shall provide notice of the requirements of this section.

#### Section 13-223

(a) Each procurement contract shall include the following clause:

"The contractor, architect, or engineer warrants that it has not employed or retained any person, partnership, corporation, or other entity, other than a bona fide employee, bona fide agent, bona fide salesperson, or commercial selling agency working for the contractor, architect, or engineer, to solicit or secure this agreement, and that it has not paid or agreed to pay any person, partnership, corporation, or other entity, other than a bona fide employee, bona fide salesperson, or commercial selling agency, any fee or other consideration contingent on the making of this agreement."

(b)

  (1)

    (i) Except as provided in subparagraph (ii) of this paragraph, unless a person is a bona fide employee, bona fide salesperson, or commercial selling agency working for the contractor, the person may not offer or agree to solicit or secure a procurement contract under this subtitle if the person's fee is contingent on, or results from, the making of the procurement contract.

    (ii) A regulated lobbyist, who is described in Sec. 5-702(a)(1), (2), or (3) of the General Provisions Article, may not offer or agree to solicit or secure a procurement contract under this subtitle if the lobbyist's fee is contingent on, or results from, the making of the procurement contract.

  (2)

    (i) Except as provided in subparagraph (ii) of this paragraph, a contractor or a person who provides architectural or engineering services may not offer to pay a fee or other consideration that is contingent on the making of a procurement contract under this article.

    (ii) This paragraph does not apply to a payment to a bona fide employee, bona fide salesperson, or commercial selling agency working for the contractor or person providing architectural or engineering services.

  (3) An employee of a unit may not solicit or secure or offer to solicit or secure a procurement contract under this article between the unit and any other person for which the employee is paid or is to be paid a fee or other consideration that is contingent on the making of the procurement contract.

#### Section 13-224

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Children of current or former recipients" has the meaning stated in Sec. 5-304 of the Human Services Article.

  (3) "Department" means the Department of Human Services.

  (4) "Eligible contract" means a procurement contract designated by the Board as appropriate for the execution of a hiring agreement.

  (5) "FIP" means the Family Investment Program established under Title 5, Subtitle 3 of the Human Services Article.

  (6) "Former recipient" has the meaning stated in Sec. 5-304 of the Human Services Article.

  (7) "Foster youth" has the meaning stated in Sec. 5-304 of the Human Services Article.

  (8) "Hiring agreement" means an agreement entered into by the Department or a local department and an entity doing business with the State under which the Department or the local department and the entity agree to work cooperatively in endeavoring to identify and hire current and former FIP recipients, children of current or former recipients, foster youth, and obligors to fill job openings of the entity.

  (9) "Local department" means a local department of social services in a county or in Baltimore City created or continued under Sec. 3-201(a) of the Human Services Article.

  (10) "Obligor" has the meaning stated in Sec. 10-101 of the Family Law Article.

(b) On or before October 1, 1998, the Board, in consultation with the Department, shall designate the types of procurement contracts that are eligible contracts.

(c)

  (1) On or before December 1, 1998, the Department shall develop a model hiring agreement form that shall be completed by the Department or a local department and an entity in conjunction with the award of an eligible contract.

  (2) The model hiring agreement form shall include the following provisions:

    (i) the entity will:

      (1) inform the Department or the local department, as appropriate, of all of the entity's job openings;

      (2) declare the Department or the local department, as appropriate, its "first source" in identifying and hiring candidates to fill those job openings;

      (3) work cooperatively with the Department or the local department, as appropriate, to develop any necessary training programs that will enable current and former FIP recipients, children of current or former recipients, foster youth, and obligors in qualifying for and securing the positions;

      (4) give first preference and first consideration to the extent permitted by law and any existing labor agreements to candidates referred to the entity by the Department or the local department, as appropriate;

      (5) agree to give candidates referred to the entity by the Department or the local department, as appropriate, priority in the filling of a job opening if the candidate meets the qualifications of the position;

      (6) provide the Department or the local department, as appropriate, with information on the disposition of all referrals made by the Department or the local department, as appropriate, including an explanation of why any such candidate was not hired or considered qualified;

      (7) provide the Department or the local department, as appropriate, with information regarding the progress and employment status of those candidates referred by the Department or the local department, as appropriate, that the entity hired; and

      (8) designate a specific individual that the Department or the local department, as appropriate, may contact in regard to the provisions of the hiring agreement; and

    (ii) the Department or the local department, as appropriate, will assign an account representative to the entity who will:

      (1) receive and process all of the entity's job notifications;

      (2) refer only screened and qualified candidates to the entity;

      (3) assist in the development of any mutually agreed upon training programs, internship programs, or both that will better prepare current and former FIP recipients, children of current or former recipients, foster youth, and obligors for employment with the entity;

      (4) arrange follow-up and post-hire transitional/supportive services, such as child care and transportation, as necessary and appropriate; and

      (5) review and evaluate the effectiveness of the hiring agreement with the entity and make modifications in the agreement as necessary and appropriate.

(d) Each year, the Department and any local departments that have entered into hiring agreements shall submit a report to the Board and, subject to Sec. 2-1257 of the State Government Article, the General Assembly on:

  (1) the number of hiring agreements executed;

  (2) the number of current and former FIP recipients, children of current or former recipients, foster youth, and obligors hired by an entity with which a hiring agreement was executed; and

  (3) the effectiveness of each hiring agreement in obtaining employment for current and former FIP recipients, children of current or former recipients, foster youth, and obligors.

#### Section 13-225

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Payment security" has the meaning stated in Sec. 17-101 of this article.

  (3) "Performance security" has the meaning stated in Sec. 17-101 of this article.

(b)

  (1) If a contractor has furnished 100% payment security and 100% performance security in accordance with Title 17, Subtitle 1 of this article under a State procurement contract for construction, the percentage specified in the contract for retainage may not exceed 5% of the total amount.

  (2) In addition to retainage, a primary procurement unit and the Maryland Transportation Authority may withhold from payments otherwise due a contractor any amount that the unit reasonably believes necessary to protect the State's interest.

  (3) Retainage withheld by a primary procurement unit and the Maryland Transportation Authority may be deposited in an interest-bearing escrow account in accordance with Sec. 15-108 of this article.

(c)

  (1) A contractor may not retain a percentage of payments due a subcontractor that exceeds the percentage of payments retained by the primary procurement unit or the Maryland Transportation Authority.

  (2) Paragraph (1) of this subsection may not be construed to prohibit a contractor from withholding any amount in addition to retainage if the contractor determines that a subcontractor's performance under the subcontract provides reasonable grounds for withholding the additional amount.

(d)

  (1) A subcontractor may not retain a percentage of payments due a lower tier subcontractor that exceeds the percentage of payments retained from the subcontractor.

  (2) Paragraph (1) of this subsection may not be construed to prohibit a subcontractor from withholding any amount in addition to retainage if the subcontractor determines that a lower tier subcontractor's performance under the subcontract provides reasonable grounds for withholding the additional amount.

(e) If retainage has been placed in escrow under Sec. 15-108 of this article, each payment of retainage shall include a pro rata portion of interest earned.

(f) This section may not be construed to limit the application of the provisions of Title 17, Subtitle 1 of this article.

#### Section 13-226

(a) Unless otherwise prohibited by law, a primary procurement unit may conduct procurement, including the solicitation of bids or proposals, evaluation, award, execution, and administration of a contract, by electronic means as provided in the Uniform Electronic Transactions Act in Title 21 of the Commercial Law Article.

(b) Bidding or submitting a proposal on a procurement contract by electronic means shall constitute consent by the bidder or proposer to conduct by electronic means all elements of the procurement of that contract which the unit agrees to conduct by electronic means.

(c)

  (1)

    (i) Except as provided in paragraph (2) of this subsection, a unit utilizing electronic means to conduct procurement or a private contractor furnishing to the State electronic means for conducting procurement may charge a reasonable fee, on approval by the Chief Procurement Officer, to the bidder, proposer, or each contract awardee for the use of the electronic means.

    (ii) Any fees collected under subparagraph (i) of this paragraph that are due to the State shall be deposited in the Operations Revenue Fund established under Sec. 13-102.1(c) of this subtitle.

  (2) Unless approved by the Board of Public Works, a fee may not be charged under this subsection.

(d) The terms and conditions of a procurement conducted under this section shall comply with the Uniform Electronic Transactions Act in Title 21 of the Commercial Law Article.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect June 1, 2025.

Approved by the Governor, April 8, 2025.

#### Section 13-227

(a) If a prime contractor requires a subcontractor to provide a bid, performance, or payment bond on a procurement contract for services, supplies, or construction related services with the State, the prime contractor may not require bid, performance, or payment bonding from the subcontractor that is more stringent than the bonding requirements in Sec.Sec. 13-207 and 13-216 of this subtitle and Sec. 17-104 of this article.

(b) A bid, performance, or payment bond that is provided by a subcontractor under subsection (a) of this section shall be accepted by the prime contractor if the bond would be accepted by the State and provided by:

  (1) a surety company authorized to do business in the State; or

  (2) the Maryland Small Business Development Financing Authority established in Title 5, Subtitle 5 of the Economic Development Article.

(c) In a solicitation or pre-bid conference for a procurement contract for services, supplies, or construction related services with the State, the procurement agency shall provide notice to all bidders that bid security shall be:

  (1) a bond provided by a surety company authorized to do business in this State;

  (2) a bond provided by an individual surety that meets the requirements of Sec.Sec. 13-207 and 13-216 of this subtitle and Sec. 17-104 of this article;

  (3) cash; or

  (4) another form of security:

    (i) authorized by federal or State regulation; or

    (ii) that is satisfactory to the unit awarding the contract.

#### Section 13-228

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Aggregator" means a person that:

    (i) provides or contracts for environmental outcomes; or

    (ii) provides or raises capital to finance delivery of environmental outcomes.

  (3) "Environmental outcome" means a commodity that is modeled or directly measured as a single, quantifiable, and certified unit of improvement to the environment, including a nutrient or carbon benefit.

  (4) "Environmental outcomes project" means a project designed to secure environmental outcomes.

  (5) "Evaluator" means a person other than an aggregator that determines whether environmental outcomes have been achieved based on defined performance measures.

  (6) "Outcome payment" means the money paid when a pay-for-success contract performance measure is met.

  (7) "Quantification plan" means a plan in which an aggregator describes:

    (i) the method that will be used to measure or model environmental outcomes and co-benefits under a pay-for-success contract;

    (ii) the compliance monitoring that will occur to ensure that the actions proposed in the pay-for-success contract are taken and maintained over the life of the project;

    (iii) verification steps that will be carried out by the State to confirm model results or accurate measurement of environmental outcomes; and

    (iv) the timeline for proposed payments under the pay-for-success contract.

(b) The General Assembly finds and declares that:

  (1) pay-for-success contracting shifts the risk of performance to the contractor because government payment is made only on achievement of outcomes;

  (2) social and environmental impact investment is growing dramatically, and investors are seeking ways to finance and execute pay-for-success contracts in the State to expand the success of Chesapeake Bay restoration efforts and achieve other public outcomes; and

  (3) it is in the best interest of the State to include pay-for-success contracting as a contracting option, particularly for units responsible for land conservation and environmental protection, enhancement, and restoration.

(c) A unit may enter into a pay-for-success contract only if the procurement officer of the unit determines that:

  (1) the contract will produce estimated financial savings or other quantifiable public benefits for the State; and

  (2) a substantial portion of the outcome payment due under the contract will be paid only after specific outcomes have been documented.

(d)

  (1) This subsection applies only to contracts by:

    (i) the Department of Agriculture;

    (ii) the Department of the Environment;

    (iii) the Department of Natural Resources;

    (iv) the Department of Transportation;

    (v) the Maryland Environmental Service; and

    (vi) the Department of General Services.

  (2) This subsection does not apply to the purchase of nitrogen load reductions with funds from the Clean Water Commerce Account of the Bay Restoration Fund established under Sec. 9-1605.2 of the Environment Article.

  (3)

    (i) A unit specified in paragraph (1) of this subsection may enter into a pay-for-success contract with an aggregator to purchase:

      (1) delivery of an environmental outcomes project; or

      (2) already certified environmental outcomes.

    (ii) Other State and local entities may participate in a pay-for-success contract under this subsection in accordance with an intergovernmental cooperative purchasing agreement under Sec. 13-110 of this title.

  (4) A pay-for-success contract executed under this subsection shall include:

    (i) a quantification plan approved by the unit;

    (ii) a statement of the environmental outcomes to be procured under the contract and a description of how defined performance measures will demonstrate progress in achieving these outcomes;

    (iii) requirements regarding the content and frequency of progress reports regarding the achievement of environmental outcomes;

    (iv) a methodology for calculating the amount and timing of outcome payments to an aggregator when the evaluator determines that the aggregator has achieved a defined performance measure;

    (v) a statement that the basis of payment is the determination of achievement of environmental outcomes by the evaluator and that payments for those outcomes do not require itemized billing or cost documentation by the aggregator; and

    (vi) terms addressing:

      (1) compliance with State law;

      (2) nondiscrimination in employment;

      (3) contractor indemnification;

      (4) termination for default; and

      (5) the unit's right to inspect the environmental outcomes project.

  (5) A pay-for-success contract executed under this subsection may include provisions regarding:

    (i) long-term maintenance and monitoring of environmental services, including the establishment of a stewardship fund;

    (ii) a requirement that the unit hold contract funds in a reserve account for outcome payments;

    (iii) for agriculture services, payment for achievement of baseline water quality requirements for nitrogen, phosphorus, or sediment; or

    (iv) terminations prior to the first payment under the contract for the purpose of selling environmental outcomes without penalty to another entity or for any other reason.

(e)

  (1) Beginning July 2025 and every 3 years thereafter, the Maryland Environmental Service shall review and evaluate the results of all pay-for-success contracts completed under this section for the previous 3 fiscal years.

  (2) The review conducted under paragraph (1) of this subsection shall include:

    (i) the cost of each project performed under a contract;

    (ii) the length of time taken to complete the project, from the date of notice to proceed until completion;

    (iii) the average cost and project duration for each project type; and

    (iv) whether each project met the terms of its contract.

  (3) Each unit that enters into a pay-for-success contract under this section shall execute an agreement with the Maryland Environmental Service to reimburse the Maryland Environmental Service for each of the unit's completed contracts the Maryland Environmental Service reviews under this section.

  (4) The Maryland Environmental Service shall provide copies of each review conducted under this subsection to:

    (i) each unit for which the Maryland Environmental Service reviewed and evaluated a contract; and

    (ii) in accordance with Sec. 2-1257 of the State Government Article, the Senate Committee on Education, Energy, and the Environment, the Senate Budget and Taxation Committee, the House Environment and Transportation Committee, and the House Appropriations Committee.

#### Section 13-229

(a) Before a unit awards any procurement contract for an amount above $500,000, the recommended awardee may be required to submit a workforce diversity plan to the procurement officer.

(b) Before a unit awards any procurement contract for an amount above $250,000, the recommended awardee may be required to submit a supplier diversity plan to the procurement officer.

(c) The Governor's Office of Small, Minority, and Women Business Affairs in consultation with the Office of State Procurement shall adopt regulations to carry out this section that include:

  (1) suggested content to be included in a workforce or supplier diversity plan; and

  (2) guidance for units to comply with the requirements of this section.

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Md. Code Ann., State Fin. & Proc. (as displayed at mgaleg.maryland.gov, October 16, 2026)