Title 15. Procurement Contract Administration and Dispute Resolution — Subtitle 1. Procurement Contract Administration
Statutes in effect as of October 1, 2026.
Md. Code Ann., State Fin. & Proc. § 15-101 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–101LinkCopy Citation
In this subtitle, “invoice” means an invoice that meets the requirements of § 15-102 of this subtitle.
Md. Code Ann., State Fin. & Proc. § 15-102 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–102LinkCopy Citation
A contractor who submits an invoice for a procurement contract shall include in the invoice:
(1)
the contractor’s federal employer’s identification number or Social Security number;
(2)
the procurement contract or purchase order number or another adequate description of the procurement contract; and
(3)
any documentation required by regulation or the procurement contract.
Md. Code Ann., State Fin. & Proc. § 15-103 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–103LinkCopy Citation
(a)
It is the policy of the State to make a payment under a procurement contract:
(1)
within 30 days after the day on which the payment becomes due and the unit receives a proper invoice; or
(2)
for a small business reserve contract, within 15 days after the day on which the payment becomes due and the unit receives a proper invoice.
(b)
Interest shall accrue in accordance with § 15–104 of this subtitle.
Md. Code Ann., State Fin. & Proc. § 15-104 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–104LinkCopy Citation
(a)
Except as provided in § 15–105 of this subtitle, interest shall accrue at the rate of 9% per annum on any amount that:
(1)
is due and payable by law and under the written procurement contract; and
(2)
remains unpaid more than 37 days after a unit receives an invoice.
(b)
Interest shall accrue beginning on the 31st day after:
(1)
the day on which payment becomes due under a procurement contract; or
(2)
if later, the day on which the unit receives an invoice.
Md. Code Ann., State Fin. & Proc. § 15-105 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–105LinkCopy Citation
A unit is not liable under § 15-104 of this subtitle for interest:
(1)
unless within 30 days after the date on the State’s check for the amount on which the interest accrued, the contractor submits an invoice for the interest;
(2)
if a contract claim has been filed under Subtitle 2 of this title;
(3)
accruing more than 1 year after the 31st day after the unit receives an invoice; or
(4)
on an amount that represents unpaid interest.
Md. Code Ann., State Fin. & Proc. § 15-106 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–106LinkCopy Citation
The Governor shall resolve a dispute among units as to which unit is responsible for a delayed payment under a procurement contract.
Md. Code Ann., State Fin. & Proc. § 15-107 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–107LinkCopy Citation
After a unit pays a semifinal estimate on a procurement contract, the unit shall place any retainage remaining in its possession in an interest bearing escrow account.
Md. Code Ann., State Fin. & Proc. § 15-108 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–108LinkCopy Citation
(a)
This section does not apply to any procurement contract funded with tax-exempt financing.
(b)
(1)
Subject to the requirements of this section, a contractor under a procurement contract that a unit awards for construction is entitled to have retainage under the procurement contract placed in an escrow account if the contractor:
(i)
elects that procedure in the procurement contract in the space provided for that election; and
(ii)
submits to the unit an escrow agreement that meets the requirements of subsection (c) of this section.
(2)
The procurement contract shall identify the escrow agent.
(c)
The escrow agreement shall:
(1)
be on a form that the unit provides;
(2)
include the complete address of both the escrow agent and the surety;
(3)
authorize the unit to pay retainage to the escrow agent; and
(4)
be signed by:
(i)
the contractor;
(ii)
the surety for the contractor; and
(iii)
the escrow agent.
(d)
On compliance with the requirements of subsection (b) of this section, the unit shall pay the retainage to the escrow agent unless:
(1)
federal money is involved and application of this section would jeopardize timely recovery of that federal money; or
(2)
retainage is withheld for:
(i)
lack of progress on the part of the contractor; or
(ii)
other violations by the contractor.
(e)
In accordance with the escrow agreement, a contractor may require an escrow agent:
(1)
to invest the retainage placed in the escrow account; and
(2)
to the extent the contractor is entitled to retainage under subsection (f)(2)(ii) of this section, to pay the earnings on the investment to the contractor.
(f)
(1)
Retainage may be released to the contractor only as directed by the unit.
(2)
At the time of final payment, the unit shall direct the escrow agent to settle the escrow account by distributing money in the escrow account in the following order:
(i)
to the unit for any claim it may have against the contractor under the procurement contract;
(ii)
unless waived by the Board, to the Comptroller for any claim exceeding $50 against the contractor by the State, a unit, or a State controlled governmental entity; and
(iii)
to the contractor.
Md. Code Ann., State Fin. & Proc. § 15-109 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–109LinkCopy Citation
(a)
At reasonable times an inspection may be conducted of a plant, place of business, or job site of:
(1)
a bidder or offeror seeking a procurement contract;
(2)
any contractor under a procurement contract;
(3)
a subcontractor under a procurement contract; or
(4)
a prospective subcontractor of:
(i)
a bidder or offeror seeking a procurement contract; or
(ii)
a contractor under a procurement contract.
(b)
An inspection under this section may be conducted by:
(1)
the Department of Legislative Services;
(2)
the unit engaged in procurement; or
(3)
as authorized by law, any other unit.
Md. Code Ann., State Fin. & Proc. § 15-110 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–110LinkCopy Citation
(a)
The following persons are subject to an audit of books, accounts, or records:
(1)
before the expiration of the period of retention under subsection (c) of this section, a person who submits cost and price information under § 13-220 of this article, if the books, accounts, or records being audited are reasonably connected with the cost and price information;
(2)
a contractor or subcontractor under a procurement contract if, from an audit of a cost-type contract, the unit has reason to believe that costs have been inappropriately assigned to the cost-type contract from a fixed-price contract; and
(3)
a contractor or subcontractor under a procurement contract that:
(i)
was awarded by a method other than competitive sealed bids; and
(ii)
is not a firm fixed-price procurement contract.
(b)
An audit under this section may be conducted by:
(1)
the Department of Legislative Services;
(2)
a unit engaged in procurement; or
(3)
as authorized by law, any other unit.
(c)
A person subject to an audit under subsection (a) of this section shall keep books, accounts, and records for:
(1)
at least 3 years after the day on which the person receives final payment under a procurement contract or a subcontract; or
(2)
if longer, the period required under the procurement contract.
Md. Code Ann., State Fin. & Proc. § 15-111 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–111LinkCopy Citation
(a)
Within 60 days after the end of each fiscal year, each primary procurement unit shall submit to the Chief Procurement Officer a report on each procurement contract that was awarded during the preceding fiscal year, whether the procurement was conducted by the primary procurement unit or subject to review by the primary procurement unit, and:
(1)
was exempt from the notice requirements of § 13–103(c) of this article because the procurement officer reasonably expected that the procurement contract would be performed entirely outside this State and the District of Columbia;
(2)
cost more than the small procurement amount specified in § 13–109 of this article and was awarded for the procurement of services, construction related services, architectural services, or engineering services; or
(3)
was awarded on the basis of:
(i)
§ 13–107 of this article (“Sole source procurement”);
(ii)
§ 13–108(a) of this article (“Emergency procurement”); or
(iii)
§ 13–108(c) of this article (“Expedited procurement”).
(b)
(1)
A report required under subsection (a)(2) or (3) of this section shall include:
(i)
the name of each contractor;
(ii)
the type and cost of the procurement contract; and
(iii)
a description of the procurement.
(2)
A report required under subsection (a)(3) of this section shall include:
(i)
a description of the basis for the award;
(ii)
the identity of the department or agency that awarded the contract;
(iii)
the identity of any agency official required to authorize the contract for award;
(iv)
the award date of the procurement contract and the final date of the contract term;
(v)
the date the contract award was posted to eMaryland Marketplace; and
(vi)
for procurements awarded under § 13–108(b) of this article (“Emergency procurement”):
(1)
the number of days between the agency declaration of an emergency procurement and the contract award date;
(2)
the date of the emergency declaration for each procurement; and
(3)
for an award that must be reported to the Board, the date the award was reported to the Board.
(c)
Within 90 days after the end of each fiscal year, the Chief Procurement Officer shall submit to the Governor, the Legislative Policy Committee, the Senate Budget and Taxation Committee, the Senate Committee on Education, Energy, and the Environment, the House Appropriations Committee, the House Health and Government Operations Committee, and the Joint Audit and Evaluation Committee a consolidated report that includes each report required under subsection (a) of this section.
(d)
Within 90 days after the end of each fiscal year, the Department of General Services shall submit to the Board and the General Assembly a report on each class of procurement for which the procedure for noncompetitive negotiated procurement has been approved under § 13–106 of this article.
(e)
A report to the General Assembly or a committee of the General Assembly under this section is subject to § 2–1257 of the State Government Article.
Md. Code Ann., State Fin. & Proc. § 15-112 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–112LinkCopy Citation
(a)
(1)
(i)
Except as provided in subparagraph (ii) of this paragraph, this section applies to State procurement contracts for:
(1)
construction;
(2)
information processing equipment, cloud computing services, and associated services; and
(3)
in accordance with Title 3.5, Subtitle 3 of this article, information technology system and cybersecurity upgrades and modernization.
(ii)
This section does not apply to State procurement contracts for public school construction or public school capital improvements.
(2)
For purposes of this section, a written acceptance letter for a State Highway Administration or Maryland Aviation Administration procurement contract for construction shall have the same force and effect as a change order until the State Highway Administration or Maryland Aviation Administration issues a written change order.
(b)
(1)
Except as provided in paragraphs (2) and (3) of this subsection, a unit may not require a prime contractor and a prime contractor may not require a subcontractor to begin change order work under a contract until the procurement officer for the unit issues a written change order that specifies whether the work is to proceed, in compliance with any changes in State law or regulation or with the terms of the contract, on:
(i)
an agreed–to price which may include a preestablished catalog or unit prices based on local prevailing wage rates and equipment and material costs for each task required for the change order as included in the bid documents at the time of bid;
(ii)
a force account;
(iii)
a construction change directive; or
(iv)
a time and materials basis.
(2)
If a procurement officer and a prime contractor do not agree that work is included within the original scope and terms of a contract, nothing in this section:
(i)
prohibits a procurement officer from issuing an order to a prime contractor to perform work or to furnish labor or materials determined by the procurement officer to be required by a contract between a unit and the prime contractor;
(ii)
authorizes a refusal to perform work or to furnish labor or materials that a procurement officer has ordered the prime contractor to perform or to furnish because the procurement officer has determined that the work or labor is or the materials are required by a contract between a unit and the prime contractor; or
(iii)
prejudices or impairs the right of a prime contractor to submit a claim or dispute to a procurement officer, in accordance with applicable law and the contract, seeking additional compensation for complying with an order of the procurement officer to perform work or to furnish labor or materials determined by the procurement officer to be required by a contract between the prime contractor and a unit.
(3)
(i)
If a unit is to pay for a contract or a part of a contract using a unit price methodology, a change order may not be required for work to continue and be completed beyond the estimated quantities in the contract.
(ii)
After work is completed, a unit shall:
(1)
determine the actual quantity used to complete the contract; and
(2)
if necessary, issue a final adjustment change order to the contractor.
(c)
If the amount to be paid under an approved change order does not exceed $50,000, a unit shall pay an invoice for work performed and accepted under the change order as provided for in the contract within 30 days after the unit receives the invoice and in accordance with § 15–103 of this subtitle.
(d)
Within 5 days after receipt of a written change order, a prime contractor shall provide a subcontractor with a copy of the approved change order and the amount to be paid to the subcontractor based on the portion of the change order work to be completed by the subcontractor.
(e)
The Board shall propose updated regulations as needed that provide for an expedited change order process for change orders valued at more than the small procurement amount specified in § 13–109 of this article.
(f)
(1)
On or before December 31, 2016, each unit shall issue guidelines for the unit’s change order process.
(2)
The guidelines issued under paragraph (1) of this subsection shall be updated and reissued when any changes are made to the unit’s change order process.
(g)
A provision of this section has effect only to the extent that the provision does not conflict with federal law or regulation.
Md. Code Ann., State Fin. & Proc. § 15-113 (2026)
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15–113LinkCopy Citation
(a)
In this section, “liquidated damages” means damages in an amount designated by the parties to a contract that the injured party is eligible to collect as compensation for a specific breach of the contract.
(b)
(1)
On or before January 1, 2024, the Board, in consultation with the Procurement Improvement Council, shall publish a model policy concerning the inclusion and use of liquidated damages provisions in procurement contracts.
(2)
The model policy shall include the following elements:
(i)
guidance on when to include liquidated damages provisions in procurement contracts, including:
(1)
instances where liquidated damages provisions are required by law, including the requirements under §§ 14–303, 17–220, 17–222, and 18–108 of this Division II; and
(2)
conditions where liquidated damages provisions are recommended to protect State interests;
(ii)
guidance for drafting liquidated damages provisions, including recommended methods for calculating the amount to be assessed;
(iii)
a draft plan for responding to deficiencies in a contractor’s performance that may trigger a liquidated damages provision, reviewed by legal counsel for the Board; and
(iv)
examples of liquidated damages provisions that may be used in a procurement contract with appropriate modification by the unit.
(3)
The Board may propose alternative elements or models based on contract type.
(4)
The Board may delegate the duties under this subsection to the Procurement Improvement Council established under § 12–105 of this Division II.
(c)
(1)
Subject to paragraph (2) of this subsection, on or before July 1, 2024, a unit shall adopt a written policy concerning the inclusion and use of liquidated damages provisions in procurement contracts by the unit that is substantially similar to the model policy established under subsection (b) of this section.
(2)
(i)
A primary procurement unit may establish a policy as required under paragraph (1) of this subsection that is applicable to those procurements that are within the control authority of the primary procurement unit.
(ii)
A unit that performs a procurement subject to the control authority of a primary procurement unit shall apply the liquidated damages policy established by the primary procurement unit to any resulting procurement contract.
(d)
A unit shall obtain the approval of the head of the unit if the unit decides not to include in a contract a liquidated damages clause specified under § 13–218(a)(4) of this article.
(e)
If a unit decides not to pursue liquidated damages when a specified breach associated with a liquidated damages provision has occurred, the unit shall:
(1)
obtain the approval of the decision by the head of the unit;
(2)
maintain documentation on the reason the unit decided not to pursue liquidated damages; and
(3)
provide documentation to the Board and the Joint Audit and Evaluation Committee on the reason that the unit intends not to pursue liquidated damages.