In this subtitle, “Appeals Board” means the Maryland State Board of Contract Appeals.

Except to the extent authorized by regulation by the Board, this subtitle does not apply to a protest concerning any act or omission by a procurement agency under Title 14, Subtitle 6 of this article.

There is a Maryland State Board of Contract Appeals.

The Appeals Board is an independent unit of the Executive Branch of the State government and, except by statute, may not be made a part of another unit of the State government.

The Appeals Board consists of 6 members appointed by the Governor with the advice and consent of the Senate. An appeal before the Appeals Board shall be heard by a panel of not more than 3 members designated by the Chairman. Each member of the Appeals Board shall: be qualified to serve in a quasi–judicial capacity; and have a thorough knowledge of procurement practices and processes. Before taking office, each appointee to the Appeals Board shall take the oath required by Article I, § 9 of the Maryland Constitution. The term of a member is 5 years. The terms of members are staggered as required by the terms provided for members of the Appeals Board on October 1, 1988. At the end of a term, a member continues to serve until a successor is appointed and qualifies. A member who is appointed after a term has begun serves only for the rest of the term and until a successor is appointed and qualifies. The Governor may remove a member of the Appeals Board for cause.

From among the members of the Appeals Board, the Governor shall designate a chairman.

Each member of the Appeals Board shall devote full time to the duties of office. Each member of the Appeals Board is entitled to: compensation in accordance with the State budget; and reimbursement for expenses under the Standard State Travel Regulations, as provided in the State budget. Subject to paragraphs (2) and (3) of this subsection, the Appeals Board may employ a staff in accordance with the State budget. The Appeals Board shall have at least three more positions than the number of positions authorized in fiscal year 2022. Subject to subparagraph (ii) of this paragraph, the Appeals Board shall employ at least three law clerks. The Appeals Board shall employ: at least one law clerk who is a graduate of the University of Maryland School of Law; at least one law clerk who is a graduate of the University of Baltimore School of Law; and at least one law clerk who is a graduate of Howard University School of Law.

In accordance with Title 10, Subtitle 1 of the State Government Article, the Appeals Board shall adopt regulations that provide for informal, expeditious, and inexpensive resolution of appeals before the Appeals Board.

The Appeals Board shall have jurisdiction to hear and decide all appeals arising from the final action of a unit: on a protest relating to the formation of a procurement contract, including a violation of § 13–212.1 of this article; or except for a contract claim relating to a lease of real property, on a contract claim by a contractor or a unit concerning: breach; performance; modification; or termination. A decision of the Appeals Board is final, subject to any judicial review.

In connection with a proceeding authorized under this subtitle, the Appeals Board may: administer oaths; certify to all official acts; and at the request of a party to the proceeding: issue subpoenas for the attendance and testimony of witnesses or the production of documents; and compel the testimony of witnesses. If a person fails to comply with a subpoena or order compelling testimony under this section, on petition of the Appeals Board, a court of competent jurisdiction may pass an order directing compliance with the subpoena or compelling testimony. A person who, under oath, willfully makes a false statement about a matter before the Appeals Board is guilty of perjury. A person who causes another person under oath to make a false statement about a matter before the Appeals Board is guilty of subornation of perjury. A person who commits perjury or subornation of perjury under this section is subject to the penalty provided in §§ 9-101 and 9-102 of the Criminal Law Article.

In this Part III of this subtitle the following words have the meanings indicated. “Contract claim” means a claim that relates to a procurement contract. “Contract claim” includes a claim about the performance, breach, modification, or termination of the procurement contract. “Interested party” means an actual or a prospective bidder, offeror, or contractor that may be aggrieved by the solicitation or award of a contract, or by the protest. “Protest” means a complaint that relates to the formation of a procurement contract. “Protest” includes a complaint about: the qualifications of a bidder or offeror; or the determination of the successful bidder or offeror.

Title 10, Subtitle 2 of the State Government Article does not apply to the disposition of a protest or a contract claim by: a primary procurement unit; a procurement officer; or a unit. The Appeals Board shall conduct its proceedings in accordance with Title 10, Subtitle 2 of the State Government Article.

A prospective bidder or offeror, a bidder, or an offeror may submit a protest to the procurement officer. A unit or a person who has been awarded a procurement contract may submit a contract claim to the procurement officer. Except as provided in § 15-219 of this subtitle, a protest or contract claim shall be submitted within the time required under regulations adopted by the primary procurement unit responsible for the procurement.

A procurement officer who receives a timely protest shall comply with this section. On receipt of a timely protest, a procurement officer: shall review the substance of the protest; may request additional information or substantiation through an appropriate procedure; may discuss with interested parties and, if appropriate, may conduct negotiations with the person initiating the protest; and shall comply with any applicable regulations. Unless clearly inappropriate, the procurement officer shall seek the advice of the Office of the Attorney General on any legal issues raised in the protest. Subject to subsection (b) of this section and consistent with the State budget and other applicable laws, the procurement officer shall: resolve the protest; wholly or partly deny the protest; or wholly or partly grant the relief sought by the person who submitted the protest. The procurement officer promptly shall send the decision in writing to the reviewing authority. Unless otherwise provided by regulation, the decision of the procurement officer shall be reviewed promptly by: the head of the unit or the head’s designee; and the head of the principal department or other equivalent unit of which the unit is a part or the head’s designee. The action of the reviewing authority under this subsection shall be the final action of the unit. A decision to deny a protest is a final action for the purpose of appeal to the Appeals Board. The failure to issue a decision or issue a written notice of the anticipated decision date on the protest within 90 days after receipt may be deemed, at the sole option of the protestor, to be a decision to deny the protest.

Except to the extent a shorter period is prescribed by regulation governing differing site conditions, a contractor shall file a written notice of a claim relating to a procurement contract within 30 days after: for requests for equitable adjustments, the later of: a unit denying a request for equitable adjustment; or one of the parties notifying the other party in writing that the notifying party determined the discussions reached an impasse in attempting to resolve their disagreement regarding the request; and for other claims, the basis for the claim is known or should have been known. Unless extended by the unit, within 90 days after submitting a notice of a contract claim under a procurement contract, a contractor shall submit to the unit a written explanation that states: the amount of the contract claim; the facts on which the contract claim is based; and all relevant data and correspondence that may substantiate the contract claim. On receipt of a timely contract claim from a contractor, a procurement officer: shall review the substance of the contract claim; may request additional information or substantiation through an appropriate procedure; may conduct negotiations with the contractor initiating the contract claim; and shall comply with any applicable regulations. Unless clearly inappropriate, the procurement officer shall seek the advice of the Office of the Attorney General on any legal issues. Subject to subsection (c) of this section and consistent with the State budget and other applicable laws, the procurement officer shall: resolve the contract claim by agreement of the parties; wholly or partly deny the contract claim; or wholly or partly grant the relief sought by the claimant. Except as provided under paragraph (3) of this subsection, for a contract other than a construction contract, the reviewing authority shall approve, disapprove, or modify the decision of the procurement officer within 180 days after receiving the contract claim or a longer period to which the parties agree. The action of the reviewing authority under this subsection shall be the final action of the unit. The reviewing authority may remand the proceeding with instructions to the procurement officer. On remand, in accordance with the reviewing authority’s instructions, the procurement officer shall proceed in accordance with subsection (c) of this section. Subject to paragraph (2) of this subsection, for a construction contract, the head of the unit engaged in procurement or the head’s designee shall review the contract claim and the decision of the procurement officer. If the unit is part of a principal department or other equivalent unit, the Secretary of the principal department or the equivalent official or the Secretary’s designee or the official’s designee shall review the contract claim and the decision of the procurement officer, unless review has been delegated by regulation to the head of the unit. The person who reviews a contract claim under subsection (f) of this section shall: investigate the contract claim; and give the contractor written notice of a resolution of the contract claim: within 90 days after receiving the contract claim or a longer period to which the parties agree, if the amount of the contract claim is not more than the amount under which the accelerated procedure may be selected before the Appeals Board; or for any other contract claim, within 180 days after receiving the contract claim or a longer period to which the parties agree. Recovery under a contract claim is not allowed for any expense incurred: more than 60 days before the required submission of a notice of a claim under subsection (a) of this section; or unless the time for submission of a claim is extended under subsection (b) of this section, more than 150 days before the required submission of the claim. If the unit determines that it is responsible for a portion but not all of the amount claimed by the contractor, subject to the terms of the contract, the unit shall pay the undisputed amount. Payment of the undisputed amount: is not an admission of the liability of the unit on the claims; and does not preclude recovery of the amount paid if it subsequently is determined that the determination of the unit was not correct. A decision not to pay a contract claim is a final action for the purpose of appeal to the Appeals Board. Prior to authorizing payment on a claim, the procurement officer shall require the contractor to supplement the claim with a certification by a senior officer or general partner of the contractor or the subcontractor, as applicable, that, to the best of that person’s knowledge and belief: the claim is made in good faith; all supporting data is accurate and complete; and the amount requested accurately reflects the contract claim for which the person believes the procurement agency is liable. At the time of final payment, the unit shall: release the retainage due to the contractor; and pay any interest that: has accrued on the retainage from the time of payment of the semifinal estimate; and is due and payable to the contractor.

A unit may assert a contract claim against a contractor by sending written notice to the contractor and the procurement officer that states: the basis for the contract claim; to the extent known, the amount, or the performance or other action, requested by the unit in the contract claim; and the date by which the contractor is required to provide a written response to the contract claim. On receipt of a contract claim from a unit, a procurement officer: shall review the substance of the contract claim; may request additional information or substantiation through an appropriate procedure; and may discuss or, if appropriate, negotiate the contract claim with the unit or contractor. The procurement officer shall proceed under subsection (b) of this section if the contractor fails to respond, provides an inadequate response, or denies the contract claim or the relief sought by the unit in whole or in part. If the contractor and the unit do not resolve the contract claim, the procurement officer shall prepare a proposed decision on the contract claim, including: a description of the contract claim; references to pertinent contract provisions; a statement of factual areas of agreement or disagreement; and a statement in the proposed decision wholly or partly granting or denying the relief sought, with supporting rationale. Unless otherwise provided by regulation, the procurement officer shall submit the contract claim and proposed decision to: the head of the unit; and the head of the principal department or other equivalent unit of which the unit is a part. The reviewing authority shall approve, modify, or disapprove the proposed decision. In disapproving a proposed decision, the reviewing authority may remand the contract claim with instructions to the procurement officer. On remand, the procurement officer shall proceed as required under this subsection and in accordance with the instructions of the reviewing authority. The decision of the reviewing authority is the final action of the unit.

Except for a contract claim related to a lease for real property, a bidder or offeror, a prospective bidder or offeror, a unit, or a contractor may appeal the final action of a unit to the Appeals Board. An appeal under this section shall be filed: for a protest, within 10 days after receipt of the notice of a final action; and for a contract claim, within 30 days after receipt of the notice of a final action.

If a person appeals the decision of a unit about a protest, the Appeals Board shall: give that case priority over other matters not involving protests before the Appeals Board; and decide it expeditiously. For any appeal, the Appeals Board may require each party to file a brief. If briefs are required, the Appeals Board shall establish the order and time limits for filing briefs after consultation with both parties. Except as provided in subsection (d) of this section, in a case before the Appeals Board, a party may obtain discovery about any matter that: is not privileged; and is relevant to the subject matter involved in that case. In an appeal from a decision about a protest, discovery shall be limited to requests for the production of documents unless the Appeals Board determines that extraordinary circumstances require additional limited discovery to avoid substantial unfairness or prejudice. In an appeal from a decision about a contract claim, unless both parties agree to a longer period, the Appeals Board shall issue its final decision within 180 days after the day on which: all briefs have been filed; or if later, the record has been closed.

The Appeals Board may award an interested party the reasonable costs of filing and pursuing a protest, including reasonable attorney’s fees, if: the interested party appeals the final action of an agency on a protest; the Appeals Board sustains the appeal; and the Appeals Board finds that there has been a violation of law or regulation. The Appeals Board shall adopt regulations to implement this section and to determine what constitutes reasonable costs of filing and pursuing a protest.

This section applies to a claim resulting under a contract. The Appeals Board may award to a contractor the reasonable costs of filing and pursuing a claim, including reasonable attorney’s fees, if the Appeals Board finds that the conduct of the unit in processing a contract claim is in bad faith, without substantial justification, or in violation of law. The Appeals Board shall adopt regulations to implement this section.

Notwithstanding any provision of a procurement contract, the Appeals Board may award interest on money that the Appeals Board determines to be due to the unit or the contractor under a contract claim. Subject to paragraph (2) of this subsection, interest may accrue from a day that the Appeals Board determines to be fair and reasonable after hearing all the facts until the day of the decision by the Appeals Board. Interest may not accrue before the procurement officer receives a contract claim from the unit or the contractor. Subject to paragraph (2) of this subsection, an award under a decision by the Appeals Board shall accrue interest until the day on which the award is paid. If an award is reduced as a result of a judicial review of the decision of the Appeals Board, interest shall be paid only on the reduced award. The rate of interest under this section shall be the rate of interest on judgments as provided under § 11-107(a) of the Courts Article.

A decision of the Appeals Board is subject to judicial review in accordance with Title 10, Subtitle 2 of the State Government Article. Any party to an Appeals Board decision, including a unit, may appeal a final decision of the Appeals Board to a court of competent jurisdiction. When a decision about a protest or contract claim has become final and is no longer subject to judicial review, the determination shall be enforceable in the appropriate court.

In this section the following words have the meanings indicated. “Supplier” means a person that has supplied labor or materials to a contractor in the prosecution of work provided for in a State procurement contract. “Undisputed amount” means an amount owed by a contractor to a subcontractor or supplier for which there is no good faith dispute, including any retainage withheld. It is the policy of the State that, for work under a State procurement contract: a contractor shall promptly pay to a subcontractor or supplier any undisputed amount to which the subcontractor or supplier is entitled; and a subcontractor shall promptly pay to a lower tier subcontractor any undisputed amount to which the lower tier subcontractor is entitled. A contractor shall pay a subcontractor or supplier an undisputed amount to which the subcontractor or supplier is entitled within 10 days of receiving a progress or final payment from the State. If a contractor withholds payment from a subcontractor or supplier, within the time period in which payment normally would be made, the contractor shall: notify the subcontractor or supplier in writing and state the reason why payment is being withheld; and provide a copy of the notice to the procurement officer. If a subcontractor or supplier does not receive a payment within the required time period, the subcontractor or supplier may give written notice of the nonpayment to the procurement officer. The notice shall: indicate the name of the contractor, the project under which the dispute exists, and the amount in dispute; provide an itemized description on which the amount is based; and if known, provide an explanation for any dispute concerning payment by the contractor. Within 2 business days of receipt of written notice from a subcontractor or supplier, a representative of the unit designated by the procurement officer shall verbally contact the contractor to ascertain whether the amount withheld is an undisputed amount. If the representative of the unit decides that a part or all of the amount withheld is an undisputed amount, the representative of the unit shall instruct the contractor to pay the subcontractor or supplier the undisputed amount within 3 business days. The representative of the unit shall verbally communicate to the subcontractor or supplier the results of discussions with the contractor. If the contractor is instructed to pay the subcontractor or supplier and the subcontractor or supplier is not paid within the time instructed under paragraph (2) of this subsection, the subcontractor or supplier may report the nonpayment in writing to the procurement officer. If the subcontractor or supplier notifies the procurement officer under subsection (e)(4) of this section that payment has not been made, the representative of the unit shall schedule a meeting to discuss the dispute with the unit’s project manager, the contractor, and the subcontractor or supplier: at a time and location designated by the representative of the unit; but not later than 10 days after receiving notice from the subcontractor or supplier under subsection (e)(4) of this section. The purpose of the meeting is to establish why the contractor has not paid the subcontractor or supplier in the required time period. The representative of the unit shall require the parties to provide at the meeting any information that the representative believes necessary to evaluate the dispute. If the representative of the unit determines that the contractor is delinquent in payment of an undisputed amount to the subcontractor or supplier, further progress payments to the contractor may be withheld until the subcontractor or supplier is paid. If payment is not paid to the subcontractor or supplier within 7 days after the representative of the unit determines that the contractor is delinquent in paying the subcontractor or supplier under this subsection, the representative shall schedule a second meeting to address the dispute: at a time and location designated by the representative of the unit; but not later than 5 days after the close of the 7–day period. If, at the completion of the second meeting, the representative of the unit determines that the contractor continues to be delinquent in payments owed to the subcontractor or supplier, the representative: shall order that further payments to the contractor not be processed until payment to the subcontractor is verified; may order that work under the contract be suspended based on the failure of the contractor to meet obligations under the contract; and subject to paragraph (7) of this subsection, may require that the contractor pay a penalty to the subcontractor or supplier, in an amount not exceeding $100 per day, from the date that payment was required under subsection (e)(2) of this section. A penalty may not be imposed under paragraph (6)(iii) of this subsection for any period that the representative of the unit determines the subcontractor or supplier was not diligent in reporting nonpayment to the procurement officer. A contractor, a subcontractor, or a supplier may appeal a decision under subsection (f)(6) of this section to the procurement officer. The contractor shall comply with the procurement officer’s decision. An act, failure to act, or decision of a procurement officer or a representative of a unit concerning a payment dispute between a contractor and subcontractor or supplier or between subcontractors under this section may not: affect the rights of the contracting parties under any other provision of law; be used as evidence on the merits of a dispute between the unit and the contractor, the contractor and subcontractor, or contractor and supplier in any other proceeding; or result in liability against or prejudice the rights of the unit. A decision of a procurement officer or a representative of the unit designated by the procurement officer under this section is not subject to judicial review or the provisions of Part III of this subtitle. A unit shall include in each State procurement contract a provision: governing prompt payment to subcontractors; and requiring inclusion of a similar provision in each subcontract at any tier. The contract provision shall establish procedures and remedies for the resolution of payment disputes similar to the process and remedies prescribed in subsections (c) through (g) of this section.