# State Personnel and Pensions (GSP)

## Title 13. Contractual Employment and Service Contracts in Executive Branch

### Subtitle 4. Service Contracts

#### Section 13-401

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

(b) "Service contract" means a procurement contract for services that:

  (1) will be provided to a unit in the Executive Branch of State government;

  (2) will be performed within a State-operated facility; and

  (3) in the estimation of the procurement officer, will exceed an annual cost of $100,000.

(c)

  (1) Except as provided in paragraph (2) of this subsection, "services" has the meaning stated in Sec. 11-101 of the State Finance and Procurement Article.

  (2) "Services" does not include information technology services and cybersecurity.

(d) "Unit" has the meaning stated in Sec. 11-101 of the State Finance and Procurement Article.

#### Section 13-402

The policy of this State is to use State employees to perform all State functions in State-operated facilities in preference to contracting with the private sector to perform those functions.

#### Section 13-403

(a) A service contract may be entered into only as approved by the Board of Public Works in accordance with this subtitle.

(b) Except as provided in subsection (c) of this section, the Board of Public Works may approve a service contract for a unit only if the Board receives a certification from the Department that:

  (1) the service contract is exempt under Sec. 13-404(b) of this subtitle; or

  (2) the unit has complied with the requirements of Sec. 13-404(c) of this subtitle.

(c) If the General Assembly authorizes or requires that certain services be performed by an independent contractor, the Board of Public Works may approve a service contract for those services without the certification required by subsection (b) of this section.

#### Section 13-404

(a) The Department may certify a service contract to the Board of Public Works as provided in this section.

(b) The Department may certify a service contract as being exempt from the preference stated in Sec. 13-402 of this subtitle if:

  (1) State employees are not available to perform the services;

  (2) a conflict of interest would result if a State employee were to perform the services;

  (3) the nature of the services meets the standards set by the Department for emergency appointments;

  (4) the services are incidental to the purchase or lease of personal property or real property, such as a service agreement that is part of the purchase or rental of computers or office equipment; or

  (5) a clear need exists to obtain an unbiased finding or opinion, such as an expert witness in litigation.

(c) The Department may certify a service contract that is not exempt under subsection (b) of this section only if:

  (1) the unit that seeks to enter into the service contract has complied with Sec. 13-405 of this subtitle; and

  (2) the Department finds that:

    (i) the potential economic advantage of entering into the service contract is not outweighed by the preference stated in Sec. 13-402 of this subtitle;

    (ii) the service contract does not adversely affect the affirmative action efforts of this State;

    (iii) the service contract includes adequate control mechanisms to ensure that the services will be performed in accordance with the service contract; and

    (iv) the service contract complies with all of the requirements of Division II of the State Finance and Procurement Article.

#### Section 13-405

(a) A unit that seeks to enter into a service contract that is not exempt under Sec. 13-403(c) or Sec. 13-404(b) of this subtitle shall submit to the Department the information required by this section.

(b) The unit shall submit a demonstration that the unit has taken formal and positive steps to consider alternatives to the service contract, including reorganization, reevaluation of service, and reevaluation of performance.

(c)

  (1) The unit shall submit calculations that:

    (i) compare the cost of the service contract with the cost of using State employees; and

    (ii) show savings to this State, over the duration of the service contract, of 20% of the contract or $200,000, whichever is less.

  (2) In calculating the cost comparison required by this subsection, a unit shall include:

    (i) direct costs, including fringe benefits;

    (ii) indirect overhead costs, including the proportional share of existing administrative salaries and benefits, rent, equipment costs, utilities, and materials, but only to the extent that those costs are attributed solely to the service in question and would not exist if the service were not performed by State employees;

    (iii) any continuing or transitional costs that would be directly associated with contracting for the services, including unemployment compensation and the cost of transitional services; and

    (iv) additional costs of performance of the services by State employees, including salaries and benefits of additional staff and the cost of additional space, equipment, and materials needed to perform the services.

(d)

  (1) The unit shall submit a formal plan of assistance for all State employees who will be adversely affected by the service contract.

  (2) The plan of assistance shall include:

    (i) efforts to place affected employees in vacant positions in the unit or in another unit;

    (ii) provisions in the service contract, if feasible, for the hiring by the contractor of displaced employees; and

    (iii) prior notification to affected employees in accordance with Sec. 13-218.1 of the State Finance and Procurement Article.

(e)

  (1) A service contract that is not exempt under Sec. 13-403(c) or Sec. 13-404(b) of this subtitle shall be subject to a legislative audit to determine compliance with projected cost savings under subsection (c) of this section.

  (2) Audit findings from an audit conducted under paragraph (1) of this subsection shall be made available to the public.

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