# COMAR Title 21 — State Procurement Regulations

## Subtitle 05 — Procurement Methods and Project Delivery Methods

### Chapter 03 — Procurement by Competitive Sealed Proposals

**Authority:** State Finance and Procurement Article, §§12-101, 13-104, and 13-105, Annotated Code of Maryland

**Administrative History:** Effective date: July 1, 1981 (8:13 Md. R. II-5)

**Administrative History:** Regulation .03C amended effective June 4, 1984 (11:11 Md. R. 963)

**Administrative History:** Chapter revised effective January 9, 1989 (15:27 Md. R. 3138)

**Administrative History:** Regulation .01 amended effective March 11, 2019 (46:5 Md. R. 310); March 3, 2025 (52:4 Md. R. 221)

**Administrative History:** Regulation .02A amended effective May 2, 2022 (49:9 Md. R. 531); September 18, 2023 (50:18 Md. R. 800)

**Administrative History:** Regulation .02G amended as an emergency provision effective April 7, 1989 (16:8 Md. R. 906); amended permanently effective June 26, 1989 (16:12 Md. R. 1338)

**Administrative History:** Regulation .02G amended effective January 26, 1998 (25:2 Md. R. 79); March 11, 2019 (46:5 Md. R. 310); June 29, 2020 (47:13 Md. R. 643)

**Administrative History:** Regulation .03A amended effective October 12, 1996 (23:20 Md. R. 1426); March 11, 2019 (46:5 Md. R. 310)

**Administrative History:** Regulation .03C amended effective May 2, 2022 (49:9 Md. R. 531)

**Administrative History:** Regulation .03F amended effective December 25, 2023 (50:25 Md. R. 1090)

**Administrative History:** Regulation .03G amended effective November 7, 2005 (32:22 Md. R. 1759); April 7, 2008 (35:7 Md. R. 751)

**Administrative History:** Regulation .06A amended effective January 26, 1998 (25:2 Md. R. 79); April 7, 2008 (35:7 Md. R. 751)

#### Regulation .01 Preference.

*COMAR 21.05.03.01*

Procurement by competitive sealed proposals is the preferred method for:

A. The procurement of human, social, cultural or educational services;

B. Real property leases; and

C. Security services with an expected value that is greater than $1,000,000.

#### Regulation .02 Solicitation of Proposals.

*COMAR 21.05.03.02*

A. Content of the Request for Proposals. The request for proposals shall include:

  (1) Information concerning proposal submission requirements, including the date, time, and place for the receipt of proposals.

  (2) The evaluation factors and an indication of the relative importance of each evaluation factor, including price.

  (3) A work statement or scope of services statement, performance schedule, and any special instructions.

  (4) A statement that discussions may be conducted with those responsible offerors that submit proposals initially judged by the procurement officer to be reasonably susceptible of being selected for award. However, if the request for proposals so notifies all offerors, discussions need not be conducted:

    (a) With respect to prices that are fixed by law or regulation, except that consideration shall be given to competitive terms and conditions;

    (b) If time of delivery or performance does not permit discussions; or

    (c) If it can be demonstrated clearly from the existence of adequate competition or accurate prior cost experience with the particular item, that acceptance of an initial offer without negotiation would result in a fair and reasonable price.

  (5) A statement of when and how price proposals should be submitted.

  (6) A statement that price proposals are irrevocable for 90 days following the closing date for submission of price proposals or best and final offers, if requested. However, a procurement officer may reduce or increase the period if the procurement officer determines it to be in the State’s best interest provided that the period is reasonable and is clearly stated in the request for proposals.

  (7) A statement whether multiple or alternate proposals may be submitted and their treatments.

  (8) The mandatory solicitation requirements set forth in COMAR 21.05.08.

  (9) All required contract terms and conditions.

  (10) A requirement that the receipt of any amendments to the request for proposals be acknowledged by offerors known by the procurement officer to have been issued, or otherwise to have received, the request for proposals.

  (11) A summary of the factors used to determine the expected degree of minority business enterprise participation, including subcontracting opportunities identified for the project, any applicable North American Industry Classification System (NAICS) codes linked to the subcontracting opportunities, and the number of certified minority business enterprises in those industries.

B. Public Notice. Public notice shall be given in the same manner provided for invitation for bids under COMAR 21.05.02.04.

C. Proposal Preparation Time. The time for preparing proposals shall be in accordance with COMAR 21.05.02.02.

D. Pre-Proposal Conference. Pre-proposal conferences may be held in accordance with COMAR 21.05.02.07.

E. Amendments to Requests for Proposals. Amendments to requests for proposals shall be made in accordance with COMAR 21.05.02.08.

F. Late Proposals, Withdrawals, and Modifications. Any proposal, withdrawal, or modification received after the established due date and time at the place designated for receipt of proposals is late and may only be considered in accordance with COMAR 21.05.02.10.

G. Receipt of Proposals.

  (1) Proposals and modifications shall either be held in a secure place if paper submission or remain locked via the eMaryland Marketplace per approved security configurations until the established due date. Proposals shall not be opened publicly but, in the event a paper submission is received, shall be opened in the presence of at least two State employees.

  (2) The identity of an offeror and the register of proposals may not be disclosed before the procurement officer makes a determination recommending the award of the contract pursuant to Regulation .03F of this chapter. After contract award, proposals shall be open to public inspection subject to the provisions of the Public Information Act, General Provisions Article, Title 4, Annotated Code of Maryland.

#### Regulation .03 Evaluation of Proposals, Negotiations and Award.

*COMAR 21.05.03.03*

A. Evaluation.

  (1) The evaluation shall be based on the evaluation factors set forth in the request for proposals and developed from both the work statement and price.

  (2) Technical proposals and price proposals shall be evaluated independently of each other.

  (3) Economic Benefits Evaluation Factor.

    (a) This subsection applies only to proposals that the procurement officer reasonably expects to exceed $50,000. When a point system is used in the evaluation of these proposals, up to 10 percent of the total allocable technical points may be awarded under an economic-benefits evaluation factor. If a point system is not used, an economic-benefits evaluation factor may be included in the technical evaluation factors and be ranked in its relative order of importance, as the procurement officer determines.

    (b) Offerors may be asked to demonstrate in their proposals how the contract will benefit the Maryland economy. The economic-benefits evaluation factor may include consideration of such elements as:

      (i) The offeror's intended procurements from Maryland subcontractors, suppliers, and joint venture partners;

      (ii) The number of jobs generated for Maryland residents;

      (iii) Tax revenues generated to Maryland and its political subdivisions;

      (iv) The amount or percentage of subcontract dollars placed with Maryland small businesses and Maryland MBEs.

    (c) Offerors may receive up to half of the total allocable technical points under an economic-benefits evaluation factor for other elements directly or indirectly attributable to the contract that contribute to the Maryland economy.

  (4) Numerical rating systems may be used but are not required.

  (5) Factors not specified in the request for proposals may not be considered.

  (6) Initial evaluations may be conducted and recommendation for award made by an evaluation committee. Final evaluations, including evaluation of the recommendation of the evaluation committee, if any, shall be performed by the procurement officer and the agency head or designee.

B. Classification of Proposals.

  (1) When more than one proposal has been received for a particular procurement, the procurement officer may initially classify the proposals as:

    (a) Reasonably susceptible of being selected for award; or

    (b) Not reasonably susceptible of being selected for award.

  (2) Offerors judged by the procurement officer not to be responsible or offerors whose proposals are classified as not reasonably susceptible of being selected for award shall be so notified.

C. Discussions.

  (1) The term “qualified offerors” includes only those responsible offerors that submitted proposals initially classified by the procurement officer as reasonably susceptible of being selected for award. The term does not include those offerors that submitted proposals not reasonably susceptible of being selected for award or that are not deemed responsible.

  (2) Purposes of Discussions. Discussions are held to:

    (a) Assure full understanding of the procurement agency's requirements and of the qualified offerors proposals and abilities to perform;

    (b) Obtain the best price for the State; and

    (c) Facilitate arrival at a contract that shall be most advantageous to the State, taking into consideration price and other relevant evaluation factors set forth in the request for proposals.

  (3) Conduct of Discussions.

    (a) General. Qualified offerors shall be accorded fair and equal treatment with respect to any opportunity for discussions, negotiations, and clarification of proposals. The procurement officer shall establish procedures and schedules for conducting discussions. If discussions indicate a need for substantive clarification of or change in the request for proposals, the procurement officer shall amend the request to incorporate the clarification or change. Except as provided in §C(3)(b)(ii), below, disclosure to a competing offeror of any information derived from a proposal of, or from discussions with, another offeror is prohibited. Any oral clarifications of substance of a proposal shall be confirmed in writing by the offeror.

    (b) Real Property Leases. In the procurement of real property leases:

      (i) The procurement officer may limit discussions and negotiations to only those responsible offerors that submitted the three best proposals based upon the procurement officer's preliminary review, in accordance with the evaluation factors, of all proposals received in response to the request for proposals;

      (ii) Discussions and negotiations may not result in the disclosure of any information derived from competing offerors except price and information related directly to price;

      (iii) The procurement officer may establish a maximum fair market rental rate for each premises offered and, after price negotiation, may reject as unacceptable any proposal that exceeds the established maximum fair market rental rate; and

      (iv) If no offers are received in response to the request for proposals, the procurement officer, with the approval of the agency head or designee, may solicit offers directly without republication of notice pursuant to Regulation .02B.

D. Best and Final Offers.

  (1) General. When in the best interest of the State, the procurement officer may permit qualified offerors to revise their initial proposals by submitting best and final offers. The procurement officer shall establish a common date and time for the submission of best and final offers. The procurement officer may require more than one series of submissions of best and final offers and discussions if the agency head or designee makes a written determination that it is in the State's best interest to conduct additional discussions or change the procurement agency's requirements and require another submission of best and final offers. Otherwise, discussion of or changes in the best and final offers is not allowed before award except as provided in §D(2)(a), below. If more than one submission of best and final offers is requested, an offeror's immediate previous offer shall be construed as its best and final offer unless the offeror submits a timely notice of withdrawal or another best and final offer.

  (2) Real Property Leases. In the procurement of real property leases:

    (a) After best and final offers are evaluated and the apparently successful offeror determined, the procurement officer may conduct further discussions and negotiations with that offeror to permit the State to obtain the best lease terms, including price, conditions, and services, subject to the requirement that any modification of the apparently successful offer be in the best interest of the State; and

    (b) If negotiations and best and final offers fail to result in lease terms comparable to market rental rates in the area in which the lease is required and if the apparently successful offeror refuses to accept a lease with terms comparable to the market rental rates as determined by the procurement officer, the procurement officer may solicit additional offers directly without republication of notice pursuant to Regulation .02B.

  (3) Existing real property leases may be renewed in accordance with COMAR 21.05.05.

E. Confirmation of Proposal. When, before an award has been made, it appears from a review of a proposal that a mistake has been made, the offeror should be asked to confirm the proposal. If the offeror alleges a mistake, the procedures in COMAR 21.05.02.12 are to be followed.

F. Award. Upon completion of all discussions and negotiations, the procurement officer shall make a determination recommending award of the contract to the responsible offeror whose proposal is determined to be the most advantageous to the State, considering price and the evaluation factors set forth in the request for proposals. In order for a procurement agency to achieve its overall minority participation goal and if the solicitation documents expressly permit it to be done, a procurement agency may, pursuant to COMAR 21.11.03.10A(1), recommend and award a contract to a certified minority business enterprise or to a person whose offer otherwise reflects the greatest amount of certified MBE or minority participation in the event of two or more offers in which the offerors' technical and price proposals are determined by the procurement officer to be equally most advantageous to the State. The MBE documentation required by COMAR 21.11.03.10B shall be used in making this determination. If the procurement agency is not a department, the procurement officer shall promptly notify all offerors of the recommended contract award, otherwise the notification is optional. After obtaining the approval of this recommendation by the agency head or designee, all other approvals required by this title, and certification by the appropriate fiscal authority as to the availability of funds, the procurement agency shall award the contract.

G. Notice of Award. After a contract is entered into, the procurement agency shall publish notice of its award in eMaryland Marketplace not more than 30 days after the execution and approval of the contract.

#### Regulation .04 Negotiated Overhead Rates.

*COMAR 21.05.03.04*

A. Scope. This regulation sets forth the policies and procedures governing the establishment of overhead rates by negotiation (including determination or settlement) for use in cost-reimbursement type contracts.

B. Definitions. For purposes of this regulation, the following terms shall have the meanings indicated:

  (1) “Billing overhead rate” means a tentative percentage or dollar factor which is acceptable to the procurement officer and is established for interim reimbursement purposes.

  (2) “Negotiated final overhead rate” means a percentage or dollar factor which expresses the ratio or ratios mutually agreed upon by the procurement officer and the contractor after the close of the contractor's fiscal year, unless the parties mutually agree to a different period, of allowable indirect expense incurred for direct labor, manufacturing cost, cost of sales, or other appropriate allocation or distribution base.

  (3) “Overhead or indirect costs” means the general group of indirect expenses such as those generated in manufacturing departments, engineering departments, tooling departments, general and administrative departments, and, if applicable, indirect costs accumulated by cost centers within these general groups.

  (4) “Provisional overhead rate” means a tentative percentage or dollar factor mutually agreed upon by the procurement officer and the contractor that is negotiated for interim reimbursement pending final settlement of the actual allowable overhead.

C. General. The negotiation, determination, or settlement of the reimbursable amount of overhead under cost-reimbursement type contracts is accomplished after the fact on an individual contract basis and is based upon an audit of actual costs incurred during the period involved. However, if a contractor performs work in the same time period under several contracts for one or more procurement activities, it may be desirable and appropriate, when mutually agreed to by the agencies and the contractor, to negotiate uniform overhead rates for application to all the contracts. Nothing contained in this section shall prevent any procurement agency from establishing a maximum overhead rate.

D. Applicability.

  (1) A billing overhead rate or negotiated (provisional and final) overhead rate may be used in every cost-reimbursement type contract when its use:

    (a) Is appropriate; and

    (b) Will accomplish one or more of the purposes enumerated in this section.

  (2) A billing or provisional overhead rate may be used for interim reimbursement only after the procurement officer is satisfied either on the basis of a recent review, as a result of previous audits or past experience with the particular contractor, or similar reliable data or experience obtained from other State or federal sources and included in the contract file, that:

    (a) The contractor's accounting system (including items treated as indirect costs and the method of distributing them) conforms to generally accepted accounting principles; and

    (b) The contractor's financial management policies and procedures, including contract financial controls, are adequate for the timely reporting of potential cost overruns and underruns to the contractor's management and to the State.

  (3) If consistent with §D(2), above, a billing or provisional overhead rate or rates may be established, taking into consideration the prior year's experience, adjusted to eliminate nonrecurring costs and to reflect any new or changed conditions which may be applicable to the future. The rate or rates shall be applied to an appropriate base or bases for computation of the interim payments. The elements of indirect cost and the base or bases used in computing interim payments may not be construed as indicating the elements of expense to be distributed or the base or bases of distribution to be employed in the determination or settlement of actual allowable overhead. When the negotiated final overhead rate is determined or settled, any interim payments shall be adjusted accordingly.

E. Procedure.

  (1) The procedure for the establishment of overhead rates generally consists of a review of the contractor's overhead rate proposal and the related advisory audit report, conduct of a negotiation conference, preparation of a negotiation report or summary, and execution of contract amendments or supplemental agreements.

  (2) The determination of the necessity and extent of an advisory audit report, and the extent of the use of the report, is solely the responsibility of the procurement officer.

  (3) The procurement officer shall arrange for appropriate legal, pricing, technical, or other specialist personnel to assist him in the conducting the negotiation conference.

  (4) After the completion of the negotiation conference, the procurement officer shall prepare a report or summary of the conference for the contract file.

F. Limitation on Overhead Cost.

  (1) Ceilings on overhead rates, beyond which the contractor shall absorb costs, may be desirable in cases of cost-sharing, new companies, recent rapid changes in rates, enhancing contractor's competitive position, or other benefits to the State.

  (2) If overhead rates resulting from an audit are less than the negotiated ceiling rates, reimbursement shall be made at the lower rates.

#### Regulation .05 Price Negotiation Policies and Techniques.

*COMAR 21.05.03.05*

A. Scope. This regulation sets forth the price negotiation policies and techniques applicable to negotiated prime contracts and modification to all types of prime contracts and to subcontracts which are subject to approval or review.

B. Basic Policy. It is the policy of the State to procure from responsible sources at fair and reasonable prices calculated to result in the lowest ultimate overall cost to the State.

C. Type of Contract. The selection of an appropriate contract type and the negotiation of prices are related and should be considered together. The circumstances which lead to the selection of a given type of contract at the outset may frequently change, resulting in a different type of contract being more appropriate during later periods.

D. Objective of Negotiations. Complete agreement of the parties on all basic issues shall be the objective of the negotiations. Except as provided in Regulation .02A(4), discussions shall be conducted with qualified offerors to the extent necessary to resolve uncertainties relating to the procurement, including the proposed price.

E. Pricing Techniques.

  (1) General.

    (a) This section describes the principal price and cost evaluation techniques and the circumstances under which each may be used. They are equally applicable to initial and subsequent price negotiations.

    (b) “Adequate price competition” means competition between two or more responsible offerors that submitted proposals initially classified by the procurement officer under Regulation .03B as reasonably susceptible of being selected for award.

  (2) Requirements for Price or Cost Analysis.

    (a) General. A price or cost analysis should be performed in connection with every negotiated procurement. Cost analysis shall be performed in accordance with §E(2)(c) when cost or pricing data is required to be submitted. Price analysis shall be used in all other instances to determine the reasonableness of the proposed contract price. Price analysis also may be useful in corroborating the overall reasonableness of a proposed price when the determination of reasonableness was developed through cost analysis.

    (b) “Price analysis” is the process of examining and evaluating a prospective price with or without evaluation of the separate cost elements and proposed profit of the individual offeror whose price is being evaluated.

    (c) “Cost analysis” is the review and evaluation of a contractor's cost or pricing data and of the judgmental factors applied in projecting cost or pricing data to the estimated costs, which shall allow the formation of an opinion as to the degree to which the contractor's proposed costs represent what performance of the contract should cost, assuming reasonable economy and efficiency.

  (3) Cost or Pricing Data.

    (a) The requirements of this subsection need not be applied if the procurement officer determines that the price negotiated is based on:

      (i) Adequate price competition;

      (ii) Established catalog or market prices of commercial items sold in substantial quantities to the general public; or

      (iii) Prices set by law or regulation.

    (b) The procurement officer shall require the offeror or contractor, as the case may be, to submit written cost or pricing information or to specifically identify such in writing if actual submission of the data is impracticable, and to certify that, to the best of the offeror's or contractor's knowledge and belief, the cost or pricing data submitted or identified was accurate, complete and current before:

      (i) The award of any negotiated contract expected to exceed $100,000 in amount or a smaller amount set by the procurement officer; or

      (ii) The pricing of any modification to any formally advertised or negotiated contract, whether or not cost or pricing data was required in connection with the initial pricing of the contract, when the modification involves an aggregate increase or decrease in costs, plus applicable profits, expected to exceed $100,000.

    (c) Certification of Current Cost or Pricing Data. When required, certification as contemplated by COMAR 21.06.04.01 shall be included in the contract file together with the documents supporting the negotiation.

    (d) Defective Cost or Pricing Data. If the certified cost or pricing data is subsequently found to have been inaccurate, incomplete, or noncurrent as of the effective date of the certificate, the State shall be entitled to adjustment of the negotiated price, including profit or fee, to exclude any sum by which the contract price was increased because of the defective data.

  (4) Evaluation and Pricing of Individual Contracts. Each contract shall be priced separately and independently, and no consideration shall be given to losses or profits realized or anticipated in the performance of other contracts. This prohibition neither prevents the negotiation of fixed overhead and other rates applicable to several contracts during annual or other specific periods nor prohibits forward pricing agreements applicable to several contracts. A proposed price reduction under another contract or other contracts may not be used as an evaluation factor.

  (5) Subcontracting Considerations in Cost Analysis. The procurement officer shall, when appropriate, solicit from the offeror or contractor information concerning:

    (a) Purchasing practices;

    (b) The principal components to be subcontracted and the contemplated subcontractors, including:

      (i) The degree of competition obtained,

      (ii) Cost or price analysis or price comparisons accomplished, including accurate, complete, and current cost or pricing data, and

      (iii) The extent of subcontract supervision;

    (c) The types of subcontracts;

    (d) The estimated total extent of subcontracting, including procurement of purchased parts and materials.

  (6) Sole Source Items. When purchases of standard commercial or modified standard commercial items are to be made from sole source suppliers, negotiations shall be based on the contractor's price lists and discount or rebate arrangements and conducted on the basis of “most favored customer” or similar practices.

F. Profit or Fee. The procurement officer, in determining profit or fee, shall follow established policy of the procurement agency or shall give consideration to:

  (1) Effect of competition;

  (2) Degree of risk;

  (3) Nature of work to be performed;

  (4) Extent of State assistance;

  (5) Extent of the contractor's investment;

  (6) Credibility of estimates;

  (7) Character of contractor's business;

  (8) Contractor's performance; and

  (9) Subcontracting.

#### Regulation .06 Debriefing of Unsuccessful Offerors.

*COMAR 21.05.03.06*

A. When a contract is to be awarded on some basis other than price alone, unsuccessful offerors may submit a written request for a debriefing to the procurement officer within a reasonable time. Debriefings shall be provided at the earliest feasible time after the procurement officer receives a request for a debriefing and before the contract award is presented to the agency head or designee or the Board for approval. The debriefing shall be conducted by a procurement official familiar with the rationale for the selection decision and contract award.

B. Debriefing.

  (1) Debriefing shall:

    (a) Be limited to discussion of the unsuccessful offeror's proposal and may not include specific discussion of a competing offeror's proposal;

    (b) Be factual and consistent with the evaluation of the unsuccessful offeror's proposal; and

    (c) Provide information on areas in which the unsuccessful offeror's technical proposal was deemed weak or deficient.

  (2) Debriefing may not include discussion or dissemination of the thoughts, notes, or rankings of individual members of an evaluation committee, but may include a summary of the procurement officer's rationale for the selection decision and recommended contract award.

C. A summary of the debriefing shall be made a part of the contract file.