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by Jonathan Cain
Selling information technology products and services to state governments has its own challenges, not the least of which is that every state procurement system is unique.
Each state legislature has developed a balance between open competition and favoring in-state contractors, as well as its own minority business policies. Each state also has its own procedures for awarding contracts, deciding pre- and post-award protests and resolving claims.
These state systems differ in varying degrees from the federal procurement model. Such differences are worth study as further amendments to federal procurement practice are considered.
Two states that present a vivid contrast in their approaches are Virginia and Maryland.
Virginia procurement law, described in detail in an earlier column, is a model of the minimalist approach. There is little explicit guidance in the statutes beyond endorsement of competitive bidding procedures, favoritism for Virginia contractors and reliance on the fairness and honesty of procurement officers. Virginia depends on its court system to resolve procurement disputes.
Maryland employs a model that might seem familiar to federal government contractors. The state procurement statutes set out basic policy supplemented by lengthy regulations. The regulations detail requirements for sealed bids and negotiated procurements, include an extensive list of mandatory contract clauses, specify cost principles and accounting standards and require state agencies to impose minority business quotas.
Appearances can be deceiving, however. Notwithstanding the extensive statutory and regulatory environment, Maryland procurements essentially are political decisions, and state procurement officers award contracts only after they have passed muster by elected state officials who have discretion to waive procurement law.
With narrow exceptions, no Maryland procurement for infotech goods or services valued at over $100,000 or which involves a multiyear procurement may be awarded unless it is approved by the state's governor, treasurer and comptroller. This Board of Public Works has full discretion to accept or refuse the recommendations of procurement officials.Thus, winning a contract in bidding or through negotiation with procurement officials is merely the first step in a Maryland state procurement. In contracts for amounts less than $100,000, the board has delegated authority to one of several state agencies, each of which has established its own procedures.
Negotiated procurements are used widely, and the procedures are flexible. Regulations require that the agency determine a tentative awardee before beginning negotiations. Only if negotiations with the tentative awardee fail are they to be held with a second or subsequent offerers. In practice, however, agencies will simultaneously negotiate large procurements with multiple offerers. This practice inevitably results in technical offers becoming more similar as negotiations progress, with best and final offers being accepted almost entirely on price.
Maryland law permits pre- and post-award protests, but the process is designed to discourage them. Protesters have only seven days to get their protest on file, but the agency has no deadline by which it must issue a decision. Fortunately, the procurement is suspended while the agency reaches a decision, unless, of course, the public works board decides to override the suspension.
If an agency protest is unsuccessful, the disappointed offerer can appeal the decision. A successful protester may obtain the costs of its protest but never its attorneys' fees. Even where violations of state procurement law are found, the elected public works board may waive the violation and award a contract regardless if the board determines everyone acted in good faith and there was "substantial compliance" with state procurement law.
Claims over changes or delays imposed by the procuring agency are resolved first by a claim to the procurement officer and then by the appeals board. While in federal practice, claims are deemed denied if not decided, under Maryland's system, claims can languish for months before state procurement officers. The contractor must exhaust all the administrative remedies before being permitted to pursue a claim in court.
Maryland appeals board proceedings are similar to judicial proceedings, and they'll be familiar to contractors who have participated in appeals conducted by federal agencies.
As the pendulum of federal government procurement law swings toward a model that vests even greater discretion in individual procurement officers, states like Maryland ? where regulations serve to support the decision makers rather than the competitive marketplace ? are worth a closer look. It may not be where we really wish to go.
Jonathan Cain chairs the Technology Practice Group of Mays & Valentine LLP, McLean, Va. His e-mail address is email@example.com.