How might the Procurement Reform Act of 2025 impact you or your business? Below, our attorneys share their analysis of proposed legislation – and what it could mean for you.
The Administration Bill (House Bill 500) makes many changes to the manner the state purchases goods and services. Many appear to be intended to bring efficiencies to the process, while reducing some of the oversight currently in the system. Such as giving the Department of Transportation (MDOT) and the Maryland Transportation Authority (MDTA) the authority to purchase supplies for transportation related activities, excluding insurance and anything purchased with general obligation bonds. Currently, the Department of General Services (DGS) purchases commodities or supplies for every state Executive Department. In addition, DGS will no longer serve as the “Control Agency” for information technology, telecommunication, and cybersecurity systems. It is unclear whether there will be a new Control Agency or whether the Department of Information Technology (DoIT) will serve in that role. As a side note, several procurement positions were transferred to DGS when it took over IT procurements less than 8 years ago. Those positions are likely to be returned to DoIT.
Internship and Registered Apprenticeship Programs
The proposed legislation includes several new initiatives including a requirement that contractors establish Internship and Registered Apprenticeship Programs. The program requires the utilization of an “Eligible Internship Program” by a contractor awarded a “Covered Procurement” with a value greater than $1,000,000. Neither an eligible internship program nor covered procurements are defined in the Bill. The Chief Procurement Officer (CPO) will determine what is a covered procurement following consultation with the Labor Secretary. A separate provision under the same subtitle requires the utilization of a Registered Apprenticeship Program. It is unclear whether this is separate from the internship requirement or in addition to an internship.
The contractors bid (or proposal) will be required to include a “written verification” of the number of interns and apprentices to be utilized during the term of the contract, including potential renewals. In addition, contractors are to identify the work to be performed by interns and apprentices in the respective programs.
The Labor Secretary is tasked with establishing penalties for a contractor’s failure to use interns or apprentices as provided in their bid or proposal. “Alleged Violations” are to be report to Labor who are to report them to the Attorney General to determine whether to bring a civil action against “a person or business”. Labor is also authorized to bring a civil action to enforce the provisions of the law. The subtitle goes further to require the court to impose penalties, including interest, attorney’s fees, and court costs. The subtitle does not state that the award of costs and attorney’s fees are to be paid where a violation is proven in the court proceedings.
Good Labor Practices Preference
The proposed legislation includes another new subtitle that will establish a procurement preference program for companies that become a “Good Labor Practices Certified Business.”
The certification will provide the business a minimum of a 5% price preference in a bid[1] for a state contract. In other words, the certified business can be awarded a contract where their price is at least 5% higher than the lowest bid. The CPO is authorized to establish a preference “of at least 5% for a Good Labor Practices Certified Business.”
To be certified, a business must attest that:
- All persons performing the work are W-2 employees;
- Not paid in cash or cash equivalents;
- Comply with the general employment standards, unemployment insurance requirements, and workman’s compensation provisions in the Maryland Labor and Employment Article;
- Provide advance notice to the procurement authority and the Department of Labor of any subcontractors performing work under the contract;
- Provide written notice to subcontractors performing work under the contract of the first 3 requirements listed above;
- Obtain and file with the Commissioner of Labor and Industry (the “Commissioner”) the subcontractor’s agreement to adhere to the provisions, referenced above;
- “Successfully complete a comprehensive consultation visit” by Maryland OSHA;
- Be jointly and severally liable as an employer for any violation by a subcontractor of the Labor codes, referenced above including Maryland OSHA;
- Provide prompt notice to the Commissioner of any suits, charges, etc. against the contractor or subcontractors for a violation of the first 3 provisions above; and
- Proof of securing a “Payment Bond” sufficient to ensure payment of wages.
The certification is good for 12 months with renewal provisions. The Commissioner is to establish a list of certified companies and provide such to every procurement officer at least once every 3 months and upon request.
In addition to penalties and prohibited acts currently in the Maryland Finance and Procurement Article, the legislation specifies penalties for willful misrepresentations or omissions of any material matter in connection with the application or required disclosure to obtain or retain a contract or subcontract under the program. These penalties may include suspension or debarment and civil penalties under the Maryland False Claims Act.
Workforce Diversity Plans
The proposed legislation authorizes agencies to require contractors to submit a “Workforce Diversity Plan” before the award of “any procurement contract” valued above $500,000 and for any contract over $250,000, are required to submit a “Supplier Diversity Plan”.
The Governor’s Office of Small, Minority, and Woman Business Affairs in consultation with the Office of State Procurement are to adopt regulations to guide implementation and detail the content of the plans.
Pay-For-Success
The proposed legislation creates a new procurement method that is intended to have an environmental outcome. In federal contracting these methods are commonly called “Performance-Based Contracting”. The intent behind the legislation is to shift the risk of performance to the contractor. Only Maryland Environmental Services, the Departments of Agriculture, Environment, Natural Resources, Transportation, and General Services may use this method for procurements that are intended to produce and environmentally outcome,
Veteran-Owned Small Business Reserve Program
Another new program is the Veteran-Owned Small Business Reserve Program. It is modeled after the current Small Business Reserve (SBR) program[2] but, directed to Veteran-Owned Small Businesses. Any procurement by the Department of Veterans and Military Families or the Military Department may be designated for the Veteran-Owned Small Business Reserve program. Once fully implemented, certified Veteran-owned small businesses can compete amongst themselves as prime contractors for designated procurements.
Oral Presentations
In the area of “Source Selection”, Procurement Officers will be given the authority to require an oral presentation for acquisitions using Competitive Sealed Proposals for:
- Architectural & Engineering contracts that exceed $2,000,000;
- Construction contracts that exceed $10,000,000; and
- IT and other professional Services that are expected to exceed $5,000,000.
The Procurement Officer may waive the requirement with a written determination that the presentation is unlikely to aid in the evaluation process.
Similar requirements are established for “Master Contracts’ (also known as Multiple Awards Contracts).
Contract Modifications
The legislation codifies when a Procurement Officer may approve a contract modification. The Procurement Officer may approve a contract modification so long as it does not materially change the scope of the work and does not increase the total value of the contract by more than $100,000. However, the CPO can approve a modification of up to $1,000,000 so long as there is no material change in the scope of work.
Chief Procurement Officer
The legislation will further empower the Chief Procurement Officer (CPO) to approve decisions on when an agency may enter into “Noncompetitive negotiations for certain human, social, or educational services” as well as the use of Expedited procurements. Currently expedited procurements had to be preapproved by the Board of Public Works (BPW). The new provision would only require reporting to the BPW after the method is utilized, similar to how Emergency Contracts are currently handled.
Contact us
For more information about how this or other proposed legislation may impact you or your business, contact the Davis, Agnor, Rapaport & Skalny attorney with whom you typically work, or contact an attorney in our Government Relations Practice Group.
[1] The use of the term “bid” and not include proposal, appears to indicate that the program is directed to Competitive Sealed Bid (low-bid) solicitations.
[2] This legislation raises the threshold requiring designation for the SBR to $1,000,000.
