Maryland Attorney General Opinion 99OAG171

Gen. 171] 171

PROCUREMENT

PUBLIC ETHICS LAW – APPLICABILITY OF PROCUREMENT

CONFLICT OF INTEREST PROVISIONS TO PUBLIC-PRIVATE

PARTNERSHIPS AND OTHER ALTERNATIVE PROJECT

DELIVERY METHODS

December 5, 2014

Michael W. Lord

Executive Director

State Ethics Commission

On behalf of the State of Maryland Ethics Commission, you

ask whether public-private partnerships, “design/build” contracts,

and certain other methods of obtaining goods and services are

subject to the provision of the State Ethics Law that protects

against conflicts of interest in the procurement process. See Md.

Code Ann., Gen. Prov. (“GP”) § 5-508. We conclude that they

are, but where the restrictions of the Ethics Law conflict with

statutory provisions specific to the type of procurement, the more

specific provisions will control. Thus, as to public-private

partnerships (“P3s”), where the provisions of Title 10A of the

State Finance and Procurement Article expressly allow the

government and potential offerors to discuss project

specifications, those provisions will prevail over the provisions of

GP § 5-508 that would otherwise prohibit such discussions. As to

the other project delivery methods included within your request,

we also conclude that GP § 5-508 applies, but where the statutory

or regulatory provisions applicable to those methods allow

coordination between the government and private parties that the

Ethics Laws would otherwise prohibit, those specific provisions

would prevail.

I

Background

A. The Evolution of the Traditional Procurement Process

1. Traditional Competitive Procurement

The development of public facilities or infrastructure has

traditionally followed a familiar “design/bid/build” project

delivery method in which each component of the project is

separately procured and each component is substantially

172 [99 Op. Att’y

completed before the next begins. For example, the development

of a new State office facility might begin with a competitive

process for design services to be provided by an architectural or

engineering firm. The State drafts specifications, incorporates

those specifications into a competitive solicitation, and firms

submit competing proposals to provide those services. The State

then evaluates the proposals, selects the successful proposer, and

awards the contract.

Once the successful architectural or engineering firm has

completed designs for the project, those designs form the basis of

the procurement for the second stage of the process. Ordinarily,

this second stage is also a competitive sealed bid process, though

designed to obtain the services of a contractor that would provide

the labor, materials, and services necessary to build what the

architects and engineers designed. The solicitation in the second

stage unfolds much like the first: The State provides specifi-

cations, advertises the opportunity to submit bids, and then

reviews the bid proposals for responsiveness. The State selects

the most favorable bid, awards the contract, and construction

presumably gets underway. After the construction is complete,

the State might proceed with a third or fourth stage to procure

building operation or maintenance services.

Each stage of the traditional design/bid/build process is

separately solicited, separately contracted, and separately ap-

proved. The separation of each stage is designed to foster

competition among firms so that the State obtains the necessary

goods or services at the lowest possible cost, thereby ensuring that

the procurement, among other things, “get[s] the maximum

benefit from the purchasing power of the State.” Md. Code Ann.,

State Fin. & Proc. (“SFP”) § 11-201(a)(7); see also Blind Indus.

and Servs. of Maryland v. Maryland Dep’t of Gen. Servs., 371

Md. 221, 236 (2002). This has been the standard procurement

model since the adoption of the Maryland procurement law in

1980. See 1980 Md. Laws, ch. 775.

The competitive sealed bid process is the preferred source

selection method. See SFP § 13-102(a). Its focus on obtaining

the lowest price for goods and services is well suited to acquiring

office supplies, consumer products, or other goods and services

where the primary factor for an award is price. Competitive

sealed bidding, however, may not always be the best method for

delivering large public works projects, and, in fact, can cause

problems on highly complex projects. For example, it might be

more efficient to use a procurement method that allows for the

Gen. 171] 173

construction firm to be involved early in the process so that it can

coordinate with the design team to resolve constructability issues

before construction begins. It might also be preferable to contract

with a firm that is capable of providing both design and

construction services at a combined lower cost than if those

contracts were separately awarded and administered. And,

because the stages of the competitive sealed bid procurement

process occur in series, with each stage unfolding only after the

previous one is complete, the ultimate delivery of the project can

take a considerable period of time.

2. Alternative Project Delivery Methods

In response to some of the limitations of traditional

procurement, State agencies have been authorized to employ

various other methods of project delivery, such as competitive

sealed proposals, design/build projects, “construction

management at risk” contracts, and public-private partnerships.

Although these approaches to government contracting take many

different forms, they all permit agencies to better meet the needs

of the State by providing greater flexibility, potential cost savings,

and faster project completion.

One such alternative project deliver method is

“design/build.” Under the design/build method, a single con-

tractor performs both the design and construction elements of a

public infrastructure project. See SFP § 3-602(g)(1) (describing

“design/build” contracts as those that involve “a single soli-

citation to design and build the facility”); COMAR 21.05.11.01B(1)

(defining a design/build contract as “a project delivery method in

which a single entity is contractually responsible for both design

and construction of a project”). For example, the State might

solicit proposals for an office building, but instead of first

soliciting and completing the design for the building, and then

soliciting and conducting construction, the design/build approach

includes both services under a single solicitation. Both functions

are thus performed by one contractor. The use of the design/build

project delivery method is specifically permitted by, and governed

by, the procurement regulations. See generally COMAR

21.05.11; see also SFP §§ 12-101 (authorizing the Board of

Public Works to adopt procurement regulations); 3-602(g)

(specifically authorizing capital project funding for “alternative

construction methods” such as “design/build” contracts).

174 [99 Op. Att’y

The “fast track” approach is another alternative project

delivery model. Unlike the design/build method, which con-

solidates the design and construction functions into one

procurement and one contractor, the fast track approach preserves

the separation between the two procurement stages and project

functions, but permits “design and construction [to be]

implemented concurrently.” SFP § 3-602(g)(2); see also COMAR

23.03.01.01B(17) (procurement regulations governing public

school construction; explaining that, under the “fast track”

approach, “portions of a project begin construction while other

portions of the project are still in the design phase”). This

approach might allow, for example, site work to commence and a

building’s foundation to be poured before the design for the

remainder of the building is fully complete. The fast track

approach is intended to be quicker and more flexible than

traditional design/bid/build procurement, since both aspects of the

project—design and construction—can be adjusted and performed

synchronously.

A “Construction management at risk” (“CMR”) contract is

yet another alternative form of public project delivery. The State

procurement regulations define CMR as:

a project delivery method wherein a

construction manager provides a range of

preconstruction services and construction

management services which may include, but

are not limited to, cost estimation and

consultation regarding the design of the

project, prequalifying and evaluating trade

contractors and subcontractors, awarding the

trade contracts and subcontracts, scheduling,

cost control, and value engineering.

COMAR 21.05.10.01B(1). The term “preconstruction services”

is further defined as “services provided by the construction

manager before construction which include, but are not limited to,

constructability analysis, value engineering, scheduling, site

assessments, and cost estimates.” COMAR 21.05.10.01B(4); see

also Balfour Beatty Constr. v. Maryland Dep’t of Gen. Servs., No.

957, Sept. Term 2013, __ Md. App. __, slip op. at 8 (Dec. 2,

2014).

The CMR model thus involves a competitive solicitation for

a construction manager who will work with the architect or

engineers—whose services are separately procured—from the

Gen. 171] 175

pre-construction project design phase through construction. In the

pre-construction phase, the construction manager’s respon-

sibilities include value-engineering, budgeting, scheduling, and

reviewing the drawings and specifications to identify any

conflicts, errors, or ambiguities. Once a design is approved, the

construction manager is responsible for ensuring that the project

is constructed within a “guaranteed maximum price.” COMAR

21.05.10.04. The construction manager thus assumes the risk for

the cost, schedule, and performance of the trade contracts. See

COMAR 21.05.10.05; see also Balfour Beatty, slip op. at 7-8; 92

Opinions of the Attorney General 65 (2007).

In the end, these project delivery methods are intended to

offer greater efficiency, flexibility, and cost savings by allowing

coordination between the design and construction aspects of a

construction project. They do not, however, encompass the

subsequent services that might be required to operate and

maintain the building. Nor do they alter the traditional roles of

the State as the owner and financier of the project, and the

contractor as the provider of goods and services. Those additional

characteristics are what distinguish these approaches—and the

traditional step-by-step approach more generally—from public-

private partnerships.

B. Public-Private Partnerships

A public-private partnership—often referred to as a “P3”—

typically involves a single procurement for a number of goods

and services that would traditionally be procured separately (e.g.,

design, construction, and operation and maintenance of a public

facility) along with the delegation or sharing of traditionally

public-sector responsibilities, such as financing or long-term

ownership of the asset. Although P3s take different forms, they

are commonly based on the expectation that they “can provide

benefits by allocating responsibilities and risks to the party—

either public or private—that is best positioned to undertake the

activity and does so most efficiently and cost-effectively.” See

Joint Legislative & Executive Commission on Oversight of

Public-Private Partnerships, Final Report to the Governor and

General Assembly at 2 (Jan. 6, 2012) (“P3 Commission Report”).

And by shifting a portion of the financing burden to the private

sector, P3s are often seen as a way for states to address their

infrastructure needs even in times of significant budgetary

challenges. Id. at 1.

176 [99 Op. Att’y

1. History of P3s in Maryland 1

Public-private partnerships have been around in some form

for centuries. Early American examples include state-chartered

road and canal companies that constructed important infra-

structure projects in exchange for the privilege of collecting tolls.

See P3 Commission Report at 12; see also, e.g., Chesapeake &

Ohio Canal Co. v. Baltimore & Ohio R.R. Co., 4 G. & J. 1, 87-90

(1832) (discussing charter of the Potomac Company to build the

C&O Canal).

Formal recognition of P3s as a distinct method of delivering

public infrastructure is relatively new here in Maryland. It was

not until 2010 that the General Assembly established a

comprehensive statutory framework for both transportation and

non-transportation P3s. See 2010 Md. Laws, chs. 640, 641.

Before then, projects were either cobbled together based on

existing statutory authority or based on legislative authority that

developed piecemeal for particular projects. For example, the

construction of public schools has been carried out through P3s

pursuant to a statute specific to that type of project. See, e.g.,

2004 Md. Laws, chs. 306, 307.

During the latter half of the 1990s, the State began using P3s

more systematically to provide transportation-related services. In

1996, our office issued an opinion concluding that the statute that

created the Maryland Transportation Authority (“MdTA”) also

granted it the authority to enter into P3s for toll highways. 81

Opinions of the Attorney General 261 (1996). In 1997, MdTA

established by regulation a “Transportation Public-Private

Partnership Program” for non-highway projects, under the

statutory authority of §§ 4-205 and 4-312 of the Transportation

Article. COMAR 11.07.06. In 2004, the General Assembly

implicitly acknowledged MdTA’s authority to enter into

transportation P3s by establishing oversight and reporting

requirements for such contracts. See 2004 Md. Laws, ch. 430.

Then, in 2007, the General Assembly expressly acknowledged

that authority by extending similar oversight and reporting

1

Much of the history that follows is based on the findings of the

Joint Legislative and Executive Commission on Oversight of Public-

Private Partnerships, which was created in 2010 to evaluate the

statutory framework governing P3s. See P3 Commission Report at 17-

20.

Gen. 171] 177

requirements to “public-private partnership arrangement[s].”

2007 Md. Laws, ch. 383.

The 2007 legislation created the first statutory definition of a

public-private partnership, but it was limited to “the operation and

maintenance of an existing or future toll or transit facility.” 2007

Md. Laws, ch. 383. That definition proved too narrow to cover

the proposed P3 for the Seagirt Terminal expansion,2 which the

Department of Legislative Services had concluded did not qualify

as a “toll or transit facility” subject to the then-current law. P3

Commission Report at 18. Accordingly, the General Assembly

imposed through the budget process a series of reporting

requirements specific to the Seagirt project. Id. Then, throughout

2008 and 2009, when the Department of General Services

(“DGS”) was formulating the State Center project,3 the

Legislature enacted various provisions in operating and capital

budget bills to provide legislative oversight of projects, like State

Center, that were often referred to as P3s but were actually

projects executed under traditional authority (e.g., land dis-

position statutes). See H.B. 560, 2013 Leg., Reg. Sess., Revised

Fiscal and Policy Note at 11.

This piecemeal approach proved sufficient for the Seagirt

Marine Terminal, but legal challenges to both the State Center

project and the reconstruction of the I-95 travel plazas4

2

In 2009, the Maryland Port Administration awarded a 50-year

lease of this deep-draft marine terminal to Ports America Chesapeake

(“PAC”). In exchange, PAC reimbursed the $140 million that the State

spent to construct the terminal in 1990, committed to certain annual

payments, and agreed to develop a deeper, 50-foot berth to

accommodate the larger ships expected following the widening of the

Panama Canal then projected for 2014. P3 Commission Report at 14.

3

The State Center project involves the redevelopment of the 28-

acre State Center complex in Baltimore City into a mixed-use, transit-

oriented development with residential, office, and retail space. The

project—which has been under consideration since at least 2004—

contemplates a mix of long-term leases or fee simple dispositions of the

property to a private developer, which will undertake to redevelop the

complex. In conjunction with the land disposition, the State con-

templates leasing office space alongside private tenants in the mixed-

use complex. See P3 Commission Report at 15; State Center, LLC v.

Lexington Charles Ltd. P’ship, 438 Md. 451 (2014).

4

In 2011, MdTA issued a request for proposals to finance,

redevelop, operate, and maintain the Maryland House and Chesapeake

178 [99 Op. Att’y

highlighted the need for comprehensive P3 legislation. See State

Center, 438 Md. 451 (dismissing, as barred by laches, suit

challenging contract for non-compliance with general pro-

curement provisions of Division II); Host Int’l, Inc. v. Maryland

Transp. Authority, Case No. 24-C-12-001507, 2012 WL 6677791

(Cir. Ct. Balt. City, Nov. 5, 2012) (finding that the travel plaza

P3, which was proceeding under former § 4-406 of the

Transportation Article, was exempt from the Maryland General

Procurement Law).

Comprehensive P3 legislation came in the 2010 legislative

session. Chapters 640 and 641 established for the first time a

statutory framework for all P3s, regardless of the context in which

they might arise. The legislation slightly modified the definition

of P3s, created new provisions for P3s in the State Finance and

Procurement Article (§§ 10A-101, 10A-102) and the Trans-

portation Article (§ 4-406), and enacted provisions requiring

notification and analysis of the project’s impact on State debt.

The legislation authorized all State agencies to enter into P3s and

imposed reporting requirements for all P3 projects. It identified

six “reporting agencies”—DGS, the Maryland Department of

Transportation (“MDOT”), the University System of Maryland,

St. Mary’s College of Maryland, Morgan State University, and

Baltimore City Community College—that were required to notify

the public and the General Assembly of their intent to pursue a

P3 and report annually to the Legislature on its progress. SFP

§§ 10A-101(g), 10A-104(a), 10A-202. DGS was designated as

the reporting agency for any P3 projects entered into by State

agencies that are not themselves reporting agencies.

The 2010 legislation also created the Joint Legislative and

Executive Commission on Oversight of Public-Private Part-

nerships to evaluate the statutory framework governing P3s. The

Commission submitted its final report in January 2012; it

recommended revising several statutory definitions, creating a

statement of public policy for the use of P3s, and requiring that all

P3s include certain contract provisions. See generally P3

Commission Report. Legislation based on the Commission’s

recommendations was introduced in the 2012 session and heavily

House—the two travel plazas that MdTA owns in the median of I-95.

In exchange for a 35-year lease, the winning contractor agreed to

renovate or replace the aging facilities, operate them, provide the State

with an annual return, and transfer the facilities back to the State at the

end of the lease term. P3 Commission Report at 14.

Gen. 171] 179

amended but ultimately failed to pass. See S.B. 358/H.B. 576

(2012). Similar legislation incorporating many of the 2012

amendments was introduced during the 2013 session and was

ultimately enacted. See 2013 Md. Laws, ch. 5.

2. Current Maryland Law on P3s

Several aspects of the 2013 legislation bear mention here.

First, the Legislature included a broad statement of public policy

in favor of utilizing P3s to strengthen “public infrastructure

assets,” apportion risk between the public and private sectors,

foster the creation of jobs, and promote the “socioeconomic

development and competitiveness of Maryland.” SFP § 10A-

102(a). The Legislature also provided the first single, com-

prehensive definition of a P3:

“Public-private partnership” means a method

for delivering public infrastructure assets

using a long-term, performance-based

agreement between a reporting agency and a

private entity where appropriate risks and

benefits can be allocated in a cost-effective

manner between the contractual partners in

which:

(i) a private entity performs functions

normally undertaken by the government, but

the reporting agency remains ultimately

accountable for the public infrastructure asset

and its public function; and

(ii) the State may retain ownership in the

public infrastructure asset and the private

entity may be given additional decision-

making rights in determining how the asset is

financed, developed, constructed, operated,

and maintained over its life cycle.

SFP § 10A-101(f).

Apparently in recognition of the fact that P3s often include

the disposition or long-term use of State property, the Legislature

placed the new P3 provisions within Division I of the State

Finance and Procurement Article—where other provisions

governing the disposition of State property lie, see, e.g., SFP

§§ 10-304 and 10-305—and not within the procurement

180 [99 Op. Att’y

provisions of Division II. See generally SFP Title 10A; see also

SFP § 10A-101(f)(2)(ii) (stating that “‘Public-private partnership’

does not include . . . a procurement governed by Division II of

this article”). The General Assembly nevertheless made certain

provisions of the procurement law specifically applicable to P3s,

such as the provisions relating to collusion, falsification, required

nondiscrimination clauses, security for construction contracts, and

prevailing and living wage requirements. SFP § 11-203(h)(2).

The statute also includes reporting requirements, § 10A-104,

provisions specific to solicited and unsolicited proposals, §§ 10A-

201 through 10A-301, and a list of terms that must be included in

all P3 agreements. § 10A-401.

Pursuant to the statute, the P3 process requires the

submission of a “presolicitation report” to the Comptroller, the

State Treasurer, the budget committees of the General Assembly,

and the Department of Legislative Services. SFP § 10A-201(a).

The presolicitation report must “state the specific policy,

operational, and financial reasons for pursuing a public-private

partnership” and the “risks and benefits” of doing so. SFP

§ 10A-201(b). It also must include—“if relevant and to the extent

possible”—a “preliminary summary of the proposed solicitation

process” and “a statement of intention to use the exemption from

the requirements of Division II” set forth in SFP § 11-203. SFP

§ 10A-201(b)(1)(iv).

The budget committees then have 45 days (60 days for

larger proposals) to review and comment on the presolicitation

report,5 at which point the reporting agency must “seek the

official designation by the Board of Public Works of the public

infrastructure asset as a public-private partnership and approval of

the solicitation method.” SFP § 10A-201(c). After receiving the

Board’s designation, the reporting agency publishes a “public

notice of solicitation,” which initiates the process of selecting the

private-sector partner. SFP § 10A-202.

The selection process is conducted by way of a “public

notice of solicitation,” which can include a request for

qualifications, a request for expressions of interest, a request for

5

The budget committees do not, however, have statutory authority

to “approve” or “veto” specific P3 projects. As we have previously

stated, legislative veto provisions are of “questionable constitution-

ality.” 85 Opinions of the Attorney General 190, 203 (2000); see I.N.S.

v. Chadha, 462 U.S. 919 (1983).

Gen. 171] 181

proposals, or any combination thereof. See SFP § 10A-101(e). If

a “request for qualifications” is utilized, the agency solicits

potential bidders to describe, among other things, their technical

ability to carry out the proposed project. See SFP § 10A-

202(b)(1). This early stage of the P3 process would unfold much

like a Division II procurement, which involves only limited and

tightly controlled discussion between the procuring unit and the

potential bidders. See COMAR 21.05.02.07 (providing for pre-

bid conferences, but no ex parte discussions, in competitive

sealed bid procurements); 21.05.03.03C (in competitive sealed

proposal procurements, providing for ex parte discussions with

qualified offerors in a manner that affords “fair and equal

treatment” to offerors). After the bidders are qualified, however,

the P3 statute specifically authorizes more extensive dialogue

between the agency and qualified bidders:

(2) After a bidder is qualified and at any time

before the award of the public-private

partnership agreement, a reporting agency

may engage in discussions with qualified

bidders.

(3) These discussions may be held to:

(i) obtain comments and make revisions to

solicitation documents;

(ii) obtain the best value for the State; and

(iii) ensure full understanding of:

1. the requirements of the State, as set

forth in the request for proposals; and

2. the proposal submitted by the bidder.

SFP § 10A-202(b); see also P3 Commission Report at 43 (stating

that “the review of P3 proposals may require alternative

evaluation criteria and review processes not allowed by existing

procurement laws, such as the use of best and final offers,

negotiation with bidders, the shortlisting of bidders, or selection

based on qualifications or best value”).

These discussions allow the State to work with bidders to

improve the solicitation so that the project ultimately provides

“best value to the State” while still being commercially

competitive and financeable. At the same time, the discussions

take place under conditions that are transparent and structured.

182 [99 Op. Att’y

The process for soliciting, evaluating, and selecting the bids is

approved by the Board of Public Works, SFP § 10A-201(c)(2),

and the reporting agency issues a public notice of the solicitations.

SFP § 10A-202(a). After the agency has completed its dis-

cussions with the bidders and revised the solicitation to reflect

their input, it issues a request for proposals, evaluates the

proposals it receives, and recommends an awardee.6 The agency

posts the agreement online, and submits it to the Comptroller, the

State Treasurer, the budget committees, and the Department of

Legislative Services for their review. SFP § 10A-203(a), (b)(2).

After those reviews, the agreement is presented to the Board of

Public Works for its review and approval. SFP § 10A-203(a).7

C. Section 5-508 of the Maryland Public Ethics Law

The Maryland Public Ethics Law is codified at §§ 5-501

through 5-1001 of the General Provisions Article.8 Its purpose is

to “guard[] against improper influence” over public officials by

requiring disclosure of certain financial affairs and by setting

certain “ethical standards for the conduct of State and local

business.” GP § 5-102(b). The subtitle has a number of pro-

visions that generally prohibit an individual (or that individual’s

6

In recognition of the potential that even a rejected proposal may

contain valuable work product, the statute authorizes the reporting

agency to reimburse a private entity for the cost incurred in preparing a

response to a P3 solicitation. SFP § 10A-202(f).

7

MDOT has since promulgated regulations to elaborate on the

solicitation process for transportation P3s. See COMAR 11.01.17. It is

our understanding that, as of the date of this opinion, other agencies

identified as “reporting agencies” under the P3 statute are in the process

of preparing their own P3 regulations.

8

At the time of your request, the Ethics Law was set forth at Title

15 of the State Government Article, and the specific provision we

interpret here appeared as § 15-508. As part of the code revision

process, the Ethics Law and several other statutes within the State

Government Article were moved into the new General Provisions

Article effective October 1, 2014. A few changes to the provision were

made to conform certain references to defined terms and for stylistic

purposes. GP § 5-508 (Revisor’s Note). Those changes do not bear on

the issue before us and, in any event, are considered non-substantive

“absent the clearest legislative intent.” See Nationwide Mutual Ins. Co

v. United States Fidelity & Guaranty Co., 314 Md. 131, 147 (1988)

(quoting McGarvey v. State, 311 Md. 233, 242 (1987)). Except where

indicated, we will refer to the procurement ethics provision by its

current citation: GP § 5-508.

Gen. 171] 183

employer) from participating in a governmental matter when that

individual has a personal interest in the outcome of the matter.

The Ethics Law also contains a specific provision, § 5-508,

that is focused entirely on procurement ethics:

§ 5-508 Participation in Procurement

(a) In General – An individual who assists

an executive unit in the drafting of

specifications, an invitation for bids, a

request for proposals for a procurement, or

the selection or award made in response to an

invitation for bids or request for proposals, or

a person that employs the individual, may

not:

(1) submit a bid or proposal for that

procurement; or

(2) assist or represent another person,

directly or indirectly, who is submitting a bid

or proposal for that procurement.

GP § 5-508(a). As the Ethics Commission has previously stated,

the purpose of the procurement ethics provision is to prevent a

contractor from gaining an unfair advantage by assisting the

procurement agency in defining the project “and then later

competing for the contract which it assisted in defining.” State

Ethics Comm’n Advisory Op. No. 01-03.

Subsection (b) exempts certain activities that do not qualify

as “assisting in the drafting of specifications, an invitation for

bids, or a request for proposals for a procurement”:

(1) providing descriptive literature such as

catalogue sheets, brochures, technical data

sheets, or standard specification “samples,”

whether requested by an executive agency or

provided unsolicited;

(2) submitting written or oral comments on a

specification prepared by an executive unit or

on a solicitation for a bid or proposal when

comments are solicited from two or more

persons as part of a request for information

or a prebid or preproposal process;

184 [99 Op. Att’y

(3) providing specifications for a sole source

procurement made in accordance with § 13-

107 of the State Finance and Procurement

Article;

(4) providing architectural and engineering

services for:

(i) programming, master planning, or

other project planning services; or

(ii) the design of a construction project if:

1. the design services do not involve

lead or prime design responsibilities or con-

struction phase responsibilities on behalf of

the State; and

2. A. the anticipated value of the

procurement contract at the time of adver-

tisement is at least $2,500,000 and not more

than $100,000,000; or

B. regardless of the amount of the

procurement contract, the payment to the in-

dividual or person for the design services

does not exceed $500,000; or

(5) for a procurement of health, human,

social, or educational services, comments

solicited from two or more persons as part of

a request for information, including written

or oral comments on a draft specification,

invitation for bids, or request for proposals.

GP § 5-508(b).

Administering these procurement ethics provisions can

prove challenging within the context of a traditional step-by-step

procurement, where the competitive stages of the procurement

process are isolated and more easily recognized. The task

becomes more difficult still in the context of P3s and other project

delivery methods, where these stages are collapsed or are

occurring simultaneously.

The concern you have raised is that these project delivery

methods might violate the subsection (a) prohibition on assisting

an executive unit with specifications or a solicitation and then

competing on that same solicitation. Specifically, we understand

your concern to be that, in the case of P3s, the State unit and the

Gen. 171] 185

contractor often discuss the terms and specifications of the

solicitation and the provisions of the eventual contract during the

solicitation process, and yet that same contractor is then permitted

to compete on the solicitation. In the case of design/build, fast

track, and construction management at risk procurement, there is

a perception that the contractor works alongside the State unit on

developing design specifications, construction terms, and the

ultimate contracts and pricing. The Commission seeks our

guidance in determining whether § 5-508 applies to P3s and these

alternative construction methods and, if so, whether the

discussions they allow violate that provision’s conflict of interest

restrictions.9

II

Analysis

A Whether the Restrictions on Participation in Procurement

in GP § 5-508 Apply to Public-Private Partnerships

The question you ask requires us to interpret the Ethics Law

and its interplay with Title 10A and Division II of the State

Finance and Procurement Article. As is always the case, the

cardinal rule of statutory construction is “to ascertain and

effectuate the real and actual intent of the Legislature.” Lockshin

v. Semsker, 412 Md. 257, 274 (2010). The process of identifying

legislative intent begins with “the normal, plain meaning of the

language of the statute, reading the statute as a whole to ensure

that no word, clause, sentence or phrase is rendered surplusage,

superfluous, meaningless or nugatory.” Anderson v. Council of

Unit Owners of Gables on Tuckerman Condo., 404 Md. 560, 571

(2008) (internal quotation marks and citations omitted). If the

language is ambiguous when viewed within “a larger statutory

scheme,” the ambiguity is resolved “by looking to the statute’s

legislative history, case law, statutory purpose, as well as the

structure of the statute.” Id. at 572. In doing so, provisions

dealing with the same subject must be harmonized, if possible, so

that each may be given effect. Id.

9

In accordance with established policy, this Office defers to the

Commission on the interpretation of the Ethics Law and for that reason

typically does not entertain opinion requests concerning the meaning of

that law. That policy is not implicated here, however, because the

opinion the Commission asks us to provide relates in large part to

interpretation of the State Finance & Procurement Article.

186 [99 Op. Att’y

We must also be mindful that both the Legislature and the

Judiciary have directed that the Ethics Law be given a liberal

construction. See GP § 5-102(c) (“The General Assembly intends

that this title, except for its criminal sanctions, be liberally

construed to accomplish [the purpose stated in § 5-102(b)].”);

Carroll County Ethics Comm’n v. Lennon, 119 Md. App. 49, 71

(1998).

1. The Plain Language of the Operative Statutory

Provisions

We start with the conflict of interest provisions in § 5-508(a)

of the Ethics Law. They prohibit someone from submitting a bid

or proposal for a procurement when they have “assist[ed] an

executive unit in the drafting of specifications, an invitation for

bids, [or] a request for proposals for a procurement.” They also

prohibit someone who has submitted a bid “for that procurement”

from participating in “the selection or award made in response to

an invitation for bids or request for proposals.” The first step in

our analysis, then, is to determine whether P3s constitute

“procurement.”10

Although “procurement” is not defined in the Ethics Law,

the term “procurement contract” is: “‘Procurement Contract’ has

the meaning provided in § 11-101 of the State Finance and

Procurement Article.” GP § 5-101(ee). That provision in turn

defines “procurement contract” as “an agreement in any form

entered into by a unit for procurement.” SFP § 11-101(n)(1).

Section 11-101(m) defines the term “procurement”:

“Procurement” means the process of . . .

leasing real or personal property as lessee

[or] buying or otherwise obtaining supplies

10

Section 5-508(b) identifies certain actions that are not considered

“assisting in the drafting of specifications, an invitation for bids, or a

request for proposals for a procurement” and, thus, are exempt from the

prohibition in subsection (a): (1) providing descriptive literature;

(2) submitting comments on a specification as part of a broad

solicitation of such comments; (3) providing specifications for a sole

source procurement; (4) providing architectural and engineering

services for certain types of projects, and (5) providing comments when

the agency has solicited such comments from two or more persons as

part of a procurement of health, human, social or educational services.

GP § 5-508(b). Although individual P3s might fall under one or more

of these exemptions, none covers P3s as a category.

Gen. 171] 187

(or services) . . . and . . . includes the

solicitation and award of procurement

contracts and all phases of procurement

contract administration.

SFP § 11-101(m)(1) and (2). Putting all of this together, the

applicability of the Ethics Law comes down to whether a P3

qualifies as a “process of . . . buying or otherwise obtaining

supplies (or services).”11 We think that it does.

We believe it is significant that the definition of

“procurement contract” in the Ethics Law uses the phrase

“meaning provided in” Division II rather than a procurement

contract “governed by” or “subject to” Division II. That choice of

words suggests that the Ethics Law is not concerned with the

technical statutory authority under which a transaction proceeds,

but with the nature of that transaction. In other words, the Ethics

Law applies to procurement whether or not that procurement is

subject to the specific requirements of Division II.

From this standpoint, a P3 would seem to qualify as

procurement. Although a P3 agreement often includes “functions

normally undertaken by the government” (i.e., how the property is

“financed” or “owne[d],” SFP § 10A-101(f)), it also involves

activities that would be the subject of a traditional procurement,

namely, how the public project is “developed, constructed,

operated, and maintained.” Id. Inasmuch as procurement—

whatever method of source selection is used—includes the

acquisition of private-sector goods and services with public funds,

it seems to us that P3s, or at least a significant portion of a P3,

involves procurement.

The definition of “public-private partnership” in the P3 law,

though it uses somewhat different terms, is not inconsistent with

the definition of “procurement.” At its most basic level, the P3

law describes a “public-private partnership” as a “method for

delivering public infrastructure assets” that meets certain criteria.

SFP § 10A-101(f). Although “delivering public infrastructure

assets” might seem different from the “process of . . . buying or

otherwise obtaining supplies (or services),” the difference is

largely semantic. Under a P3, “delivering” a modernized

11

The portion of the definition that addresses the State’s leasing of

property does not apply here.

188 [99 Op. Att’y

shipping terminal or light rail transit line necessarily involves

“obtaining” goods and services from the private sector. In the

absence of a P3, many of those goods and services would be the

subject of a traditional procurement contract.

The similarities between P3s and procurement are not

limited to the substance of what they provide; P3s also unfold

much like Division II procurements. P3s involve a solicitation,

SFP § 10A-101(e); require a competitive solicitation process,

evaluation, and award, §§ 10A-103(b), 10A-202; require the

agency to make a responsibility determination about the

proposers, §§ 10A-101(h), 10A-202; and are formalized in a

written agreement. §§ 10A-103(a), 10A-203, and 10A-401. P3s

are subject to the same security and prevailing wage requirements

that apply to other State procurement, see §§ 10A-105(b)

(incorporating the requirements of SFP Title 17, Subtitles 1 and

2); require application of the same disadvantaged and minority

business contracting provisions, see § 10A-403; and are subject to

a number of Division II requirements that apply to traditional

procurement as well. See § 11-203(h)(2). In all of these respects,

the P3 functions much as a Division II Procurement.

2. Place Within Statutory Scheme

Having concluded that P3s qualify as “procurement” at least

under a functional definition of the term, we turn next to the

activities that are excluded from the definition of “public-private

partnership” to see whether they alter that conclusion. SFP

§ 10A-101(f) provides:

(2) “Public-private partnership” does not

include:

(i) a short-term operating space lease

entered into in the ordinary course of

business by a unit of State government and a

private entity and approved under § 4-321 or

§ 12-204 of this article;

(ii) a procurement governed by Division

II of this article;

(iii) public-private partnership agree-

ments entered into by the University System

of Maryland, St. Mary’s College of

Maryland, Morgan State University, or

Baltimore City Community College, where

Gen. 171] 189

no State funds are used to fund or finance

any portion of a capital project; or

(iv) a revenue-producing transportation

facility under 21.01.03.03B(1)(d) of the Code

of Maryland Regulations that is not a public-

private partnership as defined under

paragraph (1) of this subsection.

SFP § 10A-101(f)(2) (emphasis added). Although three of the

four exclusions are not relevant, the second, italicized above,

merits further consideration because it could arguably indicate

that a P3 is not “procurement.”

We do not read the italicized provision as meaning that a P3

is not a “procurement.” That might be a plausible reading if all

procurement was “governed by Division II,” but that is not the

case; the General Assembly has identified some 24 types of

procurement (or procurement by particular government entities)

that are excluded from Division II, subject to certain exceptions.

See SFP § 11-203. Nor do we read subparagraph (f)(2)(ii) as

exempting P3s from Division II. That role is already played by

SFP § 11-203, which governs the extent to which P3s must

comply with Division II:

(h)(1) Except as provided in paragraph (2)

of this subsection, this division does not

apply to a public-private partnership under

Title 10A of this article.

(2) To the extent otherwise required by

law, the following provisions of this division

apply to a public-private partnership under

Title 10A of this article:

(i) §11-205 of this subtitle (“Collusion”);

(ii) §11-205.1 of this subtitle (“Falsif-

ication, concealment, etc. of material facts”);

(iii) Title 12, Subtitle 4 of this article

(“Policies and Procedures for Exempt

Units”);

(iv) § 13-219 of this article (“Required

clauses – Nondiscrimination clause”);

(v) Title 17, Subtitle 1 of this article

(“Security for Construction Contracts”);

190 [99 Op. Att’y

(vi) Title 17, Subtitle 2 of this article

(“Prevailing Wage Rates – Public Work

Contracts”); and

(vii) Title 18 of this article (“Living

Wage”).

SFP § 11-203(h). As this provision plainly states, P3s, as a

category, are not entirely exempt from Division II.

Instead, we read SFP § 10A-101(f)(2)(ii) as clarifying that a

standard Division II procurement is not also subject to the

provisions of Title 10A. The language of (f)(2) states that the

listed activities are not “include[d]” within the definition of

“public-private partnership.” The use of the term “include”

suggests that the General Assembly did not intend to define P3s

by the extent to which they are subject to Division II, but, rather,

intended simply to exclude from the definition of P3s those

procurements that are wholly governed by Division II.

The Joint Legislative & Executive Commission Report bears

this out. It states that the exception “clarifies that procurements

for goods and services, like contracts for operation or

maintenance, are not included in the definition of a P3.” P3

Commission Report at 27. These procurements are, and always

were, to be governed by Division II and not by the proposed P3

provisions. Id. at 26. Again, the purpose of (f)(2)(ii) is not to

exempt P3s from Division II or otherwise define them as

something other than procurement, but to make clear that

procurements governed by Division II are not P3s subject to the

various reporting and review requirements of Title 10A.

There was good reason for the Legislature to clarify that the

provisions of Title 10A do not apply to traditional procurement.

For example, the State might want to separately procure the

services of a construction company to install a parking lot at the

same time that it is engaged in a P3 for the government building

that would be served by that lot. Because the parking lot

procurement would arguably be a “method for delivering public

infrastructure assets,” the question might arise as to whether the

parking lot procurement would also be subject to the notification

and reporting requirements of the P3 statute by virtue of its

relationship to the P3. Subparagraph (f)(2)(ii) answers that

question. We thus conclude that a functional definition of the

term “procurement” includes P3s, and that the statutory

provisions governing the extent to which P3s are subject to

Division II do not alter that conclusion.

Gen. 171] 191

3. Legislative History

We turn next to the legislative histories of the two statutes at

issue here to see whether they shed light on the tentative

conclusions we have reached thus far. We have examined the

legislative history of both the Ethics Law provisions of GP § 5-

508, enacted in 1994, and the P3 provisions of Title 10A of the

State Finance and Procurement Article, enacted in 2013. With

one limited exception, discussed below, none of the materials in

the bill files directly addresses the interplay between the two

statutes. The materials surrounding the earlier enactment suggest,

however, that the General Assembly intended ethics provisions to

apply broadly to what the Legislature perceived to be a trend

toward increasing private involvement in procurement matters.

The materials surrounding the later enactment indicate that the

Legislature was aware that § 5-508 would apply but, ultimately,

opted not to change the interplay between the two statutes.

a. GP § 5-508 (1994 Md. Laws, ch. 678)12

The legislative history of the procurement ethics provisions

does not address the applicability of those provisions to P3s. As

discussed above, P3s were not comprehensively addressed by

statute until 2010, see 2010 Md. Laws, chs., 640, 641, some 16

years after the procurement ethics provisions were enacted. In

fact, the enactment of what is now GP § 5-508 preceded by two

years even our earlier opinion concluding that the Maryland

Transportation Authority had its own statutory authority to enter

into P3s for toll highways. 81 Opinions of the Attorney General

at 261. It comes as no surprise, then, that the legislative history of

the ethics provisions does not address our issue.

That history does, however, more generally address concerns

about the conflicts of interest that arise when private entities

become involved in the administration of the procurement

process. Those concerns are reflected in the report of the Joint

Task Force on Maryland Procurement, which was appointed in

the fall of 1993 to “undertake a review of Maryland’s

procurement laws and regulations” and, among other things,

12

The provision was originally codified as Article 40A, § 3-110,

and then recodified as § 15-508 of the State Government Article in

1995. As discussed above, it was recodified again in 2014 and now

appears in § 5-508 of the General Provisions Article.

192 [99 Op. Att’y

“consider what additional safeguards were warranted to prevent

abuse or the appearance of improper influence within the

procurement system.” Letter from Clarence W. Blount et al. to

Hon. Thomas V. Mike Miller, Jr. et al. (Feb. 17, 1994) (included

within the Report of the Joint Task Force on Maryland

Procurement (Feb. 1994) (“Task Force Report”)). Specifically,

the Task Force observed:

In recent years, there seems to be a trend

toward the creation of ad hoc groups to lend

expertise in the procurement process for

major and complex contracts. The conflict

occurs if an individual has participated in an

ad hoc group charged with the development

of specifications and requests for proposals

or invitation for bids. Such groups do not

fall within the definition of “executive

agency” and are thus not necessarily

precluded from participating in that

procurement. Additionally, other examples of

potential conflicts arise when a consultant or

other interested party participates in the

development of findings and

recommendations on behalf of an Executive

Branch study group, and is in a position to

suggest recommendations that may benefit

their interests.

Task Force Report at 31. Two aspects of this passage, and the

Task Force Report more generally, are enlightening. First, the

Task Force was concerned about a “trend” toward the use of

private-sector expertise to assist in the drafting of specifications,

requests for proposals, and invitations for bids when preparing

“major and complex” public contracts. Although none of the

contracts that the Task Force identified as being of specific

“public concern” appear to have involved P3s or other innovative

project delivery methods,13 it seems likely that the same concerns

13

The Task Force identified “six areas where public concerns were

raised as to the workings of the State’s procurement system (the keno

amendment to the State lottery contract, the purchase of MEDEVAC

helicopters, the development of a distance learning network, the

purchase of home detention equipment, the award of the Vehicle

Emissions Inspection Program (VEIP) contract, and the supplemental

retirement plan contract).” Task Force Report at 8.

Gen. 171] 193

the Task Force described would arise with respect to design/build

contracts, P3s, and the other innovative procurement methods

described above.

Second, the specific concern that the Task Force had about

the use of private-sector expertise in the procurement process was

that it could potentially allow bidders to gain a competitive

advantage by participating in the formulation of specifications.

The Task Force did not seem opposed to the use of such expertise

in general, so long as private-sector participants would not be in a

position to “benefit their interests.” See Task Force Report at 18

(emphasizing the need to “prevent[] the ‘tailoring’ of contract

specifications where a single vendor may gain an improper

advantage”); State Ethics Comm’n Advisory Op. No. 94-09

(noting that the Task Force had addressed the “conflicts of

interest that arise when nongovernment participants in the

development of specifications and requests for proposals are not

precluded from participating in the procurement and may thus be

in a position to benefit their own interests”); State Ethics Comm’n

Advisory Op. No. 95-13 (same).

In order to address its concerns, the Task Force

recommended the addition of language that would make

“individuals who assist in the preparation of procurement

documents subject to the conflicts of interest provisions of the

ethics law and prevent[] them from participating in any way in

that procurement.” Task Force Report at 31. This recom-

mendation ultimately became what is now GP § 5-508, although it

was amended—in part at the suggestion of Ethics Commission

staff—to delete the broad requirement that anyone who assists in

the preparation of procurement documents be “subject to the

conflicts of interest provisions of the ethics law.” See Advisory

Op. No. 94-09 (describing the legislative history of the provision).

The specific prohibition on self-dealing remained, however.

There is nothing in the legislative history of GP § 5-508 to

indicate that the General Assembly intended the word

“procurement” to mean only Division II procurement. Instead, it

seems likely that the Legislature, having put in place new conflict

of interest provisions to address the emergent use of private-sector

expertise in the public procurement process, would have intended

those provisions to apply broadly to all types of procurement.

Although the Legislature, in 1994, may not specifically have had

in mind P3s and other innovative project delivery methods, we

194 [99 Op. Att’y

believe that the broad construction we give GP § 5-508 best

effectuates legislative intent.

b. Public-Private Partnership Legislation (SFP

Title 10A)

Like the legislative history of the procurement ethics

provisions, the legislative materials surrounding the enactment of

the P3 statute do not expressly address whether the conflict of

interest provisions of what is now GP § 5-508 apply to P3s and

other innovative procurement methods. As discussed above, the

legislative process that culminated in the enactment of Subtitle

10A of the State Finance and Procurement Article began in 2010,

with legislation that established an initial regulatory framework

for P3s and charged the Joint Legislative and Executive

Commission on Oversight of Public-Private Partnerships (“P3

Commission”) with evaluating how that framework should be

revised to accommodate the growing interest in P3s. See

generally 2010 Md. Laws, chs. 640, 641.

The legislative bill files surrounding the 2010 legislation do

not mention the procurement ethics provisions and how they

might apply to P3s. Although some of the materials reflect some

nomenclatural uncertainty about whether P3s qualify as

“procurement,” none addresses the topic squarely.14 Ultimately,

14

For example, the Department of Budget and Management

(“DBM”) referred to P3s as procurement in its position statement on

the proposed legislation. Hearing on H.B. 1370 Before the House

Appropriations Committee, 2010 Leg., Reg. Sess. (March 10, 2010)

(stating that DBM should not be the agency to provide staff for the P3

Commission because it “has no experience in developing these types of

procurements or in the actual operation [of] private-public

partnerships”). Senator Verna L. Jones, by contrast, testified that the

bill’s purpose was in part “to delete obsolete references to P3 as

procurements.” Hearing on S.B. 979 Before the Senate Budget and

Taxation Committee, 2010 Leg., Reg. Sess. (March 24, 2010). The

principal provision to which Senator Jones appears to have been

referring appeared in § 4-205(c)(3) of the Transportation Article, which

at the time required MdTA to provide a “public notice of procurement”

whenever it intended to proceed with a “public-private partnership

arrangement.” TR § 4-205(c)(3)(ii) (2008 Repl. Vol.). That provision

was amended to require MdTA to issue a “public notice of solicitation

for a public-private partnership.” See id. § 4-406(c) (2010 Supp.)

(emphasis added)); see also SFP § 10A-202(a) (requiring the same for

reporting agencies).

Gen. 171] 195

the 2010 legislation included the same definitional provision that

we discussed above as one indication that the General Assembly

did not intend to exempt P3s from the procurement provisions of

the Ethics Law. It made clear that a “procurement governed by

Division II” was not included within the definition of “public-

private partnership” but did not exempt P3s from the generic

definition of “procurement” or otherwise exempt them from the

Ethics Law’s conflict of interest provisions.

There is considerably more legislative history to consider for

the P3 statute that was ultimately enacted in 2013. We have the

P3 Commission’s final report, the legislative materials relating to

the failed 2012 bills, and the materials discussing the 2013 bills

that eventually became law. These materials generally reflect the

same nomenclatural uncertainty as to whether P3s constitute

procurement. For example, many of those who testified before

the General Assembly in 2012 described P3s as a specific type of

procurement:

We see P3’s as just another “tool” for state

and municipal agencies to utilize when

considering the design and construction of

capital asset[s]. By no means does this

represent a wholesale change of traditional

design and construction procurement process

for state agencies.

Letter from Michael R. Crase, Vice President, Gilbane Bldg. Co.,

to Del. Maggie McIntosh (Feb. 24, 2012); see also Hearing on

H.B. 576 Before the House Environmental Matters Committee,

2012 Leg., Reg. Sess. (Feb. 24, 2012) (testimony of Christopher

D. Lloyd, McGuireWoods Consulting LLC) (describing P3s as

the private and public sectors “collaborating in a procurement

effort where risk and reward are shared”). We found nothing,

however, that specifically addresses whether P3s constitute

“procurement” for purposes of the procurement ethics provisions.

The Commission did, however, describe P3s in a way that

suggests it saw them as a special type of procurement, as opposed

to something other than procurement:

The nature of P3 contracts can be quite

different from routine procurements by the

State. Procurement laws often focus on the

purchase of goods and services and may not

196 [99 Op. Att’y

always be robust enough to include revenue-

generating contracts or long-term leases of

facilities. Additionally, the review of P3

proposals may require alternative evaluation

criteria and review processes not allowed by

existing procurement laws, such as the use of

best and final offers, negotiation with

bidders, the shortlisting of bidders, or

selection based on qualifications or best

value. Most P3 enabling statutes specify the

procurement or solicitation processes and

evaluation criteria that may be used for P3s

so that no legal questions arise about whether

State procurement laws apply.

P3 Commission Report at 43. From this and other similar

statements, it seems the Commission understood that P3s

ordinarily would be governed by procurement laws but that those

laws would frustrate many of the advantages of using P3s for

complex projects. The solution, according to the Commission,

was not to declare P3s to be something other than procurement,

but to create an entirely new, unified set of P3 provisions that

would be “similar to existing procurement law,” but that would

“clearly establish the authority for all agencies to enter into P3s

and create a process for the solicitation of projects.” See P3

Commission Report at 43. According to the Commission, that

process should, among other things:

 Allow for the use of request [for]

proposals, request for qualifications, and

requests for information;

 Allow for the pre-qualification of bidders,

short-listing of bidders, negotiation with

bidders, and best and final offers;

 Permit the use of alternative evaluation

criteria, such as selection based on best

value or qualifications; [and]

 Allow unsuccessful bidders to be paid for

the right to use work products from their

proposals.

P3 Commission Report at 43-44. The Commission said nothing

in its report that would suggest it thought that P3s would not be

considered “procurement” for purposes of GP § 5-508.

Gen. 171] 197

Nor did the P3 Commission specifically address the extent to

which the conflict of interest provisions of the Ethics Law apply

to P3s. Although some who appeared before the Commission

emphasized the need for “strict controls over accountability,

transparency and conflicts of interest,” e.g., P3 Commission

Report at 73 (comments of Mr. Lloyd), we found no evidence that

the Commission took up this specific issue. The only indication

we have been able to find that the General Assembly was aware

of the interplay between the P3 legislation and what was then

§ 15-508 of the State Government Article (“SG”) is the fact that

House Bill 576 initially contained one provision that would have

expressly exempted unsolicited P3 proposals from the Ethics

Law:

The provisions of § 15-508 of the State

Government Article may not preclude an

individual or firm that has submitted an

unsolicited proposal under this title from

submitting and participating in the

competitive bidding process.

H.B. 576 (2012) (First Reader) (proposed to be codified at SFP

§ 10A-301(e)). That the bill’s drafters felt the need to exempt

unsolicited P3 proposals from SG § 15-508 indicates, of course,

that they believed the provision would otherwise apply. Had the

statute ultimately been enacted in this form, it would be strong

evidence that the General Assembly understood that P3s

ordinarily would be subject to the Ethics Law’s procurement

provisions.15

The 2012 legislation did not pass, however, and the bill was

revised between sessions such that the version introduced in 2013

did not expressly provide for an exemption from SG § 15-508.

Instead of exempting unsolicited P3 proposals from the Ethics

Law, the 2013 bill affirmatively authorized the activity that the

Ethics Law would have otherwise prohibited:

15

The General Assembly had considered P3 legislation in previous

sessions as well, some of which also would have expressly exempted

P3s from the procurement ethics provisions of SG § 15-508. See, e.g.,

S.B. 596 (2004) (proposing to amend § 15-508 to exempt the act of

“[p]roviding specifications for a public-private partnership proposal

procurement made in accordance with Title 17, Subtitle 5 of the State

Finance and Procurement Article”).

198 [99 Op. Att’y

An individual or firm that has submitted an

unsolicited proposal under this title may

participate in any subsequent competitive bid

or competitive sealed proposal solicitation

process.

H.B. 560 (2013) (First Reader). After an amendment to delete the

phrase “bid or competitive sealed proposal,” this provision was

enacted and signed into law as SFP § 10A-301(e).

The omission from the 2013 legislation of an express

reference to what is now GP § 5-508 could mean that the

Legislature, when it enacted the law, understood that the Ethics

Law provision did not apply to P3s. The bill files, however,

provide no explanation for why the bill’s drafter changed this

provision between sessions. Nor did the Department of

Legislative Services ascribe any significance to the omission; its

fiscal and policy note continued to describe the bill as “exempting

[private entities that submit unsolicited proposals] from statutory

ethics provisions that would otherwise prevent them from

participating” in the resulting competitive procurement. H.B.

560, 2013 Leg., Reg. Sess., Revised Fiscal and Policy Note at 5

(May 13, 2013).

In the end, what we draw from this is that the Legislature

was likely aware of the potential applicability of the Ethics Law

to P3s as “procurement” and yet chose not to exempt them from

that Law’s provisions. Instead, the General Assembly elected to

create an entirely new set of provisions that would “specify the

procurement or solicitation processes and evaluation criteria that

may be used for P3s.” P3 Commission Report at 43. Those

solicitation processes and evaluation criteria would be modeled

after, but separate from, the Division II source selection

provisions. The Legislature appears to have chosen that path to

avoid “legal questions . . . about whether State procurement laws

apply,” but not as a way of exempting P3s from the procurement

ethics provisions of what is now GP § 5-508.

Having looked at the plain language of the operative

statutory provisions, their place within the statutory scheme, and

the history surrounding their enactment, we conclude that P3s

involve procurement, at least in part. Although the Legislature

clearly intended to separate P3s from most aspects of the

procurement law in Division II, we see little evidence that the

General Assembly intended to exempt P3s from the conflict of

interest provisions of the Ethics Law. Given the importance of

Gen. 171] 199

the Ethics Law, we doubt very much that the General Assembly

intended to exempt P3s from its ethical procurement provisions

without expressly stating as much. Construing the Ethics Law

liberally, we conclude that GP § 5-508 applies to public-private

partnerships. Cf. A.S. Abell Publ’g Co. v. Mezzanote, 297 Md. 26,

32 (1983) (concluding that the Maryland Insurance Guaranty

Association was subject to the Public Information Act because the

Act “must be liberally construed in favor of inclusion in order to

effectuate [its] broad remedial purpose”).

B. How the Ethics Law’s Conflict of Interest Provisions Apply

to P3s

Having concluded that the Ethics Law’s procurement

provisions apply to P3s, we turn next to how those provisions

apply. At first blush, it might seem as if the conflict of interest

provisions of GP § 5-508 are inconsistent with the P3 statute.

Indeed, in certain respects, the statutes are squarely at odds. The

Ethics Law, for example, would prohibit a proposer from

competing on a contract when the proposer had “assist[ed]” in the

drafting of specifications, whereas the P3 law specifically allows

the proposer to discuss with the State “revisions to the solicitation

documents.” Compare GP § 5-508(a) with SFP § 10A-202(b).

When two statutes govern the same topic, we harmonize

them through a series of canons of statutory construction. One

such canon looks to which statute is the more specific: “Where

provisions of one of the statutes deal with the common subject

generally and those of the other do so more specifically, the

statutes may be harmonized by viewing the more specific statute

as an exception to the more general one.” Napata v. Univ. of Md.

Med. Sys. Corp., 417 Md. 724, 739 (2011) (quoting Government

Employees Ins. Co. v. Insurance Comm’r, 332 Md. 124, 132-33

(1993)). Another canon deems the more recent enactment to

control in the event of a conflict. Farmers & Merchants Nat.

Bank of Hagerstown v. Schlossberg, 306 Md. 48, 61 (1986).

The P3 statute is the more recently enacted of the two, and it

is also the more specific. Whereas the Ethics Law broadly applies

to all State agency procurement—whether governed by Division

II or not—the P3 law applies only to the relatively few P3s that

one of the “reporting agencies” or another State agency might

enter into. Therefore, the P3 provisions of Title 10A that allow

the government and qualified bidders to discuss project

200 [99 Op. Att’y

specifications prevail over the provisions of GP § 5-508

prohibiting the same.

Our conclusion is consistent with the purposes of GP § 5-

508. That provision aims to preserve the fairness and integrity of

the competitive process. It is grounded in the Legislature’s policy

determination that an entity seeking to do business with the State

should not be able to obtain a competitive advantage by unfairly

influencing the terms of the solicitation that it might bid on, or by

influencing the selection process to favor its bid. See Task Force

Report at 31 (discussing the need for provision designed to ensure

that a bidder would not be “in a position to suggest

recommendations that may benefit their interests”); see also id. at

18 (“improper advantage”). Even though the P3 process allows

some flexibility after the qualification stage, the qualification

process itself unfolds just as a Division II procurement would.

The restrictions of GP § 5-508 thus ensure that competition at the

qualification stage unfolds without any party having the

opportunity to gain an unfair advantage.

We believe that our conclusion is also consistent with the

manner in which the State Ethics Commission has applied the

restrictions of the procurement ethics provisions. In applying

what is now GP § 5-508, the Commission has indicated that it

must determine whether a private company’s involvement in a

procurement process constitutes “consultation with the agency,”

which is permissible, or instead amounted to “assist[ing] . . . in

the drafting” of specifications, invitations for bids, or requests for

proposals, as that phrase appears in GP § 5-508. Memorandum

from State Ethics Commission to Agency Procurement Officers,

Vendors at 4 (Oct. 1, 2014), available at http://ethics.gov.state.md.us/

Procurement%20Summary.pdf (last visited Dec. 2, 2014). That

determination, the Commission has observed, is a “factual

determination to be judged by all of the surrounding

circumstances.” Id. In making that determination, the Com-

mission considers, among other things, “the nature of the input,

the frequency and timing of the input, and the nature of the

process.” Id.; see State Ethics Comm’n Advisory Op. No. 01-02

(same).

The Commission’s is thus a functional approach, which

ultimately focuses on whether, under the circumstances presented,

the private individual or company would gain a competitive

advantage if allowed to participate in the procurement process.

For example, in Opinion 98-09, the Commission applied the

provisions of SG § 15-508 to a procurement involving revisions

Gen. 171] 201

of the Department of Public Safety and Correctional Services’

organizational structure. The first step in the procurement was the

development of a “Blueprint” for the reorganization. The

Blueprint would then serve as the “guide” for the second step in

the procurement—the development of “a master plan for a

correctional information system.” The third and final step in the

procurement involved the “actual implementation” of the master

plan. The requestor was the successful bidder for the first phase

of the procurement and asked whether § 15-508 operated to bar its

participation in the second and third phases.

The Commission concluded that the vendor who designed

the Blueprint was prohibited from bidding on the master plan, but

not the final plan for implementation. Because the Blueprint

“forms a part of the specifications” for the master plan

procurement, allowing the vendor to participate in the master plan

stage would place the vendor “in a position to benefit [its] own

interests,” which the Task Force had cautioned against. The same

was not true at the implementation stage of the procurement.

Whatever guidance the Blueprint might provide would be “largely

superseded by the more detailed ongoing design activities”

involved in developing the master plan. Under the circumstances,

the Commission concluded that “the Requestor’s involvement in

the Blueprint development would be sufficiently remote that it

would not be viewed as having assisted in the specifications for

the implementation contract.”

In Advisory Opinion 99-05, the Commission placed the

same emphasis on whether the private company would obtain an

unfair competitive advantage by participating in a procurement to

provide certain energy services. At issue was whether a State

employee who had been involved in preparing a request for

qualifications would be able to leave State service and work for

one of the companies that might seek to be qualified. The

commission concluded that a vendor who employed the State

employee would be barred from submitting a bid only if the

employee had been employed by the vendor at the time the bid

was submitted, i.e., when the employee could have helped the

vendor craft its bid. That same vendor, however, would not

necessarily be barred from submitting a bid on the eventual

implementation contract because that contract was too remote

from the request for qualifications process. Again, the

Commission’s focus was on the timing of the employee’s

involvement and whether it gave the vendor an opportunity to

influence the procurement process.

202 [99 Op. Att’y

Finally, in Advisory Opinion 01-03, the Commission

addressed whether a private engineering firm was barred from

bidding on a State Highway Administration project by virtue of

having reviewed, on behalf of the Maryland Department of the

Environment (“MDE”), the stormwater management plan for the

project. The Commission concluded that the firm was not barred:

The purpose of the procurement ethics

provision is to avoid situations where a

vendor or private entity with an interest in a

procurement is in a position to assist the

agency in defining its needs and require-

ments and in essence drafting specifications,

and then be a participant in what is to be a

competitive process in selecting a contractor.

The law was to prevent a contractor from

assisting and then later competing for the

contract which it assisted in defining. At the

hearing SHA officials indicated their view

that the requester under the circumstances

described here did not receive a competitive

advantage by its regulatory review work for

the MDE.

We take from this that the restrictions of GP § 5-508 have

been applied functionally, with the statute’s purpose in mind.

That purpose is effectuated by evaluating whether a particular

vendor would obtain an unfair competitive advantage by being

allowed to participate at a particular stage of the procurement

process. Although the points of competition within the P3

process occur at slightly different times from those in a traditional

procurement, those points of competition exist and allow for the

application of the statute’s conflict of interest provisions in much

the same way that the Commission has applied them in more

traditional contract settings.

The points of competition within the P3 process typically

occur at the request for qualification stage and when the State

ultimately evaluates the proposals. Accordingly, GP § 5-508

would prohibit a State unit from sitting down with a vendor prior

to the qualification stage to hammer out the criteria by which

qualifications will be judged. That would give the vendor an

obvious and unfair advantage over its competitors. If a State unit

wanted to discuss the project or the bidders’ qualifications prior

to the qualification stage, it would have to comply with one of the

exemptions in GP § 5-508, such as having the potential bidders (if

Gen. 171] 203

there are two or more of them) submit written comments on the

P3 qualification specifications and make those comments part of

the pre-bid or pre-proposal process. See GP § 5-508(b)(2).

Section 5-508 would similarly prohibit a private company from

helping the agency to evaluate P3 proposals if that company had

been involved in the preparation of one of the proposals under

consideration.

By contrast, the P3 statute specifically authorizes a State

agency to engage in discussions with a potential P3 vendor

between qualification and award. Although those discussions

might allow a vendor to convince the agency of the creative merit

of the vendor’s own proposal, the Legislature specifically

determined that the additional value to the State from these

discussions outweighed any perceived advantage that a firm

might obtain. And any advantage a vendor may gain is gained

through a process that is approved by the Board of Public Works

and agreed to by the proposers themselves, and that ultimately

results in a competition that will judge all proposers based on a

single set of specifications.

We recognize that the application of GP § 5-508 to P3s will

present challenges for the Commission. After all, P3 processes,

by their very nature, are more fluid than other project delivery

methods and contemplate much more input from potential bidders

with expertise in a particular field. This distinguishes P3s from

other project delivery methods that the Commission has already

addressed. See, e.g., State Ethics Comm’n Advisory Op. No. 98-

01 (concluding, in the context of a design/build contract, that SG

§ 15-508 barred an architectural firm that prepared the request for

proposals for the design and construction of workforce centers

from participating as a consultant to a bidder on the project). But

if GP § 5-508 did not apply to P3s, there would be no up-front

statutory restraint on a potential proposer sitting with the State

and influencing the competitive process in which it intends to

participate.16 Of course, State units can and often do include

16

Statutory provisions and common law principles provide some

means of remedying fraud and collusion in the awarding of public

contracts after it has occurred. See SFP § 11-205 (providing for treble

damages where “a person, for the purpose of defrauding the State, acts

in collusion with another person in connection with the procurement

process”); Maryland Pavement Co. v. Mahool, 110 Md. 397, 408

(1909) (providing for judicial review of contract award where there is

evidence of “fraud or collusion”). These after-the-fact remedies were

204 [99 Op. Att’y

conflict of interest provisions in the solicitations and contracts

they enter into with qualified bidders, and those provisions might

be sufficient to prevent improper influence at the bid selection

stage. But we are construing legislative intent and we do not

think that the General Assembly intended to leave the competitive

integrity of the P3 process entirely up to the good intentions of

executive branch agencies.

In sum, we conclude that a P3 under Title 10A has certain

flexibility with regards to its solicitation process based on the

plain language of that statute, but remains in other respects

subject to GP § 5-508. In the event of a conflict between the P3

statute and § 5-508, the more specific provisions of the P3 statute

will control.

C. Whether the § 5-508 Restrictions on Participation in

Procurement Apply to Design/Build Contracts and Other

Project Delivery Methods.

We reach the same conclusion with respect to design/build,

“construction management at risk,” and the other construction

project delivery methods about which you inquire. These

delivery methods have been available to State agencies for many

years before the advent of a comprehensive P3 statute in Title

10A. Design/build contracts, for example, are expressly provided

for in the provisions of the State Finance and Procurement Article

that govern the oversight and study of non-transportation, capital

projects. See SFP § 3-602(g). Similar provisions have been

included in the State Finance and Procurement Article since

1988—some 22 years before P3s received their first express

legislative authorization. See 1988 Md. Laws, ch. 753 (adding

provision that was subsequently codified as SFP § 5-309(g));

1989 Md. Laws, ch. 540 (recodifying SFP § 5-309 as § 3-602).

We see no indication that the General Assembly ever

intended design/build contracts to be treated as anything but

procurement. They are not exempted from Division II, either in

whole or, as is the case with P3s, in part. See SFP § 11-203(h).

Rather, the only statutory provision that specifically addresses

design/build contracts describes them in terms that are typical for

already in place in 1994, however, which suggests that, by enacting

what is now GP § 5-508, the General Assembly did not consider them

sufficient to address conflicts of interest in procurement.

Gen. 171] 205

procurement: “[D]esign/build . . . involves a single solicitation to

design and build the facility.” SFP § 3-602(g)(1).

The regulations that govern the use of design/build contracts

also define them in familiar procurement terms. See COMAR

21.05.11.01B(1) (“‘Design build’ means a project delivery

method in which a single entity is contractually responsible for

both design and construction of a project.”). Just as in pro-

curement generally, the selection of the design/build contractor

“shall be conducted using the multi-step sealed bid procurement

method as provided in COMAR 21.05.02.17 or the competitive

sealed proposals procurement method as provided in COMAR

21.05.03.” COMAR 21.05.11.04A. And COMAR 21.05.11 cites

as its enabling legislation SFP §§ 12-101, 13-103, and 13-104,

which are the same sections that give the Maryland Board of

Public Works discretionary authority over procurement, direct the

promulgation of procurement regulations, and authorize the use of

competitive sealed bids and competitive sealed proposals. We see

no basis for concluding that design/build contracts are not

procurement.

Because design/build contracts are procurement, the

provisions of GP § 5-508 apply. Accordingly, an entity that

assists the executive unit with drafting of specifications for the

solicitation of a design/build contractor is prohibited from bidding

on the solicitation, as the Commission has previously concluded.

See Advisory Op. No. 98-01 (concluding that SG § 15-508 ap-

plied to design/build procurement). As with other project

delivery methods, the State may conduct a multi-step invitation

for sealed bids or a request for proposals under normal pro-

curement procedures, select the design/build contractor under that

process, and award the contract. See COMAR 21.05.11.04A, B.

Only after award does the selected design/build contractor assist

the State unit with refining the building’s specifications, value-

engineer a build price, and ultimately construct the project. The

assistance with generating construction plans and specifications,

then, is one of the primary objectives of the design/build contract.

But at no point is a design/build bidder permitted to generate the

specifications under which its own bid will be evaluated or

selected—something that would give it the type of competitive

advantage that GP § 5-508 was enacted to prohibit.

A construction management at risk contract is subject to GP

§ 5-508 by the same logic that applies to design/build contracts.

Like design/build contracts, construction management at risk

206 [99 Op. Att’y

contracts are procurement. They are defined in traditional

procurement terms, see COMAR 21.05.10.01B(1), (4), are

solicited using standard procedures for requests for proposals

under COMAR 21.05.10.03, and are expressly authorized by

regulations that are themselves authorized by the statutory

provisions that govern Division II procurement. SFP §§ 12-101,

13-103, and 13-104. As is the case with the design/build

contractor, the fact that the construction manager is involved with

the design phase, but plays a role in the implementation of the

construction phase, does not violate GP § 5-508. Again, the

construction “specifications” with which a construction manager

might assist an executive unit are not the same specifications that

governed the selection of the construction manager.

Consequently, the construction manager’s assistance does not

give it an unfair advantage over its competitors at the time of the

solicitation. As with design/build contracts, a construction

management at risk contract, if solicited appropriately by a

request for proposals, fits comfortably within the ethical

constraints of GP § 5-508.

Lastly, “fast track” is identified in SFP § 3-602(g) as another

method where “design and construction are implemented

concurrently.” No further reference to fast track is made in

statute, and the only similar definitions appear in the provisions of

COMAR Title 23 relating to public school construction. See

23.03.01. Based on those definitions, fast track is not a unique

procurement method or project delivery method, but rather

authority for funding and implementing a procurement contract.

A standard design contract is paired alongside a separately

procured construction contract, and certain construction elements

commence while other portions of the project are still in the

design phase. See COMAR 23.03.01.01B(17).

As with the two other alternative construction methods

discussed above, there is statutory and regulatory authority for the

fast track construction approach. That authority is expressly

provided by regulation in the public school construction context

and is implied by statute more generally for other types of

projects. SFP § 3-602(g). And here too we see no procurement

statutes or regulations that expressly prohibit fast track for design

and construction projects. As a result, we conclude that GP § 5-

508 applies to fast track in the same manner that it would apply to

any procured design or construction contract. We see no conflict

here.

Gen. 171] 207

III

Conclusion

The procurement provisions of the Ethics Law apply to all

“procurement” activity by an Executive Branch unit. Although

public-private partnerships are exempt from most of the

requirements of Division II of the State Finance and Procurement

Article, P3s typically involve some activities that would otherwise

qualify as “procurement.” In the absence of legislative history

indicating that the General Assembly intended to exempt P3s

from the procurement conflict of interest provisions, and giving

the Ethics Law the liberal construction it commands, we conclude

that P3s are subject to the restrictions set forth in GP § 5-508.

Where those restrictions conflict with the provisions of the P3

statute, however, the more specific P3 provisions control.

Accordingly, agencies involved in P3 solicitations may conduct

discussions with qualified bidders, to the extent provided for in

the P3 statute, without violating GP § 5-508. We reach the same

conclusion with respect to the applicability of the procurement

ethics provisions to design/build contracts and the other project

delivery methods you identify. Those methods constitute

“procurement” within the meaning of GP § 5-508 but, if carried

out appropriately, do not violate that provision’s prohibition on

self-dealing.

Douglas F. Gansler

Attorney General of Maryland

Scott Walchak

Assistant Attorney General

Adam D. Snyder

Chief Counsel, Opinions & Advice