Building Materials Corp. of America v. Board of Education

McDonald, j. The point of contention in this case is whether a local board of education has acted within its statutory authority. For some years, the Board of Education of Baltimore County (“Board of Education”), the Appellee, has belonged to a governmental group purchasing consortium — a sort of warehouse club for government entities — which competitively bid a roofing services contract on behalf of its members. The Board of Education has relied on that contract to fulfill its needs for roofing repair services.

Appellant Building Materials Corporation of America, a nationwide manufacturer of roofing materials that does business under the name GAF Materials Corporation (“GAF”), questions the Board of Education’s authority for that practice under the pertinent statutes. A local board of education derives its powers and responsibilities from the State education law. One section of that law ⁵⁷⁶ requires a local school system to conduct a competitive bidding process itself for procurement but explicitly authorizes the use of intergovernmental purchasing cooperatives for the purchase of “goods and commodities” — a phrase that ordinarily would not be understood to encompass construction services. In other parts of the education law, however, the Legislature has delegated substantial authority to the Board of Public Works and the Interagency Committee on School Construction to direct and oversee local school construction financed with State funds.

Those agencies have endorsed the use of intergovernmental cooperatives in regulation and have specifically approved its use by the Board of Education for the acquisition of roofing services. The Circuit Court for Baltimore County granted summary judgment in favor of the Board of Education. We affirm that judgment. When viewed in the context of the entire education law and regulations promulgated under that law, the competitive bidding statute does not bar the Board of Education from using its membership in an intergovernmental purchasing consortium for the procurement of roofing repair services.

Background Public School Governance and Funding In compliance with the constitutional directive to establish a “thorough and efficient” system of public education, 1 the General Assembly has created a structure for the operation and maintenance of public schools that weaves together State and local responsibilities. Local boards of education, such as the Appellee in this case, operate school systems in each county, subject to oversight by the State Board of Education. Maryland Code, Education Article (“ED”), §§ 2-205, 4-101. Despite their local focus, county boards of education are State agencies that are funded in part by the State and in part by their respective counties.

Chesapeake Charter, Inc. v. Anne Arundel County Board of Education, 358 Md. 129, 136 , 747 A.2d 625 (2000); ED § 5-202 ⁵⁷⁷ (“foundation program” for financing local public schools with a combination of State, local, and federal funds). Similarly, while public school construction is very much a local affair, it is subsidized and supervised to a significant degree by the State. ED § 5-301 et seq. Procurement by Local School Boards General Requirement for Competitive Bidding —ED § 5-112 While local school boards are formally State agencies and receive a substantial proportion of their funding from the State, they are not subject to the State’s general procurement law.

Chesapeake Charter, supra. Other State statutes, however, control procurement by a local board. Under ED § 5-112, a local board must ordinarily follow competitive bidding procedures when procuring buildings, improvements, supplies, or equipment costing more than $25,000. 2 The statute has an exception to that requirement for “contracts for goods or commodities that are awarded by ... intergovernmental purchasing organizations if the lead agency for the contract follows public bidding procedures.” ED § 5-112(a)(3) (emphasis added). Oversight of School Construction by Board of Public Works In regards to the construction of a particular type of building 3 — a school — the State Board of Public Works (“BPW”) 4 has a preeminent role.

The BPW determines ⁵⁷⁸ which school construction projects receive State funding. ED § 5—301(c); COMAR 23.03.02.03F. If a project receives State funding, it is subject to supervision and control by the BPW. Beka Industries, Inc. v. Board of Education, 419 Md. 194, 205 , 18 A.3d 890 (2011); Chesapeake Charter, 358 Md. at 140 n. 5, 747 A.2d 625 .

In particular, the Legislature has directed the BPW to “adopt regulations for the administration of programs [of public school construction and capital improvements]” subsidized by State funds. ED § 5-301(d)(1). Pertinent to this controversy, those regulations: ... may contain requirements for: (iv) The approval of sites, plans, and specifications for the construction of new school buildings or the improvement of existing buildings; (vi) Competitive bidding; (viii) The actual construction of school buildings or their improvements; (ix) The relative roles of different State and local governmental agencies in the planning and construction of school buildings or capital improvements; (x) School construction and capital improvements necessary or appropriate for the proper implementation of this section; (xi) The award of contracts by school systems; ... ED § 5-301(d)(2); see also ED § 5-301(b) (BPW to adopt regulations on eligible and ineligible costs); § 5-301(b-1) (BPW to adopt regulations on indoor air quality for classrooms); § 4-126(c), (g) (BPW to adopt regulations governing ⁵⁷⁹ alternative financing arrangements for school construction).

In adopting regulations, the BPW is to provide for the “maximum exercise of initiative” by county school systems to ensure that school construction meets the needs of the community and is a prudent expenditure of State funds. ED § 5-301(d)(4). County school boards are subject to the school construction regulations adopted by the BPW. ED § 5-301(g)(1).

The Legislature has directed that, in the event of a conflict between those regulations and the “authority, responsibilities, powers and duties” of a county school board (or those of certain other State and local agencies), the BPW’s regulations prevail. ED § 5—301 (g)(2). 5 Moreover, the Legislature has expressly made State funding of local school construction contingent on compliance with the BPW’s regulations. ED § 5-301(h). Interagency Committee on School Construction To assist the BPW in its duties related to school construction and to administer the State’s public school construction program on behalf of the BPW, the Legislature has created the Interagency Committee on School Construction (“IAC”). 6 ⁵⁸⁰ ED § 5-302.

The BPW is authorized to delegate its administrative and budget authority with respect to school construction to the IAC as “necessary and appropriate.” ED § 5-302(a)(5). The Legislature has also specifically directed the BPW to adopt regulations as recommended by the IAC. See ED § 4-126(g) (regulations concerning alternative financing arrangements); ED § 5-301 (regulations concerning planning and procurement of school construction). Regulations Authorizing “Intergovernmental Cooperative Purchasing” Participation in intergovernmental cooperative purchasing arrangements, if done well, can yield savings in time and funds devoted to administering a procurement process, as well as result in a more favorable price.

See National Association of State Purchasing Officers, Strength in Numbers: An Introduction to Cooperative Procurements, available at <www.naspo.org/documents/Cooperative-Rurchasing0I10 update.pdf >. In its school construction regulations, the BPW has endorsed the use of intergovernmental cooperative purchasing agreements as an alternative to competitive bidding procedures in certain circumstances. COMAR 23.03.03.03; COMAR 23.03.03.04; COMAR 23.03.03.12. In particular, the regulation concerning procurement methods provides: Methods of Source Selection.

Unless otherwise authorized, school construction procurement contracts shall be awarded by one of the following methods: A. Competitive sealed bidding, including competitive multistep sealed bidding; B. Quality-based selection; C. Competitive negotiation; D. Unsolicited proposals; E. Intergovernmental cooperative purchasing; ⁵⁸¹ F. Sole source; or G. Negotiated award after unsatisfactory competitive bidding. COMAR 28.03.03.03 (emphasis added). The regulations further state a preference for the use of the competitive sealed bidding method, but permit the use of other methods under specified circumstances. COMAR 23.03.03.04. 7 One of the regulations sets forth the circumstances under which a school system may use intergovernmental cooperative purchasing: Intergovernmental Cooperative Purchasing.

A. General. Intergovernmental cooperative purchasing means a method of source selection that permits [a county board of education] to aggregate with other government entities their common requirements for purposes of maximizing economies of scale when soliciting bids or proposals for goods and commodities or to purchase its requirements from another governmental entity’s contract if that contract is an intergovernmental purchasing agreement. B. [A county board of education] may use the intergovernmental cooperative purchasing method if it determines that the method: (1) Will provide cost benefits, promote administrative efficiencies, or promote governmental cooperation; and (2) Is not intended to avoid competition. C. Types. [A county board of education] may use the following types of intergovernmental cooperative purchasing method: (1) Pooling, a method that includes the following steps: ⁵⁸² (a) Each participating governmental entity agrees to procure its respective requirements from the successful bidder or offeror; (b) A lead jurisdiction conducts the procurement on behalf of all participants; and (c) Either a master contract award or awards is made by the lead jurisdiction on behalf of all participants or each participant awards its own contract; and (2) Piggybacking, a method wherein [a county board of education] purchases its requirements from another governmental entity’s contract if that contract contains an intergovernmental cooperative purchasing clause.

COMAR 23.03.03.12. Board of Education Roofing Contracts In 2005, the Board of Education joined the Pennsylvania Education Joint Purchasing Council (“PAEJPC”), an intergovernmental purchasing cooperative that serves more than 300 school systems, colleges, and universities in Pennsylvania, Maryland, and West Virginia. See <www.paejpc.org > (last visited August 9, 2012). PAEJPC offers its members the opportunity to participate in various cooperative purchasing contracts, including a contract for roofing services, that have been developed through a competitive bidding process conducted by the Association of Educational Purchasing Agencies (“AEPA”), another government agency consortium. 8 The Board of Education sought and obtained permission from the IAC to purchase roofing services through PAEJPC and AEPA. ⁵⁸³ In recent years, the successful bidder for the AEPA roofing services contracts has been Weatherproofing Technologies, Inc. (“TREMCO”), a competitor of GAF. 9 Since January 2006, the Board of Education, through its membership in the cooperative, has directly awarded TREMCO at least 46 contracts, valued at more than $64 million, for roofing services.

Each contract was reviewed and approved by the IAC and funded by the State with the approval of the BPW. GAF Complaint This case began when GAF filed a declaratory judgment action in January 2009 against the Board of Education in the Circuit Court for Baltimore County. 10 In that action, GAF sought a declaration that the Board of Education’s procurement of roofing services failed to comply with the State laws governing local boards of education. GAF alleged that the Board of Education’s participation in the AEPA roofing services contract prevented roofers who would use GAF’s materials from bidding on the Board’s projects. 11 The parties filed cross motions for summary judgment. They agreed that there were no material facts in dispute and that the issue to be resolved was a question of law.

Following a hearing on the motions, the Circuit Court ruled in favor of the Board of Education in January 2011. GAF noted a timely appeal. It later filed a petition for writ of certiorari, which this Court granted before the matter was heard by the Court of Special Appeals. ⁵⁸⁴ Discussion As is evident, there is no dispute as to the underlying facts and, indeed, this case does not concern any particular procurement. 12 Accordingly, our decision turns entirely on how the relevant statutes should be construed — a matter on which we owe no special deference to a circuit court. See, e.g., Nesbit v. GEICO, 382 Md. 65, 72 , 854 A.2d 879 (2004).

GAF asserts that the Board of Education, in awarding contracts to TREMCO through the purchasing cooperative, failed to comply with ED § 5-112 by not developing specifications, advertising for bids, and competitively awarding contracts itself. GAF further argues that the exception in ED § 5-112(a)(3) for purchases of “goods and commodities” through purchasing cooperatives does not apply because roofing services are not a “good” or “commodity.” It contends that installation of a roof is an “improvement” for which the Board of Education should conduct its own competitive bidding process under ED § 5—112(b). In support of this argument, GAF cites the general State procurement regulations that define “improvement” as “the construction, maintenance, and repair of any building, structure, or other public work now or hereafter constructed or acquired by the State or any State agency.” COMAR 21.01.02.01(B)(69). 13 Roof repair and replacement, it notes, are “construction, maintenance, and repair” of a building or structure. ⁵⁸⁵ The Board of Education disputes GAF’s reading of ED § 5-112(a)(3), arguing that roofing repair services could qualify as “goods or commodities.” It also points to the authority of the BPW and the IAC over school construction and the green light those agencies have given to its procurement of roofing services through the cooperative. Plain Meaning in Context Much has been made of the “plain meaning rule” in the briefs filed by the parties.

To be sure, plain meaning is a stalwart first step in our approach to statutory construction. 14 A preliminary matter, however, is to identify the statutory or regulatory language to be construed. Consider the well-known phrase “She loves me; she loves me not.” If one focuses only on the first clause, the plain meaning appears clear — no need for further exploration. Similarly, if one considers only the second clause, the meaning seems equally clear though quite different. But when the sentence is considered as a whole, there is ambiguity and one must know more than the language alone to discern its meaning.

Context and history matter. As this Court has said, “[t]he meaning of the plainest language is controlled by the context in which it appears.” 15 This Court has previously said that the competitive bidding provision of ED § 5-112 must be viewed in context. In Demory Bros., Inc. v. Board of Public Works, 273 Md. 320 , 329 A.2d 674 (1974), a potential contractor opposed the award of a school construction contract on the basis that the competitive bidding statute 16 precluded application of the prevailing ⁵⁸⁶ wage law to the procurement as the bidder who promised compliance with the prevailing wage statute had submitted a higher bid than the bidder who did not. This Court rejected that argument, reasoning that the competitive bidding statute could not be considered in isolation from other statutory provisions relating to school construction. 273 Md. at 327-29 , 329 A.2d 674 .

The Court also held that great weight should be accorded to the BPW’s and IAC’s interpretation of the public school construction statutes. Id. at 327 , 329 A.2d 674 . To assess GAF’s argument in this case; we must also consider ED § 5-112 in light of those agencies’ implementation of the school construction laws. Legislative History To place the competitive bidding statute for local board procurement in context, we take a brief detour into the history of the statutes relating to construction of local public schools.

That review reveals that the key statutes are the product of three waves of legislative concern that occurred at 30-year intervals. 1930s —Requirement of Locally-Conducted Competitive Bidding The Legislature first created a competitive bidding requirement for local school construction in 1933 when it enacted the predecessor of ED § 5-112. Chapter 151, § 59B, Laws of Maryland 1933, then codified at Article 77, § 59B. 17 It had the usual purposes of preventing favoritism and procuring construction at the lowest cost to the taxpayers. Board of Education v. Allender, 206 Md. 466, 475 , 112 A.2d 455 (1955). At that time, school construction was largely a county concern. ⁵⁸⁷ It was only during the post-World War II boom in school construction that the State first became involved in financing and overseeing public school construction.

A. Wilner, The Maryland Board of Public Works: A History (1984) at 95,103. At that time the Legislature authorized the sale of State bonds to assist the counties with school construction, but required that the financial assistance be contingent on the approval of the BPW. Id. In essence, the State lent its credit to local school systems to help finance local school construction and the BPW simply allocated the use of the State’s credit among the various jurisdictions.

The BPW was not further involved in the details of procurement or construction. 1970s —BPW Authority to Regulate Local School Construction This changed in the early 1970s. “In 1971 the State undertook a considerably expanded role in financing local school construction, and the [BPW] was assigned a much more active role in administering the program.” Wilner, supra, at 104. The Legislature created the Public School Construction Program and gave the BPW significant responsibility, enacting the predecessors of the statutes now codified at ED § 5-301 et seq. Chapter 624, Laws of Maryland 1971. The BPW was authorized to adopt “rules, regulations, and procedures” on a broad range of activities related to school construction. 18 Un ⁵⁸⁸ der that authority the BPW made the controversial decision to create the IAC by regulation 19 —a decision later affirmed by the General Assembly in statute.

The 1971 legislation also made the “authority, responsibilities, powers, and duties” of all State and local officials involved in school construction subject to the BPW’s rules and regulations. This trump card of the BPW currently appears at ED § 5—301(g)(1). 2000s —Extension of BPW Authority to Include Procurement and Financing Methods Approximately 30 years later, the General Assembly authorized greater reliance on procurement methods other than locally-conducted competitive bidding. In particular, in several instances it endorsed the use of collaborative purchasing methods as an alternative to competitive bidding. It also delegated additional authority to the BPW and IAC with respect to local school construction.

And it commissioned a comprehensive review of public school construction in Maryland. In 2002, the Legislature qualified the competitive bidding requirement in ED § 5-112. It amended that statute to specifically allow local boards of education to participate in intergovernmental purchasing organizations to purchase goods and commodities. Chapters 170, 171, Laws of Maryland 2002, codified at ED 5—112(a)(3). 20 The rationale for the amendment was that cooperative purchasing arrangements were likely to result in significant cost savings by reducing advertising and administrative costs and by allowing school systems to take advantage of volume discounts. 21 ⁵⁸⁹ Also in 2002, the Legislature created the Task Force to Study Public School Facilities (“Task Force”).

Chapter 288, § 5, Laws of Maryland 2002. 22 The Task Force conducted a survey that found that the estimated cost of bringing public schools up to current standards would be approximately $4 billion, of which $1.3 billion represented the cost of repairs and replacement of existing building systems. Final Report of Task Force to Study Public School Facilities (February 2004) at pp. 2-3. Several of the Task Force’s recommendations are relevant to the issue before us. The Task Force noted that many policy decisions had been delegated to the BPW and IAC; it recommended that those policy decisions be expressed in regulations subject to the State Administrative Procedure Act.

Task Force Report at pp. 43-46. The Task Force also recommended that local school systems be afforded the flexibility to use alternative financing methods for school construction and “to develop the procurement, contractual, and technical instruments that will meet State and local procurement requirements and bring the project to a successful conclusion.” Id. at 41. It also encouraged pooling by school systems in certain types of contracts, recommending that the State “distribute information on existing State purchasing contracts for school ⁵⁹⁰ furniture, equipment, and services that may be shared by local school systems.” Id. at 58. 23 The Legislature responded to the Task Force Report by adopting the Public School Facilities Act of 2004. Chapters 306, 307, Laws of Maryland 2004.

That legislation