Salisbury University v. Joseph M. Zimmer, Inc.

EYLER, JAMES R„ J. The primary question presented by this case is whether COMAR 21.11.03.14, a regulation issued by the Board of Public Works (“BPW”) is ultra vires because it conflicts with Maryland Code (2009 Repl.Vol.), §§ 15-215 and 15-217 of the State Finance & Procurement Article (“F.P.”). We shall answer the question in the affirmative. Facts and Proceedings The conflict in this case arises out of a bid solicitation by Salisbury University, appellant, for a contractor to replace a chiller at the University. Joseph M. Zimmer, Inc., appellee, was one of several contractors to submit a bid.

Appellee submitted the apparent low bid. Appellant later rejected the bid, however, because the bid requirements set a minority business entity (“MBE”) participation goal of 10%, and after reviewing appellee’s bid, appellant’s procurement officer determined that the subcontractor that appellee proposed to use to meet the MBE goals was not certified as a minority business. Thus, appellant concluded that appellee’s bid was not responsive to the bid requirements. Believing it had met the MBE goal, appellee filed a bid protest with appellant on April 1, 2009.

By letter dated May 13, 2009, appellant responded to appellee’s bid protest, reiterating in detail its reasons for deeming the bid non-responsive. Appellant refused to issue a final decision, however, taking the position in its May 13, 2009 letter that, under COMAR 21.11.03.14, appellee had no right to protest the rejection of its bid. Appellee appealed appellant’s rejection of the protest to the Maryland State Board of Contract Appeals (“MSBCA” or “Board”). Appellant moved to dismiss the appeal on the ¹⁶⁶ ground that, under COMAR 21.11.03.14, a protest could not be filed to challenge MBE issues, consequently, the Board lacked jurisdiction to consider the protest.

The Board agreed with appellant and dismissed the appeal. Appellant then awarded the contract at issue to another contractor, who completed the work. Appellee filed a petition for judicial review in the Circuit Court for Baltimore County, which reversed the Board. Appellant then noted an appeal to this Court.

Like the circuit court, we hold that the regulation is invalid. Standard of Review In reviewing administrative decisions, we bypass the judgment of the circuit court and look directly at the administrative decision. White v. Workers’ Comp. Comm’n, 161 Md. App. 483, 487 , 870 A.2d 1241 (2005); see, e.g., Gigeous v. E. Corr.

Inst., 363 Md. 481, 495-96 , 769 A.2d 912 (2001) (On appeal, “we reevaluate the decision of the agency, not the decision of the lower court.”). In this case, we review the Board’s legal decision concerning the regulation at issue. “In contrast to the deferential review accorded to an agency’s factual findings, questions of law receive no deference on review; we are not bound by the agency’s interpretation of law.” Mayer v. Montgomery County, 143 Md.App. 261 , 794 A.2d 704 (2002) (citations omitted). In fact, “a reviewing court is under no constraints in reversing an administrative decision which is premised solely upon an erroneous conclusion of law.” Id. (citations omitted).

Discussion There are essentially two issues on appeal: (1) whether this case should be dismissed as moot, and (2) whether COMAR 21.11.03.14 is valid. Before addressing these issues, and ultimately answering each in the negative, we engage in a background discussion of the relevant legal framework surround ¹⁶⁷ ing state procurement contracts, followed by a summary of the parties’ contentions. 1. Background Discussion Title 11 of the State Finance & Procurement Article, F.P. §§ 11-101 to 11-306, deals with general procurement law. Section ll-101(m) and (n) define “procurement” and “procurement contract,” respectively, very broadly: (m) Procurement. — (1) “Procurement” means the process of: (i) leasing real or personal property as lessee; or (ii) buying or otherwise obtaining supplies, services, construction, construction related services, architectural services, engineering services, or services provided under an energy performance contract.

(n) Procurement contract. — (1) “Procurement contract” means an agreement in any form entered into by a unit for procurement..... Title 12, Subtitle 1, F.P. §§ 12-101 to 12-109, deals specifically with “State Procurement Organization.” The BPW has general control over procurement, including the authority to adopt regulations. See § 12-101(b)(ii). Title 13, F.P. §§ 13-101 to 13-402, deals with source selection and the formation of procurement contracts, neither of which is relevant to our analysis in this case.

Procurement preferences, including the MBE program, are discussed in Title 14, F.P. §§ 14-101 to 14-505. The MBE program in particular is discussed in Subtitle 3, F.P. §§ 14-301 to 14-309. Notably, subject to one irrelevant exception, 1 ¹⁶⁸ Title 14 does not include dispute resolution procedures for MBE-related conflicts. Section 14 — 301(f) defines an MBE as follows: (f) Minority business enterprise. — (1) “Minority business enterprise” means any legal entity, except a joint venture, that is: (i) organized to engage in commercial transactions; (ii) at least 51% owned and controlled by 1 or more individuals who are socially and economically disadvantaged; and (iii) managed by, and the daily business operations of which are controlled by, one or more of the socially and economically disadvantaged individuals who own it.

A “socially and economically disadvantaged individual” is defined in § 14-301 as “a citizen or lawfully admitted permanent resident of the United States” who either (1) falls into one of the following minority groups: African American, American Indian/Native American, Asian, Hispanic, the physically or mentally disabled, or women; or (2) is “otherwise found by the certification agency to be a socially and economically disadvantaged individual.” § 14 — 301 (i) — (ii). Subsection (a) of F.P. 14-303 gives the BPW authority to, inter alia, adopt regulations implementing Subtitle 3: (a) In general. — (l)(i) In accordance with Title 10, Subtitle 1 of the State Government Article, the Board shall adopt regulations consistent with the purposes of this Division II to carry out the requirements of this subtitle. F.P. § 14 — 303(a)(i). Pursuant to its authority under F.P. 14-303(a), the BPW adopted COMAR 21.11.03.14, which provides as follows: .14 Protests.

A protest under COMAR 21.10.02 may not be filed: A. To challenge a decision whether an entity is or is not a certified MBE; or B. Concerning any act or omission by a procurement agency under this chapter. ¹⁶⁹ Subsection (b) of F.P. 14-303 then sets forth “required regulations,” ie., regulations that BPW must promulgate. F.P. §§ 14-303(b)(l)-(15). Regulations concerning MBE procurement dispute resolution are not among those required under subsection (b). Title 15, F.P. §§ 15-101 to 15-226, dedicates an entire subtitle, Subtitle 2, to dispute resolution for procurement contracts generally (ie., not MBE-specific contracts).

See F.P. §§ 15-201 to 15-226. Section 15-210 directs the MSBCA to “adopt regulations that provide for informal, expeditious, and inexpensive resolution of appeals before the Appeals Board.” 2 Part III of Subtitle 2, F.P. §§ 15-215 to 15-225 is dedicated to “Procedures for Dispute Resolution.” The following sections of that Part are relevant to our analysis below: § 15-215. Definitions. (A) In general. — In this Part III of this subtitle the following words have the meanings indicated.

(c) Protest. — (1) “Protest” means a complaint that relates to the formation of a procurement contract. (2) “Protest” includes a complaint about: (i) the qualifications of a bidder or offeror; or (ii) the determination of the successful bidder or offer- or. § 15-217. Initiation of protest or contract claim. (a) In general. — (1) A prospective bidder or offeror, a bidder, or an offeror may submit a protest to the procurement officer.

(2) A unit or a person who has been awarded a procurement contract may submit a contract claim to the procurement officer. ¹⁷⁰ Notably, F.P. § 15-202 expressly exempts “contracts] for architectural services or engineering services” from the ambit of Subtitle 2. Those are the only exemptions mentioned. Thus, except where expressly exempted, Subtitle 2 of Title 15 covers all procurement contracts, including MBEs. 2. Parties’ Contentions Appellee argues primarily that COMAR 21.11.03.14 (providing that, if the bidder is denied a contract because its MBE program does not pass muster, the bidder cannot file a bid protest) is ultra vires because it is in direct and irreconcilable conflict with F.P. §§ 15-215 and 15-217 (providing conjointly that a bidder may file a bid protest to complain about the qualifications of the bidder or the determination of the successful bidder).

Appellant essentially makes four arguments in response to appellee’s ultra vires argument. First, appellant highlights the preamble to Maryland’s first MBE law, which was enacted in 1978 and codified in Md. Ann.Code Art. 41 § 483 (1978 Repl.Vol.), titled “Governor-Exec, and Admin. Depts.” The preamble notes that the MBE law does not create a private right of action with respect to the State’s implementation of the law, but rather is a “policy direction to the