Univ. of Md. v. MFE Inc./NCP Architects, Inc.

WILNER, Judge. This appeal concerns a dispute between the University of Maryland and a joint venture of architects (which' we shall hereafter refer to, collectively, as MFE) arising out of a procurement contract for architectural services. We granted ⁸⁹ certiorari to consider the narrow question of whether delivery to MFE of the procurement officer’s final decision by facsimile transmission (FAX) sufficed to commence the 30-day period allowed for filing an appeal to the State Board of Contract Appeals (BCA). In the course of our research on that issue, however, we discovered a more significant problem: the BCA had no subject matter jurisdiction over the claim.

BACKGROUND The relevant facts are undisputed. In September, 1981, the parties entered into a contract calling for MFE to provide plans and specifications for the renovation and expansion of the McKeldin Library on the University’s College Park campus. On May 4,1993—nearly 12 years later and after completion of the construction based on those plans and specifications—the University gave written notice to MFE that it was asserting a claim in the amount of $2,470,792 for certain delay and additional construction costs allegedly incurred by the University as the result of errors and omissions in MFE’s designs. Insofar as we can tell from the record, the University was not then holding any money owing to MFE under the contract.

It was not attempting, therefore, to set off its claim against funds otherwise due to MFE but rather was seeking to have MFE affirmatively pay the amount of the claim to the University. The letter informed MFE that it could file a response within 30 days. By letter dated June 4, 1993—the thirty-first day, as we count it—MFE, through its attorney, filed a response denying liability. 1 The attorney sent the response to the University “Via Facsimile and Overnight Mail” on her law firm’s stationery, which included the firm’s FAX number. By letter dated October 28, 1993, addressed to the attorney, the Director of the University’s Department of Procurement and Supply informed MFE that the State was entitled to ⁹⁰ indemnification for costs aggregating $2,043,735 due to MFE’s design errors and omissions.

The letter stated that it constituted the final action of the procurement officer and that the decision could be appealed to the BCA in accordance with Code of Maryland Regulations (COMAR) 21.10.04.06. The letter concluded with the statement, “If you decide to take such an appeal, you must mail or otherwise file a written notice of appeal with the Appeals Board within 30 days from the date you receive this decision.” The 15-page letter was sent to the attorney by FAX transmission from the Contract Litigation Unit of the Attorney General’s Office on October 29, 1993. The transmission produced a Transmission Result Report showing, among other things, a date of October 29, 1993, a time of 11:25 a.m., 15 pages, and a “Result” of “OK.” After the transmission was completed, a secretary in that unit called the attorney’s office and was informed by someone named Tina that the FAXed document had been received. She then wrote on the Transmission Result Report: “Called 10/29/93—11:35 a.m.—spoke to Tina.

It was received.” Not content to rely solely upon the FAX transmission, the Assistant Attorney General also sent a copy of the decision to the attorney by Federal Express on October 29. On December 8, 1993, upon a tracer request, one Deborah Constable, listed by Federal Express as being with the State Department of Transportation but identified otherwise as being a secretary in the Attorney General’s office, was informed by Federal Express that its records showed that the document was delivered to an L. Garett on November 1, 1993. The identity of Mr. or Ms. Garett is not revealed in the record before us, but it is undisputed that the document was, in fact, delivered to someone in the attorney’s office on November 1. That document, being a copy of the one FAXed on October 29, also ended with the statement that it constituted the final action of the procurement officer, that it could be appealed to the BCA in accordance with COMAR 21.10.04.06, and that, to take such an appeal, it was necessary to file a written notice with the BCA within 30 days “from the date you receive this decision.” ⁹¹ On November 29, 1993, the attorney sent a notice of appeal to the BCA.

The notice was sent by first class mail and was received by the BCA on November 30. On December 30, the University moved to dismiss the appeal on the ground that it was untimely. The University argued that the time for appeal commenced to run on October 29, when the Director’s final decision was transmitted to the attorney by FAX, and that the time elapsed on November 28. The BCA agreed with the University and dismissed the appeal.

It noted that the pertinent COMAR regulation (21.10.04.04D) requires that the procurement agency’s final decision be “furnished to the contractor by certified mail, return receipt requested, or by any other method that provides evidence of receipt” and held that the FAX transmission in this instance constituted a method that provided evidence of receipt. It observed that the record left no doubt that MFE had actual possession of the final decision on October 29 and that transmission of copies by FAX “has become an everyday event in the ordinary course of business” and was “accurate, reliable and meets all of the substantive tests as a method of furnishing the final decision to the contractor.” Both the Code and COMAR require that an appeal from a final agency decision denying a contract claim be filed within 30 days after receipt of the notice of final action. Rejecting MFE’s claim that the appeal should be regarded as having been filed when the notice was dropped in the mailbox on November 28, the BCA held that the appeal was actually filed on November 30 and was therefore two days late. On March 7, 1994, the BCA dismissed the appeal for lack of jurisdiction.

It confirmed that ruling on June 30, when it denied MFE’s motion for reconsideration. The Circuit Court for Baltimore County, on judicial review, reversed the BCA ruling, holding that the combination of FAX and telephone follow-up did not suffice to constitute a furnishing of the final agency decision by “any other method that provides evidence of receipt,” as required by COMAR 21.10.04.04D. The court concluded that the regulation did not ⁹² contemplate delivery by FAX because that method of transmission was not used when the regulation was adopted. DISCUSSION State procurement is governed by statute and regulation, and we therefore turned to them to determine whether the transmission of a final agency procurement decision by FAX suffices to commence the time for noting an appeal to the BCA.

To our surprise—and no doubt to the surprise of the parties, as neither of them has raised the issue—we discovered that the administrative BCA procedure created by statute does not apply to a claim such as this one—an attempt by a State agency to force a former contractor to pay over money not then being held by the agency under the contract. The statutes are contained in Maryland Code (1995 Repl. Vol.), State Finance and Procurement article, titles 11 through 17. Section 12-101 of that article vests general control over procurement in the Board of Public Works which, among other things, may set policy, adopt regulations, and establish internal operating procedures.

In accordance with that authority, the Board has adopted a set of procurement regulations; they are found in COMAR, title 21. Title 15, subtitle 2 of the State Finance and Procurement article. (§§ 15-201 through 15-223) sets forth a statutory framework for the resolution of procurement contract disputes. Those statutes deal with two kinds of disputes: (1) “contract claims,” which are defined in § 15-215(b) as claims that relate to a procurement contract, including claims about the performance or breach of the contract, and (2) “protests,” which are defined in § 15-215(c) as complaints relating to the formation of a procurement contract.

This case, of course, involves a contract claim, not a protest. Section 15-217, captioned “Initiation of protest or contract claim,” permits a bidder, prospective bidder, offeror, or prospective offeror to submit a protest. It allows only a “person who has been awarded a procurement contract” to file a contract claim. There is no provision in § 15-217 or, to our ⁹³ knowledge, in any other part of the subtitle, permitting the State unit to file either a protest or a contract claim.

It is not surprising that the law makes no reference to a State unit filing a protest, as there would ordinarily be no occasion for the unit to do so; it awards the contract. As we shall see, however, the omission to authorize contract claims by a State unit is significant, for both the Model Procurement Code developed by the American Bar Association, which was, in fact, used as a guide in the development of the Maryland procurement law, and the Federal Contract Disputes Act, which had been enacted and was available for use as a guide, provide for contract claims by governmental units. Section 15-217 commences the chronology of the administrative dispute resolution process. Section 15-218 sets forth the duties of the procurement officer when he or she receives a contract claim, ie., to review the claim, make a decision on it, and send the decision to the reviewing authority.

The reviewing authority may then approve, disapprove, or modify the decision of the procurement officer. Section 15-219 deals specifically with contracts for construction. That section also is written with particular reference to contract claims by contractors, not by the State. Section 15-220 permits a contractor to appeal the final action of a unit to the BCA within 30 days after receipt of the notice of a final action.

Section 15-221 sets forth procedures to be used by the BCA in adjudicating the appeal. Section 15-222 allows the BCA to award interest on money that it determines is due to the contractor under a contract claim. There is no provision for interest on money found to be due to the State. Finally, § 15-223 provides that a decision of the BCA is subject to judicial review in accordance with the Administrative Procedure Act (Md.Code, State Government article, title 10, subtitle 2).

Any party to the BCA decision, including the governmental unit, may seek such review. This whole statutory structure is established to deal with protests and contract claims, and, as we have noted, only a contractor—a “person who has been awarded a procurement ⁹⁴ contract”—is authorized to file a contract claim. § 15-217(a)(2). There is no statutory basis of BCA jurisdiction over a claim filed by anyone else, including the State unit. The legislative history of the procurement law indicates that that limitation was not inadvertent.

The practical origin of the current State procurement law was House Joint Resolution 19, adopted in the 1977 Session of the General Assembly. That Resolution, calling attention to the numerous bills that had been introduced dealing with purchasing and procurement, the various National and State groups and committees studying various aspects of State procurement policy, the fact that the American Bar Association had released for study a Model Procurement Code for State and Local Governments, and the need to establish a coordinated purchasing and procurement system, created a Purchasing and Procurement Policies Task Force (PPPTF). The stated objective of the PPPTF was to bring greater coordination, simplicity, and uniformity to State purchasing and procurement processes, to consolidate and integrate the existing diverse laws and regulations, and to recommend which processes should be in the law and which should be in regulations. The Task Force was to report by December, 1977.

The PPPTF made its first report in October, 1977, attaching a Preliminary Working Draft No. 1 of a comprehensive procurement statute. It noted that the draft was a tentative one and was based on proposals embodied in the Preliminary Working Paper No. 2, issued in June, 1977, by a Coordinating Committee of the ABA working on the development of a Model Procurement Code for State and Local Governments. The preliminary ABA Coordinating Committee proposal placed initial responsibility for resolving contract disputes on the purchasing officer or agency. Section 9-201 authorized that officer or the head of the unit to settle, pay, or adjust any “claim by or against, or controversy with, a contractor relating to a contract entered into by the [State].” (Emphasis added.) ⁹⁵ Section 9-202 directed the officer or unit to make, in writing, a final agency decision on the claim.

The purchasing officer’s decision was binding on the unit. The contractor, however, was given the right to sue in court and, pursuant to an optional provision providing for a BCA, to appeal to that board. See §§ 9-202, 9-301, and 9-401—9-404. It is clear from this draft that, although only the contractor could appeal from the purchasing officer’s decision, all claims arising from the contract—those initiated by the contractor and those initiated by the unit—were subject to the dispute resolution process.

The PPPTF preliminary working draft did not include any provision for a BCA. It called for protests over the award of procurement contracts to be resolved by the purchasing officer or the head of the purchasing agency, with the right of a bidder, prospective bidder, or offeror to appeal that decision to the circuit court. The only provision relating to contract claims was in proposed § 8-101, which directed that, “[pjrior to the institution of any action in a court concerning any contract, claim, or controversy,” the purchasing officer or the purchasing agency was authorized, subject to budgetary limitations or conditions imposed by regulation, to settle, compromise, pay, or otherwise adjust “the claim by or against, or controversy with, a contractor” relating to a contract, including a claim or controversy based on breach of contract, mistake, misrepresentation, or other cause for contract modification or rescission. Presumably, if any such claim, for or against a contractor, was not resolved at that level, either party could go to court.

In February, 1978, the PPPTF filed what it thought was its final report, enclosing a second draft of a procurement law. That draft was introduced into the 1978 Session as SB 748 and HB 1236. As introduced, it created an Office of State Procurement within the Department of General Services, to be headed by a Chief Procurement Coordinator. That Coordinator, rather than an agency purchasing officer, was authorized to compromise, pay, or adjust “a claim or controversy relating ⁹⁶ to a contract entered into by the State----” There was no provision in the bills for a BCA or any other administrative procedure beyond the authority of the Coordinator.

Presumably, therefore, if a claim by either the unit or the contractor was not resolved by the Coordinator, either party could file an action in court. The House Bill was not acted upon. The Senate passed the Senate Bill, but with substantial amendments to the dispute resolution provisions. Those amendments provided for initial resolution of contract disputes by the agency procurement officer, with the right of “a person aggrieved” by the final action of the agency to appeal to a BCA, which would have been created under the amendments.

Significantly, however, this process was commenced by a “timely demand,” which, in the case of contract disputes, could be made only by a “contractor.” The language substituted by the Senate, in proposed § 8-201, was “[u]pon timely demand ... by a prospective bidder, bidder or contractor....” That language was apparently taken from the final version of the ABA Model Code. Unfortunately, the Senate did not read the Model Code carefully. The language in question was used in § 9-101 of the Model Code with respect to bid protests, not contract claims. Section 9-103 of the Model Code, dealing with contract claims, extended to “controversies between the [State] and a contractor and which arise under, or by virtue of, a contract between them” and did not indicate who could, or could not, file a claim or demand.

The administrative process provided for in the Model Code encompassed any such “controversy” and was therefore not limited to claims filed by a contractor. By apparently lifting and substituting the limiting language used by the ABA with respect to bid protests and applying it to contract claims as well, the Senate framed the bill, for the first time, to exclude contract claims made by State units. The bill died in the House Appropriations Committee late in the Session. ⁹⁷ A more limited procurement law did pass in the 1978 Session. 1978 Md. Laws, ch. 418 created a BCA for the Department of Transportation and gave it jurisdiction over “all disputes other than labor disputes arising under a contract with the department, or as a result of a breach of a contract with the department.” Consistently with the approach taken in the PPPTF proposal, that language was broad enough to include contract claims by either party. Indeed,