The Maryland State Board of Contract Appeals addressed the State’s power to issue an “emergency” procurement pursuant to COMAR. Trinity Services Group, MSBCA 2917, 2931 & 2935. This matter arose out of the Maryland Department of Public Safety and Correctional Services (“DPSCS”) issuance of a RFP for a private vendor to provide food services to certain correctional facilities in the State of Maryland. The presumptive awardee, Crystal Enterprises, Inc, had several problems with its proposal including the failure to provide a performance bond and an exceptionally low price. Crystal had secured a letter from its bonding agent that vouched for its ability to secure a two million dollar performance bond, but did not actually supply the bond as required by the solicitation. Also, Crystal’s proposal was more than 50 million dollars less than the incumbent contractor. At the Board of Public Works hearing, State Comptroller Franchot expressed serious reservations about the low price but commented that the presence of a performance bond would provide a measure of protection for tax payers from a default. The DPSCS confirmed the existence of a performance bond even though Crystal had yet to provide one.
Crystal immediately ran into problems on the contract and because it had priced its proposal so aggressively it could not overcome those issues without incurring negative cash flow. Crystal threatened to stop work unless it received price concessions. Because a stop work would have meant the cessation of food services to the correctional facilities, DPSCS terminated the existing agreement and issued an emergency short term six month contract to Crystal that increased the contract price and obviated the need for a performance bond. It then planned to reissue the solicitation. The incumbent contractor protested.
The decision by the MSBCA primarily focused on the COMAR definition of emergency. “Emergency” is defined by COMAR 21.01.02.01B(36) as “a sudden and unexpected occurrence or condition which agency management reasonably could not foresee that requires an action to avoid or to mitigate serious damage to public health, safety or welfare.” (Emphasis added). The MSBCA noted that COMAR, unlike the dictionary, defined “emergency” to include a lack of foreseeability in its meaning. It noted that a hurricane can be both foreseeable and an emergency but for whatever reason, COMAR seemed to restrict the definition of emergency to only those situations that were truly unforeseen. In this instance, it was clear to all that Comptroller Franchot foresaw problems with this contract as he flagged it on the record at a BPW hearing. However, the MSBCA reasoned that no one foresaw the failure by Crystal to procure a performance bond as evidenced by DPSCS’s erroneous representation that Crystal had procured a performance bond, and thus this failure created the “emergency” as defined by COMAR. Consequently, this “emergency” procurement was upheld.
The matter has been referred to the attorney general’s office for investigation. For further information on bid protests, contact Matt Hjortsberg at (410) 583-2400 or at Hjortsberg@bowie-jensen.com.