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Maryland State Board of Contract Appeals Holds Agency May Reject All Bids And Re-Advertise The Solicitation If In The State’s Best Interest, But Requires Competitive Bidding For Extension to Existing Contract

In Appeal of Cigna Corporation, MSBCA 2910, the Maryland State Board of Contract Appeals considered two issues on appeal: 1) whether the State’s properly rejected all bids and re-issued solicitations because of deficiencies in the originally requested pricing information and 2) whether the State’s extension of the contract to the incumbent vendor, while the bid was reissued, should have been subject to competitive bidding. The MSBCA held that the State may reject all bids during the procurement process when the rejection is in the State’s best interest; however, the MSBCA found the extension of a contract, past the terms of the contract, to be impermissible under Maryland law.

In this matter, the Maryland Transit Administration (“MTA”) issued three Requests for Proposals (“RPFs”), seeking administrative services for management of health care benefits. The MTA erroneously released the RFPs without the authorization of the Department of Budget and Management. Pursuant to the RFPs, Appellant Cigna Corporation and CareFirst of Maryland, Inc., the incumbent vendor, submitted proposals pursuant to the RFPs. MTA subsequently requested submission for Best and Final Offers (“BAFOs”); however, the BAFOs forms used by the MTA were simplistic compared to the nature of the proposals. Specifically, the forms failed to provide space to indicate the following: total price, any pricing information for the two options years of the contract, discount rates, and other substantive information. Despite the dearth of substantive information provided in the BAFOs, the MTA awarded the project to Cigna.

CareFirst appealed the decision to the MSBA (MSBCA No. 2903); however, before the MSBCA heard the appeal, the MTA voluntarily rejected all bids, stating that it was in the State’s best interest to reject all proposals and re-advertise. As the re-advertisement and re-bid process could not be completed before the MTA employees’ health insurance lapsed, the MTA requested that a one-year extension be provided to the existing CareFirst contract, which was subsequently approved by the Board of Public Works. Cigna appealed on both issues.

The MSBCA determined that the rejection of all bids lay within the discretion of the agency and permissible, as long as the basis for the rejection of all bids is fiscally advantageous or otherwise in the State’s best interest. The opinion acknowledges the late timing of the rejection, as Cigna had already been awarded the project, but found the need for greater clarity in the pricing sheets a prerequisite necessary to ensure a fair and thorough procurement process.

Conversely, the MSBCA held the MTA and Board of Public Works’ approval of a one-year extension to be unlawful. The expiration of the original contract, without any options for renewal, precludes the MTA from simply agreeing to an extension. The MSBCA determine this action to undermine the entire procurement process for governmental contracts. As such, the MSBCA rendered the one-year contract extension between MTA and CareFirst null and void.

For more information on procurement, bid protests, or appeals to the MSBCA, contact Michael Siri at (410) 583-2400 or Siri@Bowie-Jensen.com.

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