Md. needs better bidding practices

This winter, Gov. Larry Hogan made a critical move toward improving how Maryland selects its contractors. Faced with several questionable contracts up for approval by the Board of Public Works, the governor joined with Comptroller Peter Franchot to reject proposals that seemed too expensive or failed to undergo serious competition.

Good governance should not be a partisan issue; still, it is refreshing to see a Democrat and Republican working together to promote sound procurement practices. For example, it is a lot easier for Maryland residents to get a good deal when there are several bidders competing for a contract. That’s why state agencies are expected to foster as much competition as possible. State procurement practices also include quality standards for contractors, including modest guarantees for decent working conditions for contract workers. When agencies follow smart procurement practices, it helps ensure that our state government actually serves its residents.

Some agencies are better at this than others. As Michael Dresser pointed out in this paper, one of the biggest offenders for sending up dubious deals has been the University System of Maryland. In 1999, state lawmakers exempted the university system from having to follow most of the state’s procurement law. It may be time to question the wisdom of that decision.

A recent example should illustrate the problem. In April 2013, the University of Maryland put out a request for developers interested in building a hotel on campus next to the Rossborough Inn. The University received 10 responses, including companies with specific experience in university hotels.

One of the responses was a bid from Southern Management Corporation (SMC), which had no experience developing university hotels, but had an existing relationship with the University. Instead of proposing a hotel in the location specified in the bid, SMC proposed a development on an entirely different parcel of land. The company admitted that their proposal was “not directly responsive to the [solicitation].”

One might think that being nonresponsive to the University’s request might disqualify SMC from moving on to the next round of bidding. But that is far from what happened. Instead of allowing any of the developers who properly responded to the solicitation to move forward with the proposal, the University said that SMC could build the hotel where it wanted.

What happened here? Did the university realize that the second parcel was actually a better place for the hotel? If so, why didn’t they put out another solicitation to get the best offer on that piece of land? For some reason, they must to have decided they didn’t want to allow competition to build the hotel on that parcel.

To make matters worse, the university implied to the public that they did use a competitive process to select the developer. During the state approval process, the university system administration sub- mitted documents to the Maryland Office of Planning stating that “the [solicitation] resulted in a plan” to sell the development to the UMCP Foundation, which would lease the land to SMC to develop the hotel.

However, the solicitation did not envision that transaction at all, nor did it propose a hotel on that piece of land. So how could the solicitation have resulted in this plan? Their misleading statement suggests one of two things: Either the university system administration doesn’t really know what its member institutions are doing, or else they were trying to cover up a sole-source bid by pretending they had used a competitive process. Either way, this project demonstrates a serious accountability problem at the university.

Governor Hogan’s actions are very welcome; however, more action will be necessary to create a culture of accountability in Maryland. For one, the University of Maryland, currently funded by taxpayers at over $4 billion a year, should no longer be exempted from statewide requirements for fair procurement. For another, lawmakers should revisit their decision to exempt other agencies from state procurement law, such as the Department of Business and Economic Development. Finally, citizens should hold government at all levels accountable for following sound procurement practices. After all, it’s our tax dollars they’re playing with.