94.09

Opinion No. 94-9

An opinion has been requested as to whether the provisions of HB 1467, codified as Article 40A, §3-110, Annotated Code of Maryland, will apply to prevent a Corporation (the Corporation or the Requestor) from bidding on a contract to implement an information management program for the Department of Public Safety and Correctional Services (DPSC), if it participates in specification development activities after the effective date of the Law. We advise that §3-110 of the Law would apply to prevent the company from bidding on a subsequent procurement where it assists in developing the specifications for the project after October 1, 1994.

The project involved in this request is one component of the Offender Based Management Information System (OBMIS), an integrated comprehensive information system being developed by the Department of Public Safety and Correctional Services (DPSC) to replace its currently decentralized system with one that integrates all information collected from arrest through pre-trial or post-conviction supervision in the community. The procurements involved here relate to the Community Supervision component, the second aspect of the program, which will be required to build on and be integrated with the Arrest Booking System currently under way. As is apparently often the agency's practice in carrying out information management programs, the project entails two procurements, the first involving project design and the second the implementation.

In the Invitation for Bids (IFB) for the design contract the agency describes generally what it anticipates will be required for this component of OBMIS. The design contractor is to review the functional way the agency operates in its community supervision program, develop a conceptual design plan for how the program should work, and prepare a systems architecture plan that includes a detail design of the program, including equipment requirements to create the system reflected in the conceptual design. Though the agency is free to reject recommendations and rework the documents, agency managers advise that the product result of the design contract will form the significant basis for the procurement documents to be used in acquiring a vendor to perform the implementation part of the Community Services component of OBMIS. The Requestor agrees that its activities will result in a work product that would form a substantial part of the specifications for the subsequent procurement.

Procurement for the design of the Community Services component was conducted at the end of fiscal year 1994 and as the 1994 session of the General Assembly was concluding (closing date April 11, 1994). The Invitation for Bids was mailed to potential bidders on April 5, 1994 and the pre-bid proposal conference was conducted on April 12, 1994. In early May the Corporation submitted one of five bids received on the project. According to the Department, its bid received the highest technical score and was also the lowest financial bid. It was therefore notified on May 12, 1994 that it was the selected bidder. After Board of Public Works approval on June 22, 1994, the contract was finalized by signature by the State on June 24, 1994.

The contract is a firm fixed price contract and includes provision of services by several subcontractors, and provides for initial interviews with agency personnel regarding the current information systems. It further calls for work to be completed in several stages with milestone payments to be paid upon completion and submission of this and other defined deliverables, with the anticipated completion and delivery of the Conceptual Design and System Architecture Plan in January 1995. The design contract is entirely separate from the implementation contract and there is no legal requirement that there even be an implementation contract. We are advised that as of the time when this request was heard, the Corporation was in the process of completing its interviews. No deliverables have been provided or requests for milestone payments made, and we agree that these work program activities prior to October 1, 1994 are not impacted by the new Law.

The question here is application to this situation of the provisions of House Bill 1467 enacted in the 1994 session of the General Assembly and codified as §3-110 of the Maryland Public Ethics Law (Article 40A, §3-110, Annotated Code of Maryland, the Ethics Law). This legislation resulted from the activities of a legislative Joint Task Force on Maryland's Procurement Law established in the Fall of 1993 to review Maryland's procurement law, including considering what additional safeguards were warranted to prevent abuse or the appearance of improper influence within the procurement system. The Task Force received testimony in several public meetings regarding issues raised in several recent State procurements, and, with the goal of determining whether there are adequate safeguards against improper interference in the procurement process, examined the relevant provisions of the Ethics Law and procurement law. It transmitted a Report to the presiding officers of the House and the Senate on February 17, 1994 addressing the need for increased oversight in the preparation of bid specifications and requests for proposals. The Report also addressed various ethics aspects of the procurement process, including conflicts of interest that arise when nongovernment participants in the development of specifications and requests for proposals are not precluded from participating in the procurement and may thus be in a position to benefit their own interests.

The Task Force Report included draft legislation to amend the Ethics Law (HB 1467 and SB 524), which was introduced in February 1994 and considered in public hearings during the legislative session. Originally drafted to also make all participants in specification drafting public officials subject to all provisions of the Ethics Law (including financial disclosure), the bills were narrowed by an amendment (in part at the suggestion of Ethics Commission staff) to provide that

if an individual assists an executive agency in the drafting of specifications, an invitation for bids, or a request for proposals for a procurement, the individual or a person that employs the individual may not:

1) submit a bid or proposal for that procurement; or

2) assist or represent another person, directly or indirectly, who is submitting a bid or proposal for that procurement.

These bills were passed by the General Assembly during the last week of the session. HB 1467 was signed by the Governor on May 26, 1994, with an October 1, 1994 effective date (the date now generally used for the start of new legislation). The Ethics Commission and its staff immediately began to consider implementation of this legislation and undertook meetings and reviews with various persons and groups both in and out of government, including representatives of the Chamber of Commerce, lobbyists and procurement lawyers, and the Office of the Attorney General. A memorandum generally describing the legislation and addressing some expected questions regarding it was prepared and distributed by the Commission at the end of August.1

The newly enacted §3-110 of the Ethics Law prohibits an individual (or the employer of an individual) who assists an executive agency in preparation of certain procurement documents from bidding on or assisting in preparing a bid on that procurement. The initial question in applying this provision is whether the activity at issue constitutes "assisting" in the drafting of the documents as contemplated by the provision. We addressed this issue in our preliminary consideration of the application of this section. In particular, in the staff memorandum resulting from our review, the view was expressed that generally, a potential vendor could respond to requests for information, submit unsolicited information, or meet with State representatives to discuss product information or its views regarding specifications at a preliminary stage in the process. It was suggested, however, that when a vendor or its employee takes a role, either individually or as a member of a group, in connection with the actual specifications drafting or development process then the provision would be applicable.

In the situation here, the attorney for the Corporation indicates that the company accepts that development of the end product involved in the design contract in this particular situation would be viewed as "assisting" in specification drafting under the Law. In our view preliminary work being done under the contract as of the date of our consideration of this matter would not necessarily constitute assistance that would trigger the prohibition as to the subsequent procurement. This also would probably be true for some of the other survey and study activities contemplated as part of the contract. However, the contract also calls, in part, for definition of the operational and performance requirements for the system, as well as a description of required hardware and software. We agree with the Corporation that development of the full work product would be an activity that would constitute "assistance" in specifications drafting as contemplated in §3-110.

We therefore advise the Corporation and the agency that if specification assistance activities take place after the October 1, 1994 effective date of §3-110, then this section of the Ethics Law will serve to preclude the Corporation from bidding on the implementation contract that relies on this activity. We recognize that the company believes that it has certain rights that are impacted by application of this provision. As a practical and legal matter, however, we note that the new Law does not impact on or prohibit the Corporation from completing its current contract. Through its attorney, the Corporation has presented its argument and legal cases supporting its position, and states that it believes it was misled by the State at its pre-proposal conference as to its eligibility for future work. We have reviewed the cases and conclude that they involve transactions and legal provisions very different from the circumstances here. In our view, none of them presents a fact situation or legal principles that apply to the circumstances presented here or that require a different conclusion. This is particularly so in view of the history of this legislation and the stated public purpose of ensuring the integrity of the procurement process.

To the extent there could be any doubt here, we believe ourselves to be obligated by the Ethics Law's mandate that the Law is to be liberally construed to accomplish its purposes, and note that the Corporation does not dispute that the purpose of the new Law is to prohibit this type of activity. Under all of these circumstances, we conclude that §3-110 of the Ethics Law prohibits the Corporation's participation as a bidder after October 1, 1994 in a contract to implement the Community Services component of OBMIS if, after October 1, 1994, it engages in activities under its existing design contract that constitute assistance to DPSC in preparation of specifications for the procurement action for implementation of the project.

Mark C. Medairy, Jr., Chairman
   Michael L. May
   Robert J. Romadka

Date: November 1, 1994

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1 #032; Memorandum, John E. O'Donnell, Executive Director, State Ethics Commission, to procurement agencies, vendors and lobbyists, August 30, 1994.