In a recently reported decision, the Court of Special Appeals considered a challenge to a State agency’s consideration of the presence of a project labor agreement (“PLA”) in the evaluation of contract proposals. Balfour Beatty Construction v. Maryland Department of General Services, No. 957, Sept. Term, 2013 (Md. Ct. Spec. App. Dec. 2, 2014). The Court held that (i) a PLA specification in a single procurement solicitation, without more, does not first require rulemaking under the Maryland Administrative Procedure Act (“APA”), and (ii) the record before the Maryland State Board of Contract Appeals (“MSBCA”) contained substantial evidence to support its decision that the PLA specification was reasonably related to the needs of the State while encouraging maximum practicable completion.
Background
In late 2011, the Maryland Department of General Services (“DGS”) issued a request for proposals (“RFP”) to coordinate the construction of a new detention facility in Prince George’s County. Under the RFP, the DGS procurement officer was to recommend contract award to the responsible offeror whose proposal was determined to be the most advantageous to the State, considering price and the evaluation of technical factors. One of the factors to be considered was the presence of a PLA. The RFP did not require the use of a PLA, and the PLA was ranked as the sixth most important evaluation factor (out of a total of seven).
Several contractors filed a protest with DGS that challenged the inclusion of the PLA evaluation factor. The protest argued that the inclusion of the PLA factor in ranking proposals established a procurement preference for organized labor and constituted an unprecedented change in public policy that mandated formal rulemaking under the APA. The protest also asserted that the PLA evaluation factor restricted competition in violation of Maryland procurement law.
DGS denied the protest. DGS pointed to the benefits of a PLA, including its guarantees against strikes or similar disruptions, procedures for prompt resolution of labor disputes, and mechanisms for labor-management cooperation. The Protesters appealed to the MSBCA. In a decision dated November 16, 2012, the MSBCA denied the appeal. The MSBCA concluded that the consideration of a PLA as an evaluation factor in a single procurement had no general application or future effect and, therefore, did not amount to a new regulation subject to the formal rulemaking procedures required by the APA. The MSBCA also found that the PLA evaluation factor was not unduly restrictive. The Circuit Court for Baltimore City affirmed the decision of the MSBCA in a decision dated July 17, 2013. The Protesters then appealed to the Court of Special Appeals.
Decision
On review, the Court of Special Appeals affirmed the judgment of the Circuit Court. The Court concluded that the MSBCA was presented sufficient evidence to conclude that the one-time inclusion of a PLA evaluation factor in a single RFP did not constitute rulemaking under the Maryland APA. The Court explained that requiring State agencies to amend their regulations each time they include a new or novel bid specification would not only constitute an unnecessary and costly burden on the State, but would have a chilling effect on the State’s ability to take advantage of innovative technologies and services. The Court also determined that there was ample evidence in the record for the MSBCA to find that the inclusion of a PLA evaluation factor was reasonably related to the needs of the agency, and not unduly restrictive of competition (as the Court pointed out, all seven proposals to the RFP contained a PLA).
Use of PLAs in Future State Procurements
What does the Court’s decision mean for the future use of PLAs in government procurements? Probably not much—at least in the immediate future. There is no requirement under Maryland procurement law that PLAs be used as an evaluation factor in State procurements. And although the Court confirmed that a procuring agency may consider the use of PLAs in the evaluation of proposals, until the General Assembly or Board of Public Works says otherwise, the inclusion of a PLA in the procurement selection process will remain a matter of agency discretion.
Contact us regarding Government Procurement and Labor matters:
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