Montgomery Park, LLC v. Md. Dep't of Gen. Servs.

MONTGOMERY PARK, LLC v. MARYLAND DEPARTMENT OF GENERAL SERVICES

Nos. 12-2022, 13-2022

Maryland Supreme Court ^[*]

February 24, 2023

Argued: October 3, 2022

Circuit Court for Baltimore City Case Nos. 24C20000887 & 24C20001565

Watts, Hotten, Booth, Biran, Gould, Eaves, Harrell, Glenn T., Jr. (Senior Justice, Specially Assigned) JJ.

OPINION

EAVES, J.

The dispute in this case arises from two decisions of the Maryland State Board of Contract Appeals ("the Board") that sustained two bid protests filed by Montgomery Park, LLC ("Montgomery Park"). In 2017, the Maryland Department of General Services ("DGS"), on behalf of the Maryland Insurance Administration ("MIA"), issued a Request for Proposal ("RFP") for office space. Although Montgomery Park was initially named the intended awardee, DGS, through its Procurement Officer, later cancelled the RFP before the award was presented to the Board of Public Works for approval. After cancelling the RFP for new office space, the Procurement Officer negotiated a renewal of MIA's existing lease at 200 St. Paul Place in Baltimore City.

In response to DGS's actions, Montgomery Park filed two separate bid protests- one relating to the Procurement Officer's decision to cancel the RFP, and a second one relating to the renewal of the existing lease between MIA and St. Paul Place (hereinafter referred to as "St. Paul Plaza" or "leased premise" as appropriate to the context). The Procurement Officer denied both bid protests. The Procurement Officer determined that the cancellation of the RFP complied with the applicable provisions of the State Finance and Procurement Article of the Maryland Code and the Code of Maryland Regulations ("COMAR"). With respect to the second bid protest, the Procurement Officer determined that Montgomery Park did not have standing to challenge the lease renewal, but even if it did, the lease renewal was negotiated pursuant to the provisions of State law that permit the renewal of an existing lease without soliciting other offers. Thereafter, Montgomery Park appealed the Procurement Officer's decisions to the Board, which overturned the Procurement Officer's decisions. The Board determined that the Procurement Officer's cancellation of the RFP and subsequent lease renewal violated Maryland procurement law. In a separate opinion, the Board concluded that Montgomery Park had standing to challenge the Procurement Officer's renewal of MIA's existing lease. Turning to the merits, the Board ruled that the Procurement Officer violated the procurement law by failing to document separately her reasons for determining that it was in the State's best interest to renew the lease with St. Paul Plaza.

DGS appealed the Board's two decisions to the Circuit Court for Baltimore City, which reversed the Board. Montgomery Park appealed the circuit court's decisions to the Appellate Court of Maryland (at the time named the Court of Special Appeals of Maryland).^[1] The Appellate Court affirmed the circuit court's rulings in a reported opinion.^[2]Montgomery Park petitioned this Court for a writ of certiorari, which this Court granted on June 3, 2022.^[3] Montgomery Park presents the following questions for our review, which we have rephrased as follows:^[4]

1. Did the Board err in determining that the Procurement Officer's decision to cancel the RFP for an office lease in connection with the relocation of MIA's headquarters was arbitrary and capricious?

2. Did the Board err in determining that Montgomery Park, as the intended awardee of the RFP, had standing to challenge the renewal of MIA's existing lease after the RFP was cancelled?

For the following reasons, this Court answers "yes" to both questions and shall affirm the judgment of the Appellate Court of Maryland.

I. BACKGROUND

A. Statutory and Regulatory Background

Before we discuss the particular facts and procedural background of this case, it is useful to provide an overview of Maryland procurement law.

Title 13 of the State Finance and Procurement Article of the Maryland Code and Title 21 of COMAR govern the solicitation and award of certain state contracts, including an agency's leasing of real or personal property as a lessee. State Ctr., LLC v. Lexington Charles Ltd. P'ship, 438 Md. 451, 503 (2014); Md. Code Ann., State Finance and Procurement Article ("SF") (1988, 2021 Repl. Vol.) § 11-101(n)(1).

"The procurement process begins with the procurement officer-the individual authorized by an agency to enter, administer, and make determinations and findings with respect to procurement contracts-who selects a procurement method and solicits bids for procurement." Brawner Builders, Inc. v. State Highway Admin., 476 Md. 15, 33-34 (2021) (citing SF § 11-101(p) (defining "procurement officer) and SF § 13-102 (permitting procurement officer to solicit bids)). Under COMAR 21.03.04.01, "[e]ach determination required by the State Finance and Procurement Article" or Title 21 of COMAR must be written and "[b]ased on written findings of, and signed by, the person who made the determination[.]"

After a bid is opened, but prior to an award, "if with the approval of the Board, a unit^[5] determines that it is fiscally advantageous or otherwise in the best interest of the State, the unit may cancel the invitation for bids, a request for proposals, or other solicitation[.]" SF § 13-206(b)(1); see also COMAR 21.06.02.02.02C(1) ("After opening of bid proposals but before award, all bids or proposals may be rejected in whole or in part where the procurement agency . . . determines that this action is fiscally advantageous or otherwise in the State's best interest.").^[6] Additionally, if a procurement officer "determines that renewal of an existing lease is in the best interest of the State, the procurement officer may negotiate the renewal without soliciting other offers." SF § 13-105(g); see also COMAR 21.05.05.02D ("When it is determined to be in the best interest of the State, the procurement officer may negotiate the renewal of an existing real property lease without soliciting other proposals.").

Title 15, Subtitle 2 of the State Finance and Procurement Article sets forth the statutory remedies for "dispute resolution." State Ctr., 438 Md. at 505. A bid protest is a "complaint relating to the solicitation or award of a procurement contract." COMAR 21.10.02.01B(2). "A prospective bidder or offeror, a bidder, or an offeror" may submit a protest to the procurement officer." SF § 15-217(a)(1); see also COMAR 21.10.02.02A ("An interested party may protest to the appropriate procurement officer against the award or proposed award of a contract[.]"). If the protestor is dissatisfied with the procurement officer's decision, they may appeal to the Board pursuant to COMAR 21.10.07.02.

Under SF § 15-223(a)(1), a decision of the Board is subject to judicial review in accordance with the Maryland Administrative Procedure Act ("APA"), Title 10, Subtitle 2 of the State Government Article ("SG") (1984, 2021 Repl. Vol.). Section 10-222(h) of the State Government Article provides the circuit court with the authority to take the following actions with respect to an agency decision:

(1) remand the case for further proceedings;

(2) affirm the final decision; or

(3) reverse or modify the decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision:

(i) is unconstitutional;

(ii) exceeds the statutory authority or jurisdiction of the final decision maker; (iii) results from an unlawful procedure;

(iv) is affected by any other error of law;

(v) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; [or]

* * *

(vii) is arbitrary or capricious.

Parties aggrieved by a final judgment of the circuit court may appeal to the Appellate Court of Maryland. SG § 10-223(b)(1).

B. Factual Background

In August 2017, MIA's headquarters was located at 200 St. Paul Place, in Baltimore City, Maryland. MIA was a tenant under an existing lease with St. Paul Plaza, which was set to expire in May 2019, subject to a five-year renewal option and a six-month holdover period. Based upon concerns about parking options for its employees, MIA requested that DGS issue an RFP for new office space. Approximately twelve vendors submitted proposals, including Montgomery Park and St. Paul Plaza. After the submission period closed, DGS's Procurement Officer, Wendy Scott-Napier (hereinafter referred to as "the Procurement Officer" or "Ms. Scott-Napier") evaluated and listed each proposed location in ranked order. Montgomery Park came in first place, while St. Paul Plaza came in second. Accordingly, Ms. Scott-Napier notified Montgomery Park that it was the recommended awardee for the procurement. DGS chose Montgomery Park over St. Paul Plaza because "[c]urrently . . . not all MIA employees have access to free parking. Montgomery Park operates a surface parking lot where all MIA employees would have access to free parking." ^[7]

Following DGS's selection of Montgomery Park as the intended awardee, representatives of DGS, MIA, and Montgomery Park met in November 2018 to discuss the logistics of the move from the St. Paul Plaza location to Montgomery Park. Montgomery Park left that meeting "with an understanding that the lease was to be presented to the Board of Public Works in January 2019." However, on March 12, 2019, DGS informed Montgomery Park that the MIA lease would be presented to the Board of Public Works for approval on April 24, 2019.

During the same time in which DGS and Montgomery Park were negotiating the terms of a new proposed lease, Ms Scott-Napier was also attempting to negotiate a shortterm lease extension with St. Paul Plaza to provide...