Relating to Real Estate
It Takes a Lot to Reject a Procurement Officer’s Decision
- Spoiler alert: The Maryland Insurance Administration (MIA) is still a tenant at 200 St. Paul Place in St. Paul Plaza in downtown Baltimore.
- Fun facts:
1. The insurance companies regulated by the MIA pay the expenses of the MIA.
2. After a bid for certain state contracts, including for the lease of real property, a procurement officer may cancel a request for proposal (RFP) before the award if the procurement officer determines that cancellation “is fiscally advantageous or otherwise in the best interests of the State.”
3. A procurement officer who “determines that renewal of an existing lease is in the best interest of the State ... may negotiate the renewal without soliciting other offers.”
The MIA entered into a lease with St. Paul Plaza for space at 200 St. Paul Place in Baltimore City with an original term that extended to May 3, 2019. The lease included a five-year renewal option and a six-month holdover period. Based on its concerns about parking, the MIA requested in August 2017 that the Maryland Department of General Services (DGS) issue an RFP for new office space. Twelve buildings responded to the RFP, and Wendy Scott-Napier, the DGS procurement officer, selected Montgomery Park.
The DGS and Montgomery Park spent 11 months negotiating a lease. By the terms of a summary prepared by the DGS, the State would save $337,705.27 each year, or 10 times that over the 10-year lease term, factoring in the moving costs and a move-in allowance. Additionally, all MIA employees would have free parking at Montgomery Park, which was not the case at St. Paul Plaza. Montgomery Park thought that the DGS was going to present a lease to the Maryland Board of Public Works (BPW) for approval in January 2019.
The DGS had discussions with St. Paul Plaza starting in December 2018, at first about renewing the current lease for one year. St. Paul Plaza pressed for a longer renewal of its lease.
On April 19, 2019, Ms. Scott-Napier wrote to MIA Commissioner Al Redmer and the DGS to inform them about the St. Paul Plaza lease renegotiation discussion. Four days later, the day before the lease between Montgomery Plaza and the MIA was to be submitted to the BPW for its approval, Commissioner Redmer asked DGS to cancel the procurement of the MIA lease. On the same day, Ms. Scott-Napier wrote to Montgomery Park cancelling the RFP. Two days later, Ms. Scott-Napier wrote to St. Paul Plaza about discussing a lease with the MIA. On January 8, 2020, the BPW approved the MIA’s request to renew its lease with St. Paul Plaza.
Montgomery Park filed two protests. The first protest, filed April 19, 2019, alleged that the cancellation of the procurement was arbitrary, capricious, and unreasonable. Ms. Scott-Napier denied that protest. The second protest, filed July 1, 2019, challenged the renewal of the lease with St. Paul Plaza. Ms. Scott-Napier denied that protest as being untimely and because Montgomery Park did not have standing.
On appeal, the Maryland State Board of Contract Appeals (the Board) sustained the first protest, finding that Ms. Scott-Napier’s decision was unreasonable, arbitrary, and capricious. The Board also sustained Montgomery Park’s second protest.
The DGS sought judicial review, and after a hearing, the Circuit Court for Baltimore City held that the Board had used the wrong standard of review with respect to Ms. Scott-Napier’s decision to terminate the procurement. The circuit court also held that the second protest was not filed timely.
Court of Special Appeals’ Opinion
On appeal, the Court of Special Appeals (CSA) held that, as to the first protest, the Board applied the correct legal standard — whether the procurement officer’s decision was unreasonable, arbitrary, and capricious — but did not apply it correctly’ The CSA stated, “The bottom line is that it takes a lot for the Board to reject a procurement officer’s decision.” According to the CSA, the Board erred when it required the DGS to prove that Ms. Scott-Napier’s cancellation was not arbitrary and capricious. Instead, the Board should have required Montgomery Park to prove that it was.
With regard to the second protest, the CSA held that “in order to qualify as an interested party and thus to have standing, one must be ‘in line for the award.’” When Ms. Scott-Napier cancelled the RFP with Montgomery Park, Montgomery Park no longer had a relationship to the procurement process. Moreover, Montgomery Park was never in line for renewal of the lease between the MIA and St. Paul Plaza. Therefore, Montgomery Park lacked standing to bring the second protest.
Accordingly, the CSA ordered that the Board’s findings be reversed.
For more information, contact Edward J. Levin.
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