EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb0507*
SENATE BILL 507
P2 EMERGENCY BILL 2lr2248
By: Senators Salling, Bailey, and Ready
Introduced and read first time: January 28, 2022
Assigned to: Budget and Taxation
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: March 18, 2022
CHAPTER ______
AN ACT concerning 1
Procurement – Construction Contracts – Contract Modification Clause – Report 2
FOR the purpose of requiring a procurement contract for construction to include a clause 3
providing for contract modification when there is a substantial increase in the price 4
of materials required to complete the contract, as determined by the unit, due to 5
certain factors; requiring the Secretary of Transportation and the Secretary of 6
General Services to review certain State contracts and report findings regarding 7
contract modifications related to the price of materials; and generally relating to 8
contract modifications for construction contracts. 9
BY repealing and reenacting, with amendments, 10
Article – State Finance and Procurement 11
Section 13–218 12
Annotated Code of Maryland 13
(2021 Replacement Volume) 14
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15
That the Laws of Maryland read as follows: 16
Article – State Finance and Procurement 17
13–218. 18
(a) Each procurement contract shall include clauses covering: 19
2 SENATE BILL 507
(1) termination for default; 1
(2) termination wholly or partly by the State for its convenience if the head 2
of the primary procurement unit determines that termination is appropriate; 3
(3) variations that occur between estimated and actual quantities of work 4
in a procurement contract; 5
(4) liquidated damages, as appropriate; 6
(5) specified excuses for nonperformance; 7
(6) except for real property leases, the unilateral right of the State to order 8
in writing: 9
(i) changes in the work, if the changes are within the scope of the 10
procurement contract; and 11
(ii) a temporary stop or delay in performance; 12
(7) the obligation of the contractor to comply with the political contribution 13
reporting requirements under Title 14 of the Election Law Article, to which the contractor 14
may be subject as required under § 17–402 of this article; and 15
(8) nonvisual access for information technology as required under § 16
3A–312 of this article. 17
(b) In addition to the clauses required under subsection (a) of this section, a 18
procurement contract for construction shall include: 19
(1) SUBJECT TO THE REQUI REMENTS OF SU BSECTION (E) OF THIS 20
SECTION, A CLAUSE PROVIDING F OR CONTRACT MODIFICA TION WHEN THERE IS A 21
SUBSTANTIAL INCREASE IN THE PRICE OF MATE RIALS REQUIRED TO CO MPLETE THE 22
CONTRACT, AS DETERMINED BY THE PROCURING UNIT , DUE TO: 23
(I) DELAYED NOTICE OF COMMENCEMENT BY THE UNIT FOR 24
ANY REASON; 25
(II) ACTS OR OMISSIONS BY THE UNIT; 26
(III) CHANGES IN THE WORK OR THE SEQUENCING OF THE WORK 27
ORDERED BY THE UNIT OR ARISING FROM DECI SIONS OF THE UNIT TH AT IMPACT 28
THE TIME OF PERFORMA NCE OF THE WORK ; 29
(IV) ENCOUNTERING HAZARDO US MATERIALS OR CONC EALED 30
OR UNKNOWN CONDITION S; 31 SENATE BILL 507 3
(V) DELAY AUTHORIZED BY THE UNIT PENDING DIS PUTE 1
RESOLUTION OR SUSPEN SION BY THE UNIT; OR 2
(VI) FORCE MAJEURE EVENTS , INCLUDING AN EPIDEMI C OR A 3
PANDEMIC; 4
(2) a clause providing for contract modification if the condition of a site 5
differs from the condition described in the specifications; and 6
[(2)] (3) a clause covering the requirements for notice of contract claims, 7
submission of contract claims, and resolution of contract claims under § 15–219 of this 8
article. 9
(c) Each procurement contract shall include a clause that gives to the parties 10
notice that preexisting regulations apply to the procurement contract in accordance with § 11
11–206 of this article. 12
(d) At any time after the parties enter into a procurement contract they may 13
include additional clauses in the procurement contract, by consent, without consideration. 14
(e) A clause required under this section for contract modification of or change 15
orders to a procurement contract for construction shall: 16
(1) make each contract modification or change order that affects the price 17
of the procurement contract subject to: 18
(i) prior written approval from the unit and any other person 19
responsible for the procurement contract; and 20
(ii) prior certification by the fiscal authority responsible for the unit 21
about: 22
1. the availability of money; and 23
2. the effect of the contract modification or change order on 24
the project budget or the total construction cost; and 25
(2) prohibit the contract modification or change order if the certification by 26
the fiscal authority discloses that the contract modification or change order will increase 27
the cost beyond budgeted and available money, unless: 28
(i) sufficient additional money is made available; or 29
(ii) the scope of the project is adjusted to allow completion within the 30
project budget. 31 4 SENATE BILL 507
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to 1
apply only prospectively and may not be applied or interpreted to have any effect on or 2
application to any construction contract executed before the effective date of this Act. 3
SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency 4
measure, is necessary for the immediate preservation of the public health or safety, has 5
been passed by a yea and nay vote supported by three–fifths of all the members elected to 6
each of the two Houses of the General Assembly, and shall take effect from the date it is 7
enacted. 8
(a) On or before December 1, 2022, the Secretary of Transportation shall report 9
to the General Assembly, in accordance with § 2–1257 of the State Government Article, for 10
fiscal years 2019, 2020, and 2021: 11
(1) the number and percentage of State procurements for construction 12
using a fixed–price contract with price adjustment; 13
(2) the number and percentage of State procurements for construction 14
using a fixed–price contract with price adjustment where a price adjustment for materials 15
was made during the contract; and 16
(3) for price adjustments identified under item (2) of this subsection: 17
(i) each material type for which there was a price adjustment; and 18
(ii) the average price adjustment for each material type. 19
(b) On or before December 1, 2022, the Secretary of General Services shall report 20
to the General Assembly, in accordance with § 2–1257 of the State Government Article, for 21
fiscal years 2019, 2020, and 2021: 22
(1) the number and percentage of State procurements for construction 23
using a fixed–price contract with price adjustment; 24
(2) the number and percentage of State procurements for construction 25
using a fixed–price contract with price adjustment where a price adjustment for materials 26
was made during the contract; and 27
(3) for price adjustments identified under item (2) of this subsection: 28
(i) each material type for which there was a price adjustment; and 29
(ii) the average price adjustment for each material type. 30
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 31
1, 2022. It shall remain effective for a period of 1 year and, at the end of June 30, 2023, this 32 SENATE BILL 507 5
Act, with no further action required by the General Assembly, shall be abrogated and of no 1
further force and effect. 2
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.