LAWRENCE J. HOGAN, JR., Governor Ch. 516
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Chapter 516
(Senate Bill 507)
AN ACT concerning
Procurement – Construction Contracts – Contract Modification Clause – Report
FOR the purpose of requiring a procurement contract for construction to include a clause
providing for contract modification when there is a substantial increase in the price
of materials required to complete the contract, as determined by the unit, due to
certain factors; requiring the Secretary of Transportation and the Secretary of
General Services to review certain State contracts and report findings regarding
contract modifications related to the price of materials; and generally relating to
contract modifications for construction contracts.
BY repealing and reenacting, with amendments,
Article – State Finance and Procurement
Section 13–218
Annotated Code of Maryland
(2021 Replacement Volume)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – State Finance and Procurement
13–218.
(a) Each procurement contract shall include clauses covering:
(1) termination for default;
(2) termination wholly or partly by the State for its convenience if the head
of the primary procurement unit determines that termination is appropriate;
(3) variations that occur between estimated and actual quantities of work
in a procurement contract;
(4) liquidated damages, as appropriate;
(5) specified excuses for nonperformance;
(6) except for real property leases, the unilateral right of the State to order
in writing:
Ch. 516 2022 LAWS OF MARYLAND
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(i) changes in the work, if the changes are within the scope of the
procurement contract; and
(ii) a temporary stop or delay in performance;
(7) the obligation of the contractor to comply with the political contribution
reporting requirements under Title 14 of the Election Law Article, to which the contractor
may be subject as required under § 17–402 of this article; and
(8) nonvisual access for information technology as required under §
3A–312 of this article.
(b) In addition to the clauses required under subsection (a) of this section, a
procurement contract for construction shall include:
(1) SUBJECT TO THE REQUI REMENTS OF SUBSECTIO N (E) OF THIS
SECTION, A CLAUSE PROVIDING F OR CONTRACT MODIFICA TION WHEN THERE IS A
SUBSTANTIAL INCREASE IN THE PRICE OF MATE RIALS REQUIRED TO CO MPLETE THE
CONTRACT, AS DETERMINED BY THE PROCURING UNIT , DUE TO:
(I) DELAYED NOTICE OF CO MMENCEMENT BY THE UN IT FOR
ANY REASON;
(II) ACTS OR OMISSIONS BY THE UNIT;
(III) CHANGES IN THE WORK OR THE SEQUENCING OF THE WORK
ORDERED BY THE UNIT OR ARISING FROM DECI SIONS OF THE UNIT TH AT IMPACT
THE TIME OF PERFORMA NCE OF THE WORK ;
(IV) ENCOUNTERING HAZARDO US MATERIALS OR CONCE ALED
OR UNKNOWN CONDITION S;
(V) DELAY AUTHORIZED BY THE UNIT PENDING DIS PUTE
RESOLUTION OR SUSPEN SION BY THE UNIT; OR
(VI) FORCE MAJEURE EVENTS , INCLUDING AN EPIDEMI C OR A
PANDEMIC;
(2) a clause providing for contract modification if the condition of a site
differs from the condition described in the specifications; and
[(2)] (3) a clause covering the requirements for notice of contract claims,
submission of contract claims, and resolution of contract claims under § 15–219 of this
article.
LAWRENCE J. HOGAN, JR., Governor Ch. 516
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(c) Each procurement contract shall include a clause that gives to the parties
notice that preexisting regulations apply to the procurement contract in accordance with §
11–206 of this article.
(d) At any time after the parties enter into a procurement contract they may
include additional clauses in the procurement contract, by consent, without consideration.
(e) A clause required under this section for contract modification of or change
orders to a procurement contract for construction shall:
(1) make each contract modification or change order that affects the price
of the procurement contract subject to:
(i) prior written approval from the unit and any other person
responsible for the procurement contract; and
(ii) prior certification by the fiscal authority responsible for the unit
about:
1. the availability of money; and
2. the effect of the contract modification or change order on
the project budget or the total construction cost; and
(2) prohibit the contract modification or change order if the certification by
the fiscal authority discloses that the contract modification or change order will increase
the cost beyond budgeted and available money, unless:
(i) sufficient additional money is made available; or
(ii) the scope of the project is adjusted to allow completion within the
project budget.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to
apply only prospectively and may not be applied or interpreted to have any effect on or
application to any construction contract executed before the effective date of this Act.
SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency
measure, is necessary for the immediate preservation of the public health or safety, has
been passed by a yea and nay vote supported by three–fifths of all the members elected to
each of the two Houses of the General Assembly, and shall take effect from the date it is
enacted.
(a) On or before December 1, 2022, the Secretary of Transportation shall report
to the General Assembly, in accordance with § 2–1257 of the State Government Article, for
fiscal years 2019, 2020, and 2021: Ch. 516 2022 LAWS OF MARYLAND
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(1) the number and percentage of State procurements for construction
using a fixed–price contract with price adjustment;
(2) the number and percentage of State procurements for construction
using a fixed–price contract with price adjustment where a price adjustment for materials
was made during the contract; and
(3) for price adjustments identified under item (2) of this subsection:
(i) each material type for which there was a price adjustment; and
(ii) the average price adjustment for each material type.
(b) On or before December 1, 2022, the Secretary of General Services shall report
to the General Assembly, in accordance with § 2–1257 of the State Government Article, for
fiscal years 2019, 2020, and 2021:
(1) the number and percentage of State procurements for construction
using a fixed–price contract with price adjustment;
(2) the number and percentage of State procurements for construction
using a fixed–price contract with price adjustment where a price adjustment for materials
was made during the contract; and
(3) for price adjustments identified under item (2) of this subsection:
(i) each material type for which there was a price adjustment; and
(ii) the average price adjustment for each material type.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July
1, 2022. It shall remain effective for a period of 1 year and, at the end of June 30, 2023, this
Act, with no further action required by the General Assembly, shall be abrogated and of no
further force and effect.
Enacted under Article II, § 17(c) of the Maryland Constitution, May 29, 2022.