MD
Maryland Senate Bill SB507

Maryland 2022 Regular Session

Maryland Senate Bill SB507 Compare Versions

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1- LAWRENCE J. HOGAN, JR., Governor Ch. 516
21
3-– 1 –
4-Chapter 516
5-(Senate Bill 507)
62
7-AN ACT concerning
3+EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4+ [Brackets] indicate matter deleted from existing law.
5+ Underlining indicates amendments to bill.
6+ Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7+amendment.
8+ *sb0507*
89
9-Procurement – Construction Contracts – Contract Modification Clause – Report
10+SENATE BILL 507
11+P2 EMERGENCY BILL 2lr2248
1012
11-FOR the purpose of requiring a procurement contract for construction to include a clause
12-providing for contract modification when there is a substantial increase in the price
13-of materials required to complete the contract, as determined by the unit, due to
14-certain factors; requiring the Secretary of Transportation and the Secretary of
15-General Services to review certain State contracts and report findings regarding
16-contract modifications related to the price of materials; and generally relating to
17-contract modifications for construction contracts.
13+By: Senators Salling, Bailey, and Ready
14+Introduced and read first time: January 28, 2022
15+Assigned to: Budget and Taxation
16+Committee Report: Favorable with amendments
17+Senate action: Adopted
18+Read second time: March 18, 2022
1819
19-BY repealing and reenacting, with amendments,
20- Article – State Finance and Procurement
21-Section 13–218
22- Annotated Code of Maryland
23- (2021 Replacement Volume)
20+CHAPTER ______
2421
25- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
26-That the Laws of Maryland read as follows:
22+AN ACT concerning 1
2723
28-Article – State Finance and Procurement
24+Procurement – Construction Contracts – Contract Modification Clause – Report 2
2925
30-13–218.
26+FOR the purpose of requiring a procurement contract for construction to include a clause 3
27+providing for contract modification when there is a substantial increase in the price 4
28+of materials required to complete the contract, as determined by the unit, due to 5
29+certain factors; requiring the Secretary of Transportation and the Secretary of 6
30+General Services to review certain State contracts and report findings regarding 7
31+contract modifications related to the price of materials; and generally relating to 8
32+contract modifications for construction contracts. 9
3133
32- (a) Each procurement contract shall include clauses covering:
34+BY repealing and reenacting, with amendments, 10
35+ Article – State Finance and Procurement 11
36+Section 13–218 12
37+ Annotated Code of Maryland 13
38+ (2021 Replacement Volume) 14
3339
34- (1) termination for default;
40+ SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15
41+That the Laws of Maryland read as follows: 16
3542
36- (2) termination wholly or partly by the State for its convenience if the head
37-of the primary procurement unit determines that termination is appropriate;
43+Article – State Finance and Procurement 17
3844
39- (3) variations that occur between estimated and actual quantities of work
40-in a procurement contract;
45+13–218. 18
4146
42- (4) liquidated damages, as appropriate;
47+ (a) Each procurement contract shall include clauses covering: 19
48+ 2 SENATE BILL 507
4349
44- (5) specified excuses for nonperformance;
4550
46- (6) except for real property leases, the unilateral right of the State to order
47-in writing:
48- Ch. 516 2022 LAWS OF MARYLAND
51+ (1) termination for default; 1
4952
50-– 2 –
51- (i) changes in the work, if the changes are within the scope of the
52-procurement contract; and
53+ (2) termination wholly or partly by the State for its convenience if the head 2
54+of the primary procurement unit determines that termination is appropriate; 3
5355
54- (ii) a temporary stop or delay in performance;
56+ (3) variations that occur between estimated and actual quantities of work 4
57+in a procurement contract; 5
5558
56- (7) the obligation of the contractor to comply with the political contribution
57-reporting requirements under Title 14 of the Election Law Article, to which the contractor
58-may be subject as required under § 17–402 of this article; and
59+ (4) liquidated damages, as appropriate; 6
5960
60- (8) nonvisual access for information technology as required under §
61-3A–312 of this article.
61+ (5) specified excuses for nonperformance; 7
6262
63- (b) In addition to the clauses required under subsection (a) of this section, a
64-procurement contract for construction shall include:
63+ (6) except for real property leases, the unilateral right of the State to order 8
64+in writing: 9
6565
66- (1) SUBJECT TO THE REQUI REMENTS OF SUBSECTIO N (E) OF THIS
67-SECTION, A CLAUSE PROVIDING F OR CONTRACT MODIFICA TION WHEN THERE IS A
68-SUBSTANTIAL INCREASE IN THE PRICE OF MATE RIALS REQUIRED TO CO MPLETE THE
69-CONTRACT, AS DETERMINED BY THE PROCURING UNIT , DUE TO:
66+ (i) changes in the work, if the changes are within the scope of the 10
67+procurement contract; and 11
7068
71- (I) DELAYED NOTICE OF CO MMENCEMENT BY THE UN IT FOR
72-ANY REASON;
69+ (ii) a temporary stop or delay in performance; 12
7370
74- (II) ACTS OR OMISSIONS BY THE UNIT;
71+ (7) the obligation of the contractor to comply with the political contribution 13
72+reporting requirements under Title 14 of the Election Law Article, to which the contractor 14
73+may be subject as required under § 17–402 of this article; and 15
7574
76- (III) CHANGES IN THE WORK OR THE SEQUENCING OF THE WORK
77-ORDERED BY THE UNIT OR ARISING FROM DECI SIONS OF THE UNIT TH AT IMPACT
78-THE TIME OF PERFORMA NCE OF THE WORK ;
75+ (8) nonvisual access for information technology as required under § 16
76+3A–312 of this article. 17
7977
80- (IV) ENCOUNTERING HAZARDO US MATERIALS OR CONCE ALED
81-OR UNKNOWN CONDITION S;
78+ (b) In addition to the clauses required under subsection (a) of this section, a 18
79+procurement contract for construction shall include: 19
8280
83- (V) DELAY AUTHORIZED BY THE UNIT PENDING DIS PUTE
84-RESOLUTION OR SUSPEN SION BY THE UNIT; OR
81+ (1) SUBJECT TO THE REQUI REMENTS OF SU BSECTION (E) OF THIS 20
82+SECTION, A CLAUSE PROVIDING F OR CONTRACT MODIFICA TION WHEN THERE IS A 21
83+SUBSTANTIAL INCREASE IN THE PRICE OF MATE RIALS REQUIRED TO CO MPLETE THE 22
84+CONTRACT, AS DETERMINED BY THE PROCURING UNIT , DUE TO: 23
8585
86- (VI) FORCE MAJEURE EVENTS , INCLUDING AN EPIDEMI C OR A
87-PANDEMIC;
86+ (I) DELAYED NOTICE OF COMMENCEMENT BY THE UNIT FOR 24
87+ANY REASON; 25
8888
89- (2) a clause providing for contract modification if the condition of a site
90-differs from the condition described in the specifications; and
89+ (II) ACTS OR OMISSIONS BY THE UNIT; 26
9190
92- [(2)] (3) a clause covering the requirements for notice of contract claims,
93-submission of contract claims, and resolution of contract claims under § 15–219 of this
94-article.
95- LAWRENCE J. HOGAN, JR., Governor Ch. 516
91+ (III) CHANGES IN THE WORK OR THE SEQUENCING OF THE WORK 27
92+ORDERED BY THE UNIT OR ARISING FROM DECI SIONS OF THE UNIT TH AT IMPACT 28
93+THE TIME OF PERFORMA NCE OF THE WORK ; 29
9694
97-– 3 –
98- (c) Each procurement contract shall include a clause that gives to the parties
99-notice that preexisting regulations apply to the procurement contract in accordance with §
100-11–206 of this article.
95+ (IV) ENCOUNTERING HAZARDO US MATERIALS OR CONC EALED 30
96+OR UNKNOWN CONDITION S; 31 SENATE BILL 507 3
10197
102- (d) At any time after the parties enter into a procurement contract they may
103-include additional clauses in the procurement contract, by consent, without consideration.
10498
105- (e) A clause required under this section for contract modification of or change
106-orders to a procurement contract for construction shall:
10799
108- (1) make each contract modification or change order that affects the price
109-of the procurement contract subject to:
100+ (V) DELAY AUTHORIZED BY THE UNIT PENDING DIS PUTE 1
101+RESOLUTION OR SUSPEN SION BY THE UNIT; OR 2
110102
111- (i) prior written approval from the unit and any other person
112-responsible for the procurement contract; and
103+ (VI) FORCE MAJEURE EVENTS , INCLUDING AN EPIDEMI C OR A 3
104+PANDEMIC; 4
113105
114- (ii) prior certification by the fiscal authority responsible for the unit
115-about:
106+ (2) a clause providing for contract modification if the condition of a site 5
107+differs from the condition described in the specifications; and 6
116108
117- 1. the availability of money; and
109+ [(2)] (3) a clause covering the requirements for notice of contract claims, 7
110+submission of contract claims, and resolution of contract claims under § 15–219 of this 8
111+article. 9
118112
119- 2. the effect of the contract modification or change order on
120-the project budget or the total construction cost; and
113+ (c) Each procurement contract shall include a clause that gives to the parties 10
114+notice that preexisting regulations apply to the procurement contract in accordance with § 11
115+11–206 of this article. 12
121116
122- (2) prohibit the contract modification or change order if the certification by
123-the fiscal authority discloses that the contract modification or change order will increase
124-the cost beyond budgeted and available money, unless:
117+ (d) At any time after the parties enter into a procurement contract they may 13
118+include additional clauses in the procurement contract, by consent, without consideration. 14
125119
126- (i) sufficient additional money is made available; or
120+ (e) A clause required under this section for contract modification of or change 15
121+orders to a procurement contract for construction shall: 16
127122
128- (ii) the scope of the project is adjusted to allow completion within the
129-project budget.
123+ (1) make each contract modification or change order that affects the price 17
124+of the procurement contract subject to: 18
130125
131- SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to
132-apply only prospectively and may not be applied or interpreted to have any effect on or
133-application to any construction contract executed before the effective date of this Act.
126+ (i) prior written approval from the unit and any other person 19
127+responsible for the procurement contract; and 20
134128
135- SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency
136-measure, is necessary for the immediate preservation of the public health or safety, has
137-been passed by a yea and nay vote supported by three–fifths of all the members elected to
138-each of the two Houses of the General Assembly, and shall take effect from the date it is
139-enacted.
129+ (ii) prior certification by the fiscal authority responsible for the unit 21
130+about: 22
140131
141- (a) On or before December 1, 2022, the Secretary of Transportation shall report
142-to the General Assembly, in accordance with § 2–1257 of the State Government Article, for
143-fiscal years 2019, 2020, and 2021: Ch. 516 2022 LAWS OF MARYLAND
132+ 1. the availability of money; and 23
144133
145-– 4 –
134+ 2. the effect of the contract modification or change order on 24
135+the project budget or the total construction cost; and 25
146136
147- (1) the number and percentage of State procurements for construction
148-using a fixed–price contract with price adjustment;
137+ (2) prohibit the contract modification or change order if the certification by 26
138+the fiscal authority discloses that the contract modification or change order will increase 27
139+the cost beyond budgeted and available money, unless: 28
149140
150- (2) the number and percentage of State procurements for construction
151-using a fixed–price contract with price adjustment where a price adjustment for materials
152-was made during the contract; and
141+ (i) sufficient additional money is made available; or 29
153142
154- (3) for price adjustments identified under item (2) of this subsection:
143+ (ii) the scope of the project is adjusted to allow completion within the 30
144+project budget. 31 4 SENATE BILL 507
155145
156- (i) each material type for which there was a price adjustment; and
157146
158- (ii) the average price adjustment for each material type.
159147
160- (b) On or before December 1, 2022, the Secretary of General Services shall report
161-to the General Assembly, in accordance with § 2–1257 of the State Government Article, for
162-fiscal years 2019, 2020, and 2021:
148+ SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to 1
149+apply only prospectively and may not be applied or interpreted to have any effect on or 2
150+application to any construction contract executed before the effective date of this Act. 3
163151
164- (1) the number and percentage of State procurements for construction
165-using a fixed–price contract with price adjustment;
152+ SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency 4
153+measure, is necessary for the immediate preservation of the public health or safety, has 5
154+been passed by a yea and nay vote supported by three–fifths of all the members elected to 6
155+each of the two Houses of the General Assembly, and shall take effect from the date it is 7
156+enacted. 8
166157
167- (2) the number and percentage of State procurements for construction
168-using a fixed–price contract with price adjustment where a price adjustment for materials
169-was made during the contract; and
158+ (a) On or before December 1, 2022, the Secretary of Transportation shall report 9
159+to the General Assembly, in accordance with § 2–1257 of the State Government Article, for 10
160+fiscal years 2019, 2020, and 2021: 11
170161
171- (3) for price adjustments identified under item (2) of this subsection:
162+ (1) the number and percentage of State procurements for construction 12
163+using a fixed–price contract with price adjustment; 13
172164
173- (i) each material type for which there was a price adjustment; and
165+ (2) the number and percentage of State procurements for construction 14
166+using a fixed–price contract with price adjustment where a price adjustment for materials 15
167+was made during the contract; and 16
174168
175- (ii) the average price adjustment for each material type.
169+ (3) for price adjustments identified under item (2) of this subsection: 17
176170
177- SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July
178-1, 2022. It shall remain effective for a period of 1 year and, at the end of June 30, 2023, this
179-Act, with no further action required by the General Assembly, shall be abrogated and of no
180-further force and effect.
171+ (i) each material type for which there was a price adjustment; and 18
181172
182-Enacted under Article II, § 17(c) of the Maryland Constitution, May 29, 2022.
173+ (ii) the average price adjustment for each material type. 19
174+
175+ (b) On or before December 1, 2022, the Secretary of General Services shall report 20
176+to the General Assembly, in accordance with § 2–1257 of the State Government Article, for 21
177+fiscal years 2019, 2020, and 2021: 22
178+
179+ (1) the number and percentage of State procurements for construction 23
180+using a fixed–price contract with price adjustment; 24
181+
182+ (2) the number and percentage of State procurements for construction 25
183+using a fixed–price contract with price adjustment where a price adjustment for materials 26
184+was made during the contract; and 27
185+
186+ (3) for price adjustments identified under item (2) of this subsection: 28
187+
188+ (i) each material type for which there was a price adjustment; and 29
189+
190+ (ii) the average price adjustment for each material type. 30
191+
192+ SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 31
193+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
194+
195+
196+Act, with no further action required by the General Assembly, shall be abrogated and of no 1
197+further force and effect. 2
198+
199+
200+
201+
202+Approved:
203+________________________________________________________________________________
204+ Governor.
205+________________________________________________________________________________
206+ President of the Senate.
207+________________________________________________________________________________
208+ Speaker of the House of Delegates.