EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb0819*
HOUSE BILL 819
P2, F2 5lr1117
CF 5lr2348
By: Delegates Guzzone, Edelson, Embry, Hill, Kerr, R. Lewis, Shetty,
White Holland, and Woods
Introduced and read first time: January 29, 2025
Assigned to: Health and Government Operations
A BILL ENTITLED
AN ACT concerning 1
Procurement – Employee Stock Ownership P lan Preference – Pilot 2
FOR the purpose of establishing a preference program for certain procurements by the 3
Maryland Stadium Authority, the University System of Maryland, Morgan State 4
University, St. Mary’s College of Maryland, and Baltimore City Community College; 5
establishing a certain price preference for bids and proposals by an entity that 6
utilizes certain employee stock ownership plans; requiring contractors to provide 7
certain information to a unit regarding the use of an employee stock ownership plan; 8
and generally relating to procurement preferences for entities that utilize an 9
employee stock ownership plan. 10
BY repealing and reenacting, with amendments, 11
Article – State Finance and Procurement 12
Section 11–203(c) 13
Annotated Code of Maryland 14
(2021 Replacement Volume and 2024 Supplement) 15
BY repealing and reenacting, without amendments, 16
Article – State Finance and Procurement 17
Section 11–203(e)(1), (2), and (7) 18
Annotated Code of Maryland 19
(2021 Replacement Volume and 2024 Supplement) 20
BY repealing and reenacting, with amendments, 21
Article – State Finance and Procurement 22
Section 11–203(e)(5) 23
Annotated Code of Maryland 24
(2021 Replacement Volume and 2024 Supplement) 25
(As enacted by Chapters 575 and 576 of the Acts of the General Assembly of 2023) 26
2 HOUSE BILL 819
BY adding to 1
Article – State Finance and Procurement 2
Section 14–801 through 14–806 to be under the new subtitle “Subtitle 8. Employee 3
Stock Ownership Plan Preference Program” 4
Annotated Code of Maryland 5
(2021 Replacement Volume and 2024 Supplement) 6
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 7
That the Laws of Maryland read as follows: 8
Article – State Finance and Procurement 9
11–203. 10
(c) Except as provided in Title 12, Subtitle 4 and Title 14, [Subtitle 3] 11
SUBTITLES 3 AND 8 of this article and except for §§ 15–112 and 15–113 of this article, this 12
Division II does not apply to the Maryland Stadium Authority. 13
(e) (1) In this subsection, “University” means the University System of 14
Maryland, Morgan State University, or St. Mary’s College of Maryland. 15
(2) Except as otherwise provided in this subsection, this Division II does 16
not apply to the University System of Maryland, Morgan State University, St. Mary’s 17
College of Maryland, or Baltimore City Community College. 18
(5) (i) Except as provided in paragraph (7) of this subsection, the 19
following provisions of Division II of this article apply to a University and to Baltimore City 20
Community College: 21
1. § 11–205 of this subtitle (“Collusion”); 22
2. § 11–205.1 of this subtitle (“Falsification, concealment, 23
etc., of material facts”); 24
3. § 13–219 of this article (“Required clauses – 25
Nondiscrimination clause”); 26
4. § 13–225 of this article (“Retainage”); 27
5. Title 14, Subtitle 3 of this article (“Minority Business 28
Participation”); 29
6. Title 14, Subtitle 7 of this article (“Certified Local Farm 30
and Fish Program”); 31
7. TITLE 14, SUBTITLE 8 OF THIS ARTICLE (“EMPLOYEE 32
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM”); 33 HOUSE BILL 819 3
[7.] 8. Title 15, Subtitle 1 of this article (“Procurement Contract 1
Administration”); 2
[8.] 9. § 15–226 of this article (“Policy established; timing of 3
payments; notice upon nonpayment; disputes; appeals”); and 4
[9.] 10. Title 16 of this article (“Suspension and Debarment 5
of Contractors”). 6
(ii) If a procurement violates the provisions of this subsection or 7
policies adopted in accordance with this subsection, the procurement contract is void or 8
voidable in accordance with the provisions of § 11–204 of this subtitle. 9
(7) Except with regard to the provisions of § 15–113 of this article, 10
paragraphs (3), (4), and (5) of this subsection do not apply to: 11
(i) procurement by a University or Baltimore City Community 12
College from: 13
1. another unit; 14
2. a political subdivision of the State; 15
3. an agency of a political subdivision of the State; 16
4. a government, including the government of another state, 17
of the United States, or of another country; 18
5. an agency or political subdivision of a government; or 19
6. a bistate, multistate, bicounty, or multicounty 20
governmental agency; 21
(ii) procurement by a University in support of enterprise activities 22
for the purpose of: 23
1. direct resale; 24
2. remanufacture and subsequent resale; or 25
3. procurement by the University for overseas programs; or 26
(iii) procurement by the University System of Maryland for: 27
1. services of managers to invest, in accordance with the 28
management and investment policies adopted by the Board of Regents of the University 29 4 HOUSE BILL 819
System of Maryland, gift and endowment assets received by the University System of 1
Maryland in accordance with § 12–104(e) of the Education Article; or 2
2. expenditures to manage, maintain, and enhance, in 3
accordance with the management and investment policies adopted by the Board of Regents 4
of the University System of Maryland, the value of gift and endowment assets received by 5
the University System of Maryland in accordance with § 12–104(e) of the Education Article. 6
SUBTITLE 8. EMPLOYEE STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 7
14–801. 8
(A) IN THIS SUBTITLE THE FOLLOWING WORDS HAVE THE MEANINGS 9
INDICATED. 10
(B) “COVERED PROCUREMENT ” MEANS A PROCUREMENT THAT IS VALUED 11
AT LESS THAN $80,000,000. 12
(C) “ESOP BIDDER” MEANS A RESPONSIBLE BIDDER WHO UTILIZES AN 13
EMPLOYEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF THE INTERNAL 14
REVENUE CODE. 15
(D) “ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO UTILIZES AN 16
EMPLOYEE STOCK OWNER SHIP PLAN APPROVED U NDER § 401(A) OF THE INTERNAL 17
REVENUE CODE. 18
(E) “NON–ESOP BIDDER” MEANS A RESPONSIBLE BIDDER WHO DOES NOT 19
UTILIZE AN EMPLOYEE STOCK OWNERSHIP P LAN APPROVED UNDER § 401(A) OF THE 20
INTERNAL REVENUE CODE. 21
(F) “NON–ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO DOES 22
NOT UTILIZE AN EMPLO YEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF 23
THE INTERNAL REVENUE CODE. 24
(G) “PERCENTAGE PREFERENCE ” MEANS: 25
(1) THE PERCENT OF THE L OWEST RESPONSIVE BID SUBMITTED BY A 26
NON–ESOP BIDDER BY WHICH A RE SPONSIVE BID SUBMITT ED BY AN ESOP BIDDER 27
MAY: 28
(I) EXCEED THE LOWEST B ID; AND 29
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 30
ACCORDANCE WITH THIS SUBTITLE; OR 31 HOUSE BILL 819 5
(2) THE PERCENT OF THE L OWEST RESPONSIVE COS T PROPOSAL 1
SUBMITTED BY A NON–ESOP OFFEROR BY WHICH A R ESPONSIVE PROPOSAL 2
SUBMITTED BY A N ESOP OFFEROR MAY : 3
(I) EXCEED THE LOWEST CO ST; AND 4
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 5
ACCORDANCE WITH THIS SUBTITLE. 6
(H) “UNIT” MEANS THE MARYLAND STADIUM AUTHORITY, A UNIVERSITY, 7
OR THE BALTIMORE CITY COMMUNITY COLLEGE. 8
(I) “UNIVERSITY” MEANS THE UNIVERSITY SYSTEM OF MARYLAND, 9
MORGAN STATE UNIVERSITY, OR ST. MARY’S COLLEGE OF MARYLAND. 10
14–802. 11
THIS SUBTITLE APPLIES TO A COVERED PROCURE MENT OF: 12
(1) THE MARYLAND STADIUM AUTHORITY; 13
(2) A UNIVERSITY; OR 14
(3) BALTIMORE CITY COMMUNITY COLLEGE. 15
14–803. 16
SUBJECT TO THE APPROV AL OF THE BOARD, EACH UNIT SHALL ESTA BLISH A 17
PERCENTAGE PREFERENC E, NOT TO EXCEED 5%. 18
14–804. 19
(A) A UNIT SHALL AWARD A C OVERED PROCUREMENT C ONTRACT TO AN 20
ESOP BIDDER IF THE ESOP BIDDER: 21
(1) SUBMITS THE LOWEST RESPONSIVE BID ; OR 22
(2) DOES NOT SUBMIT THE LOWEST RESPONSIVE BI D BUT THE 23
DIFFERENCE BETWEEN T HE BID AND THE LOWEST R ESPONSIVE BID SUBMIT TED BY 24
A NON–ESOP BIDDER DOES NOT EXCE ED THE PERCENTAGE PR EFERENCE 25
ESTABLISHED UNDER § 14–803 OF THIS SUBTITLE. 26
(B) A UNIT SHALL AWARD A C OVERED PROCUREMENT C ONTRACT TO AN 27 6 HOUSE BILL 819
ESOP OFFEROR IF THE ESOP OFFEROR: 1
(1) SUBMITS THE RESPONSI VE PROPOSAL THAT IS MOST 2
ADVANTAGEOUS TO THE UNIT AFTER FACTORING IN T HE PRICE PREFERENCE ; OR 3
(2) DOES NOT SUBMIT THE RESPONSIVE PROPO SAL THAT IS MOST 4
ADVANTAGEOUS TO THE UNIT BUT THE DIFFERENCE BETWE EN THAT PROPOSAL AND 5
THE LOWEST RESPONSIV E PROPOSAL SUBMITTED BY A NON–ESOP OFFEROR DOES 6
NOT EXCEED THE PERCE NTAGE PREFERENCE EST ABLISHED UNDER § 14–803 OF 7
THIS SUBTITLE. 8
14–805. 9
(A) A CONTRACTOR THAT IS A WARDED A CONTRACT FO R A COVERED 10
PROCUREMENT SHALL PR OVIDE TO A UNIT , AS A CONDITION OF RE CEIVING THE 11
CONTRACT, WRITTEN VERIFICATION OF THE IRS DETERMINATION LETTER FOR THE 12
CONTRACTOR ’S EMPLOYEE STOCK OWNER SHIP PLAN. 13
(B) THE WRITTEN VERIFICAT ION REQUIRED UNDER SUBSECTION (A) OF 14
THIS SECTION SHALL B E PROVIDED BY A CONT RACTOR TO THE UNIT R ESPONSIBLE 15
FOR THE PROJECT WITH THE SUBMISSION OF A BID OR PROPOSAL . 16
14–806. 17
ON OR BEFORE DECEMBER 1, 2028, THE MARYLAND STADIUM AUTHORITY, 18
BALTIMORE CITY COMMUNITY COLLEGE, THE UNIVERSITY SYSTEM OF MARYLAND, 19
MORGAN STATE UNIVERSITY, AND ST. MARY’S COLLEGE OF MARYLAND SHALL 20
SUBMIT A REPORT , IN ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT 21
ARTICLE, TO THE LEGISLATIVE POLICY COMMITTEE, THE SENATE BUDGET AND 22
TAXATION COMMITTEE, AND THE HOUSE HEALTH AND GOVERNMENT OPERATIONS 23
COMMITTEE, ON: 24
(1) THE NUMBER AND DOLLA R VALUE OF CONTRACTS AWARDED IN 25
ACCORDANCE WITH THIS SUBTITLE TO ESOP BIDDERS AND ESOP OFFERORS 26
DURING FISCAL YEARS 2026, 2027, AND 2028; 27
(2) THE AMOUNT OF PRICE PREFERENCE APPLIED T O ALL 28
CONTRACTS AWARDED IN ACCORDANCE WITH THIS SUBTITLE; AND 29
(3) AN EVALUATION OF THE EFFECTIVENESS OF THE EMPLOYEE 30
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 31
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to 32
procurement contracts solicited on or before June 30, 2030. 33 HOUSE BILL 819 7
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect July 1
1, 2025. It shall remain effective for a period of 5 years and, at the end of June 30, 2030, 2
this Act, with no further action required by the General Assembly, shall be abrogated and 3
of no further force and effect. 4