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.
*hb0819*
HOUSE BILL 819
P2, F2 5lr1117
CF SB 653
By: Delegates Guzzone, Edelson, Embry, Hill, Kerr, R. Lewis, Shetty,
White Holland, and Woods Woods, Alston, Bagnall, Bhandari, Chisholm,
Cullison, Hutchinson, S. Johnson, Kaiser, Kipke, Lopez, Martinez,
M. Morgan, Pena–Melnyk, Reilly, Rosenberg, Ross, Szeliga, Taveras, and
Woorman
Introduced and read first time: January 29, 2025
Assigned to: Health and Government Operations
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 3, 2025
CHAPTER ______
AN ACT concerning 1
Procurement – Employee Stock Ownership Plan Preference – Pilot 2
FOR the purpose of establishing a preference program for certain procurements by 3
authorizing the Maryland Stadium Authority, the University System of Maryland, 4
Morgan State University, St. Mary’s College of Maryland, and Baltimore City 5
Community College to establish a certain preference program for certain 6
procurements; establishing authorizing a certain price preference for bids and 7
proposals by an entity that utilizes certain employee stock ownership plans; 8
requiring contractors to provide certain information to a unit regarding the use of an 9
employee stock ownership plan; and generally relating to procurement preferences 10
for entities that utilize an employee stock ownership plan. 11
BY repealing and reenacting, with amendments, 12
Article – State Finance and Procurement 13
Section 11–203(c) 14
Annotated Code of Maryland 15
(2021 Replacement Volume and 2024 Supplement) 16
BY repealing and reenacting, without amendments, 17
Article – State Finance and Procurement 18
Section 11–203(e)(1), (2), and (7) 19 2 HOUSE BILL 819
Annotated Code of Maryland 1
(2021 Replacement Volume and 2024 Supplement) 2
BY repealing and reenacting, with amendments, 3
Article – State Finance and Procurement 4
Section 11–203(e)(5) 5
Annotated Code of Maryland 6
(2021 Replacement Volume and 2024 Supplement) 7
(As enacted by Chapters 575 and 576 of the Acts of the General Assembly of 2023) 8
BY adding to 9
Article – State Finance and Procurement 10
Section 14–801 through 14–806 to be under the new subtitle “Subtitle 8. Employee 11
Stock Ownership Plan Preference Program” 12
Annotated Code of Maryland 13
(2021 Replacement Volume and 2024 Supplement) 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
11–203. 18
(c) Except as provided in Title 12, Subtitle 4 and Title 14, [Subtitle 3] 19
SUBTITLES 3 AND 8 of this article and except for §§ 15–112 and 15–113 of this article, this 20
Division II does not apply to the Maryland Stadium Authority. 21
(e) (1) In this subsection, “University” means the University System of 22
Maryland, Morgan State University, or St. Mary’s College of Maryland. 23
(2) Except as otherwise provided in this subsection, this Division II does 24
not apply to the University System of Maryland, Morgan State University, St. Mary’s 25
College of Maryland, or Baltimore City Community College. 26
(5) (i) Except as provided in paragraph (7) of this subsection, the 27
following provisions of Division II of this article apply to a University and to Baltimore City 28
Community College: 29
1. § 11–205 of this subtitle (“Collusion”); 30
2. § 11–205.1 of this subtitle (“Falsification, concealment, 31
etc., of material facts”); 32
3. § 13–219 of this article (“Required clauses – 33
Nondiscrimination clause”); 34
HOUSE BILL 819 3
4. § 13–225 of this article (“Retainage”); 1
5. Title 14, Subtitle 3 of this article (“Minority Business 2
Participation”); 3
6. Title 14, Subtitle 7 of this article (“Certified Local Farm 4
and Fish Program”); 5
7. TITLE 14, SUBTITLE 8 OF THIS ARTICLE (“EMPLOYEE 6
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM”); 7
[7.] 8. Title 15, Subtitle 1 of this article (“Procurement Contract 8
Administration”); 9
[8.] 9. § 15–226 of this article (“Policy established; timing of 10
payments; notice upon nonpayment; disputes; appeals”); and 11
[9.] 10. Title 16 of this article (“Suspension and Debarment 12
of Contractors”). 13
(II) EXCEPT AS PROVIDED IN PARAGRAPH (7) OF THIS 14
SUBSECTION, TITLE 14, SUBTITLE 8 OF THIS ARTICLE (“EMPLOYEE STOCK 15
OWNERSHIP PLAN PREFERENCE PROGRAM”) APPLIES TO MORGAN STATE 16
UNIVERSITY, ST. MARY’S COLLEGE OF MARYLAND, AND BALTIMORE CITY 17
COMMUNITY COLLEGE. 18
(ii) (III) If a procurement violates the provisions of this subsection 19
or policies adopted in accordance with this subsection, the procurement contract is void or 20
voidable in accordance with the provisions of § 11–204 of this subtitle. 21
(7) Except with regard to the provisions of § 15–113 of this article, 22
paragraphs (3), (4), and (5) of this subsection do not apply to: 23
(i) procurement by a University or Baltimore City Community 24
College from: 25
1. another unit; 26
2. a political subdivision of the State; 27
3. an agency of a political subdivision of the State; 28
4. a government, including the government of another state, 29
of the United States, or of another country; 30
5. an agency or political subdivision of a government; or 31 4 HOUSE BILL 819
6. a bistate, multistate, bicounty, or multicounty 1
governmental agency; 2
(ii) procurement by a University in support of enterprise activities 3
for the purpose of: 4
1. direct resale; 5
2. remanufacture and subsequent resale; or 6
3. procurement by the University for overseas programs; or 7
(iii) procurement by the University System of Maryland for: 8
1. services of managers to invest, in accordance with the 9
management and investment policies adopted by the Board of Regents of the University 10
System of Maryland, gift and endowment assets received by the University System of 11
Maryland in accordance with § 12–104(e) of the Education Article; or 12
2. expenditures to manage, maintain, and enhance, in 13
accordance with the management and investment policies adopted by the Board of Regents 14
of the University System of Maryland, the value of gift and endowment assets received by 15
the University System of Maryland in accordance with § 12–104(e) of the Education Article. 16
SUBTITLE 8. EMPLOYEE STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 17
14–801. 18
(A) IN THIS SUBTITLE THE FOLLOWING WORDS HAVE THE MEANINGS 19
INDICATED. 20
(B) “COVERED PROCUREMENT ” MEANS A PROCUREMENT THAT IS VALUED 21
AT LESS THAN $80,000,000. 22
(C) “ESOP BIDDER” MEANS A RESP ONSIBLE BIDDER WHO U TILIZES AN 23
EMPLOYEE STOCK OWNER SHIP PLAN APPROVED U NDER § 401(A) OF THE INTERNAL 24
REVENUE CODE. 25
(D) “ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO UTILIZES AN 26
EMPLOYEE STOCK OWNER SHIP PLAN APPROVED U NDER § 401(A) OF THE INTERNAL 27
REVENUE CODE. 28
(E) “NON–ESOP BIDDER” MEANS A RESPONSIBLE BIDDER WHO DOES NOT 29
UTILIZE AN EMPLOYEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF THE 30
INTERNAL REVENUE CODE. 31 HOUSE BILL 819 5
(F) “NON–ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO DOES 1
NOT UTILIZE AN EMPLO YEE STOCK OWNERSHIP PLAN AP PROVED UNDER § 401(A) OF 2
THE INTERNAL REVENUE CODE. 3
(G) “PERCENTAGE PREFERENCE ” MEANS: 4
(1) THE PERCENT OF THE L OWEST RESPONSIVE BID SUBMITTED BY A 5
NON–ESOP BIDDER BY WHICH A RE SPONSIVE BID SUBMITT ED BY AN ESOP BIDDER 6
MAY: 7
(I) EXCEED THE LOWEST BID ; AND 8
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 9
ACCORDANCE WITH THIS SUBTITLE; OR 10
(2) THE PERCENT OF THE L OWEST RESPONSIVE COS T PROPOSAL 11
SUBMITTED BY A NON –ESOP OFFEROR BY WHICH A R ESPONSIVE PROPOSAL 12
SUBMITTED BY AN ESOP OFFEROR MAY : 13
(I) EXCEED THE LOWEST CO ST; AND 14
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 15
ACCORDANCE WITH THIS SUBTITLE. 16
(H) “UNIT” MEANS THE MARYLAND STADIUM AUTHORITY, A UNIVERSITY, 17
OR THE BALTIMORE CITY COMMUNITY COLLEGE. 18
(I) “UNIVERSITY” MEANS THE UNIVERSITY SYSTEM OF MARYLAND, 19
MORGAN STATE UNIVERSITY, OR ST. MARY’S COLLEGE OF MARYLAND. 20
14–802. 21
THIS SUBTITLE APPLIES TO A COVERED PROCURE MENT OF: 22
(1) THE MARYLAND STADIUM AUTHORITY; 23
(2) A UNIVERSITY; OR 24
(3) BALTIMORE CITY COMMUNITY COLLEGE. 25
14–803. 26
SUBJECT TO THE APPROV AL OF THE BOARD, EACH UNIT SHALL MAY 27
ESTABLISH A PERCENTA GE PREFERENCE , NOT TO EXCEED 5%. 28 6 HOUSE BILL 819
14–804. 1
(A) A UNIT SHALL AWARD IF A UNIT AWARDS A COVERED PROCUREMEN T 2
CONTRACT USING COMPETITIVE SE ALED BIDS UNDER § 13–103 OF THIS ARTICLE , 3
THE UNIT MAY AWARD T HE CONTRACT TO AN ESOP BIDDER IF THE ESOP BIDDER: 4
(1) SUBMITS THE LOWEST R ESPONSIVE BID; OR 5
(2) DOES NOT SUBMIT THE LOWEST RESPONSIVE BI D BUT THE 6
DIFFERENCE BETWEEN T HE BID AND THE LOWES T RESPONSIVE BID SUBMITTED BY 7
A NON–ESOP BIDDER DOES NOT EXCE ED THE PERCENTAGE PR EFERENCE 8
ESTABLISHED UNDER § 14–803 OF THIS SUBTITLE. 9
(B) A UNIT SHALL AWARD IF A UNIT AWARDS A COVERED PROCUREMEN T 10
CONTRACT USING COMPETITIVE SE ALED PROPOSALS UNDER § 13–104 OF THIS 11
ARTICLE, THE UNIT MAY AWARD T HE CONTRACT TO AN ESOP OFFEROR IF THE 12
ESOP OFFEROR: 13
(1) SUBMITS THE RESPONSI VE PROPOSAL THAT IS MOST 14
ADVANTAGEOUS TO THE UNIT AFTER FACTORING IN THE PRICE PREFERE NCE; OR 15
(2) DOES NOT SUBMIT THE RESPONSIVE PROPOSAL THAT IS MOST 16
ADVANTAGEOUS TO THE UNIT BUT THE DIFFERE NCE BETWEEN THAT PRO POSAL AND 17
THE LOWEST RESPONSIV E PROPOSAL SUBMITTED BY A NON–ESOP OFFEROR DOES 18
NOT EXCEED THE PERCE NTAGE PREFERENCE EST ABLISHED UNDER § 14–803 OF 19
THIS SUBTITLE. 20
14–805. 21
(A) A CONTRACTO R THAT IS AWARDED A CONTRACT FOR A COVER ED 22
PROCUREMENT SHALL PR OVIDE TO A UNIT , AS A CONDITION OF RE CEIVING THE 23
CONTRACT, WRITTEN VERIFICATION OF THE IRS DETERMINATION LETTER FOR THE 24
CONTRACTOR ’S EMPLOYEE STOCK OWN ERSHIP PLAN. 25
(B) THE WRITTEN VERIFICATION REQUIRE D UNDER SUBSECTION (A) OF 26
THIS SECTION SHALL B E PROVIDED BY A CONT RACTOR TO THE UNIT R ESPONSIBLE 27
FOR THE PROJECT WITH THE SUBMISSION OF A BID OR PROPOSAL . 28
14–806. 29
ON OR BEFORE DECEMBER 1, 2028, THE MARYLAND STADIUM AUTHORITY, 30
BALTIMORE CITY COMMUNITY COLLEGE, THE UNIVERSITY SYSTEM OF MARYLAND, 31
MORGAN STATE UNIVERSITY, AND ST. MARY’S COLLEGE OF MARYLAND SHALL 32 HOUSE BILL 819 7
SUBMIT A REPORT , IN ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT 1
ARTICLE, TO THE LEGISLATIVE POLICY COMMITTEE, THE SENATE BUDGET AND 2
TAXATION COMMITTEE, AND THE HOUSE HEALTH AND GOVERNMENT OPERATIONS 3
COMMITTEE, ON: 4
(1) THE NUMBER AND DOLLA R VALUE OF CONTRACTS AWARDED IN 5
ACCORDANCE WITH THIS SUBTITLE TO ESOP BIDDERS AND ESOP OFFERORS 6
DURING FISCAL YEARS 2026, 2027, AND 2028; 7
(2) THE AMOUNT OF PRICE PREFERENCE APPLIED T O ALL 8
CONTRACTS AWARDED IN ACCORDANCE WITH THIS SUBTITLE; AND 9
(3) AN EVALUATION OF THE EFFECTIVENESS OF THE EMPLOYEE 10
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 11
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to 12
procurement contracts solicited on or before June 30, 2030. 13
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect July 14
1, 2025. It shall remain effective for a period of 5 years and, at the end of June 30, 2030, 15
this Act, with no further action required by the General Assembly, shall be abrogated and 16
of no further force and effect. 17
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.