EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0653*
SENATE BILL 653
P2, F2 5lr2348
CF HB 819
By: Senator McCray
Introduced and read first time: January 25, 2025
Assigned to: Budget and Taxation
A BILL ENTITLED
AN ACT concerning 1
Procurement – Employee Stock Ownership Plan 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
BY adding to 27 2 SENATE BILL 653
Article – State Finance and Procurement 1
Section 14–801 through 14–806 to be under the new subtitle “Subtitle 8. Employee 2
Stock Ownership Plan Preference Program” 3
Annotated Code of Maryland 4
(2021 Replacement Volume and 2024 Supplement) 5
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 6
That the Laws of Maryland read as follows: 7
Article – State Finance and Procurement 8
11–203. 9
(c) Except as provided in Title 12, Subtitle 4 and Title 14, [Subtitle 3] 10
SUBTITLES 3 AND 8 of this article and except for §§ 15–112 and 15–113 of this article, this 11
Division II does not apply to the Maryland Stadium Authority. 12
(e) (1) In this subsection, “University” means the University System of 13
Maryland, Morgan State University, or St. Mary’s College of Maryland. 14
(2) Except as otherwise provided in this subsection, this Division II does 15
not apply to the University System of Maryland, Morgan State University, St. Mary’s 16
College of Maryland, or Baltimore City Community College. 17
(5) (i) Except as provided in paragraph (7) of this subsection, the 18
following provisions of Division II of this article apply to a University and to Baltimore City 19
Community College: 20
1. § 11–205 of this subtitle (“Collusion”); 21
2. § 11–205.1 of this subtitle (“Falsification, concealment, 22
etc., of material facts”); 23
3. § 13–219 of this article (“Required clauses – 24
Nondiscrimination clause”); 25
4. § 13–225 of this article (“Retainage”); 26
5. Title 14, Subtitle 3 of this article (“Minority Business 27
Participation”); 28
6. Title 14, Subtitle 7 of this article (“Certified Local Farm 29
and Fish Program”); 30
7. TITLE 14, SUBTITLE 8 OF THIS ARTICLE (“EMPLOYEE 31
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM”); 32
SENATE BILL 653 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
System of Maryland, gift and endowment assets received by the University System of 30 4 SENATE BILL 653
Maryland in accordance with § 12–104(e) of the Education Article; or 1
2. expenditures to manage, maintain, and enhance, in 2
accordance with the management and investment policies adopted by the Board of Regents 3
of the University System of Maryland, the value of gift and endowment assets received by 4
the University System of Maryland in accordance with § 12–104(e) of the Education Article. 5
SUBTITLE 8. EMPLOYEE STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 6
14–801. 7
(A) IN THIS SUBTITLE THE FOLLOWING WORDS HAVE THE MEANINGS 8
INDICATED. 9
(B) “COVERED PROCUREMENT ” MEANS A PROCUREMENT THAT IS VALUED 10
AT LESS THAN $80,000,000. 11
(C) “ESOP BIDDER” MEANS A RESPONSIBLE BIDDER WHO UTILIZES AN 12
EMPLOYEE STOCK OWNER SHIP PLAN APPROVED U NDER § 401(A) OF THE INTERNAL 13
REVENUE CODE. 14
(D) “ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO UTILIZES AN 15
EMPLOYEE STOCK OWNER SHIP PLAN APPROVED UNDER § 401(A) OF THE INTERNAL 16
REVENUE CODE. 17
(E) “NON–ESOP BIDDER” MEANS A RESPONSIBLE BIDDER WHO DOES NOT 18
UTILIZE AN EMPLOYEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF THE 19
INTERNAL REVENUE CODE. 20
(F) “NON–ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO DOES 21
NOT UTILIZE AN EMPLO YEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF 22
THE INTERNAL REVENUE CODE. 23
(G) “PERCENTAGE PREFERENCE ” MEANS: 24
(1) THE PERCENT OF THE L OWEST RESPONSIVE BID SUBMITTED BY A 25
NON–ESOP BIDDER BY WHICH A RE SPONSIVE BID SUBMI TTED BY AN ESOP BIDDER 26
MAY: 27
(I) EXCEED THE LOWEST BI D; AND 28
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 29
ACCORDANCE WITH THIS SUBTITLE; OR 30
SENATE BILL 653 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 AN 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 R ESPONSIVE BID; OR 22
(2) DOES NOT SUBMIT THE LOWEST RESPONSIVE BI D BUT THE 23
DIFFERENCE BETWEEN T HE BID AND THE LOWES T RESPONSIVE BID SUB MITTED 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
ESOP OFFEROR IF THE ESOP OFFEROR: 28 6 SENATE BILL 653
(1) SUBMITS THE RESPONSI VE PROPOSAL THAT IS MOST 1
ADVANTAGEOUS TO THE UNIT AFTER FACTORING IN THE PRICE PREFERE NCE; OR 2
(2) DOES NOT SUBMIT THE RESPONSIVE PROPOSAL THAT IS MOST 3
ADVANTAGEOUS TO THE UNIT BUT THE DIFFERE NCE BETWEEN THAT PRO POSAL AND 4
THE LOWEST RESPONSIV E PROPOSAL SUBMITTED BY A NON–ESOP OFFEROR DOES 5
NOT EXCEED THE PERCE NTAGE PREFERENCE EST ABLISHED UN DER § 14–803 OF 6
THIS SUBTITLE. 7
14–805. 8
(A) A CONTRACTOR THAT IS A WARDED A CONTRACT FO R A COVERED 9
PROCUREMENT SHALL PR OVIDE TO A UNIT , AS A CONDITION OF RE CEIVING THE 10
CONTRACT, WRITTEN VERIFICATION OF THE IRS DETERMINATION LETTER FOR THE 11
CONTRACTOR ’S EMPLOYEE STOCK OWNER SHIP PLAN. 12
(B) THE WRITTEN VERIFICAT ION REQUIRED UNDER S UBSECTION (A) OF 13
THIS SECTION SHALL B E PROVIDED BY A CONT RACTOR TO THE UNIT R ESPONSIBLE 14
FOR THE PROJECT WITH THE SUBMISSION OF A BID OR PROPOSAL . 15
14–806. 16
ON OR BEFORE DECEMBER 1, 2028, THE MARYLAND STADIUM AUTHORITY, 17
BALTIMORE CITY COMMUNITY COLLEGE, THE UNIVERSITY SYSTEM OF MARYLAND, 18
MORGAN STATE UNIVERSITY, AND ST. MARY’S COLLEGE OF MARYLAND SHALL 19
SUBMIT A REPORT , IN ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT 20
ARTICLE, TO THE LEGISLATIVE POLICY COMMITTEE, THE SENATE BUDGET AND 21
TAXATION COMMITTEE, AND THE HOUSE HEALTH AND GOVERNMENT OPERATIONS 22
COMMITTEE, ON: 23
(1) THE NUMBER AND DOLLA R VALUE OF CONTRACTS AWARDED IN 24
ACCORDANCE WITH THIS SUBTITLE TO ESOP BIDDERS AND ESOP OFFERORS 25
DURING FISCAL YEARS 2026, 2027, AND 2028; 26
(2) THE AMOUNT OF PRICE PREFERENCE APPLIED T O ALL 27
CONTRACTS AWARDED IN ACCORDANCE WITH THIS SUBTITLE; AND 28
(3) AN EVALUATION OF THE EFFECTIVENESS OF THE EMPLOYEE 29
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 30
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to 31
procurement contracts solicited on or before June 30, 2030. 32
SENATE BILL 653 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