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.
*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
Committee Report: Favorable with amendments
Senate action: Adopted with floor amendments
Read second time: March 10, 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 the establishment of a certain price 7
preference evaluation factor for certain bids and proposals by an entity that utilizes 8
certain employee stock ownership plans; requiring contractors to provide certain 9
information to a unit regarding the use of an employee stock ownership plan; and 10
generally relating to procurement preferences for entities that utilize an employee 11
stock ownership plan. 12
BY repealing and reenacting, with amendments, 13
Article – State Finance and Procurement 14
Section 11–203(c) 15
Annotated Code of Maryland 16
(2021 Replacement Volume and 2024 Supplement) 17
BY repealing and reenacting, without amendments, 18
Article – State Finance and Procurement 19
Section 11–203(e)(1), (2), and (7) 20
Annotated Code of Maryland 21
(2021 Replacement Volume and 2024 Supplement) 22
2 SENATE BILL 653
BY repealing and reenacting, with amendments, 1
Article – State Finance and Procurement 2
Section 11–203(e)(5) 3
Annotated Code of Maryland 4
(2021 Replacement Volume and 2024 Supplement) 5
(As enacted by Chapters 575 and 576 of the Acts of the General Assembly of 2023) 6
BY adding to 7
Article – State Finance and Procurement 8
Section 14–801 through 14–806 to be under the new subtitle “Subtitle 8. Employee 9
Stock Ownership Plan Preference Program” 10
Annotated Code of Maryland 11
(2021 Replacement Volume and 2024 Supplement) 12
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 13
That the Laws of Maryland read as follows: 14
Article – State Finance and Procurement 15
11–203. 16
(c) Except as provided in Title 12, Subtitle 4 and Title 14, [Subtitle 3] 17
SUBTITLES 3 AND 8 of this article and except for §§ 15–112 and 15–113 of this article, this 18
Division II does not apply to the Maryland Stadium Authority. 19
(e) (1) In this subsection, “University” means the University System of 20
Maryland, Morgan State University, or St. Mary’s College of Maryland. 21
(2) Except as otherwise provided in this subsection, this Division II does 22
not apply to the University System of Maryland, Morgan State University, St. Mary’s 23
College of Maryland, or Baltimore City Community College. 24
(5) (i) Except as provided in paragraph (7) of this subsection, the 25
following provisions of Division II of this article apply to a University and to Baltimore City 26
Community College: 27
1. § 11–205 of this subtitle (“Collusion”); 28
2. § 11–205.1 of this subtitle (“Falsification, concealment, 29
etc., of material facts”); 30
3. § 13 –219 of this article (“Required 31
clauses – Nondiscrimination clause”); 32
4. § 13–225 of this article (“Retainage”); 33
SENATE BILL 653 3
5. Title 14, Subtitle 3 of this article (“Minority Business 1
Participation”); 2
6. Title 14, Subtitle 7 of this article (“Certified Local Farm 3
and Fish Program”); 4
7. TITLE 14, SUBTITLE 8 OF THIS ARTICLE (“EMPLOYEE 5
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM”); 6
[7.] 8. Title 15, Subtitle 1 of this article (“Procurement Contract 7
Administration”); 8
[8.] 9. § 15–226 of this article (“Policy established; timing of 9
payments; notice upon nonpayment; disputes; appeals”); and 10
[9.] 10. Title 16 of this article (“Suspension and Debarment 11
of Contractors”). 12
(II) EXCEPT AS PROVIDED IN PARAGRAPH (7) OF THIS 13
SUBSECTION, TITLE 14, SUBTITLE 8 OF THIS ARTICLE (“EMPLOYEE STOCK 14
OWNERSHIP PLAN PREFERENCE PROGRAM”) APPLIES TO MORGAN STATE 15
UNIVERSITY, ST. MARY’S COLLEGE OF MARYLAND, AND BALTIMORE CITY 16
COMMUNITY COLLEGE. 17
(ii) (III) If a procurement violates the provisions of this subsection 18
or policies adopted in accordance with this subsection, the procurement contract is void or 19
voidable in accordance with the provisions of § 11–204 of this subtitle. 20
(7) Except with regard to the provisions of § 15–113 of this article, 21
paragraphs (3), (4), and (5) of this subsection do not apply to: 22
(i) procurement by a University or Baltimore City Community 23
College from: 24
1. another unit; 25
2. a political subdivision of the State; 26
3. an agency of a political subdivision of the State; 27
4. a government, including the government of another state, 28
of the United States, or of another country; 29
5. an agency or political subdivision of a government; or 30
4 SENATE BILL 653
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 RESPONSIBLE BIDDER WHO UTILIZES AN 23
EMPLOYEE STOCK OWNER SHIP PLAN APPROVED U NDER § 401(A) OF THE INTERNAL 24
REVENUE CODE. 25
(D) “ESOP EVALUATION FACTOR ” MEANS A PREFERENCE F OR AN ESOP 26
BIDDER OR ESOP OFFEROR TH AT A UNIT MAY INCLUD E IN THE VALUATION O F 27
PROPOSALS. 28
(D) (E) “ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO 29
UTILIZES AN EMPLOYEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF 30
THE INTERNAL REVENUE CODE. 31
SENATE BILL 653 5
(E) (F) “NON–ESOP BIDDER” MEANS A RESPONSIBLE BIDDER WHO DOES 1
NOT UTILIZE AN EMPLO YEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF 2
THE INTERNAL REVENUE CODE. 3
(F) (G) “NON–ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO 4
DOES NOT UTILIZE AN EMPLOYEE STOCK OWNER SHIP PLAN APPROVED U NDER § 5
401(A) OF THE INTERNAL REVENUE CODE. 6
(G) “PERCENTAGE PREFERENCE ” MEANS: 7
(1) THE PERCENT OF THE L OWEST RESPONSIVE BID SUBMITTED BY A 8
NON–ESOP BIDDER BY WHICH A RE SPONSIVE BID SUBMITT ED BY AN ESOP BIDDER 9
MAY: 10
(I) EXCEED THE LOWEST BI D; AND 11
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 12
ACCORDANCE WITH THIS SUBTITLE; OR 13
(2) THE PERCENT OF THE L OWEST RESPONSIVE COS T PROPOSAL 14
SUBMITTED BY A NON –ESOP OFFEROR BY WHICH A R ESPONSIVE PROPOSAL 15
SUBMITTED BY AN ESOP OFFEROR MAY : 16
(I) EXCEED THE LOWEST CO ST; AND 17
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 18
ACCORDANCE WITH THIS SUBTITLE. 19
(H) “UNIT” MEANS THE MARYLAND STADIUM AUTHORITY, A UNIVERSITY, 20
OR THE BALTIMORE CITY COMMUNITY COLLEGE. 21
(I) “UNIVERSITY” MEANS THE UNIVERSITY SYSTEM OF MARYLAND, 22
MORGAN STATE UNIVERSITY, OR ST. MARY’S COLLEGE OF MARYLAND. 23
14–802. 24
THIS SUBTITLE APPLIES TO A COVERED PROCURE MENT OF: 25
(1) THE MARYLAND STADIUM AUTHORITY; 26
(2) A UNIVERSITY; OR 27
(3) BALTIMORE CITY COMMUNITY COLLEGE. 28
14–803. 29 6 SENATE BILL 653
SUBJECT TO THE APPROV AL OF THE BOARD, EACH UNIT SHALL MAY 1
ESTABLISH A PERCENTAGE PREFERE NCE AN EVALUATION FACTOR , NOT TO EXCEED 2
5% 10%. 3
14–804. 4
(A) A UNIT SHALL AWARD IF A UNIT AWARDS A COVERED PROCUREMEN T 5
CONTRACT USING COMPETITIVE SE ALED BIDS UNDER § 13–103 OF THIS ARTICLE , 6
THE UNIT MAY AWARD T HE CONTRACT TO AN ESOP BIDDER IF THE ESOP BIDDER: 7
(1) SUBMITS THE LOWEST R ESPONSIVE BID; OR 8
(2) DOES NOT SUBMIT THE LOWEST RESPONSIVE BI D BUT THE 9
DIFFERENCE BETWEEN T HE BID AND THE LOWES T RESPONSIVE BID SUB MITTED BY 10
A NON–ESOP BIDDER DOES NOT EXCEED THE PERCENTAGE PREFE RENCE 11
ESTABLISHED UNDER § 14–803 OF THIS SUBTITLE. 12
(B) A UNIT SHALL AWARD IF A UNIT AWARDS A COVERED PROCUREMEN T 13
CONTRACT USING COMPETITIVE SE ALED PROPOSALS UNDER § 13–104 OF THIS 14
ARTICLE, THE UNIT MAY AWARD T HE CONTRACT TO AN ESOP OFFEROR IF THE 15
ESOP OFFEROR: 16
(1) SUBMITS THE RESPONSI VE PROPOSAL THAT IS MOST 17
ADVANTAGEOUS TO THE UNIT AFTER FACTORING IN THE PRICE PREFERE NCE; OR 18
(2) DOES NOT SUBMIT THE RESPONSIVE PROPOSAL THAT IS MOST 19
ADVANTAGEOUS TO THE UNIT BUT THE DIFFERENCE B ETWEEN THAT PROPOSAL AND 20
THE LOWEST RESPONSIV E PROPOSAL SUBMITTED BY A NON–ESOP OFFEROR DOES 21
NOT EXCEED THE PERCE NTAGE PREFERENCE EST ABLISHED UNDER § 14–803 OF 22
THIS SUBTITLE. 23
(A) A UNIT MAY INCLUDE AN ESOP EVALUATION FACTOR IN THE 24
TECHNICAL EVALUATION FO R A COMPETITIVE SEAL ED PROPOSAL UNDER § 13–104 25
OF THIS ARTICLE FOR A CONTRACT SUBJECT T O THIS SUBTITLE. 26
(B) AN ESOP EVALUATION FACTOR MA Y BE: 27
(1) IF A POINT SYSTEM IS USED FOR EVALUATION OF PROPOSALS , UP 28
TO THE PERCENTAGE OF THE TOTAL ALLOCABLE TECHNI CAL POINTS AUTHORIZE D 29
UNDER § 14–803 OF THIS SUBTITLE; OR 30
(2) IF A POINT SYSTEM IS NOT USED FOR EVALUAT ION OF PROPOSALS , 31
RANKED IN ITS RELATI VE ORDER OF IMPORTAN CE. 32 SENATE BILL 653 7
14–805. 1
(A) A CONTRACTOR THAT IS A WARDED A CONTRACT FO R A COVERED 2
PROCUREMENT SHALL PR OVIDE TO A UNIT , AS A CONDITION OF RE CEIVING THE 3
CONTRACT, WRITTEN VERIFICATION OF THE IRS DETERMINATION LETTER FOR THE 4
CONTRACTOR ’S EMPLOYEE STOCK OWN ERSHIP PLAN. 5
(B) THE WRITTEN VERIFICAT ION REQUIRED UNDER S UBSECTION (A) OF 6
THIS SECTION SHALL BE PROVI DED BY A CONTRACTOR TO THE UNIT RESPONSI BLE 7
FOR THE PROJECT WITH THE SUBMISSION OF A BID OR PROPOSAL . 8
14–806. 9
ON OR BEFORE DECEMBER 1, 2028, THE MARYLAND STADIUM AUTHORITY, 10
BALTIMORE CITY COMMUNITY COLLEGE, THE UNIVERSITY SYSTEM OF MARYLAND, 11
MORGAN STATE UNIVERSITY, AND ST. MARY’S COLLEGE OF MARYLAND SHALL 12
SUBMIT A REPORT , IN ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT 13
ARTICLE, TO THE LEGISLATIVE POLICY COMMITTEE, THE SENATE BUDGET AND 14
TAXATION COMMITTEE, AND THE HOUSE HEALTH AND GOVERNMENT OPERATIONS 15
COMMITTEE, ON: 16
(1) THE NUMBER AND DOLLA R VALUE OF CONTRACTS AWARDED IN 17
ACCORDANCE WITH THIS SUBTITLE TO ESOP BIDDERS AND ESOP OFFERORS 18
DURING FISCAL YEARS 2026, 2027, AND 2028; AND 19
(2) THE AMOUNT OF PRICE PREFERENCE APPLIED T O ALL 20
CONTRACTS AWARDED IN ACCORDANCE WITH THIS SUBTITLE; AND 21
(3) AN EVALUATION OF THE EFFECTIVENESS OF THE EMPLOYEE 22
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 23
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to 24
procurement contracts solicited on or before June 30, 2030. 25
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect July 26
1, 2025. It shall remain effective for a period of 5 years and, at the end of June 30, 2030, 27
this Act, with no further action required by the General Assembly, shall be abrogated and 28
of no further force and effect. 29