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.
Italics indicate opposite chamber/conference committee amendments.
*sb0653*
SENATE BILL 653
P2, F2 (5lr2348)
ENROLLED BILL
— Budget and Taxation/Health and Government Operations —
Introduced by Senator McCray
Read and Examined by Proofreaders:
_______________________________________________
Proofreader.
_______________________________________________
Proofreader.
Sealed with the Great Seal and presented to the Governor, for his approval this
_______ day of _______________ at __ ______________________ o’clock, ________M.
______________________________________________
President.
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 2 SENATE BILL 653
Section 11–203(c) 1
Annotated Code of Maryland 2
(2021 Replacement Volume and 2024 Supplement) 3
BY repealing and reenacting, without amendments, 4
Article – State Finance and Procurement 5
Section 11–203(e)(1), (2), and (7) 6
Annotated Code of Maryland 7
(2021 Replacement Volume and 2024 Supplement) 8
BY repealing and reenacting, with amendments, 9
Article – State Finance and Procurement 10
Section 11–203(e)(5) 11
Annotated Code of Maryland 12
(2021 Replacement Volume and 2024 Supplement) 13
(As enacted by Chapters 575 and 576 of the Acts of the General Assembly of 2023) 14
BY adding to 15
Article – State Finance and Procurement 16
Section 14–801 through 14–806 to be under the new subtitle “Subtitle 8. Employee 17
Stock Ownership Plan Preference Program” 18
Annotated Code of Maryland 19
(2021 Replacement Volume and 2024 Supplement) 20
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 21
That the Laws of Maryland read as follows: 22
Article – State Finance and Procurement 23
11–203. 24
(c) Except as provided in Title 12, Subtitle 4 and Title 14, [Subtitle 3] 25
SUBTITLES 3 AND 8 of this article and except for §§ 15–112 and 15–113 of this article, this 26
Division II does not apply to the Maryland Stadium Authority. 27
(e) (1) In this subsection, “University” means the University System of 28
Maryland, Morgan State University, or St. Mary’s College of Maryland. 29
(2) Except as otherwise provided in this subsection, this Division II does 30
not apply to the University System of Maryland, Morgan State University, St. Mary’s 31
College of Maryland, or Baltimore City Community College. 32
(5) (i) Except as provided in paragraph (7) of this subsection, the 33
following provisions of Division II of this article apply to a University and to Baltimore City 34
Community College: 35
1. § 11–205 of this subtitle (“Collusion”); 36 SENATE BILL 653 3
2. § 11–205.1 of this subtitle (“Falsification, concealment, 1
etc., of material facts”); 2
3. § 13 –219 of this article (“Required 3
clauses – Nondiscrimination clause”); 4
4. § 13–225 of this article (“Retainage”); 5
5. Title 14, Subtitle 3 of this article (“Minority Business 6
Participation”); 7
6. Title 14, Subtitle 7 of this article (“Certified Local Farm 8
and Fish Program”); 9
7. TITLE 14, SUBTITLE 8 OF THIS ARTICLE (“EMPLOYEE 10
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM”); 11
[7.] 8. Title 15, Subtitle 1 of this article (“Procurement Contract 12
Administration”); 13
[8.] 9. § 15–226 of this article (“Policy established; timing of 14
payments; notice upon nonpayment; disputes; appeals”); and 15
[9.] 10. Title 16 of this article (“Suspension and Debarment 16
of Contractors”). 17
(II) EXCEPT AS PROVIDED IN PARAGRAPH (7) OF THIS 18
SUBSECTION, TITLE 14, SUBTITLE 8 OF THIS ARTICLE (“EMPLOYEE STOCK 19
OWNERSHIP PLAN PREFERENCE PROGRAM”) APPLIES TO MORGAN STATE 20
UNIVERSITY, ST. MARY’S COLLEGE OF MARYLAND, AND BALTIMORE CITY 21
COMMUNITY COLLEGE. 22
(ii) (III) If a procurement violates the provisions of this subsection 23
or policies adopted in accordance with this subsection, the procurement contract is void or 24
voidable in accordance with the provisions of § 11–204 of this subtitle. 25
(7) Except with regard to the provisions of § 15–113 of this article, 26
paragraphs (3), (4), and (5) of this subsection do not apply to: 27
(i) procurement by a University or Baltimore City Community 28
College from: 29
1. another unit; 30
2. a political subdivision of the State; 31 4 SENATE BILL 653
3. an agency of a political subdivision of the State; 1
4. a government, including the government of another state, 2
of the United States, or of another country; 3
5. an agency or political subdivision of a government; or 4
6. a bistate, multistate, bicounty, or multicounty 5
governmental agency; 6
(ii) procurement by a University in support of enterprise activities 7
for the purpose of: 8
1. direct resale; 9
2. remanufacture and subsequent resale; or 10
3. procurement by the University for overseas programs; or 11
(iii) procurement by the University System of Maryland for: 12
1. services of managers to invest, in accordance with the 13
management and investment policies adopted by the Board of Regents of the University 14
System of Maryland, gift and endowment assets received by the University System of 15
Maryland in accordance with § 12–104(e) of the Education Article; or 16
2. expenditures to manage, maintain, and enhance, in 17
accordance with the management and investment policies adopted by the Board of Regents 18
of the University System of Maryland, the value of gift and endowment assets received by 19
the University System of Maryland in accordance with § 12–104(e) of the Education Article. 20
SUBTITLE 8. EMPLOYEE STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 21
14–801. 22
(A) IN THIS SUBTITLE THE FOLLOWING WORDS HAVE THE MEANINGS 23
INDICATED. 24
(B) “COVERED PROCUREMENT ” MEANS A PROCUREMENT THAT IS VALUED 25
AT LESS THAN $80,000,000. 26
(C) “ESOP BIDDER” MEANS A RESPONSIBLE BIDDER WHO UTILIZES AN 27
EMPLOYEE STOCK OWNER SHIP PLAN APPROVED U NDER § 401(A) OF THE INTERNAL 28
REVENUE CODE. 29
SENATE BILL 653 5
(D) (C) “ESOP EVALUATION FACTOR ” MEANS A PREFERENCE F OR AN 1
ESOP BIDDER OR ESOP OFFEROR THAT A UNIT MAY INCLUDE IN THE VALUATION 2
EVALUATION OF PROPOSALS . 3
(D) (E) (D) “ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO 4
UTILIZES AN EMPLOYEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF 5
THE INTERNAL REVENUE CODE. 6
(E) (F) “NON–ESOP BIDDER” MEANS A RESPONSIBLE BIDDER WHO DOES 7
NOT UTILIZE AN EMPLO YEE STOCK OWNERSHIP PLAN APPROVED UNDER § 401(A) OF 8
THE INTERNAL REVENUE CODE. 9
(F) (G) “NON–ESOP OFFEROR” MEANS A RESPONSIBLE OFFEROR WHO 10
DOES NOT UTILIZE AN EMPLOYEE STOCK OWNERSHIP PLAN APPRO VED UNDER § 11
401(A) OF THE INTERNAL REVENUE CODE. 12
(G) “PERCENTAGE PREFERENCE ” MEANS: 13
(1) THE PERCENT OF THE L OWEST RESPONSIVE BID SUBMITTED BY A 14
NON–ESOP BIDDER BY WHICH A RE SPONSIVE BID SUBMITT ED BY AN ESOP BIDDER 15
MAY: 16
(I) EXCEED THE LOWEST BID ; AND 17
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 18
ACCORDANCE WITH THIS SUBTITLE; OR 19
(2) THE PERCENT OF THE L OWEST RESPONSIVE COS T PROPOSAL 20
SUBMITTED BY A NON –ESOP OFFEROR BY WHICH A R ESPONSIVE PROPOSAL 21
SUBMITTED BY AN ESOP OFFEROR MAY : 22
(I) EXCEED THE LOWEST CO ST; AND 23
(II) BE AWARDED A COVERED PROCUREMENT CONTRACT IN 24
ACCORDANCE WITH THIS SUBTITLE. 25
(H) (E) “UNIT” MEANS THE MARYLAND STADIUM AUTHORITY, A 26
UNIVERSITY, OR THE BALTIMORE CITY COMMUNITY COLLEGE. 27
(I) (F) “UNIVERSITY” MEANS THE UNIVERSITY SYSTEM OF MARYLAND, 28
MORGAN STATE UNIVERSITY, OR ST. MARY’S COLLEGE OF MARYLAND. 29
14–802. 30
6 SENATE BILL 653
THIS SUBTITLE APPLIES TO A COVERED PROCURE MENT OF: 1
(1) THE MARYLAND STADIUM AUTHORITY; 2
(2) A UNIVERSITY; OR 3
(3) BALTIMORE CITY COMMUNITY COLLEGE. 4
14–803. 5
SUBJECT TO THE APPROV AL OF THE BOARD, EACH UNIT SHALL MAY 6
ESTABLISH A PERCENTAGE PREFERE NCE AN EVALUATION FACTOR , NOT TO EXCEED 7
5% 10%. 8
14–804. 9
(A) A UNIT SHALL AWARD IF A UNIT AWARDS A COVERED PROCUREMEN T 10
CONTRACT USING COMPETITIVE SE ALED BIDS UNDER § 13–103 OF THIS ARTICLE , 11
THE UNIT MAY AWARD T HE CONTRACT TO AN ESOP BIDDER IF THE ESOP BIDDER: 12
(1) SUBMITS THE LOWEST R ESPONSIVE BID; OR 13
(2) DOES NOT SUBMIT THE LOWEST RESPONSIVE BI D BUT THE 14
DIFFERENCE BETWEEN T HE BID AND THE LOWEST R ESPONSIVE BID SUBMIT TED BY 15
A NON–ESOP BIDDER DOES NOT EXCE ED THE PERCENTAGE PR EFERENCE 16
ESTABLISHED UNDER § 14–803 OF THIS SUBTITLE. 17
(B) A UNIT SHALL AWARD IF A UNIT AWARDS A COVERED PROCUREMEN T 18
CONTRACT USING COMPETITIVE SE ALED PROPO SALS UNDER § 13–104 OF THIS 19
ARTICLE, THE UNIT MAY AWARD T HE CONTRACT TO AN ESOP OFFEROR IF THE 20
ESOP OFFEROR: 21
(1) SUBMITS THE RESPONSI VE PROPOSAL THAT IS MOST 22
ADVANTAGEOUS TO THE UNIT AFTER FACTORING IN THE PRICE PREFERE NCE; OR 23
(2) DOES NOT SUBMIT THE RESPONSIVE PROPOSAL THAT IS MOST 24
ADVANTAGEOUS TO THE UNIT BUT THE DIFFERE NCE BETWEEN THAT PRO POSAL AND 25
THE LOWEST RESPONSIV E PROPOSAL SUBMITTED BY A NON–ESOP OFFEROR DOES 26
NOT EXCEED THE PERCE NTAGE PREFERENCE EST ABLISHED UNDER § 14–803 OF 27
THIS SUBTITLE. 28
(A) A UNIT MAY INCLUDE AN ESOP EVALUATION FACTOR IN THE 29
TECHNICAL EVALUATION FOR A COMPETITIVE SE ALED PROPOSAL UNDER § 13–104 30
OF THIS ARTICLE FOR A CONTRACT SUBJECT T O THIS SUBTITLE. 31 SENATE BILL 653 7
(B) AN ESOP EVALUATION FACTOR MA Y BE: 1
(1) IF A POINT SYSTEM IS USED FOR EVALUATION OF PR OPOSALS, UP 2
TO THE PERCENTAGE OF THE TOTAL ALLOCABLE TECHNICAL POINTS AUT HORIZED 3
UNDER § 14–803 OF THIS SUBTITLE; OR 4
(2) IF A POINT SYSTEM IS NOT USED FOR EVALUAT ION OF PROPOSALS , 5
RANKED IN ITS RELATI VE ORDER OF IMPORTAN CE. 6
14–805. 7
(A) A CONTRACTOR THAT IS A WARDED A CONTRACT FO R A COVERED 8
PROCUREMENT SHALL PR OVIDE TO A UNIT , AS A CONDITION OF RE CEIVING THE 9
CONTRACT, WRITTEN VERIFICATION OF THE IRS DETERMINATION LETTER FOR THE 10
CONTRACTOR ’S EMPLOYEE STOCK OWN ERSHIP PLAN. 11
(B) THE WRITTEN VERIFICATION R EQUIRED UNDER SUBSEC TION (A) OF 12
THIS SECTION SHALL B E PROVIDED BY A CONT RACTOR TO THE UNIT R ESPONSIBLE 13
FOR THE PROJECT WITH THE SUBMISSION OF A BID OR PROPOSAL. 14
14–806. 15
ON OR BEFORE DECEMBER 1, 2028, THE MARYLAND STADIUM AUTHORITY, 16
BALTIMORE CITY COMMUNITY COLLEGE, THE UNIVERSITY SYSTEM OF MARYLAND, 17
MORGAN STATE UNIVERSITY, AND ST. MARY’S COLLEGE OF MARYLAND SHALL 18
SUBMIT A REPORT , IN ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT 19
ARTICLE, TO THE LEGISLATIVE POLICY COMMITTEE, THE SENATE BUDGET AND 20
TAXATION COMMITTEE, AND THE HOUSE HEALTH AND GOVERNMENT OPERATIONS 21
COMMITTEE, ON: 22
(1) THE NUMBER AND DOLLA R VALUE OF CONTRACTS AWARDED IN 23
ACCORDANCE WITH THIS SUBTITLE TO ESOP BIDDERS AND ESOP OFFERORS 24
DURING FISCAL YEARS 2026, 2027, AND 2028; AND 25
(2) THE AMOUNT OF PRICE PREFERENCE APPLIED T O ALL 26
CONTRACTS AWARDED IN ACCORDANCE WITH THIS SUBTITLE; AND 27
(3) AN EVALUATION OF THE EFFECTIVENESS OF THE EMPLOYEE 28
STOCK OWNERSHIP PLAN PREFERENCE PROGRAM. 29
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to 30
procurement contracts solicited on or before June 30, 2030. 31
8 SENATE BILL 653
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
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.