ABC MOURNS PASSING OF 'DEAN OF 
CONSTRUCTION LAW,' WILLIAM HUDDLES
We are saddened today by the loss of longtime member and friend William M. Huddles of Huddles, Jones, Sorteberg, & Dachille.
Mr. Huddles began his legal career as a law clerk to Judge Thomas M. Anderson of the Court of Special Appeals of Maryland in 1971. In 1972, he was appointed as an Assistant Attorney General for the State of Maryland where he first became involved in construction law.
Mr. Huddles was heavily involved in alternative methods of resolving construction disputes, having represented clients in countless arbitrations and mediations. He also served as a member of the American Arbitration Association National Roster of Neutrals.
William leaves behind a wife and son, ABC members are asked to keep his family in their thoughts. At this time, funeral arrangements have not been set.
NEW: PROCUREMENT ADVISORY COUNCIL UPDATE
Each quarter, ABC Baltimore will bring you a brief update from members of its Procurement Advisory Council on legal issues that have a direct impact on the construction community.
COURT RULES THAT BIDDERS MAY PROTEST ON MBE GROUNDS
One of the most common grounds for bid protests on public construction projects is based upon alleged failures to properly comply with MBE policies and procedures
Recently, a Maryland court has invalidated an ill-conceived State regulation prohibiting bidders on State projects from filing bid protests on MBE related grounds.
The case has been appealed to a higher court. If the ruling is upheld, bidders finally will be able to protest arbitrary MBE decisions made by the State in the awarding of contracts and failures by other bidders to comply with MBE rules.
An adverse ruling by the higher court will allow the State to disqualify low bidders with impunity on MBE grounds and award jobs to favored contractors, with no administrative or judicial oversight possible.
The higher court’s ruling is expected by the Spring of next year. In the event of an unfavorable ruling, ABC must be prepared to ask the legislature to permit bid protests based upon MBE related issues. Otherwise, the integrity of the procurement system will continue to be compromised.
(Note! This article was written by William Huddles earlier this year)
NEW STATE PROCUREMENT REGULATION FOR CONSTRUCTION MANAGEMENT AT RISK LEAVES MANY UNANSWERED QUESTIONS
With certain exceptions, the regulation applies to GMPs that may exceed $10,000,000. Agencies are prohibited from using CM at risk for lower amounts without prior approval of the Board of Public Works.
The CM at risk will be selected by a request for proposal which means proposers will be evaluated on qualitative issues as well as price. Once the CM is selected it will perform the preconstruction services and when directed by the agency will propose a GMP for construction services.
The traditional method of selecting a contractor based strictly on the low bid from a responsive and responsible contractor does not apply. The CM, not the State agency, solicits trade contractor bids. The CM may require that the trade contractor be prequalified, and, subject to approval by the procurement officer may select trade contractors based on evaluation factors other than low bid such as MBE participation, past performance and special qualifications.
What is equally important is what the regulation does not discuss, such as, for example, what qualitative issues will be considered, pricing that needs to be provided with the proposal (for example, preconstruction services price, construction fee, general conditions, contingency, etc.) and how MBE participation is to be utilized and evaluated.
For more information please contact:
Paul S. Sugar, Esq.
Ober/Kaler
120 East Baltimore Street
Baltimore, MD21202
410-347-7318
pssugar@ober.com
CONTRACTORS COULD BE LEFT WITHOUT RIGHTS OR PAYMENT ON HYBRID PROJECTS
Hybrid projects, (often called Public Private Partnerships, P3s, Enhanced Use Leasing, or EULs) can present serious impediments to payment security for General Contractors and Subcontractors.
Hybrid Projects often take place on Federal, State, or Local Government property where no lien rights exist, but may resemble or appear to be private projects.
Hybrid Projects often involve private development or construction on public land, construction of public utilities for private development, and private development on public land which is leased to a developer, to name a few. These projects often involve complicated leasing or turn-over arrangements and funding arrangements through private lenders or banks.
Frequently on Hybrid Projects, the Developer negotiates the contract with the General Contractor and sets the requirements for subcontracts without the participation of government procurement officers, resulting in the legal requirements of supplying payment and performance bonds being overlooked or neglected.
Without sufficient pre-contract investigation, General Contractors and Subcontractors may have no idea that the project is a Hybrid Project or that the project is located on government owned land.
General Contractors and Subcontractors that only discover they are working on Hybrid Projects after payment issues arise usually find that they have little or no recourse and no one to litigate against for payment.
Nevertheless, General Contractors and Subcontractors involved on Hybrid Projects can minimize the risk of payment issues through careful and creative contract negotiation, ownership investigation prior to executing contracts, and diligent project management.
For more information or for any questions you may have, please contact:
Michael J. (Mike) Pappas, Esq. at
Harrison Law Group
410-842-0145 (direct)
mpappas@harrisonlawgroup.com
MARYLAND’S HIGHEST COURT TO HEAR CONTRACTOR’S APPEAL OF DECISION GRANTING COUNTY SCHOOL BOARD SOVEREIGN IMMUNITY
For decades in Maryland, the lawhas been clear that county boards of education are not entitled to assert the doctrine of 'sovereign immunity' in suits brought against them based upon authorized written contracts. The law has long been established in Maryland that when a county board of education enters into a contract, that board is obligated to perform under the contract in the same manner that a private citizen is bound to perform.
In a case of great interest to Maryland’s school contractors and subcontractors, that long-standing rule was changed when Maryland’s intermediate appellate court ruled in the case of BEKA Industries v. Worcester County Board of Education that though a county school board is bound to the terms of a written construction contract, it is up to the contractor to prove that the school board has the funds to pay the judgment.
Fortunately for school contractors, Maryland’s highest court agreed to hear the appeal of this misguided ruling. Arguments will be heard by the high court in December of this year.
Even if the high court were to consider that a local board of education was entitled to assert the defense of sovereign immunity in a contract action, the Maryland General Assembly has already spoken on this issue.
In 1976, the Maryland General Assembly passed, and the Governor signed into law, what is now codified as Md. Code. Ann., State Gov’t §§ 12-201, et seq. and Md. Ann. Code art. 25B, § 13A.
All of these statutes are part of a comprehensive framework that serves to waive the defense of sovereign immunity in contract actions based upon written contracts that are validly executed by an authorized representative of the government, whether state or local. Md. Code. Ann., State Gov’t § 12-203 provides a funding mechanism for judgments entered against the State and its units arising out of written contracts. Md. Ann. Code art. 25B, § 13A(d) provides a funding mechanism for judgments entered against code counties arising out of written contracts.
These funding mechanisms clearly apply whenever the waivers of sovereign immunity set forth in Md. Code. Ann., State Gov’t § 12-201 and Md. Ann. Code art. 25B, § 13A apply. The Court of Special Appeals improperly ruled that the funding mechanisms set-up by the General Assembly did not apply in this case.
Although because of the intermediate court’s ruling contractors must proceed with caution when entering into a construction contract with a county school board (perhaps even obtaining written affidavits from school officials that monies have been appropriated and will be maintained for payment to the contractor), relief should be on the way when the high court gets an opportunity to restore the prior law of long-standing and require local school boards, once again, to honor their commitments to the same extent as is required of all other state and local governments, agencies and boards.
For more information on this important issue, please contact:
David D. Gilliss
Pike & Gilliss, LLC
E-mail: Gilliss@PikeGilliss.com