Montgomery Park, LLC v. Maryland Department of General Services, Nos. 12 & 13, September Term, 2022. Opinion by Eaves, J.
STATE FINANCE AND PROCUREMENT – MARYLAND STATE BOARD OF CONTRACT APPEALS – LEGAL STANDARD OF REVIEW FOR CANCELLATION OF INTENDED PROCUREMENT AWARDS
The Supreme Court of Maryland held that in a bid protest filed under the State Finance and Procurement Article of the Maryland Code (“SF”), Title 15, Subtitle 2, the standard of review that the Maryland State Board of Contract Appeals (“Board”) must apply to a procurement officer’s decision to cancel a request for proposal (“RFP”) is the arbitrary or capricious standard.
In this case, the Procurement Officer for the Department of General Services (“DGS”) issued an RFP seeking bids for a new lease for the Maryland Insurance Administration (“MIA”) headquarters. The Procurement Officer thereafter cancelled the RFP after notifying Montgomery Park, LLC (“Montgomery Park”) that it was the intended awardee of the bid for new office space, but prior to approval of the bid by the Board of Public Works. Montgomery Park filed a bid protest with the Board, which reversed the Procurement Officer’s decision. The Supreme Court held that the Board erred in concluding that the Procurement Officer’s decision was arbitrary and capricious.
STATE FINANCE AND PROCUREMENT – BID PROTEST – STANDING
To file a bid protest under State procurement law, the protestor must be an interested party. An interested party is defined as an “actual or prospective bidder, offeror, or contractor that may be aggrieved by the solicitation or award of a contract, or by the protest.” Md. Code Regs. 21.10.02.01B(1).
The Supreme Court held that Montgomery Park lacked standing to protest the sole source renewal of the existing lease between MIA and St. Paul Place. The Court held that the RFP for office space and the subsequent renewal of the existing lease were two factually and legally distinct events that must be considered separately. The Court determined that, once the Procurement Officer cancelled the RFP, Montgomery Park was “no longer an ‘actual or prospective bidder [or] offeror[.]” With the RFP no longer in effect, under SF § 13- 105(g), the Procurement Officer was entitled to proceed with the renewal of the existing lease as a sole-source contract renewal, without soliciting other offers. Because Montgomery Park had no interest in the existing lease and was never in line for an award of a lease renewal under the sole-source renewal provisions of State law, the Court held that it lacked standing to challenge the renewal lease. Circuit Court for Baltimore City Case Nos. 24C20000887 & 24C20001565 Argued: October 3, 2022 IN THE SUPREME COURT
OF MARYLAND*
Nos. 12 & 13
September Term, 2022
MONTGOMERY PARK, LLC
v.
MARYLAND DEPARTMENT OF GENERAL SERVICES
Watts, Hotten, Booth, Biran, Gould, Eaves, Harrell, Glenn T., Jr. (Senior Justice, Specially Assigned)
JJ.
Opinion by Eaves, J.
Filed: February 24, 2023
* At the November 8, 2022, general election, the voters of Maryland ratified a constitutional Pursuant to the Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this amendment changing the name of the Court of document is authentic. Appeals to the Supreme Court of Maryland. The 2023-02-24 14:17-05:00 name change took effect on December 14, 2022.
Gregory Hilton, Clerk The dispute in this case arises from two decisions of the Maryland State Board of
Contract Appeals (“the Board”) that sustained two bid protests filed by Montgomery Park,
LLC (“Montgomery Park”). In 2017, the Maryland Department of General Services
(“DGS”), on behalf of the Maryland Insurance Administration (“MIA”), issued a Request
for Proposal (“RFP”) for office space. Although Montgomery Park was initially named
the intended awardee, DGS, through its Procurement Officer, later cancelled the RFP
before the award was presented to the Board of Public Works for approval. After
cancelling the RFP for new office space, the Procurement Officer negotiated a renewal of
MIA’s existing lease at 200 St. Paul Place in Baltimore City.
In response to DGS’s actions, Montgomery Park filed two separate bid protests—
one relating to the Procurement Officer’s decision to cancel the RFP, and a second one
relating to the renewal of the existing lease between MIA and St. Paul Place (hereinafter
referred to as “St. Paul Plaza” or “leased premise” as appropriate to the context). The
Procurement Officer denied both bid protests. The Procurement Officer determined that
the cancellation of the RFP complied with the applicable provisions of the State Finance
and Procurement Article of the Maryland Code and the Code of Maryland Regulations
(“COMAR”). With respect to the second bid protest, the Procurement Officer determined
that Montgomery Park did not have standing to challenge the lease renewal, but even if it
did, the lease renewal was negotiated pursuant to the provisions of State law that permit
the renewal of an existing lease without soliciting other offers. Thereafter, Montgomery
Park appealed the Procurement Officer’s decisions to the Board, which overturned the
Procurement Officer’s decisions. The Board determined that the Procurement Officer’s cancellation of the RFP and subsequent lease renewal violated Maryland procurement law.
In a separate opinion, the Board concluded that Montgomery Park had standing to
challenge the Procurement Officer’s renewal of MIA’s existing lease. Turning to the
merits, the Board ruled that the Procurement Officer violated the procurement law by
failing to document separately her reasons for determining that it was in the State’s best
interest to renew the lease with St. Paul Plaza.
DGS appealed the Board’s two decisions to the Circuit Court for Baltimore City,
which reversed the Board. Montgomery Park appealed the circuit court’s decisions to the
Appellate Court of Maryland (at the time named the Court of Special Appeals of
Maryland).1 The Appellate Court affirmed the circuit court’s rulings in a reported opinion.2
Montgomery Park petitioned this Court for a writ of certiorari, which this Court granted
on June 3, 2022.3 Montgomery Park presents the following questions for our review, which
we have rephrased as follows:4
1 At the November 8, 2022, general election, the voters of Maryland ratified a constitutional amendment changing the name of the Court of Special Appeals of Maryland to the Appellate Court of Maryland. The name change took effect on December 14, 2022. 2 Montgomery Park, LLC v. Maryland Dep’t of Gen. Servs., 254 Md. App. 73 (2022). 3 Montgomery Park, LLC v. Maryland Dep’t of Gen. Servs., 479 Md. 64 (2022). 4 The questions presented in the petition for a writ of certiorari were:
1. Is it arbitrary or capricious for a procurement officer to cancel the proposed award of a procurement contract without making independent “written findings” required by Maryland law to support that decision, and instead relying on someone else’s findings that were not supported by the administrative record? 2 1. Did the Board err in determining that the Procurement Officer’s decision to cancel the RFP for an office lease in connection with the relocation of MIA’s headquarters was arbitrary and capricious?
2. Did the Board err in determining that Montgomery Park, as the intended awardee of the RFP, had standing to challenge the renewal of MIA’s existing lease after the RFP was cancelled?
For the following reasons, this Court answers “yes” to both questions and shall affirm
the judgment of the Appellate Court of Maryland.
I. BACKGROUND
A. Statutory and Regulatory Background
Before we discuss the particular facts and procedural background of this case, it is
useful to provide an overview of Maryland procurement law.
Title 13 of the State Finance and Procurement Article of the Maryland Code and
Title 21 of COMAR govern the solicitation and award of certain state contracts, including
an agency’s leasing of real or personal property as a lessee. State Ctr., LLC v. Lexington
Charles Ltd. P’ship, 438 Md. 451, 503 (2014); Md. Code Ann., State Finance and
Procurement Article (“SF”) (1988, 2021 Repl. Vol.) § 11-101(n)(1).
“The procurement process begins with the procurement officer—the individual
authorized by an agency to enter, administer, and make determinations and findings with
respect to procurement contracts—who selects a procurement method and solicits bids for
procurement.” Brawner Builders, Inc. v. State Highway Admin., 476 Md. 15, 33–34 (2021)
2. Did Montgomery Park have standing to challenge the unlawful award of a sole source contract?
3 (citing SF § 11-101(p) (defining “procurement officer) and SF § 13-102 (permitting
procurement officer to solicit bids)). Under COMAR 21.03.04.01, “[e]ach determination
required by the State Finance and Procurement Article” or Title 21 of COMAR must be
written and “[b]ased on written findings of, and signed by, the person who made the
determination[.]”
After a bid is opened, but prior to an award, “if with the approval of the Board, a
unit[5] determines that it is fiscally advantageous or otherwise in the best interest of the
State, the unit may cancel the invitation for bids, a request for proposals, or other
solicitation[.]” SF § 13-206(b)(1); see also COMAR 21.06.02.02.02C(1) (“After opening
of bid proposals but before award, all bids or proposals may be rejected in whole or in part
where the procurement agency . . . determines that this action is fiscally advantageous or
otherwise in the State’s best interest.”).6 Additionally, if a procurement officer “determines
that renewal of an existing lease is in the best interest of the State, the procurement officer
may negotiate the renewal without soliciting other offers.” SF § 13-105(g); see also
COMAR 21.05.05.02D (“When it is determined to be in the best interest of the State, the
5 “Unit” is defined as “an officer or other entity that is in the Executive Branch of the State Government and is authorized by law to enter into a procurement contract.” SF § 11-101(y)(1). DGS is a “primary procurement unit” with the authority to designate procurement officers to “(1) enter into a procurement contract; (2) administer a procurement contract; or (3) make determinations and findings with respect to a procurement contract” on behalf of the State. SF § 11-101(m)(2), (p)(1)–(3). 6 SF § 13-206(b)(1) states that a “unit determines” whether the cancellation is in the best interest of the State. In the instant case, DGS is the “unit” for purposes of SF § 13- 206(b)(1). DGS’s Procurement Officer was Wendy Scott-Napier, who was also the Assistant Secretary of DGS during the pendency of the procurement at issue here. 4 procurement officer may negotiate the renewal of an existing real property lease without
soliciting other proposals.”).
Title 15, Subtitle 2 of the State Finance and Procurement Article sets forth the
statutory remedies for “dispute resolution.” State Ctr., 438 Md. at 505. A bid protest is a
“complaint relating to the solicitation or award of a procurement contract.” COMAR
21.10.02.01B(2). “A prospective bidder or offeror, a bidder, or an offeror” may submit a
protest to the procurement officer.” SF § 15-217(a)(1); see also COMAR 21.10.02.02A
(“An interested party may protest to the appropriate procurement officer against the award
or proposed award of a contract[.]”). If the protestor is dissatisfied with the procurement
officer’s decision, they may appeal to the Board pursuant to COMAR 21.10.07.02.
Under SF § 15-223(a)(1), a decision of the Board is subject to judicial review in
accordance with the Maryland Administrative Procedure Act (“APA”), Title 10, Subtitle 2
of the State Government Article (“SG”) (1984, 2021 Repl. Vol.). Section 10-222(h) of the
State Government Article provides the circuit court with the authority to take the following
actions with respect to an agency decision:
(1) remand the case for further proceedings;
(2) affirm the final decision; or
(3) reverse or modify the decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision:
(i) is unconstitutional;
(ii) exceeds the statutory authority or jurisdiction of the final decision maker;
5 (iii) results from an unlawful procedure;
(iv) is affected by any other error of law;
(v) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; [or]
* * *
(vii) is arbitrary or capricious.
Parties aggrieved by a final judgment of the circuit court may appeal to the Appellate
Court of Maryland. SG § 10-223(b)(1).
B. Factual Background
In August 2017, MIA’s headquarters was located at 200 St. Paul Place, in Baltimore
City, Maryland. MIA was a tenant under an existing lease with St. Paul Plaza, which was
set to expire in May 2019, subject to a five-year renewal option and a six-month holdover
period. Based upon concerns about parking options for its employees, MIA requested that
DGS issue an RFP for new office space. Approximately twelve vendors submitted
proposals, including Montgomery Park and St. Paul Plaza. After the submission period
closed, DGS’s Procurement Officer, Wendy Scott-Napier (hereinafter referred to as “the
Procurement Officer” or “Ms. Scott-Napier”) evaluated and listed each proposed location
in ranked order. Montgomery Park came in first place, while St. Paul Plaza came in second.
Accordingly, Ms. Scott-Napier notified Montgomery Park that it was the recommended
awardee for the procurement. DGS chose Montgomery Park over St. Paul Plaza because
“[c]urrently . . . not all MIA employees have access to free parking. Montgomery Park
6 operates a surface parking lot where all MIA employees would have access to free
parking.” 7
Following DGS’s selection of Montgomery Park as the intended awardee,
representatives of DGS, MIA, and Montgomery Park met in November 2018 to discuss the
logistics of the move from the St. Paul Plaza location to Montgomery Park. Montgomery
Park left that meeting “with an understanding that the lease was to be presented to the
Board of Public Works in January 2019.” However, on March 12, 2019, DGS informed
Montgomery Park that the MIA lease would be presented to the Board of Public Works for
approval on April 24, 2019.
During the same time in which DGS and Montgomery Park were negotiating the
terms of a new proposed lease, Ms. Scott-Napier was also attempting to negotiate a short-
term lease extension with St. Paul Plaza to provide additional time for MIA to prepare to
move to the Montgomery Park location. A St. Paul Plaza representative, however, rejected
the offer. Instead, the representative stated that St. Paul Plaza was only interested in a
multi-year lease.
Ms. Scott-Napier and another DGS representative met with a St. Paul Plaza
representative on March 29, 2019, to again discuss a short-term lease renewal. There were
no notes taken of this meeting, although, in a follow-up email to Ms. Scott-Napier, the St.
Paul Plaza representative stated:
7 DGS’s other reasons for selecting Montgomery Park included an annual savings of $337,705.27 and a “$3,337,052.70 savings over the full 10-year lease term, after factoring in the agency’s moving costs and a moving allowance provided by the landlord.” 7 I just wanted to send a reminder that in our meeting on March 29th, we determined a [Letter of Intent] with fully negotiated terms agreed upon by both parties would be delivered no later than April 24th or we would have to unfortunately continue negotiations with other tenants to fill the MIA space[.]
(Emphasis in original). Ms. Scott-Napier, however, disagreed with this summarization of
the meeting and testified that the only purpose of the meeting was to discuss a short-term
extension or holdover extension.8
As it was preparing to relocate, MIA concluded that the initial justification for the
request for proposals—primarily the lack of adequate parking—was not sufficient to justify
relocating to an area in which public transit options were not readily available. The
Maryland Insurance Commissioner, Alfred Redmer, Jr., was concerned about the impact
the proposed location would have on MIA. Accordingly, in a letter dated April 23, 2019,
Commissioner Redmer asked DGS to cancel the procurement of the MIA lease. He
provided four reasons to cancel the RFP:
1. The initial justification for the Request for Space has changed and is no longer valid. The MIA initiated a Request for Space with the intent of offering its staff improved parking options and less street construction and congestion. . . . [However,] it became clear that improved parking options were less critical to staff than access to multiple modes of public transportation; approximately 60% of MIA employees use public transportation to commute to and from work. [Montgomery Park] is not directly accessible by multiple city bus routes, regional commuter buses, Metro and Light Rail. Lack of direct access to [Montgomery Park] will requires employees to board a private [ ] shuttle[.] . . . Members of the
8 At the Board hearing, Ms. Scott-Napier testified that, at the March 29th meeting, “we [DGS] told them we could not discuss [a long-term] lease renewal” and that “we did not discuss terms.” According to Ms. Scott-Napier, DGS explained that it would know by April 24—the date of the Board of Public Works meeting—“whether we were moving to Montgomery Park[,]” because we would have sought approval for the lease.” 8 general public will not have access to the private shuttle and will be required to transfer to one of the two bus lines[.]
2. Employee retention will be significantly adversely impacted. . . . The MIA anticipates that its relocation to [Montgomery Park] will result in the departure of experienced regulatory staff with the specialized insurance-related knowledge and expertise needed to perform its regulatory functions. An increase in employee turnover and the time and expense to recruit and train new staff will be particularly detrimental to the MIA’s operations[.]
3. Interruption of MIA operations and regulation of Maryland’s insurance industry will hurt Maryland consumers and businesses. The moving cost estimate did not consider the interruption to regulatory operations during the relocation period which is projected to last several weeks. This interruption could have a significant adverse effect upon consumers and the regulation of the Maryland insurance industry.
4. Insurance companies doing business in Maryland have opposed the move on the basis that it will be the second time in 10 years that these companies must fund the MIA’s relocation. Among other regulated entities, several large insurance companies, one a Maryland domestic company, have complained that the relocation of the agency twice in 10 years is a wasteful expenditure of their funds. The moving cost estimate did not consider that the relocation would increase the cost of doing business in Maryland. Should a company leave the state, this will not only hurt consumers of insurance, but will reduce jobs, and reduce the premium tax revenue.
(Emphasis in original). Commissioner Redmer concluded that it was “in the best interest
of the State to cancel this procurement.”
That same day, Ms. Scott-Napier sent a letter to Montgomery Park cancelling the
RFP. The letter did not state a reason for cancelling the procurement, “only that ‘[a]t the
request of [MIA], [DGS] is canceling [the] RFP [.]’” Ms. Scott-Napier, however, attached
Commissioner Redmer’s April 23 letter to DGS outlining the reasons MIA wanted to
cancel the procurement. She then prepared a Procurement Officer’s Written Determination
9 in which she summarized Commissioner Redmer’s April 23 letter and concluded that
“[b]ased on the rationale presented, I find that the RFP is no longer in the State’s best
interest and recommend approval of MIA’s request.”
Having cancelled the RFP, the Procurement Officer then determined that it was in
the best interest of the State to renew MIA’s lease with St. Paul Plaza, and proceeded to
negotiate the renewal of MIA’s lease with St. Paul Plaza without soliciting other offers.
The Board of Public Works ultimately approved DGS’s request to renew MIA’s lease with
St. Paul Plaza on January 8, 2020.
Montgomery Park filed two bid protests with Ms. Scott-Napier, in her capacity as
DGS’s Procurement Officer, as provided for in SF § 15-217(a)(1). We examine each bid
protest and subsequent appeal in turn.
C. Montgomery Park’s First Bid Protest
Montgomery Park’s first bid protest related to Ms. Scott-Napier’s decision to cancel
the procurement (“First Protest”). Specifically, Montgomery Park contended that “DGS’s
decision to cancel the RFP was arbitrary and capricious, lacked a rational basis, and was
otherwise unreasonable.” In support thereof, Montgomery Park argued that the
cancellation notice violated COMAR 21.03.04.01 and 21.06.02.02 because there was “no
determination made by DGS that cancellation is ‘fiscally advantageous or otherwise in the
State’s best interest,’ nor are there reasons offered by DGS why cancellation is necessary.”
Moreover, according to Montgomery Park, Commissioner Redmer’s April 23 letter did not
provide “DGS with a rational basis to support its decision to cancel the RFP.” Finally,
Montgomery Park contended that MIA’s reasons for cancellation were “pretextual” and
10 meant “to prevent the State of Maryland from entering into a lease agreement with anyone
other than St. Paul Plaza.” (Emphasis in original).
Ms. Scott-Napier denied Montgomery Park’s First Protest. She stated that “[a]fter
careful and detailed consideration of all the factors . . . I determined that [ ] the solicitation
was no longer justified, and that cancellation of the RFP was fiscally advantageous and in
the best interest of the State.” Ms. Scott-Napier rejected Montgomery Park’s contention
that the cancellation notice violated COMAR, reasoning that the “absence of a continued
need for the procurement is, in and of itself, a sufficient reason for cancelling the RFP.”
She determined that MIA had a rational basis for requesting that the RFP be canceled,
which was explained in Commissioner Redmer’s letter, and that DGS evaluated the
concerns, and reached the same conclusion. Montgomery Park appealed DGS’s denial of
the First Bid Protest to the Board.
D. Montgomery Park’s Second Bid Protest
On September 27, 2019, Montgomery Park filed a second bid protest challenging
DGS’s decision to renew MIA’s lease with St. Paul Plaza (“Second Protest”). To support
its claim, Montgomery Park argued that: (1) DGS violated COMAR because the
Procurement Officer negotiated the MIA lease with St. Paul Plaza without first
determining, in writing, that the lease renewal was in the best interest of the State; (2) it
was not in the State’s best interest to renew the lease with St. Paul Plaza; and (3)
Montgomery Park had proper standing because it was aggrieved by DGS’s unauthorized
negotiations with St. Paul Plaza and the award of the lease renewal.
11 As a threshold matter, before considering the merits of the Second Protest, Ms.
Scott-Napier addressed the timeliness of the bid protest and Montgomery Park’s standing.
First, she determined that Montgomery Park’s Second Protest was untimely. She
concluded that Montgomery Park should have, pursuant to COMAR 21.10.02.03B, filed
its Second Protest within seven days of July 23, 2019. Second, she concluded that
Montgomery Park lacked standing because it was not an interested party to the lease
renewal. In other words, Ms. Scott-Napier believed that the lease renewal was solely
between DGS and St. Paul Plaza, and therefore did not include Montgomery Park. Finally,
Ms. Scott-Napier determined that, even if the protest was timely and Montgomery Park
had standing, the protest must be denied on the merits. She reasoned that COMAR does
not require the procurement officer to make a written determination prior to negotiating a
lease renewal. Montgomery Park appealed DGS’s denial of the Second Protest to the
Board.
E. Montgomery Park’s First Appeal to the Board of Contract Appeals
In Montgomery Park’s appeal to the Board as to the First Protest, the parties debated
the applicable standard of review that the Board must apply when reviewing the
Procurement Officer’s decision to cancel the RFP. Montgomery Park urged the Board to
find that the cancellation was arbitrary or capricious and that there was no rational basis to
support the cancellation. For its part, DGS asked the Board to consider whether the
cancellation was “so arbitrary as to be fraudulent or a breach of the public trust.”
At the Board hearing, Ms. Scott-Napier testified that she canceled the RFP because
she determined that it was in the State’s best interest to do so. She testified that she knew
12 of MIA’s concerns about moving to Montgomery Park before the April 23, 2019,
cancellation, and explained that, “when we met in February we were reviewing the moving
costs to address their concerns, but were still working toward seeking approval for the
Montgomery Park lease.” She stated that she asked Commissioner Redmer to put MIA’s
concerns in writing. She reviewed Commissioner Redmer’s letter and considered MIA’s
reasons “to be legitimate because of the conversations that I had with MIA,” and “[b]ecause
I’m hearing it directly from Al Redmer and I take it seriously.” Ms. Scott-Napier
acknowledged that she did not state her reasons for cancelling the RFP specifically in her
letter to Montgomery Park, but explained that she failed to do so because she “felt it had
been stated in the Redmer letter” that was attached to her cancellation letter.
Commissioner Redmer also testified at the hearing. He acknowledged that “[o]nce
Montgomery Park was announced as the awardee of the RFP, there was instant heartburn”
among MIA employees who were not in favor of the move. Commissioner Redmer
testified that over time, he became concerned about the move to Montgomery Park:
Well, there was certainly a cumulative effect. So while I’m hearing heartburn from all these internal and external forces, while we’re hearing the heartburn, we’re working on a daily basis, my Deputy, in preparing for a move. . . .
As we rounded the end of 2018, I had growing concern about the items that I mentioned and the risk of not having a home. You know, the lease expires May 1 of 2019. We had an automatic extension of six months until November 1st, what? Two weeks from now. You know, as we got into the spring of 2019, you can’t move 250 people in 4 or 5 or 6 months. You just can’t do it.
So when you look at the fact that we didn’t have a lease, I have a lease that’s expiring with 250 people that I need to have desks for. That, in addition to all of the other heartburn is what raised my temperature.
13 He testified that he explained his concerns to DGS in his April 23 letter, pointing out that
“the issue of parking no longer outweighed everything else.”
The Board issued its opinion concerning the First Protest on January 20, 2020.
Before addressing the merits, the Board discussed at length the applicable standard of
review it was applying to the Procurement Officer’s decision to cancel the RFP. The Board
noted that the applicable standard of review was “muddled with inconsistencies.” To
resolve the confusion, the Board provided a detailed analysis of its previous opinions and
ultimately concluded that the standard of review is the arbitrary and capricious standard.
Turning to the merits, the Board concluded that the Procurement Officer’s process
for cancelling the award was flawed. The Board stated:
In this case, it is clear from the evidence presented, both in documentary form and from witness testimony, that the reasons stated in support of the [Procurement Officer’s] determination that it was in the best interest of the State to cancel the solicitation were, in fact, the four reasons asserted by Mr. Redmer for why Mr. Redmer believed it was in the State’s best interest to cancel. The [Procurement Officer] wholly adopted Mr. Redmer’s reasons as her own, admittedly, without undertaking any significant independent investigation to confirm that the facts stated by Mr. Redmer were accurate. In short, the process by which she made her determination was flawed.
The Board reasoned that the Procurement Officer should not have wholly adopted
the MIA Commissioner’s reasoning. Instead, according to the Board, it was the
Procurement Officer’s duty to independently investigate the MIA Commissioner’s four
reasons for requesting that the intended award be cancelled. The Board opined, because
she failed to do so, that the Procurement Officer could not have reasonably concluded that
the cancellation of the intended award was in the State’s best interest. As such, the Board
14 concluded that the Procurement Officer’s decision to cancel the procurement was
unreasonable, arbitrary, and capricious, noting:
In this case, the [Procurement Officer’s] abrupt determination that it was in the State’s best interest to cancel the solicitation was, in effect, made by the head of the using agency, the MIA, rather than the [Procurement Officer] and the procurement agency, DGS. The process by which the [Procurement Officer] made her determination was flawed: she adopted virtually whole cloth the head of the using agency’s reasons for wanting to cancel the procurement without verifying the facts supporting his assertions and exercising her independent judgment based on those verified facts. The stated concerns may well have been legitimate and factually based, but it was incumbent upon the [Procurement Officer] to investigate and determine whether the facts adequately support those concerns and to weigh all the advantages and disadvantages to the State of cancelling this solicitation before making a determination that cancelling was in the State’s best interest.
Thus, the Board sustained Montgomery Park’s appeal with respect to the First Protest.
F. Montgomery Park’s Second Appeal to the Board of Contract Appeals
Montgomery Park also appealed the Procurement Officer’s denial of its Second
Protest to the Board. As noted above, Montgomery Park argued that the Procurement
Officer violated the State Finance and Procurement Article of the Maryland Code because
she failed to make a written determination stating the reasons it was in the State’s best
interest to renew MIA’s lease with St. Paul Plaza.
As a threshold matter, the Board, like the Procurement Officer, addressed the issue
of standing. Unlike the Procurement Officer, however, the Board found that Montgomery
Park had standing to protest the renewal of MIA’s lease with St. Paul Plaza, reasoning that
because the lease renewal “arises and flows from the wrongful cancellation of the prior
competitive procurement[,]” Montgomery Park was an aggrieved party. In other words,
15 according to the Board, the two bid protests must be considered together when deciding
standing.
Likewise, the Board addressed whether Montgomery Park had timely filed its
Second Protest. The Board determined that Montgomery Park was obliged to filed its
Second Protest within seven days of September 23, 2019. Given that Montgomery Park’s
Second Protest was filed on September 27, 2019, the Board opined that it was, in fact,
timely.
The Board next addressed the merits of the appeal and concluded that the
Procurement Officer violated the applicable provisions of COMAR by failing to document
her reasons for determining that it was in the State’s best interest to renew MIA’s current
lease. Thus, the Board sustained Montgomery Park’s Second Protest.
G. Judicial Review in the Circuit Court for Baltimore City
Following the Board’s two decisions, DGS petitioned for judicial review in the
Circuit Court for Baltimore City. The circuit court issued two memorandum opinions
reversing each of the Board’s decisions. Regarding the Board’s first opinion (January 2,
2020), the court found that when the Board adopted Montgomery Park’s espoused standard
of review, it departed from its own precedent. Thus, according to the court, the Board acted
arbitrarily and capriciously. As to the Board’s second opinion (February 8, 2021), the court
found that Montgomery Park’s protest was untimely. Consequently, the circuit court
concluded that the Board lacked jurisdiction to hear the second appeal. Montgomery Park
timely appealed the circuit court’s two rulings to the Appellate Court of Maryland.
16 H. Appellate Court of Maryland
The Appellate Court of Maryland, having consolidated the appeals, affirmed the
judgments of the circuit court in a reported opinion. Montgomery Park, LLC v. Maryland
Dep’t of Gen. Servs., 254 Md. App. 73 (2022). The intermediate appellate court held that
the Board’s overall conclusion, that the standard of review is one of arbitrariness or
capriciousness, was “fundamentally correct.” Id. at 100. However, the court reasoned that
the Board improperly applied this standard by assigning to DGS the burden to
independently investigate the MIA Commissioner’s reasons for wanting to cancel the
procurement. Id. at 103.
The Appellate Court of Maryland also determined that Montgomery Park lacked
standing to file the Second Protest. The court pointed out that under COMAR 21.10.03.02,
only an interested party may file a bid protest, which is defined as “an actual or prospective
bidder, offeror, or contractor that may be aggrieved by the solicitation or award of a
contractor or by the protest.” Id. at 106 (citing COMAR 21.10.02.01B(1)). In addition,
the court opined that one must be in line for the procurement award to be an interested
party. Id. at 103. The court determined that, once the Procurement Officer cancelled
Montgomery Park’s intended award, the relationship between Montgomery Park and DGS
was severed. Therefore, the Appellate Court reasoned, Montgomery Park was no longer in
line for an award and lacked standing to challenge the decision to renew the lease with St.
Paul Plaza.
17 II. STANDARD OF REVIEW
“When this or any appellate court reviews the final decision of an administrative
agency such as the [Board of Contract Appeals], the court looks through the circuit court’s
and intermediate appellate court’s decisions, although applying the same standards of
review, and evaluates the decision of the agency.” Anne Arundel Cty. v. 808 Bestgate
Realty, LLC, 479 Md. 404, 419 (2022) (citations omitted).
When reviewing an agency’s findings of fact “we affirm the agency’s decision if
there is substantial evidence in the record as a whole to support the agency’s findings and
conclusions.” Id. (internal citations and quotations omitted). Moreover, we presume them
to be valid. Id. This Court, however, reviews conclusions of law de novo and we afford
the agency “no such deference.” Id.
III. ANALYSIS
The two questions posed by Montgomery Park relate to its first and second bid
protests, respectively. Therefore, we will examine each question presented within the
context of the relevant bid protest. Before we turn to the merits, we first address the proper
standard of review that the Board must apply in reviewing a procurement officer’s decision
to cancel a RFP.
18 A. The Standard of Review Applicable to the Board’s Review of a Procurement Officer’s Decision to Cancel an RFP
In its first opinion, the Board explained that it has historically used the standard of
review articulated in Hanna v. Board of Education of Wicomico County when reviewing
the cancellation of procurement solicitations and awards. 200 Md. 49 (1952). In Hanna,
this Court stated:
On a suit by a taxpayer, a court of equity will not review the exercise of discretion of an administrative agency, if it acts within the scope of its authority, unless its power is fraudulently or corruptly exercised; but the court will restrain an agency from entering into or performing a void or ultra vires contract or from acting fraudulently or so arbitrarily as to constitute a breach of trust.
Id. at 51 (citations omitted).
The Board noted that its use of the standard of review articulated in Hanna has been
“muddled with inconsistencies.” Particularly, the Board opined that although it often cites
Hanna in its procurement cancellation cases, the Board’s application has varied in several
ways. After engaging in a survey of its opinions and the Board’s inconsistent application
of the standard of review in its procurement cancellation cases, the Board came to two
conclusions:
First, the Board concluded that the Hanna standard of review only applies to courts
of equity, and therefore not to the Board:
[i]t is clear that the standard of review cited . . . in Hanna pre-dated the passing of the APA by five (5) years, and thus it was meant to be applied by courts of equity, usually in taxpayer standing. It set a high standard to meet before a court of equity could enjoin the anticipated actions of an administrative agency. But this Board is not a court of equity and does not have equitable powers to enjoin the conduct of administrative agencies.
19 Second, the Board concluded that the Hanna standard of review is inconsistent with
the APA standard of review:
[a]lthough the Hanna standard has been proliferated throughout the Board’s short history of jurisprudence, it does not appear that any of the Board’s decisions ever gave more than a passing thought to whether the Hanna standard was appropriate post-APA[.]
Lacking any binding or persuasive authority on this issue in Maryland case law, we look to the APA . . . for guidance. Clearly, the Hanna standard is inconsistent with the APA Standard of Review that courts use when reviewing administrative decisions in contested cases.
[Because] the ‘fraudulent or so arbitrary as to constitute a breach of trust’ standard cited by in Hanna is considered a higher standard than that set forth in the APA[ ] standard of review, we hereby reject that proposed standard of review. Our standard of review for all bid protests, including cancellations of solicitations before bid/proposal opening and rejection of all bids/protests after bid opening but before award, is this: a procurement officer’s decision will be overturned only if it is shown by a preponderance of the evidence that the agency action was biased, or that the action was arbitrary, capricious, unreasonable, or in violation of law.
We agree with the Board’s conclusion that, when the Board undertakes a review of
a procurement officer’s decision to cancel a RFP, the standard of review is whether the
procurement officer’s decision is arbitrary or capricious. We do not, however, agree with
the Board’s conclusion that our discussion of the standard of review in Hanna is
inconsistent with the arbitrary or capricious standard of review. As articulated by the
Appellate Court of Maryland, the Hanna standard of review does not “replace arbitrariness
or capriciousness[.]” Montgomery Park, LLC, 254 Md. App. at 102. Instead, it represents
20 the “sort of conduct that would demonstrate arbitrary or capricious decision-making[.]” Id.
at 100–03.
The prepositional phrase “as to” in “so arbitrary as to constitute a breach of trust”
means to what extent an action will be considered arbitrary. See As to, Merriam-Webster’s
Dictionary (11th ed. 2020). Thus, the Court in Hanna merely determined that when an
action reaches the point of being a breach of trust, it becomes arbitrary. Hanna, 200 Md.
at 51. In other words, the Hanna Court “phrased the standard in terms of arbitrariness to a
degree reflecting fraud or a breach of trust.” Montgomery Park, LLC, 254 Md. App. at
101.
Accordingly, we hold that, when the Board undertakes a review of a procurement
officer’s decision to cancel a RFP, the applicable standard of review that the Board must
apply is whether the procurement officer’s decision was arbitrary or capricious. With the
correct articulation of the standard of review, we consider whether the Board correctly
applied that standard when reviewing Ms. Scott-Napier’s decision in this instance.
B. Montgomery Park’s First Protest—Was the Procurement Officer’s Decision to Cancel the RFP Arbitrary or Capricious?
Montgomery Park argues that the Procurement Officer’s cancellation of its intended
award was arbitrary or capricious. In support of its claim, Montgomery Park contends that
the Procurement Officer needed to independently investigate Commissioner Redmer’s four
reasons for wanting to cancel the intended award, not just adopt them. Montgomery Park
insists that this Court’s opinion in Maryland Office of People’s Counsel v. Maryland Public
Service Commission justifies this type of burden-shifting approach. 461 Md. 380 (2018).
21 In People’s Counsel, this Court reiterated that the arbitrary or capricious standard is
“similar to the standard under federal administrative law.” Id. at 399 (footnote omitted).
In doing so, the Court noted several factors9 a reviewing court considers when determining
if an agency’s actions are arbitrary or capricious. Id. at 399 n.16. Moreover, we
emphasized that it is the “petitioner [who] must overcome [the] very deferential standard
to rebut the presumption that the [agency] exercised its discretion properly.” Id. at 400. In
other words, it is petitioner’s burden to prove the relevant factors necessary to support a
finding that the agency’s action was arbitrary or capricious. Thus, in this instance, it is
Montgomery Park’s burden to provide evidence that the Procurement Officer’s
cancellation of the RFP was arbitrary or capricious.
Instead, the Board found that the Procurement Officer had an independent duty to
investigate and verify Commissioner Redmer’s four reasons for wanting to cancel the
procurement. The Board’s conclusion that the Procurement Officer was required to
conduct a “significant independent investigation to confirm that the facts stated by Mr.
9 The factors are whether:
(1) there is a rational connection between the facts found and the choice made; (2) the decision was based on a consideration of the relevant factors; (3) there has been clear error of judgment; (4) the agency relied on factors which Congress has not intended it to consider; (5) the agency has entirely failed to consider an important aspect of the problem; (6) there is an explanation for a decision that runs counter to the evidence; and (7) the decision is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
People’s Counsel, 461 Md. at 399 n.16 (citing Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983)). 22 Redmer were accurate” has no basis in law. “There is no language in any statute,
regulation, Board decision, or case imposing [such] a requirement on” the Procurement
Officer. Montgomery Park, LLC, 254 Md. App. at 103.
To the contrary, our review of the record supports the conclusion that the
Procurement Officer did, in fact, exercise her discretion in determining that Commissioner
Redmer’s four reasons were legitimate. In her testimony before the Board, the
Procurement Officer stated that she cancelled the RFP because Commissioner Redmer had
articulated reasons why cancellation was in the best interests of the State, and that she
agreed with those reasons:
[COUNSEL FOR DGS]: So based on your review of [the April 23rd] letter, and your discussions with MIA during this April 18 to 23rd timeframe, what was your determination?
[MS. SCOTT-NAPIER]: That we should cancel the RFP.
[COUNSEL FOR DGS]: And did you conclude that it was in the best interest of the State and fiscally advantageous to cancel that procurement?
[MS. SCOTT-NAPIER]: I did. That was in my written procurement officer’s determination that was in our file. Not specifically stated in my letter, but I felt it had been stated in the Redmer letter.
We agree with the Appellate Court of Maryland that “[t]his was all that was required
of Ms. Scott-Napier.” Id. at 104.
We further determine that the Board erred when it engaged in a detailed explanation
of what, in its view, the Procurement Officer should have done to evaluate whether a
relocation to Montgomery Park was in the best interest of the State. In doing so, the Board
substituted its judgment for the judgment of the Procurement Officer, Ms. Scott-Napier,
23 and Commissioner Redmer. We agree with the intermediate appellate court that the
Procurement Officer was entitled to “rely on the rationale articulated by the head of the
tenant agency, who is closer to the needs and concerns than the Board is[.]” Id. at 105.
Moreover, Montgomery Park offered no evidence or testimony to contradict or undermine
Commissioner Redmer’s reasons for requesting the cancellation.
In conclusion, we hold that the Procurement Officer’s decision to cancel the RFP
was not arbitrary or capricious. The record clearly reflects that Commissioner Redmer, the
head of MIA, articulated his reasons for why the relocation of this state agency was not in
the best interests of the State. Based upon our review of the record, Ms. Scott-Napier
exercised her discretion and judgment in determining that Commissioner Redmer’s four
reasons were persuasive on their face. Montgomery Park offered no evidence or testimony
that refuted Commissioner Redmer’s reasons for requesting the cancellation or the
appropriateness of the Procurement Officer’s decision to rely on them.
C. Montgomery Park’s Second Protest—Did Montgomery Park Have Standing?
Turning to the second question presented in this case, Montgomery Park asserts that
it had standing to challenge the renewal of the MIA lease with St. Paul Plaza.
Under COMAR 21.10.02.02A, “[a]n interested party may protest to the appropriate
procurement officer against the award or the proposed award of a contract subject to this
title[.]” An interested party is “an actual or prospective bidder, offeror, or contractor that
may be aggrieved by the solicitation or award of a contract, or by the protest.” Id.
21.10.02.01B(1).
24 Here, the Board concluded that Montgomery Park was an interested party and was
aggrieved. In its analysis, the Board considered the First Protest and Second Protest
together. The Board opined that Montgomery Park was an actual offeror in the initial
competitive procurement, and that, but for the wrongful cancellation of the competitive
procurement, the lease renewal between MIA and St. Paul Plaza would not have occurred;
therefore, Montgomery Park was “undeniably aggrieved” by the lease renewal. We
disagree. For the following reasons, the Board improperly considered the two bid protests
together in reaching its conclusion that Montgomery Park has standing to lodge the Second
Protest.
The First Protest by Montgomery Park challenged the Procurement Officer’s
decision to cancel a competitive sealed bidding process for which Montgomery Park was
the recommended awardee. Neither party disputes Montgomery Park’s standing to protest
the cancellation of the procurement. Because the procurement process only involved DGS
and Montgomery Park, the promise and the benefits set forth in the proposed award were
directed to Montgomery Park, which as “an actual or prospective bidder may be aggrieved
by” the cancellation of the procurement. Id. 21.10.02.01B(1). We have no quarrel with
this finding by the Board as to Montgomery Park’s standing to challenge the cancellation.
The Second Protest, however, related to DGS’s decision to renew MIA’s existing
lease pursuant to the statutory and regulatory provisions that permit a sole-source renewal
of an existing lease without engaging in a competitive bidding process. See SF § 13-105(g)
(“If a procurement officer determines that renewal of an existing lease is in the best
interests of the State, the procurement officer may negotiate the renewal without soliciting
25 other offers.” (emphasis added)); COMAR 21.05.05.02 (same). We agree with the
Appellate Court that “the First Protest and Second Protest are factually and legally distinct
events and must be considered separately.” Montgomery Park, LLC, 254 Md. App at 107.
As aptly stated by our colleagues on the intermediate appellate court, “[a]lthough the
timeline supports the Board’s assertion that the sole-source procurement ‘arises and flows’
from DGS’s decision to cancel the RFP with Montgomery Park, that logical and temporal
connection doesn’t give Montgomery Park a legal interest in the sole source renewal lease.”
Id.
Second, as the intermediate appellate court observed, “in order to qualify as an
interested party and thus to have standing, one must be “in line for award.” Id. at 107
(quoting Branch Off. Supply, MSBCA No. 2437 at 3 (2003), and citing DESCO Assoc.,
MSBCA No. 2680 at 2 (2010); James F. Knott Constr. Co., Inc., MSBCA No. 2437 at 3
(2004)). We conclude that Ms. Scott-Napier correctly determined that, “[b]ecause
Montgomery Park is not the holder of the existing real property lease, even if the protest
were to be sustained, Montgomery Park would not be in line for a lease renewal under
COMAR 21.05.05.02(D), the COMAR provision permitting DGS to renew the current
lease for office space for MIA.” Ms. Scott-Napier’s cancellation of the RFP severed the
relationships between Montgomery Park, DGS, and MIA. Once the RFP was cancelled,
Montgomery Park was no longer “an actual or prospective bidder or offeror” under
COMAR 21.05.05.(D). With the RFP no longer outstanding, Ms. Scott-Napier was entitled
to negotiate the lease renewal with the existing leaseholder as a sole-source contract
renewal, without soliciting other offers. See SF § 13-105(g). Montgomery Park had no
26 interest in the existing lease and was never in line for the renewal lease between DGS and
St. Paul Plaza. Accordingly, we determine that Montgomery Park lacked standing to
challenge the decision of the Procurement Officer to renew the lease between MIA and St.
Paul Plaza.10
IV. CONCLUSION
In conclusion, we hold as follows:
1. In a bid protest, the standard of review that the Maryland State Board of
Contract Appeals must apply to a procurement officer’s decision to cancel a request for
proposals is whether the procurement officer’s decision was arbitrary or capricious.
2. The Procurement Officer’s decision to cancel the RFP, after making a
recommended award and prior to presenting it to the Board of Public Works, was not
arbitrary or capricious.
3. Montgomery Park lacked standing to protest the sole-source renewal of the
existing lease between MIA and St. Paul Plaza.
JUDGMENT OF THE APPELLATE COURT OF MARYLAND AFFIRMED. COSTS TO BE PAID BY PETITIONER.
Because we hold that Montgomery Park lacked standing, we do not address 10
whether the Second Protest was timely filed or the merits of whether the Board correctly concluded that DGS violated State procurement law by failing to make a written determination that renewing the existing lease was in the best interest of the State. 27