OPINION NO. 01-03
An opinion has been requested by a private engineering firm as to whether it is barred by §15-508 from bidding on a State Highway Administration (SHA) Invitation for Bids (IFB) by virtue of its review of a SHA's draft storm water management on behalf of the Maryland Department of Environment which was later included in the "Detail Build" IFB. We advise on the information provided and a careful review of the total circumstances of this request that the requestor's activities related to the Department of Environment did not constitute assistance in preparing the specification for the SHA's IBF and does not have the effect of disqualifying the requestor pursuant to §15-508 of the Ethics Law.
The request involves a pending procurement at the SHA for the design and construction of a two and one-half mile stretch of US 113 for the purpose of improving and increasing travel capacity through a dualized highway. The traditional approach to highway contracts has been for SHA either by its own staff or in combination with consultant engineers to develop the entire set of plans and specifications including construction notes and material quantities for the project. It would be a complete plan which when finalized would be competitively bid, with the successful bidder doing the building or renovation of the highway according to the plans and specifications.
The contract being procured in this request is a "Detail Build" contract however. "Detail Build" varies from the traditional contracting mechanism in that the contractor is required to perform final design activities itself. In the detail-build approach, SHA either through its staff or with consulting engineers develop plans and specifications that are only about 30% complete. Generally the plans do not include any construction notes. SHA then bids the project with the understanding that the successful bidder will complete the design activities and do the construction. Generally the bidders on these jobs are joint venturers and involve an engineering firm and a construction firm. According to SHA officials, the bid process is one of two steps. First they solicit firms who may be interested in bidding and "short-list" the qualified bidders. This review is based on the qualification of the bidders. The shortlist of bidders is then invited to prepare finished design documents and submit bids for the construction. SHA pays the bidders up to a certain amount for their bid. The final bid is a lump sum bid which is to complete the rest of the engineering and construct the highway.
According to SHA officials, SHA recently used "detail-build" approach for about 7 projects over the past 2 years. The "detail-build" approach places the burden on the bidders to perform final design activities and determine, for example, quantities of construction materials (e.g. number of feet of guardrail, cubic yards of dirt, quantity of asphalt) that the builder will need to determine the construction costs. The advantage to the State of the "detail build" approach is that it takes less time to get the construction underway than the traditional approach.
Prior to undertaking any construction, SHA is required to submit a storm water management plan for the proposed work for review and approval by the Maryland Department of Environment (MDE). MDE regulations require MDE to review and approve all storm water management plans for State and federal construction projects. These plans are submitted prior to construction for MDE review, comment and approval. MDE regulations require that storm water management plans be prepared by professional engineers, professional land surveyors and landscape architects as appropriate. The regulations further specify what reports must be submitted with plans for approval. Included are such requirements as the following: (1) Brief narrative description of project; (2) Geotechnical investigations including soil maps and site specific recommendations; (3) Hydrologic computations, including drainage area maps; (4) Hydraulic computations; (5) Structural computations; and (6) Construction drawings, including vicinity and topography maps. MDE has adopted a design manual effective July 1, 2001 ("2000 Maryland Stormwater Design Manual-Volumes I & II). Prior to July 1st, agencies followed 8 or 9 "design papers" which had been issued by MDE.
The Plan Review Section of the Water Management Administration of MDE receives and reviews the storm water management plans submitted by various State and Federal agencies. The review varies with the proposed plans submitted. "Traditional" plans, that are 100% plans and which set forth all constructions site conditions and water management tools to be used, receive MDE review and comment, and possible clarifications from the agency, resulting in a final approval of the plan by MDE. However in regard to "detail build" drawings that are only 25% or 30% complete and contain little or no construction notes, MDE's review is a conceptual one with the understanding that the final design of the project will require further review and approval. The agency submits a "base hydrology model" of how storm water will be managed. MDE approves the use of the model or the concept as being applicable to certain areas of the construction project. The successful detail build contractor is responsible for final approvals from MDE as the design is completed and is not necessarily bound to the original MDE approval of the model.
MDE because of limited resources has reached an accommodation with certain agencies, like SHA, to provide MDE with professional engineers through contracts with engineering firms who will review the storm water management plans and provide comments and recommendations for review by MDE officials and MDE final decision. The requestor is one of seven or eight engineering firms under contract with SHA to provide qualified engineers to review SHA storm water management plans on behalf of MDE at MDE offices.1
In the instant matter, SHA submitted a storm water management plan for the US 113 project in August, 2000. Because it was a "detail-build" proposal the plans were approximately 30% complete and was submitted to MDE for conceptual approval. The plan was reviewed by a professional engineer from the requestor's engineering firm who drafted comments and made recommendations to MDE's Chief of Plan Review. There was apparently some exchange of comments between MDE and SHA which eventually resulted in MDE approving the concept in February 2001 and noting that the final design when completed would require further MDE review.
In late March 2001, SHA issued the IFB for the "detailed build" contract for US 113. The IFB included a copy of the February letter from MDE and noted that the detail build successful contractor would be responsible for obtaining final approval of the storm water management plan from MDE for the project. In early May, 2001, SHA distributed the draft storm water management plan to potential bidders. Apparently in late May, 2001, SHA became aware that the requestor's professional engineer assigned to MDE had reviewed the draft storm water management plan for MDE and SHA raised the issue with the requestor. The requesting engineering firm submitted a proposal with a construction contractor in response to the IFB and was the lower bidder on the project. It subsequently requested advice from us on the application of §15-508 of the Public Ethics Law (State Government Article §15-508, Annotated Code of Maryland, the Ethics Law).
The procurement provision of the Ethics Law was added to the code effective October 1, 1994. This section prohibits an entity from bidding on or assisting with the bid for a procurement if that entity or an employee of the entity assisted an executive unit of State government in developing specifications, invitations for bid or requests for proposals in connection with the procurement. We have addressed questions presented by this provision in several prior advice situations, advising that where an entity contracts with an agency to prepare planning documents for a project and the results of the planning process become the definition of the project that subsequent bidders bid to implement, then the planning contractor has assisted in drafting specifications for the implementation phase and is barred by §15-508 from bidding or otherwise being involved in the later phase.
More particularly, we advised in Opinion No. 94-9, for example, that the definition of operational and performance requirement for a system, as well as descriptions of required hardware and software that were to be used in a subsequent procurement resulted in a bar from the later procurement (opinions published in COMAR Title 19A). Later in Opinion No. 95-13, the development of a program document to be used for fiscal and program justification and for developing subsequent procurement documents in a capital project was found to constitute assisting in drafting specifications. Opinion No. 98-9 involved computer system development being handled in several stages. We advised in that opinion that a "Blueprint" contained in a program document and relied upon as the basis for a second stage barred the developer from participation in the second stage procurement, but that the developer could possibly be involved in a later stage, assuming that as a matter of fact the intervening second contract clearly resulted in a third stage that was separate and distinct from the earlier Blueprint development. Opinion 99-01 involved the legislative amendment to §15-508 for architect and engineering activities related to capital projects. In Opinion 00-01, we found that a contractor on a planning contract for child welfare information system had included in the planning phases sufficient information to be deemed to have assisted in the drafting of specifics for the monitoring contract. Additionally in Opinion 01-02 we found that the RFP review activities of a former State employee were sufficient to conclude he had assisted in the drafting of the specifications and that his new employer was barred by §15-508 from bidding on that procurement.
In addition to formal and informal advisory documents, the Commission issued a general information memorandum on this section designed to respond to anticipated questions under the provision. Considering the question of what constitutes "assistance," the memorandum reflects the Commission's view that identifying non-agency functions that constitute assisting in drafting is a factual determination to be judged by all of the surrounding circumstances. In the situation presented here, and after careful consideration of the facts we conclude that the requestor's engineer who reviewed the SHA preliminary storm water management plan for MDE did not assist the SHA in the drafting of specifications for the IFB for the US 113 project.
In our view reviewing the storm water plan for MDE under the factual circumstances described here was assistance to a regulatory agency and not assistance to the executive agency drafting the specifications for the IFB. The requestor's contract was to review plans and computation for compliance with relevant environmental regulations and guidelines specifically pertaining to the MDE Stormwater Management Regulations and the guidelines MDE publishes. The detail-build approach also leaves open that the successful contractor would be responsible for final approval from MDE and the IFB also makes clear that other storm water management facilities were encouraged.
The purpose of the procurement ethics provision is to avoid situations where a vendor or private entity with an interest in a procurement is in a position to assist the agency in defining its needs and requirements and in essence drafting specifications, and then be a participant in what is to be a competitive process in selecting a contractor. The law was to prevent a contractor from assisting and then later competing for the contract which it assisted in defining. At the hearing SHA officials indicated their view that the requestor under the circumstances described here did not receive a competitive advantage by its regulatory review work for the MDE.
We are aware that the Ethics Law directs the Commission to interpret its provisions liberally in order to accomplish the purposes of the law which include avoiding even the appearance of impropriety. While the present circumstances may present some appearance issues, based on the facts as presented we conclude that the requestor's engineer's independent review for MDE in accord with its regulatory requirements did not constitute assistance to SHA in the drafting of its specifications. We therefore advise in the described circumstances and facts presented here that the requestor is not barred by its review activities for MDE from bidding on the procurement of the detail build contract for US 113. We also note that the agency has indicated that in the future all "detail build" submissions requiring storm water management plan review by MDE will be assigned to MDE employees to avoid the circumstances presented in this request.2
Charles O. Monk, II, Chairman
Michael L. May
D. Bruce Poole
Date: October 29, 2001
1 SHA indicates that in instances where engineering consultants are used to draft storm water management plans these firms are precluded from reviewing the plans for MDE since it would be a review of its own design.
2 Because we conclude that the requestor's activities did not constitute assistance to an executive unit in the drafting of specifications, we do not need to address the architectural/ engineering services exemption in §15-508(b)(4) which was also presented by the requestor.