Contract blocked because bidders are not Md. firms

September 14, 1995|By John W. Frece | John W. Frece,Sun Staff Writer

Gov. Parris N. Glendening blocked the award of one state contract yesterday and nearly rejected a second because the winning bidders in both cases were not Maryland firms.

In his role as chairman of the Board of Public Works, the governor chastised members of his Cabinet and other officials for not doing enough to see that state contracts are awarded to businesses here.

He said he is worried about the jobs that will be lost in the state because of federal budget cuts and said the only way to stave off a serious economic slide is to create private sector work whenever possible.

"I have an added sense of urgency because I know the threat to our economy from the loss of federal jobs," he said. "I know that if we don't turn this around, we're going to see Maryland taxpayers supporting employment in other states while our people face unemployment and joblessness."

The governor blocked the awarding of a Department of Transportation contract and threatened to vote against a drug prescription contract before changing his mind.

Maryland has no law granting businesses here a preference in the awarding of state contracts. Courts probably would strike down such a law as an unconstitutional restraint of interstate commerce, state officials say. Also, any attempt to grant preferences to Maryland firms probably would be greeted with retaliation from neighboring states. Maryland and its regional neighbors have laws on the books that permit reciprocal retaliation.

Retaliatory practices could hurt firms in a small state such as Maryland because many of them do business in neighboring states.

"We want to be encouraging, but we do not want to start a war," said Sandra K. Reynold, executive secretary to the Board of Public Works.

Gene Lynch, acting secretary of General Services, said Mr. Glendening "is looking for opportunity, not preference. He wants to make certain that Maryland firms are considered and given every opportunity possible to be competitive."

The state is constrained from favoring Maryland firms by laws that require contracts to be awarded to the lowest qualified bidder. In an era when corporate headquarters are often in one state and operations in another, it can be difficult to precisely define a Maryland firm.

Mr. Glendening appeared to be talking about firms that operate here and consequently employ Maryland residents and pay state taxes.

State figures show that between 1991 and 1993, 76 percent of architectural and engineering service contracts, 72 percent of construction contracts, 63 percent of other service contracts, and 39 percent of commodity contracts went to companies regarded as Maryland firms.

Mr. Glendening said he believes the state can and must do better.

Yesterday, with state Treasurer Lucille Maurer absent due to health problems, Mr. Glendening threatened to exercise the veto power any of the three board members has when one is not there to vote.

He nearly blocked the award of a lucrative contract to provide prescription drug services to state employees because the winning bidder, Medco Exclusive, is based in Montvale, N.J. Not one of a dozen firms that bid was from Maryland.

"The way the bid was structured, the Maryland firms were eliminated," he said, venting his unhappiness at Budget Secretary Marita B. Brown. "I know it was not intentional, but still I have concerns."

He ultimately voted for the contract, but only after being told that any delay would force the state to extend the current contract at an estimated cost to the state and its employees of $61 million.

Later, the governor forced Department of Transportation officials to withdraw an architectural and engineering contract for state airports that was about to be awarded to three firms, two from Virginia.

But Deputy Aviation Administrator Nicholas J. Schaus conceded there may not be much the department can do about a contract that already has gone through the bidding process unless the Board of Public Works decides to reject it and orders the department to start over. Such an approach, other state officials said, could open the state to potential lawsuits.

"We can't break the law and automatically award things to Maryland bidders if they are not the low bidder or the technical winner," said Kristen Saunders, the governor's assistant for board matters.

What state officials say they are trying to do is improve "outreach" efforts to locate and notify Maryland firms about contracting opportunities through such means as direct mail solicitation and advertising. They also say they are trying to avoid contract specifications that preclude Maryland businesses from bidding.

Champe C. McCulloch, president of the Maryland Chamber of Commerce, said he rarely hears businesses complain that they were unaware of bidding opportunities. But he said the state could attract more Maryland firms to the bidding process by easing environmental regulations that may make product production more expensive here than in other states.

Mr. McCulloch also suggested that the state grant technical points to bidders who promise to create jobs in Maryland or generate tax revenue for the state.

"That doesn't discriminate against firms from out-of-state doing business here, but it gives them strong encouragement to create jobs in Maryland," he said.

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