Md. may ease bid process for state contracts Performance bond draws criticism


August 15, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

Maryland's state government will apparently move to ease the requirements for small businesses to bid on mid-sized state contracts after the Board of Public Works chastised budget officials yesterday for requiring a $100,000 performance bond on a contract worth $113,321.

Officials of the board and the Department of Budget and Management told the board's members that they would deliver some proposals to lessen the requirements as early as the board's next meeting on Sept. 4.

That promise came as board members reluctantly approved the award of a contract to Language Learning Enterprises Inc. of Washington to provide language interpreter services for emergency communications such as 911 lines.

Language Learning had outbid incumbent contractor AT&T Language Line of Monterey, Calif., by offering to provide the service for three years for $113,221, compared with $127,587 for AT&T.

But members of the board were concerned that the Academy of Languages in Baltimore chose not to bid because of the requirement that it secure a $100,000 performance bond in order to bid on the contract.

Maria Mazzoni, director of the academy, said she had been discouraged from bidding by the time-consuming process of finding a bonding company that was interested in insuring a business as small as hers.

A performance bond is a form of insurance that protects the state against the failure of a contractor to carry out the terms of the agreement. Contractors buy them from bond agencies for varying amounts depending upon the size of the contractor and risk.

Under state law, construction contractors must secure performance bonds to bid on contracts worth more than $100,000. For non-construction contracts, such as the interpreter pact, the decision is up to the agency letting the contract.

Frederick W. Puddester, secretary of budget and management, said the decision to require a bond in the interpreter contract was "a judgment call."

"I'll make a judgment. I think it's terrible," Gov. Parris N. Glendening shot back. He was joined in his criticism by the other two board members, Comptroller Louis L. Goldstein and Treasurer Richard N. Dixon.

The members complained that unnecessarily high performance bond requirements discourage small businesses, minority enterprises and start-up companies from seeking state contracts.

However, the board voted to accept Puddester's argument to approve this particular contract because re-bidding it would be unfair to the winning bidder. Warren Wright, procurement adviser to the board, said budget officials would come back with a report on possible changes in bonding policies. One possibility the state will consider is that of purchasing a "master performance bond" that bidders could pay a share of and not have to secure their own.

Pub Date: 8/15/96

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