Montgomery Park, LLC v. Md. Dep't of Gen. Servs.

• Decision Date: 23 February 2022
• Docket Number: 35, 48, Sept. Term, 2021
• Citation: 254 Md.App. 73,270 A.3d 993
• Parties: MONTGOMERY PARK, LLC v. MARYLAND DEPARTMENT OF GENERAL SERVICES
• Court: Court of Special Appeals of Maryland

254 Md.App. 73

270 A.3d 993

MONTGOMERY PARK, LLC

v.MARYLAND DEPARTMENT OF GENERAL SERVICES

No. 35, 48, Sept. Term, 2021

Court of Special Appeals of Maryland.

February 23, 2022

Argued by: Christopher J. Olsen (Henner & Scarbrough LLP, Atlanta, GA), on brief, for Appellant.

Argued by: Patrick D. Sheridan (Melodie M. Mabanta, Brian E. Frosh, Atty. Gen., Baltimore, MD), on brief, for Appellee.

Fader, C.J., Berger, Nazarian, JJ.^*

Nazarian, J.

This pair of appeals arises from decisions of the Maryland State Board of Contract Appeals ("Board") to sustain two bid protests filed by Montgomery Park, LLC. First , Montgomery Park protested the Maryland Department of General Services's ("DGS") decision to cancel a Request for Proposal ("RFP") for office space, that DGS had issued on behalf of the Maryland Insurance Administration ("MIA"). Montgomery Park was the recommended awardee of the MIA lease, but DGS cancelled the RFP before presenting it to the Board of Public Works ("BPW") for approval. The DGS procurement officer denied Montgomery Park's bid protest and Montgomery Park appealed to the Board.

Second , Montgomery Park protested DGS's decision to renew MIA's lease with St. Paul Plaza Office Tower, LLC ("St. Paul Plaza") on a sole-source basis. The DGS procurement officer denied this protest as well and Montgomery Park appealed to the Board again.

The Board sustained both bid protests and DGS sought judicial review in the Circuit Court for Baltimore City. Montgomery Park appeals both decisions of the circuit court, which reversed the judgments of the Board and reinstated the DGS procurement officer's original decisions. For the reasons set forth below, we affirm the judgments of the circuit court.

I. BACKGROUND

A. Regulatory And Statutory Background.

We start with an overview of Maryland procurement law. "The State Finance and Procurement Article of the Maryland Code," specifically Title 13, "and its regulations," Title 21 of the Code of Maryland Regulations ("COMAR"), "govern the solicitation and award of certain state contracts for the purchase of" real property. State Ctr., LLC v. Lexington Charles Ltd. P'ship , 438 Md. 451, 503, 92 A.3d 400 (2014). Title 21 of COMAR "contains the regulations that govern" Title 13 of the State Finance and Procurement Article. Department of Pub. Safety & Corr. Servs. v. ARA Health Servs., Inc. , 107 Md. App. 445, 460, 668 A.2d 960 (1995). 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 before the award, a procurement officer may "cancel an invitation for bids, a request for proposal, or other solicitation" if the officer determines that cancellation "is fiscally advantageous or otherwise in the best interests of the State." Md. Code (1988, 2021 Repl. Vol.), § 13-206(b)(1) of the State Finance & Procurement Article ("SF"); see also COMAR 21.06.02.02C(1) ("After opening of bid proposals but before award, all bids or proposals may be rejected in whole or in part when the procurement agency ... determines that this action is fiscally advantageous or otherwise in the State's best interest."). Further, a procurement officer who "determines that renewal of an existing lease is in the best interests of the State ... 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 interests of the State, the procurement officer may negotiate the renewal of an existing real property lease without soliciting other proposals.").

Interested parties, defined as "an actual or prospective bidder, offeror, or contractor that may be aggrieved by the solicitation or award of a contract," may file a bid protest. COMAR 21.10.02.01B(1). A bid protest is "a complaint relating to the solicitation or award of a procurement contract." COMAR 21.10.02.01B(2). Bid protests must "be filed not later than 7 days after the basis for the protest is known or should have been known, whichever is earlier." COMAR 21.10.02.03B. "Protestors are required to seek resolution of their complaints initially with the procurement agency." COMAR 21.10.02.10A. If the protestor is unsatisfied with the procurement agency's determination, they may appeal to the Board under COMAR 21.10.07.02.

The Maryland Administrative Procedure Act ("APA"), as codified in the State Government Article ("SG") (1984, 2021 Repl. Vol.), governs judicial review of final administrative agency decisions, including the Board's, in contested cases. Section 10-222(h) provides the circuit court with authority to review and either remand, affirm, or reverse agency decisions:

(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;

(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;

(vi) in a case involving termination of employment or employee discipline, fails to reasonably state the basis for the termination or the nature and extent of the penalty or sanction imposed by the agency; or

(vii) is arbitrary or capricious.

Parties aggrieved by the final judgment of the circuit court may appeal to this Court. SG § 10-223(b)(1).

B. The Requests For Proposal And Procurement Process.

On April 1, 2008, MIA entered into a lease agreement with St. Paul Plaza, located at 200 St. Paul Place in Baltimore City. St. Paul Plaza is owned and managed by the Kornblatt Company. The lease between MIA and St. Paul Plaza was set to expire on May 3, 2019, subject to a five-year renewal option and a six-month holdover period. In August 2017, based on concerns about parking options for its employees, MIA asked DGS to issue a RFP for new office space.¹ On behalf of MIA, DGS issued RFP No. LA-01-18, which solicited offers for new office space, on August 21, 2017.

On September 19, 2017, Montgomery Park, located at 1800 Washington Boulevard in Baltimore City, submitted its proposal and offered to lease office space to MIA. Eleven other buildings, including St. Paul Plaza, also submitted proposals for the new office space. On May 4, 2018, DGS Procurement Officer ("PO") Wendy Scott-Napier selected Montgomery Park for award of the MIA lease. Ms. Scott-Napier listed the proposals in ranked order, and Montgomery Park came in first place with a score of 229.4 while St. Paul Plaza came in second with a score of 204.0.

DGS and Montgomery Park then entered an eleven-month period of negotiations over the MIA lease. In June 2018, DGS prepared a briefing summary that detailed reasons for selecting Montgomery Park for the MIA lease. The summary noted that "[b]y moving MIA to Montgomery Park, the State would save $337,705.27 annually and $3,337,052.70 over the full 10-year lease term, after factoring in the agency's moving costs and a moving allowance provided by the landlord." DGS also chose Montgomery Park over St. Paul Plaza because "[c]urrently ... not all MIA employees have access to free parking. Montgomery Park operates a surface parking lot where all MIA employees would have access to free parking."

DGS, MIA, and Montgomery Park met in November 2018 to discuss the logistics of a move to Montgomery Park. At this time, DGS also provided Montgomery Park a draft lease. Montgomery Park left that meeting "with an understanding that the lease was to be presented to the Board of Public Works in January 2019."

On December 18, 2018, Ms. Scott-Napier notified Kornblatt representative Tim Polanowski by email that DGS would not be exercising the five-year renewal option with St. Paul Plaza, but asked for a one-year extension "in the event the move [to Montgomery Park] is delayed." Mr. Polanowski rejected this request as "unworkable for [St. Paul Plaza]," but offered to negotiate a multi-year renewal. On January 3, 2019, Ms. Scott-Napier emailed Mr. Polanowski requesting "a renewal of the lease on behalf of MIA for a shorter period of time" than five years. This conversation continued on February 7, 2019, when Ms. Scott-Napier discussed the lease extension with Mr. Polanowski and "requested either a 3 year short term lease with [termination for convenience] or a 3 month hold-over extension[.]" But as of March 11, 2019, Mr. Polanowski had not responded to Ms. Scott-Napier's request for a short-term extension because the trustees of St. Paul Plaza wanted to meet with her. Meanwhile, on March 12, 2019, DGS informed Montgomery Park the MIA lease would be presented to the BPW for approval on April 24, 2019.

On March 29, 2019, Ms. Scott-Napier and another DGS representative met with Mr. Polanowski and two St. Paul Plaza trustees to discuss the MIA lease. There were no notes of this meeting, but on April 9, 2019, Mr. Polanowski emailed Ms. Scott-Napier his understanding of the outcome:

I just wanted to send a reminder that in our meeting on March 29^th, 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, had a different understanding of the meeting:

[COUNSEL FOR MONTGOMERY PARK]: Did the Kornblatt Company ask DGS to renew its lease at the March 29th meeting?

[MS. SCOTT-NAPIER]: They asked, and we told them we could not discuss the lease renewal at that meeting. That we were there only to discuss a short-term extension or hold-over extension.

Ms. Scott-Napier also disagreed with Mr. Polanowski's characterization...