New Proposed Legislation Would Require Bond: If House Bill 1488 becomes law in Maryland, bid protesters of state contracts appealing a decision to the Maryland Board of Contract Appeals would be required to simultaneously submit a “protest appeal bond or other form of acceptable security” along with their bid protest appeal. For mid-sized and large businesses, the bond would be required to be in an amount equal to 5 percent of the estimated value of the contract being protested – including base term and options. For small businesses, the proposed legislation would require a protest appeal bond in an amount equal to 1 percent of the estimated value of the contract being protested (including base term and options).
If You Lose, The State Keeps The Cash: HB 1488 provides that if the Appeals Board affirms the unit’s procurement decision (or if the appeal is dismissed) the appeal bond (or other form of acceptable security) “shall be deposited into the General Fund of the State.” In other words, if you lose, your bond is forfeit to the State. If the protest appeal is successful, the appeal bond or other form of acceptable security would be returned to the protestor.
Chilling Effect: If House Bill 1488 becomes law, it will likely have a dramatic effect on the number of appeals filed. Indeed, the number of legitimate protests filed would most assuredly decline.
House Bill 1488 was first introduced and read for the first time on February 24, 2014. Cohen Seglias will continue to monitor the status of House Bill 1488.
Jennifer M. Horn is a Partner at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.