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Md. high court will hear Montgomery Park’s bid for insurance administration lease

The Montgomery Park building’s back-and-forth legal battle to reopen the bidding for the Maryland Insurance Administration’s lucrative Baltimore lease will go before the state’s top court.

The Court of Appeals on Friday agreed to hear Montgomery Park’s challenge to a lower court ruling that the Department of General Services, the state’s leasing agency, validly renewed MIA’s lease and withdrew its request for bids even though Montgomery Park had a competitive offer on the table.

In its successful request for high court review, Montgomery Park said DGS acted arbitrarily by canceling the request for bids without having made an independent, written finding explaining its cancellation decision.

Montgomery Park is also challenging the intermediate Court of Special Appeals’ ruling that the office building, in Pigtown, lacked legal standing to challenge the renewal of MIA’s lease at 200 St. Paul Place once the request for bids was canceled.

The Maryland Board of Public Works approved DGS’s controversial renewal in January 2020 amid Montgomery Park’s legal challenge. The 10-year lease in downtown Baltimore is set at about $17 million.

“Maryland procurement law was designed to increase confidence in state procurement, ensure fair and equitable treatment of all persons who deal with the system, and provide safeguards for maintaining a procurement system of quality and integrity,” Montgomery Park’s attorney, Christopher J. Olsen, wrote in its petition for Court of Appeals review.

“To those ends, when an agency like DGS makes certain decisions regarding a procurement – e.g., selecting an offeror for award, canceling a solicitation, or awarding a sole-source contract – Maryland law requires the agency to prepare an official ‘determination’ to support each decision,” added Olsen, of Henner & Scarbrough LLP in Atlanta. “This requirement provides taxpayers and bidders with the appropriate level of transparency as to why the state has decided to select a particular bidder for award, or to select no one at all and award a non-competitive sole source contract.”

Olsen’s argument had won in the Maryland Board of Contract Appeals, which held that DGS had acted arbitrarily and capriciously in withdrawing the request for bids based solely on objections raised by then-MIA chief Al Redmer, who favored renewing the lease.

Redmer expressed concern that experienced MIA employees would quit because Montgomery Park is not easily accessible by public transportation and that the agency’s regulatory operations would be delayed during the weeks-long relocation.

The Board of Contract Appeals said DGS wrongly accepted Redmer’s objections without investigating whether his concerns were justified. But the Court of Special Appeals said DGS and its procurement officer, Wendy Scott-Napier, were under no legal obligation to investigate.

“The procurement officer relied on the rationale articulated by the head of the tenant agency, who is closer to its needs and concerns than the board is, and Montgomery Park offered no evidence or testimony that undermined Commissioner Redmer’s reasons for requesting the cancellation or the procurement officer’s decision to rely on them,” the Court of Special Appeals stated in its reported February decision that drew criticism from the vanquished bidder.

“If DGS’s procurement officer can nullify the results of a competitive procurement based upon statements from an individual outside the procurement agency, as the Court of Special Appeals held, then why can’t a procurement officer justify a decision with statements that appeared in a newspaper article? Or letters from a disappointed bidder and its lobbyists,” Olsen wrote in the petition for review. “According to the Court of Special Appeals, a procurement officer has no obligation to verify the accuracy of those statements.”

Olsen added that Montgomery Park has standing as an “interested” and “aggrieved” party to challenge the lease’s renewal.

DGS countered that neither state law nor regulation requires a procurement officer to investigate a tenant’s stated reasons for wanting to renew a lease.

The Board of Contract Appeals’ call for an investigation “does not ‘increase confidence’ in the state procurement system, ‘ensure fair and equitable treatment of all persons who deal with the system,’ or maintain ‘quality and integrity’ within that system,” Assistant Maryland Attorney General Patrick D. Sheridan wrote in DGS’s unsuccessful request that the high court deny Montgomery Park’s request for review. “To the contrary, the board’s action was itself arbitrary and capricious, and signaled the board’s willingness to disregard the law to reach the result it considered to be fair.”

In addition, Montgomery Park lacked standing because DGS’s canceled solicitation for bids “ ‘severed the relationships among Montgomery Park, DGS, and MIA for procurement purposes,’ ” Sheridan wrote, quoting from the Court of Special Appeals decision.

Montgomery Park is majority owned by Himmelrich Associates Inc. in Baltimore.

Kornblatt Co. owns 200 St. Paul Place.

The Court of Appeals is scheduled to hear arguments in October and expected to issue its decision by Aug. 31, 2023. The case is docketed at the high court as Montgomery Park LLC v. Maryland Department of General Services, No. 12, September Term 2022.