Building Materials Corp. of America v. Board of Education

Citations: 428 Md. 572; 53 A.3d 347; 2012 WL 4329334; 2012 Md. LEXIS 606Docket: No. 71

Court: Court of Appeals of Maryland; September 24, 2012; Maryland; State Supreme Court

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The central issue is whether the Baltimore County Board of Education acted within its statutory authority by utilizing a governmental purchasing consortium for roofing services. The Appellee, the Board of Education, has been relying on a competitively bid roofing contract from this consortium. The Appellant, Building Materials Corporation of America (GAF Materials Corporation), contests the Board's authority to do so under relevant statutes.

Local boards of education, governed by state education law, are required to conduct competitive bidding for procurements but may use intergovernmental purchasing cooperatives for 'goods and commodities.' However, the term 'goods and commodities' typically excludes construction services. Nonetheless, state law grants the Board of Public Works and the Interagency Committee on School Construction significant authority over local school construction, including the endorsement of intergovernmental cooperatives for roofing services.

The Circuit Court granted summary judgment in favor of the Board of Education, and this decision was affirmed. The court concluded that the competitive bidding statute does not prohibit the Board from participating in the purchasing consortium for roofing repair services. Local boards of education operate under a framework that combines state and local responsibilities, receiving funding from both sources while being subject to specific procurement laws rather than the general state procurement law. Under Maryland Code, a local board must typically follow competitive bidding for contracts over $25,000, but there is an exception for contracts awarded through intergovernmental purchasing organizations if the lead agency adheres to public bidding procedures.

The State Board of Public Works (BPW) plays a crucial role in overseeing school construction projects that receive State funding, as determined under ED. 5—301(c) and COMAR 23.03.02.03F. Projects funded by the State are supervised by the BPW, which is tasked by the Legislature to adopt regulations governing public school construction and capital improvements subsidized by State funds (ED. 5-301(d)(1)). These regulations address site and plan approvals, competitive bidding, construction processes, inter-agency roles, and contract awards (ED. 5-301(d)(2)). The BPW also sets regulations on eligible costs and alternative financing arrangements, aiming to empower county school systems to meet community needs effectively (ED. 5-301(b-1) and ED. 5-301(d)(4)). 

County school boards must adhere to BPW regulations, which take precedence over any conflicting local authority (ED. 5-301(g)(1) and ED. 5-301(g)(2)). Compliance with BPW regulations is a condition for State funding of local school construction (ED. 5-301(h)). To support BPW's functions, the Legislature established the Interagency Committee on School Construction (IAC), which can be delegated administrative and budget authority by the BPW (ED. 5-302). The BPW is also directed to adopt IAC-recommended regulations regarding financing and procurement for school construction.

Furthermore, the BPW endorses intergovernmental cooperative purchasing as a viable alternative to traditional competitive bidding in school construction, recognizing its potential for cost and time savings (COMAR 23.03.03.03; COMAR 23.03.03.04; COMAR 23.03.03.12). Regulations outline various procurement methods, including competitive sealed bidding and intergovernmental cooperative purchasing (COMAR 28.03.03.03).

Regulations favor the competitive sealed bidding method for procurement while allowing alternative methods under certain conditions, as outlined in COMAR 23.03.03.04. Intergovernmental cooperative purchasing enables county boards of education to combine their purchasing needs with other governmental entities to achieve cost savings and administrative efficiencies. This method is permitted if it does not circumvent competition. Two types of cooperative purchasing are defined: pooling, where entities collectively procure from a successful bidder, and piggybacking, allowing a board to utilize another government entity's contract with an intergovernmental clause.

In 2005, the Board of Education joined the Pennsylvania Education Joint Purchasing Council (PAEJPC), participating in cooperative contracts, including roofing services developed via competitive bidding by the Association of Educational Purchasing Agencies (AEPA). The Board secured permission from the IAC to purchase roofing services through PAEJPC and AEPA, awarding at least 46 contracts to Weatherproofing Technologies, Inc. (TREMCO) since January 2006, totaling over $64 million, with each contract approved by the IAC and funded by the State.

The dispute arose when GAF filed a declaratory judgment action in January 2009 against the Board of Education, claiming that the procurement process violated state laws and hindered roofers using GAF materials from bidding. Both parties filed cross motions for summary judgment, agreeing on the absence of material facts, leading the Circuit Court to rule in favor of the Board in January 2011. GAF appealed and subsequently sought a writ of certiorari, which was granted by the court.

No dispute exists regarding the underlying facts of this case, which centers solely on the interpretation of relevant statutes without needing special deference to the circuit court. GAF argues that the Board of Education violated ED. 5-112 by awarding contracts to TREMCO without developing specifications, advertising for bids, and conducting a competitive award process. GAF contends that the exception for 'goods and commodities' does not apply to roofing services, which it classifies as an 'improvement' necessitating competitive bidding under ED. 5-112(b). To support this, GAF cites state procurement regulations defining 'improvement' as construction, maintenance, and repair of state structures, asserting that roofing activities fall within this definition.

In response, the Board of Education argues that roofing repair services could be classified as 'goods or commodities' and highlights the authority of the BPW and IAC over school construction, which has sanctioned its procurement method. The discussion also emphasizes the importance of the 'plain meaning rule' in statutory construction, noting that context and history are crucial for accurate interpretation. The court illustrates this with an analogy regarding ambiguous phrases and references past cases, such as Demory Bros. Inc. v. Board of Public Works, which confirmed that competitive bidding statutes should not be viewed in isolation from related provisions. Finally, a review of the legislative history of the competitive bidding statute is suggested to contextualize local board procurement within broader statutory developments over the years.

In 1933, Maryland established a competitive bidding requirement for local school construction to prevent favoritism and ensure cost efficiency for taxpayers, as codified in ED. 5-112. Initially, school construction was primarily a county responsibility, with state involvement increasing post-World War II through bond sales to aid counties, contingent on approval from the Board of Public Works (BPW). In 1971, the BPW's role expanded significantly, administering the Public School Construction Program, adopting regulations, and establishing the Interagency Committee (IAC) for oversight of school construction, making BPW regulations applicable to all involved parties.

By the 2000s, the General Assembly allowed for alternative procurement methods beyond local competitive bidding, endorsing collaborative purchasing to achieve cost savings. In 2002, legislation permitted local boards of education to join intergovernmental purchasing organizations, aiming to reduce administrative costs and leverage volume discounts. Additionally, a Task Force on Public School Facilities reported an estimated $4 billion needed to update schools, recommending that BPW and IAC policy decisions be codified in regulations and that local systems be permitted flexibility in financing and procurement methods.

The Public School Facilities Act of 2004 was enacted in response to the Task Force Report, allowing local school systems to utilize alternative financing methods and project delivery methods for school construction, as regulated by the Board of Public Works (BPW). The legislation expanded the BPW’s authority to govern school construction contracts, enabling local systems to engage in intergovernmental cooperative purchasing, including arrangements like piggybacking and pooling. Historically, the requirement for competitive bidding under ED. 5-112 has been long-standing, but as the State's financial role in public education grew, the General Assembly adjusted its preference for sealed bidding, granting significant oversight to the BPW for school financing and construction. The regulations established by the BPW are intended to be binding and carry the force of law.

Regarding the Board of Education's ability to use cooperative purchasing for roofing services, ED. 5-112 permits local boards to procure 'goods' or 'commodities' through intergovernmental contracts, although roofing repair services may not fit these definitions as argued by GAF. The Board of Education cites an opinion from the IAC's executive director to support its position, but post-enactment interpretations hold limited weight. Consequently, there is insufficient justification under ED. 5-112(a)(3) for using intergovernmental contracts for roof repair. Other relevant legislative acts specific to school construction direct the BPW to set regulations that emphasize local school systems' autonomy and can supersede typical oversight rules. The Legislature's authorization for alternative financing and project delivery methods, regulated by the BPW, suggests that these methods may not adhere to standard competitive bidding procedures. The BPW has subsequently adopted regulations permitting local systems to utilize intergovernmental cooperative purchasing for various needs.

The regulation permits intergovernmental cooperative purchasing for acquiring goods, commodities, and 'requirements' under agreements with other governmental entities, provided that local school systems do not seek to avoid competition and can demonstrate benefits such as cost savings or efficiency. Roofing repair services are classified as 'requirements' necessary for maintaining school facilities. The Board of Education’s use of the AEPA contract reflects a pooling approach that yields perceived benefits, including cost savings.

While the BPW regulations could be interpreted narrowly to limit cooperative purchasing to goods and commodities, such a narrow interpretation seems unlikely given the context of the regulations, which are situated within a chapter on public school construction. The BPW's approval and funding of the Board of Education’s roofing services contracts indicate that these contracts fall under BPW regulations. 

The BPW and IAC have acknowledged the benefits of cooperative purchasing arrangements in their oversight of local school construction. Although ED. 5-112 generally mandates competitive bidding, it must be considered alongside the state's evolving role in local school construction and the authority vested in the BPW and IAC to oversee procurement processes. Therefore, ED. 5-112 does not prevent the Board of Education from using intergovernmental purchasing cooperatives for roofing repair services under BPW regulations. The prudence of using such a consortium is not for examination here; rather, the focus is on whether this action is authorized under the BPW’s legislative delegation, which the General Assembly can amend.

The judgment of the Circuit Court for Baltimore County is affirmed, with costs to be borne by the appellant. According to Maryland Constitution, Article VIII, bids must adhere to specifications regarding quantity, delivery timelines, purpose, bidder competency, satisfactory service capability, and minority contractor utilization plans. Local boards are permitted to construct certain buildings without oversight from the Board of Public Works (BPW), as specified in COMAR 23.03.05.01B, which excludes office buildings and similar structures from regulatory purview. The BPW, established by the State Constitution, comprises the Governor, the Comptroller, and the State Treasurer, and while its constitutional powers are largely outdated, it retains significant legislative functions related to state finance and procurement. 

Under the relevant statute, the regulations adopted by the BPW govern the authority and responsibilities of various entities involved in public school construction and capital improvements, superseding conflicting regulations from other agencies. The Interagency Committee (IAC), consisting of five members including state officials and legislative appointees, operates under the State Department of Education for budgetary and administrative purposes. A prior error in the Maryland Code of Regulations regarding procurement methods for county boards of education has been corrected. The AEPA, an intergovernmental purchasing cooperative, manages a competitive bidding process for services across multiple states, including roofing services, in which GAF participated in 2000 but not in subsequent years. GAF initially filed a lawsuit in 2008 regarding the Board of Education’s procurement practices, which was dismissed on jurisdictional grounds, leading to the current complaint for similar relief. GAF's roofing materials are installed by independent contractors.

GAF offers roofing services including specification and design review and inspection. The company is seeking declaratory and injunctive relief related to future procurements by the Board of Education, without addressing specific past procurements. The mention of regulations under State procurement law serves as an analogy, as these laws typically do not apply to county boards of education, with the exception of a 2009 provision allowing cooperative purchasing agreements. Historically, competitive bidding has been a preferred method for awarding government contracts, rooted in Maryland law since the 1970s. The Board of Public Works (BPW) has been authorized to establish requirements for school construction and capital improvements, including competitive bidding processes. Past legislative efforts to create group purchasing for educational supplies were unsuccessful, but in 1997, the General Assembly permitted State agencies to engage in cooperative purchasing, later extending this to local boards of education receiving State funding in 2009.

The General Assembly established the Commission on Education Finance, Equity, and Excellence, known as the Thornton Commission, to enhance public school financing and performance in Maryland. In response to the Commission’s recommendations, the Legislature created a Task Force through the Bridge to Excellence in Public Schools Act of 2002, focusing on school construction issues. Following the Task Force's recommendations in 2004, the Legislature mandated the State Department of General Services to report annually to local school systems on available State contracts.

GAF contends that the statute ED. 4-126 should be interpreted narrowly based on its title, which was assigned by a legal publisher and does not reflect legislative intent. Legislative regulations derive from a specific statutory grant and are binding, unlike interpretive regulations, which merely express agency opinions without binding authority. GAF also references various definitions to support its interpretation of the statute, arguing that the construction of a school qualifies as a "good" or "commodity."

The Legislature codified ED. 5-112 in a title related to local school system financing, while ED. 5-301 pertains specifically to school construction. ED. 4-126 relates to local board powers. Testimony from the Board of Education’s purchasing manager highlighted the cost-saving benefits of the contract. Ultimately, while regulation interpretation is a legal question for the courts, agency interpretations should receive deference, particularly when based on legislative delegation.

Maryland has experienced an uptick in intergovernmental purchase agreements for school construction, allowing Local Education Agencies (LEAs) to acquire construction services via contracts established by other governmental entities. This procurement method is particularly effective for small projects with uniform materials and extensive scopes, such as roofing and paving. Baltimore County Public Schools (BCPS) has utilized the Pennsylvania Education Joint Purchasing Council (PAEJPC), part of the Association of Educational Purchasing Agencies (AEPA), for roofing replacements. The AEPA conducts national bidding processes and awards contracts to the lowest qualified bidders. Members benefit from access to pre-established bid prices and can avoid lengthy bid solicitation processes, significantly reducing project approval times. All participating vendors are fully bonded and compliant with various state bidding requirements. BCPS reports satisfaction with the quality of workmanship guaranteed by PAEJPC oversight and the effective selection of qualified contractors, resulting in a low-risk roof replacement program. Current services include full-time project management, which optimizes resources by reducing the need for school system roofing inspector hours.