Procurement – Architectural and Engineering Services – Reciprocal Preference

On May 15th the Governor signed into law, Senate Bill 1020, Procurement – Architectural Services and Engineering Services – Reciprocal Preference.  This bill was the culmination of over 5 years of collaboration between AIA Maryland’s Legislative Committee representatives, several leaders of Maryland’s small, medium and large Architecture firms, and representatives of the State of Maryland to assess and analyze procurement preference and professional service awards to Maryland resident and nonresident firms. The bill was prepared, sponsored and guided through the legislative process by Senator Joan Carter Conway and her staff.  AIA Maryland would like to express its gratitude to the Senator for her many years of continual support on behalf of Maryland’s Architects.

To further support this effort, AIA Maryland engaged the services of the nationally recognized Sage Policy Group, Inc.  The report was commissioned in 2016 and their final report, titled “The Economic Implications of Purchasing Architectural Services from non-Marylanders” was submitted in November 2017 to AIA Maryland.  It was subsequently submitted to the Senate’s Education, Health, and Environmental Affairs Committee for its review and consideration. Sage Policy Group measured the economic implications associated with out-of-state architecture service contracts by key Maryland State Agencies. The findings of this study helped form this current procurement legislation.  A few of the report’s findings are as follows:

  • Award Share: Since 2004 over 25% of state awards were secured by firms not headquartered in Maryland and over 50% of contract dollars went to design professionals outside the state. The University of Maryland System, for instance, has awarded only 40% of their contract dollars to Maryland headquartered firms.
  • Reciprocity: Many states, including neighboring states, have local preference laws that penalize out of state architects while architects based in these protectionist states to work freely in Maryland. The District of Columbia is an example of one of these jurisdictions where Maryland architects are subject to a non-resident penalty.
  • Employment Opportunities: The report identifies missed opportunities of over 2,250 jobs since 2004 if the contract procurement dollars had remained in the state. The associated labor dollars are estimated at over $166 million in labor income and approximate aggregate business sales over $350 million.
  • Tax Revenue: The state has forgone over $14.6 million in tax revenue through contracts awarded to out-of-state firms.

Though the new law reactivates past Maryland preference legislation for professional architectural and engineering services, it is critical to recognize that the current law does not create an isolationist position that could potentially trigger procurement preference language in other states thus negatively impacting Maryland firms.  The new law hopes to level the playing field, and creates fair and reasonable reciprocal preference for resident firms.  In summary, the law:

  • provides a clear and robust definition of a nonresident firm, especially with respect to time of residency, and applicability and/or limitations of a firm’s principle or branch offices;
  • provides a clear definition of a resident firm, especially with respect to the applicability and/or limitations of a joint venture;
  • provides preference guidelines to a State unit during the review of proposals and qualifications from prospective offerors;
  • provides reciprocal language that requires nonresident firms to follow their home state’s requirements for nonresident firm preference. Thus, if a nonresident firm has regulatory language that gives preference to that state’s resident firms, then an equal reciprocal preference will be applied to their weighting in the Maryland qualification based selection process. By leveling the playing field, nonresident firms cannot benefit from a restriction in their state, only to have an advantage in Maryland by not having the same restrictions;
  • provides language that a State unit may give preference to a Maryland resident firm if there is a tie in the scoring of a solicitation’s offerors;

To review the details of the new law, we invite you to visit Maryland’s legislative website.

Shortly, the State will begin to develop the policies and regulations in compliance with the law that will guide procurement by units of the State that solicit for architectural and engineering services.  The development of these policies and regulations may take time.  Currently, AIA Maryland is unsure of the law’s implementation timetable though we plan to continue speaking with legislators to be sure the policies created reflect the intent of the legislation . . . Stay tuned for updates.