G en. 287] 287

Th is opi nio n wa s ori g inally iss ue d in unpu bli sh e d for

m on Au gus t 1 10, 1992 as Opinion No. 92-023. Subsequently , the Boa rd approved the contra cts. Although our conc lusion is unchang ed and the B oard ha s long since a cted, some pa ssag es i n the initial opinion were susceptible of misint erpretation. To ave rt unintended proble ms, we are withdra wing Opinion No. 92-023 in favor of this published treatment of theissue. P ROCURE M EN T B OAR D OF P UB L I C W ORK S

) A PPR OVAL OF C ONTRACTS D ATED “A S OF ” A N E AR L I E R D ATE

M ay24, 1993

The H onor abl e W

i l l i am D onald Schaef

er G over nor T h e H o n o ra b le L o u is L . G o ld ste in C om ptr oll er The H onor abl e Luci l l e M

aur er Tre as ur er B oar d of P ubl i c W

or ks

Yo u h a v e r e q u e s t e d o u ro p i n i o n a s t o t h e l e g a l i t yo f t wo con tr act s pr es ent ed forappr oval t o t he B oar d of Publ i c W or ks ( “B oar d”) att he B oard ’ s J ul y22, 1992 m eet i ng. For t he r eas ons s t at ed bel ow , w e concl ude t hat t he B oar d coul d l aw ful l yappr ove t he c o n tr a c ts a s p re s e n te d if it c h o o s e s to d o s o . 1

I Backg r ound T he contr act s i n ques t i on ar e betw een the D epar t m entof H eal t h and M ent al H y g ie ne ( “D H M H ”) and The Johns H opki ns U ni ver s i t ySchool of M edi ci ne ( “H opki ns ”)

. T he contr act s , w hi ch a re fund ed en t i rel yw i t h fed eral and pri vate foun dati on grant m on i es,2 8 8 [7 8 O p . A tt ’y

ar e fort he purpos e of obt ai ni ng s tudi es of t he effe cti v eness of c e rt ai n p rogram s i n im proving t he b i rth o utcom es of M edica id reci pient s. H o p k ins has al readybeg un perform ance u nd er bot h o f t hese cont r act s , and t he contr act s ar e dat ed “a s of Sept ember 30, 1991” a n d “ a s o f

M a r c h 1 , 1 9 9 2 , ” r e s p e c t i v e l y . We a r e t o l d t h a tDHMH has notexec ut ed t he cont r act s by s i gni ng t hem. O n t he ot herhand, D H M H did not pr om ptl yseek t o o btai n ap provals for t he co ntr act s, and t he del ay in se eki ng appr oval coupl ed w i t h t he s t ar tof per for m ance byt he contr act or gave r i s e t o conce r n t hatt he par t i es m ig h t h a v e b e e n p r o c e e d in g a s if th e c o n tra c ts w e re a lre a d yin ef fe ct. T h e re co rd is n o t entir elyclea r on this po int, h o w ev er. T h e c o n tra c t d a ted a s o f S e p tem b e r is f

o r $ 5 3 0 ,0 6 6 . A u th o rity fort he appr oval of t hi s cont r acthas not been del egat ed byt he B oar d. See C O M A R 21. 02. 01. 04A ( a) ( del egat i ng approv al author i t yfor s er vi ce c ont r act s “i n t he amount of $1 0 0 , 000 orl es s ” t o t he D epar t m ent of B udget and F i s cal Pl anni ng ( “D B FP”) )

. T her efor e, D H M H “ m a yn o t en ter in to ” th is co n tra c t w ith o u t B o a rd a p p ro v a l. C O M A R 21. 03. 01. T he contr actdat ed as of M ar ch i s for$56, 900. T hi s contr act or di nar i l yw oul d have been s ubj ectt o D B FP’s del egat ed appr oval aut hor i t y ; D B FP, how ever , s ubm i t t ed i tt o t he B oar d on t he vi ew t hat t he cont r act w as ei t her voi d or , i f t he B oar d s o det er m i ned, voi dabl e, beca us e i tvi ol at ed C O M A R 21. 02. 03. 02C ( 5)

. T hi s r egul at i on pr ovi des i n pert i nent par t as fol l ow s : “A ny cont r actr equi r ed t o be s ubm i t t ed t o [D B FP] i n acc or dance w i t h t hi s r egul at i on m ay nott ake e f f e c t u n les s it h a s b e e n a p p ro v e d b y[ D B F P ].” A g a in , the re c o rd is no t en ti r el ycl earbuti tappea r s t hatpr e- appr oval per for m ance by H opki ns m ayhave been t he s ol e bas i s on w hi ch D B FP j udged t hat a re g u la to ry v io la tio n h a d o c c u rr e d

.

II A n a ly sis W e ar e aw ar e of no pr ovi s i on i n t he Pr o cu r ement L aw t hat pr ohi bi t s appr oval and s ubs equentagenc yexec ut i on of a c ont r act dat ed “a s of” a n ear l i erdat e orw her e t he contr act o r a lr ea d y hasG en. 287] 289

Prior to approva l, the contra ctor is at risk that it will not be 2 compensated for w ork per formed. The contractor may not enforc e an un a pp ro ve d c ontr a c t. b eg u n to perf

o rm . U n d er c o m m o n law p ri n ciples, m o reo v er, th ere 2 i s no bar t o a cont r act ’ s t aki ng eff ect pr i or t o t he dat e of e xecut i on. C anar as v. Li

f tTruc k Serv ices, I

nc. , 272 M d. 337, 349, 322 A

. 2d 8 6 6 , 8 7 2 (1 9 7 4 ); B r ew er v. N at i onalSur et

y C or por at i on , 169 F. 2d 926, 928 ( 10t h C i r . 1948)

. A s t he C ourt o f A ppeal s w r ot e, “The par t i es [t o a contr act ] m ay. . . pr ovi de at t he t i m e of i t s exec ut i on t hat th e c o n tra c t is e n ter e d ‘ a s o f ’ a n e a rlier d a te th a n th a t o n w h ich it w as i n fac texec ut ed; s uch agr eement s ar e t hen ef fec t i ve r et r oact i vel yas of t he ea r l i erdat e and the par t i es ar e bound acc or di ngl y . ” 272 M d. at 3 4 9

. A s not ed i n Par tI above, t he cont r act s at i s s ue ar e dat ed “as of” t he dat es w hen t he w or k began. T hi s phr as i ng i s s uffi ci entt o obl i gat e the St at e dur i ng t he r et r oact i ve per i ods , butonl yi f t he contr act s ar e appr oved. T hus , a r egul at or yvi ol at i on does notoccurs ol el yb ec au se a cont empl at ed effec t i ve dat e for a cont r act i s ear l i ert han t he expe ct ed dat e of a ppr oval orexec ut i on byt he St at e o r b ec ause a cont r act or al readyhas em barked on perform ance. In t he ab sence o f other fact s, a pr opos ed c o nt r actw i t h an “a s of” e ffe ct i ve dat e ori nvol vi ng per for m ance under w aym aybe ac t ed upon un d ert he pr ocedur es nor m al l yappl i cabl e t o cont r actappr oval

. C O M A R 21. 02. H ow ever , t o t he ext entt hat H o pki ns and D H M H had bee n pr ocee di ng as i f t he cont r act s al r eady w er e eff ecti v e w i t hout a p p ro v a l, D H M H ’s h a n d lin g o f th e se c o ntr act s w as i nco nsi sten t w ith t he i nt entof t he pr ocur ement r egul at i ons . W e recogni ze, i n t he w or ds of t he r egul at i on, t hatl egal l yD H M H has not“ent er [ed] i nt o” t he contr act s and t hatt he contr act s have not “t ake[ n] eff ect , ” gi ven th a t D H M H h a s n o t e x e c u te d th e m . See gener al l y Ri egel v. H olm es , 171 N

. E

. 2d 553, 563 ( O hi o C t

. C om . Pleas 1 9 6 0) ( “ent eri nt o” m ea n s to b ec o m e leg all yb o u n d ). N o n ethe less, the re g u lat o ry sc h e m e is in ten d e d to g iv e D B F P a n d th e B o a rd th e o p p o rtu n ityto cons i der a s er vi ces cont r actbefor e t he contr act i ng agenc yt r eat s t he co n tr ac t as i f italread y is in f o rce . A cq u iesce n ce in the co n tr ac tor’s under t aki ng per for m ance w hi l e at t he s ame t i m e fa i l i ng t o s eek the r equi s i t e appr oval i n a t i m el yw aym ayi ndi cat e t o t he appr oval aut hor i t yt hatt he age ncyw as notcompl y i ng w i t h t he r equi r ement for a p p ro v a l.2 9 0 [7 8 O p . A tt ’y

CO MAR 21 .0 3. 01 .0 4 re qu ir e s the a pp ro priate depa

rtme nt h e a d to 3 ma kea n initi al det erm in ati onregardi ng vo idnes s an d v oi dab ility, a vaila ble for review by

the Board. Such a

deter mination, which COMAR 2 1

. 0 1.02.01(34) require s be in writing , would presumably set forth the fac ts relating to the procurement in sufficie nt detail to allow an informe d judgme nt by

the B oard. A purpor t ed c o n t r actt hatdoes notcompl yw i t h t he Pr ocur ement L aw ori t s i m pl ement i ng r egul at i ons i s voi d. §11- 20 4( b) ( 1) of

t he St a t e Fi na nc e a nd Pr oc ur e mentA r t i cl e ( “ SF” A r t i cl e) ; C O M A R 21. 03. 01. 02A

. Pr ocedur es nor m al l yus ed for c o n tra c t app roval m ay no t be used w hen t he l ack of com pli ance is know n to the appr oval aut hor i t y . I ns t ead, underSF §11-204( c) ( 1) a n d C O M A R 2 1 .0 3 .0 1 .0 3 A , th e B o a rd m a y , in its d isc re tio n , trea t a c o n tra c t as m e re ly v o id a b le if (i) th e p a rties a c ted in g o o d f a ith , (ii ) r at i fi cat ion w o ul d notunder m i ne t he purpos es of t he Pr ocur ement L aw , and ( i ii ) th e vi ol at i on w as i ns i gni fi cantordi d notpr event su b sta n tial c o m p li a n c e w it h th e P r o c u r e m e n t L a w . W h il e ju d g m e n ts aboutw hati s voi d orvoi dabl e ar e for t he B oar d and not t he A t t or ney G eneral , cer t ai n fac t s of w hi ch w e have been made aw ar e )for e x a m p le, th e d e sira b ili tyo f u sin g th e f

e d e r a l g ra n t f

u n d s p ro m p tly fort hes e publ i c heal t h r es ear ch pr oj ect s and t he uni que exper t i s e of H o pk i ns )coupl ed w i t h t he appa r entgood fai t h of D H M H and H opki ns , s ugges t t hat a det er m i nat i on of m er e voi dabi l i t yw oul d be w el l w i t hi n t he B oar d’ s di s cr et i on. 3

III C oncl usi on In sum m ary , i t i s ou r op i nion that t he B oard m ay , in its di s cr et i on, appr ove t he contr act s w i t h H opki ns as of t he dat es w hen H o p k in s ’ p e rf

o rm a n c e c o m m e n c e d

.

J. Jo sep h C u rran , Jr. A t t or ney G ener al Ja c k S c h w a rtz C hi ef C ouns el O pi ni ons & Advi ce