## Facts

- Maryland’s Department of General Services (DGS) sought a new State Highway Administration facility on State-owned land and used an integrated lease–finance–construct–purchase arrangement rather than standard bonded construction procurement.
- DGS issued a request for proposals (RFP) with conceptual plans and technical specifications and provided 48 soil boring logs indicating three to six inches of topsoil.
- The RFP stated the plans/specifications were not construction specifications and disclaimed responsibility for site conditions differing from the RFP information; the final contract omitted an express differing-site-conditions clause.
- Harmans Associates Limited Partnership (Harmans) won the proposal, agreed to finance and build the facility, and to sell the completed project to DGS for a fixed price (about $10.9 million).
- During construction, Harmans encountered materially different subsurface conditions—about two feet of topsoil—requiring excavation and removal of roughly 12,000 additional cubic yards.
- Harmans sought an equitable adjustment for added excavation-related costs; DGS denied the claim based on the disclaimers and contract terms.

## Issues

1. Whether DGS’s appeal from the circuit court’s judgment reviewing the Board of Contract Appeals (BCA) decision was authorized.
2. Whether the BCA had jurisdiction, i.e., whether the integrated transaction was a procurement contract subject to procurement law or merely a real estate transaction.
3. Whether a statutory differing-site-conditions clause was implied into the transaction and, if so, whether the RFP disclaimers and contract language nevertheless shifted the risk to Harmans and barred recovery.
4. Whether the circuit court could add pre-decision interest after the BCA denied interest, and whether interest was recoverable against the State absent an express waiver.

## Decision

- The motion to dismiss DGS’s appeal was denied.
- The BCA’s jurisdiction was affirmed because the substance of the arrangement was procurement of construction of a State facility, despite its lease/purchase financing form.
- The equitable adjustment award to Harmans (about $163,719, subject to a minor modification) was affirmed because materially different subsurface conditions were shown and the statutory differing-site-conditions protection applied.
- The circuit court’s award of pre-decision interest was reversed; the BCA’s denial of interest was reinstated.
- The judgment was affirmed in part and reversed in part.

## Legal Principles

- Public contract characterization turns on practical function; a government entity cannot avoid procurement statutes and procurement-board jurisdiction by structuring a construction acquisition as a real estate lease/purchase transaction.
- Mandatory statutory procurement clauses may be incorporated into covered public contracts by operation of law even if omitted from the written contract.
- A statutory differing-site-conditions regime supports equitable adjustment when a contractor reasonably relies on government-supplied subsurface data and encounters materially different conditions.
- General RFP disclaimers and “not construction specifications” language do not negate mandatory statutory risk-allocation rules where the government supplied detailed information inviting reliance.
- Interest against the State is unavailable absent an explicit statutory or contractual waiver; a reviewing court may not add pre-decision interest contrary to the administrative board’s award where no waiver authorizes it.

## Conclusion

The court treated the transaction as a procurement for construction, upheld an equitable adjustment for materially different subsurface conditions under an implied statutory clause despite RFP disclaimers, and disallowed pre-decision interest because the State had not waived immunity from interest liability.


Dep’t of Gen. Servs. v. Harmans Assocs. Ltd. P’ship, 633 A.2d 939 (Md. Ct. Spec. App. 1993)