## Facts

- The Maryland Comptroller of the Treasury invited bids to supply temporary workers to process state income tax returns.
- The invitation incorporated the State’s procurement requirements, including that each bid be accompanied by a bid bond (or pledge of securities) in an amount at least 5% of the total bid price.
- Bay Services, Inc. submitted the low bid of $608,159 and provided a $30,000 bid bond, which was about $407 short of 5% of its bid.
- Kennedy Temporaries submitted the second-low bid of $621,502 and included a $50,000 guarantee letter from Maryland National Bank.
- Before award, Kennedy noticed Bay Services’ bid-bond shortfall and called the Comptroller to complain, but Kennedy did not submit a written protest under the procurement protest procedures.
- Relying on procurement regulations that permitted waiver of non-substantial bid-bond deficiencies in limited circumstances, the Comptroller treated the $407 shortfall as non-substantial (given the roughly $13,000 spread between the two bids) and accepted Bay Services’ bid.
- Kennedy appealed to the Maryland State Board of Contract Appeals and sought to overturn the award and obtain damages as the bidder allegedly entitled to the contract.
- The Board sustained Kennedy’s position, concluding that the regulation allowing acceptance of a bond below 5% conflicted with the procurement statute’s 5% requirement and was therefore invalid; it treated Bay’s bid as nonresponsive.
- The Comptroller sought judicial review in the Circuit Court for Baltimore City; the circuit court affirmed the Board’s ruling on the regulation but held sovereign immunity barred Kennedy’s damages claim.
- Kennedy appealed the damages ruling, and the Comptroller cross-appealed the rulings invalidating the regulation and upsetting the award; the Court of Special Appeals addressed the cross-appeals.

## Issues

1. Whether Kennedy, after failing to file a timely written bid protest required by procurement regulations, had standing to challenge the award based on Bay Services’ bid-bond shortfall.
2. Whether, even if Kennedy could be heard, Kennedy waived its objection by failing to pursue the prescribed written protest process when it knew of the alleged defect before award.
3. Whether the court needed to decide the validity of the bid-bond waiver regulation or the availability of damages against the State in light of sovereign immunity.

## Decision

- The Court of Special Appeals reversed the circuit court judgment to the extent it granted relief to Kennedy.
- The court held Kennedy lacked standing to pursue the challenge in the posture presented because it did not properly invoke and preserve its objection through the procurement protest process.
- The court held, in the alternative, that Kennedy effectively waived its right to litigate the objection by not filing a timely written protest despite knowing of the bid-bond shortfall before award.
- Because standing and waiver disposed of the case, the court declined to decide whether the regulation permitting waiver of certain bid-bond deficiencies conflicted with the procurement statute, and it did not reach Kennedy’s damages claim or the sovereign-immunity question.

## Legal Principles

- A disappointed bidder’s ability to challenge a public contract award is limited and depends on compliance with the procurement statute and the protest procedures established by regulation.
- When procurement rules require a timely written protest, informal complaints (such as telephone calls) are not enough to preserve a challenge to an alleged defect known before award.
- A bidder that does not timely use the protest mechanism may be denied judicial relief for lack of standing and may also be treated as having waived the objection.
- Appellate courts may resolve procurement disputes on threshold grounds such as standing and waiver and avoid deciding broader statutory, regulatory, and damages questions not necessary to the result.

## Conclusion

Kennedy Temporaries challenged the Comptroller’s award to the low bidder based on a small bid-bond shortfall, but the Court of Special Appeals reversed the relief Kennedy had obtained below, holding that Kennedy could not pursue the challenge because it failed to file the required timely written protest and, in any event, waived its objection; the court therefore did not decide the regulation’s validity or whether damages were available against the State.


Kennedy Temporaries v. Comptroller of the Treasury, 468 A.2d 1026 (1984)