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THE UNIVERSITY OF MARYLAND v. MFE INCORPORATED/NCP ARCHITECTS INCORPORATED NO. 24, SEPTEMBER TERM, 1996 State procurement: Board of Contract Appeals has no jurisdiction over contract claim by State agency seeking payment from former contractor when agency is not holding funds owing to the contractor against which the agency's claim can be set off.

IN THE COURT OF APPEALS OF MARYLAND No. 24 September Term, 1996 __________________________________

THE UNIVERSITY OF MARYLAND

v.

MFE INCORPORATED/ NCP ARCHITECTS, INCORPORATED

__________________________________

Bell, C.J. Eldridge Rodowsky Chasanow Karwacki Raker, Wilner, JJ. __________________________________ Opinion by Wilner, J. __________________________________ Filed: March 10, 1997

This appeal concerns a dispute between the University of Maryland hereafter and a joint to, venture of architects as MFE) (which arising we out We shall of a

refer

collectively, for

procurement

contract

architectural

services.

granted

certiorari to consider the narrow question of whether delivery to MFE of the procurement officer's final decision by facsimile

transmission (FAX) sufficed to commence the 30-day period allowed for filing an appeal to the State Board of Contract Appeals (BCA). In the course of our research on that issue, however, we discovered a more significant problem: the BCA had no subject matter

jurisdiction over the claim.

BACKGROUND The relevant facts are undisputed. In September, 1981, the

parties entered into a contract calling for MFE to provide plans and specifications for the renovation and expansion of the McKeldin Library on the University's College Park campus. On May 4, 1993 --

nearly 12 years later and after completion of the construction based on those plans and specifications -- the University gave written notice to MFE that it was asserting a claim in the amount of $2,470,792 for certain delay and additional construction costs allegedly incurred by the University as the result of errors and omissions in MFE's designs. Insofar as we can tell from the

record, the University was not then holding any money owing to MFE under the contract. It was not attempting, therefore, to set off

its claim against funds otherwise due to MFE but rather was seeking

- 2 to have MFE affirmatively pay the amount of the claim to the University. The letter informed MFE that it could file a response

within 30 days. By letter dated June 4, 1993 -- the thirty-first day, as we count it -- MFE, through its attorney, filed a response denying liability.1 The attorney sent the response to the University "Via

Facsimile and Overnight Mail" on her law firm's stationery, which included the firm's FAX number. By letter dated October 28, 1993, addressed to the attorney, the Director of the University's Department of Procurement and Supply informed MFE that the State was entitled to indemnification for costs aggregating $2,043,735 due to MFE's design errors and omissions. The letter stated that it constituted the final action

of the procurement officer and that the decision could be appealed to the BCA in accordance with Code of Maryland Regulations (COMAR) 21.10.04.06. The letter concluded with the statement, "If you

decide to take such an appeal, you must mail or otherwise file a written notice of appeal with the Appeals Board within 30 days from the date you receive this decision." The 15-page letter was sent to the attorney by FAX

transmission from the Contract Litigation Unit of the Attorney General's Office on October 29, 1993. The transmission produced a

The University's letter of May 4 was sent separately to each of the joint venturers, MFE, Incorporated and NCP, Incorporated. The attorney's response was a single one on behalf of the joint venture.

1

- 3 Transmission Result Report showing, among other things, a date of October 29, 1993, a time of 11:25 a.m., 15 pages, and a "Result" of "OK." After the transmission was completed, a secretary in that

unit called the attorney's office and was informed by someone named Tina that the FAXed document had been received. the Transmission Result Report: spoke to Tina. It was received." She then wrote on

"Called 10/29/93 -- 11:35 a.m. --

Not content to rely solely upon the FAX transmission, the Assistant Attorney General also sent a copy of the decision to the attorney by Federal Express on October 29. On December 8, 1993,

upon a tracer request, one Deborah Constable, listed by Federal Express as being with the State Department of Transportation but identified otherwise as being a secretary in the Attorney General's office, was informed by Federal Express that its records showed that the document was delivered to an L. Garett on November 1, 1993. The identity of Mr. or Ms. Garett is not revealed in the

record before us, but it is undisputed that the document was, in fact, delivered to someone in the attorney's office on November 1. That document, being a copy of the one FAXed on October 29, also ended with the statement that it constituted the final action of the procurement officer, that it could be appealed to the BCA in accordance with COMAR 21.10.04.06, and that, to take such an appeal, it was necessary to file a written notice with the BCA within 30 days "from the date you receive this decision." On November 29, 1993, the attorney sent a notice of appeal to

- 4 the BCA. The notice was sent by first class mail and was received On December 30, the University moved to The

by the BCA on November 30.

dismiss the appeal on the ground that it was untimely.

University argued that the time for appeal commenced to run on October 29, when the Director's final decision was transmitted to Ms. Nevius by FAX, and that the time elapsed on November 28. The BCA agreed with the University and dismissed the appeal. It noted that the pertinent COMAR regulation (21.10.04.04D)

requires that the procurement agency's final decision be "furnished to the contractor by certified mail, return receipt requested, or by any other method that provides evidence of receipt" and held that the FAX transmission in this instance constituted a method that provided evidence of receipt. It observed that the record

left no doubt that MFE had actual possession of the final decision on October 29 and that transmission of copies by FAX "has become an everyday event in the ordinary course of business" and was

"accurate, reliable and meets all of the substantive tests as a method of furnishing the final decision to the contractor." Both the Code and COMAR require that an appeal from a final agency decision denying a contract claim be filed within 30 days after receipt of the notice of final action. Rejecting MFE's claim

that the appeal should be regarded as having been filed when the notice was dropped in the mailbox on November 28, the BCA held that the appeal was actually filed on November 30 and was therefore two days late. On March 7, 1994, the BCA dismissed the appeal for lack

- 5 of jurisdiction. It confirmed that ruling on June 30, when it

denied MFE's motion for reconsideration. The Circuit Court for Baltimore County, on judicial review, reversed the BCA ruling, holding that the combination of FAX and telephone follow-up did not suffice to constitute a furnishing of the final agency decision by "any other method that provides evidence of receipt," as required by COMAR 21.10.04.04D. The court

concluded that the regulation did not contemplate delivery by FAX because that method of transmission was not used when the

regulation was adopted.

DISCUSSION State procurement is governed by statute and regulation, and we therefore turned to them to determine whether the transmission of a final agency procurement decision by FAX suffices to commence the time for noting an appeal to the BCA. To our surprise -- and no

doubt to the surprise of the parties, as neither of them has raised the issue -- we discovered that the administrative BCA procedure created by statute does not apply to a claim such as this one -- an attempt by a State agency to force a former contractor to pay over money not then being held by the agency under the contract. The statutes are contained in Maryland Code (1995 Repl. Vol.), State Finance and Procurement article, titles 11 through 17. 12-101 of that article vests general control over

Section

procurement in the Board of Public Works which, among other things,

- 6 may set policy, adopt regulations, and establish internal operating procedures. In accordance with that authority, the Board has

adopted a set of procurement regulations; they are found in COMAR, title 21. Title 15, subtitle 2 of the State Finance and Procurement article (

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