Kennedy Temporaries v. Comptroller of the Treasury

Maryland’s Comptroller of the Treasury (Comptroller) (defendant) invited companies to submit bids to provide temporary tax workers for the processing of income tax returns. The invitation included a memorandum on the state’s procurement law, including that all bids must be accompanied by a bid bond equal to at least 5 percent of the bid price in the form of a bond or pledge of securities. The two lowest bids were submitted by Kennedy Temporaries (Kennedy) (plaintiff) and Bay Services, Inc., coming in at $621,502 and $608,159, respectively. Bay Services included a $30,000 bid bond, which was $407 less than 5 percent of its bid price. Kennedy submitted a $50,000 guarantee letter from Maryland National Bank. Kennedy noticed the $407 shortfall on Bay Services’ bid bond and called the Comptroller to complain; however, Kennedy never submitted a written protest. Pursuant to state regulations, the Comptroller exercised its discretion to waive the $407 shortfall on Bay Services’ bid bond as nonsubstantial because the $407 shortfall was less than the approximately $13,000 difference in price between Bay Services’ bid and Kennedy’s bid. The Comptroller accepted Bay Services’ bid. Kennedy appealed to the Board of Contract Appeals (Board) and sought damages. The Board sustained Kennedy’s appeal, holding that the Comptroller’s statutory discretion to waive nonsubstantial bid bond deficiencies was void because it contradicted the state’s procurement law requirement that all bid bonds be greater than, or equal to, 5 percent of the bid price. The Comptroller appealed to the Baltimore City Circuit Court. The court affirmed the board’s decision but barred Kennedy’s damages claim on sovereign-immunity grounds. Kennedy and the Comptroller both appealed to the Maryland Court of Special Appeals.