Maryland Passes P3 Legislation

by Ballard Spahr LLP

Legislation encouraging the use of public-private partnerships (P3s) to address Maryland’s growing infrastructure needs has been passed by the General Assembly and signed into law by Governor O’Malley with bipartisan support. The 2013 P3 law, based on legislation introduced by the O’Malley-Brown administration on January 30, 2013, followed momentum from similar legislation that was nearly enacted last year. The 2013 P3 law takes effect on July 1, 2013.

Efforts to pass P3 legislation in Maryland in 2012 gained national attention as a dialogue about the growing need for more innovative infrastructure financing evolved. Like many states across the country, Maryland has infrastructure needs that exceed the State’s ability to pay for them with traditional resources. The potential to leverage private sector resources and share the risks involved in development has become increasingly attractive. The O’Malley-Brown administration recognizes the potential to attract private sector resources to address infrastructure needs and is leading the State’s efforts to establish an open and competitive process that would encourage P3s.

The P3 law places Maryland among a growing list of states that have recently enacted laws that seek to encourage innovative types of infrastructure financing. While the use of P3s is not a new concept in Maryland, this approach has been limited by the absence of comprehensive legislative and regulatory guidance. The law provides Maryland’s first statewide policy on P3s, formalizes the process for evaluating both solicited and unsolicited proposals, and clarifies the requirements for any P3 agreement. It offers increased transparency, efficiency, and predictability in effort to attract private investors.

The P3 law promises not only to strengthen Maryland’s infrastructure, but also to create new jobs. The O’Malley-Brown administration estimates that increased use of P3s “could contribute between 6 and 10 percent of Maryland’s $3.1 billion annual capital budget and create up to 4,000 jobs.”

P3 Projects Authorized Extends Beyond Transportation

The law extends statewide guidance on P3s beyond transportation projects for the first time, and offers a mechanism that balances the need to incentivize private sector investment with the need for oversight and transparency.

Maryland’s law affects any sale or lease agreement between the State and a private entity that involves either of the following:

  • The private entity assuming control of the operation or maintenance of a State asset
  • The private entity constructing, financing, or operating a State asset or facility for the State’s use and collecting fees in connection with the use of the asset

Traditionally, transportation assets have been the focus of P3 discussions, but Maryland’s P3 law includes any capital facility or structure. The law allows P3 projects to be financed with any combination of federal, State, or local funds, loan debt, or other public funding sources, as well as private funding or financing sources.

State Agencies Affected

The 2013 P3 law applies to a number of State entities, including the Department of General Services, the Maryland Department of Transportation, the Maryland Transportation Authority, the University System of Maryland, Morgan State University, St. Mary’s College of Maryland, and the Baltimore City Community College. Each Agency must adopt regulations and establish processes for the development of P3s. The 2013 P3 law does not apply to local governments.

By January 1 of each year, each Agency is required to submit to the Senate Budget and Taxation Committee, the House Committee on Ways and Means, and the House Appropriations Committee (the Budget Committees):

  • A report concerning each P3 project under consideration that has not been reviewed or approved previously by the General Assembly
  • A status report concerning each existing P3

Solicitation Process

The law sets forth a detailed process for the solicitation of P3 projects in Maryland.

  • Pre-Solicitation Reports

First, pre-solicitation reports must be submitted by an Agency to the Budget Committees and the Department of Legislative Services for review and comment (non-transportation P3 projects must also be submitted to the State Comptroller and the State Treasurer). The Budget Committees have 45 days to review and comment on the pre-solicitation reports. If the total value of the proposed P3 exceeds $500 million, the Budget Committees may request an additional 15 days to review and comment on the pre-solicitation report.

The pre-solicitation reports are required to include the objectives, anticipated value, and potential risks and benefits of the P3, and to the extent possible, a preliminary analysis on debt affordability, a preliminary summary of the proposed solicitation process, and a statement of intention to use any permitted exemption, each prepared by the Agency in consultation with the DBM. Pre-solicitation reports will be made publicly available and must accompany any request for approval of a public notice of solicitation.

  • Official Designation

After the Budget Committees have reviewed the pre-solicitation report, an Agency isthen required to seek the official designation of the project as a P3 from the Board of Public Works (the Board) and seek approval of the solicitation method. The Board is comprised of the Governor, the State Comptroller and the State Treasurer.

  • Procurement Process

After the Budget Committees have reviewed the pre-solicitation report and the Board has approved the projects as a P3, the Agency may issue a public notice of solicitation for the P3 project. A private entity may be qualified as a bidder through a request for qualifications (RFQ). Once a bidder is qualified, an Agency may engage in discussions with such qualified bidders to obtain comments and revise solicitation documents and obtain the best value for the State. The Agency will make a determination regarding capacity, integrity, and reliability for each private entity responding to a public solicitation notice.

Unsolicited Proposals

Agencies are permitted to consider unsolicited proposals but Agencies must establish a process for determining whether an unsolicited proposal meets the need of the Agency. An Agency may establish an application fee for submitting an unsolicited proposal.

If an Agency determines that the unsolicited proposal meets its needs, it must then conduct a competitive sealed bid or a competitive solicitation process, protect proprietary information included in the unsolicited proposal, and comply with all other requirements under the P3 law, including the solicitation process described above and the requirements for specific provisions in P3 agreements. The private entity that submitted the unsolicited proposal may participate in the competitive process.

P3 Agreements

The P3 law establishes a number of specifics requirements for P3 agreements, including provisions related to the terms of transferring interests in the P3 agreement, the method of establishing rates or fees related to the public asset, the terms of any revenue-sharing agreements, minimum quality standards, operation and maintenance standards, the State’s inspection rights, compensation events for both parties, provisions for oversight, handback requirements, and performance security.

The Board may not approve a P3 agreement for a transportation asset until the proposal is submitted to the Budget Committees and the Department of Legislative Services. The Board may not approve a P3 agreement for a non-transportation asset until the proposal is simultaneously submitted to the State Comptroller, the State Treasurer, the Budget Committees, and the Department of Legislative Services. The State Treasurer will then analyze the project’s impact on the State’s capital debt affordability limits. This review process must not exceed 30 days.

Competing Facilities

A P3 agreement may also call for providing compensation for competing infrastructure projects that are not in the State’s Capital Improvement Program or Consolidated Transportation Program planning documents that results in a loss in revenue for the private entity. The P3 law specifically prohibits any non-compete clause for P3 projects involving road, highway, and bridge assets, however.


The term of a P3 agreement is limited to 50 years, provided that the Board may extend the term if it determines that the Agency has demonstrated sufficient reason for a longer one.

State Law Requirements

The P3 law contains a number of State laws and regulations that will apply to a P3 project.

  • Any P3 agreement must provide that State employees will retain all of the protections in State law, regulations, and policies that are in effect at the time the Board approves such an agreement.
  • P3 agreements must contain minority business enterprise participation goals and procedures, which are to be established by an Agency, the Office of the Attorney General, and the Governor’s Office of Minority Affairs.
  • P3 projects must comply with the State’s prevailing wage act, anti-collusion laws, living wage laws, environmental laws, and nondiscrimination laws.

The new law serves as one of several examples of P3 laws across the nation that seek to balance growing infrastructure needs and private sector incentives with a solicitation process that provides transparency and oversight. Other states that struggle with tight budgets and growing infrastructure needs might benefit from similar legislation.

Attorneys in Ballard Spahr’s P3/Infrastructure Group routinely monitor and report on new developments in federal and state infrastructure programs. For more information, please contact P3/Infrastructure Practice Leader BrianWalsh at 215.864.8510 or, or Steve T.Park at 215.864.8533 or, or the member of the Group with whom you work.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP

Ballard Spahr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.