Appropriations Committee reviews DGS fiscal 2026 budget; procurement, grants and State Center relocation draw scrutiny

The Appropriations Committee heard a detailed review of the Department of General Services' (DGS) proposed fiscal 2026 operating budget and ongoing operational issues, including procurement delays tied to the eMaryland Marketplace Advantage (EMA) system, rollout problems with a new grants management system, staffing shortfalls in the Office of State Procurement, and remaining costs from the canceled State Center redevelopment.

David Propert, an analyst with the Maryland Department of Legislative Services (DLS), told the committee that the DGS fiscal 2026 allowance would increase by $32,100,000, or 18.3 percent, to $207,300,000. Propert said the increase reflects a mix of operating and capital items that currently sit in the operating budget, including $15,000,000 in PAYGo funding for TradePoint Atlantic's container terminal and $10,000,000 placed in DGS's operating budget for a new IONQ headquarters in College Park; DLS recommends those amounts be shifted into the capital budget.

The budget review highlighted lingering data gaps in procurement performance metrics. "There have been no managing for results data for the percentage of large procurements completed within 90 days since fiscal '21," Propert said, attributing the missing metric to data integrity problems arising from the transition to EMA. He noted the Office of State Procurement (OSP) aims to complete 80 percent of large procurements (those over $100,000) within 90 days but that the data have been unavailable.

Secretary, Department of General Services, responding for the agency, acknowledged implementation issues with EMA and other IT initiatives but described a multi-pronged approach. On OSP staffing, the secretary said, "These 12 positions, within OSP are critically needed as part of the Moore Miller administration's efforts to reform and streamline procurement operations across the state." He told the committee that seven of the 12 positions were filled and the remaining vacancies were actively being recruited.

DLS also flagged a sharp rise in the number of new procurements from fiscal 2023 to fiscal 2024 (a 264 percent increase) and a decline in highly competed large-service procurements: the share of competitive services procurements over $5,050,000 with two or more bids dropped from 95 percent in fiscal 2023 to 68 percent in fiscal 2024. DGS told the committee it intentionally sometimes splits larger procurements into smaller solicitations to increase participation by small and minority- and women-owned businesses.

MBE participation was reviewed: DLS noted a statutory or program goal of 29 percent prime and subcontract awards to minority business enterprises (MBE). In fiscal 2024, DGS reported $95,200,000 in contracts to MBE prime contractors and $49,700,000 to MBE subcontractors, yielding a 21.4 percent participation rate — the highest since fiscal 2015 but below the 29 percent target.

Committee members questioned energy and facilities programs. Propert pointed out that DGS's state energy database contains complete data for only about 60 percent of state facilities and that a utility bill centralization pilot launched for DGS facilities in 2022 had not yet substantially increased statewide coverage (from 59.8 percent in fiscal 2023 to 60.3 percent in fiscal 2024). The committee also reviewed energy spending figures: calendar 2024 utility spending reported to DGS totaled $248,600,000, with nearly two-thirds spent on electricity.

DGS described energy-efficiency work including LED lighting installations and energy performance contracts (EPCs). The secretary said DGS has spent over $13,000,000 on LED projects since fiscal 2020, with about 40,500 fixtures installed or under contract and an estimated simple payback of roughly eight years. He estimated eventual annual energy and maintenance cost avoidance of about $1,600,000 and total energy savings of roughly 8,500,000 kilowatt-hours when projects are complete. DGS representatives said they plan to expand EPCs where cost-benefit analyses support them and noted statutory changes that allow longer contract terms than historically permitted.

The committee also reviewed State Center relocation and related finances. Propert summarized DLS's accounting: the fiscal 2022 budget initially appropriated $50,000,000 to a dedicated purpose account (DPA) for relocation costs, the fiscal 2025 budget added a $30,000,000 deficiency for fiscal 2024, and DGS expects a $6,900,000 reversion at fiscal 2025 closeout from the Department of Labor. A provision in the Budget Reconciliation and Financing Act of 2025 would allow the governor to transfer $20,000,000 from the DPA to the general fund. After those adjustments, DLS estimated about $29,300,000 would remain in the dedicated purpose account at the end of fiscal 2025. Propert also said agency relocation requests total about $115,000,000, of which DGS considered about $96,000,000 eligible for reimbursement from the DPA.

Propert reminded the committee that litigation over the canceled public-private partnership to redevelop State Center concluded with the Board of Public Works approving a $58,500,000 settlement on Nov. 20, 2024; DLS's analysis noted roughly $47,000,000 of that payment will be general funds and about $12,000,000 will be paid from the Transportation Trust Fund. The committee asked DGS for updates on agency moves; the secretary reported the Maryland Department of Aging relocated in February 2025 and DGS expects remaining agencies to complete relocation by the end of calendar 2026.

Grants administration drew sustained attention. DLS and committee members raised problems with the new cloud-based grants management system (Submittable), which DGS put into service in October 2024 to replace a largely manual, email- and spreadsheet-driven process. DGS currently manages roughly 4,000 active grants; the secretary said about half of grantees have created logins and activated grants in the new system. The committee heard that the old grama unit had been receiving as many as 7,000 emails per month seeking grant status; Submittable allows grantees to view status, upload documents and see next steps, but DGS acknowledged "growing pains" related to onboarding and customer-service responsiveness. The secretary outlined a plan to reorganize the capital grants program: add grant coordinators for customer service, roughly double the number of grant administrators, assign the capital grants unit to a new chief operating officer, expand outreach and training materials, and publish service-level timelines for processing steps.

DLS recommended committee narrative requesting DGS report on vacancies and recommended deletion of funds for 12 procurement positions that remained unfilled as of Dec. 31, 2024; DGS concurred with the report requests but opposed deletion of the 12 positions, noting difficulties in recruiting procurement staff and saying most of the positions were now filled or in active recruitment.

Committee members pressed for additional detail in several areas: an implementation timeline for EMA and procurement reform milestones; whether the state could seek recoupment from EMA vendors for prior inadequate work (the secretary said DGS will consult the Office of the Attorney General when vendor accountability is at issue); more granular timelines for grant processing steps (DGS said intake forms that previously took months are now capped at 30 days under new service-level agreements); and more details on cost and status of LED and EPC projects.

The hearing concluded with committee members saying they will monitor DGS's progress on procurement certification, grant customer service, and relocation reporting. DLS's analyst recommended committee action language to restrict certain funds pending submission of relocation reports; DGS concurred with the request for narrative but asked the committee not to delete the 12 procurement positions it considers critical to the administration's procurement reforms.