ANNAPOLIS, Md. — A new legislative audit review says more than 40 Maryland government entities operating outside the state’s standard procurement rules have uneven safeguards over how they spend billions of dollars each year, with some lacking basic written policies or clear requirements for competition and public disclosure.
In a special review released Nov. 20, 2025, the Office of Legislative Audits identified 42 state units that are either fully or partially exempt from Division II of the State Finance and Procurement Article, which governs how most agencies bid, award and advertise contracts. Twenty-nine of those units are fully exempt from the law for all procurements, while 13 have exemptions for specific types of contracts or programs.
The exempt group ranges from higher education institutions and economic development authorities to the Maryland Health Benefit Exchange, Maryland Stadium Authority, Maryland Environmental Service and Developmental Disabilities Administration. Together, those units reported about $8.5 billion in non-payroll operating expenditures in fiscal 2024, according to the report.
Auditors said the review was prompted by concerns raised in recent agency audits and by members of the General Assembly about how exempt entities manage procurement without the usual oversight of the Board of Public Works and statewide regulations intended to ensure competition, transparency and fair treatment of vendors.
Four exempt units lack written policies
State law generally requires exempt units to adopt their own written procurement policies covering methods of purchasing, advertising, minority business enterprise (MBE) goals and approval processes. Colleges and universities have separate requirements to adopt policies that support the purposes of state procurement law and submit them to the Board of Public Works.
The review found that 38 of the 42 exempt units had established written procurement policies. Four did not: the Maryland State Lottery and Gaming Control Agency, the Maryland Corps Program, the Maryland State Archives and the Maryland Energy Administration, as of March 2025.
Among nine higher-risk units selected for closer review — including the Maryland Health Benefit Exchange, Maryland Stadium Authority, Department of General Services, Maryland Economic Development Corporation, Maryland Environmental Service, Maryland Public Broadcasting Commission, Maryland Food Center Authority, Maryland African American Museum Corporation and the University System of Maryland — auditors found gaps even when policies existed.
Two of those nine did not include all elements required by law, such as advertising requirements or MBE goals, and one had a procurement policy that had not been approved by its board of directors, the report says.
Policies often weaker than statewide rules
Because exempt entities are not barred from following statewide rules, auditors compared the selected units’ internal policies with key provisions that apply to non-exempt agencies, focusing on competitive bidding, sole-source contracts, intergovernmental cooperative purchasing, public notice and MBE participation.
Across those five areas, the review found numerous cases where exempt units’ policies either did not address a control at all or were less stringent than statewide standards. Examples cited in the report include:
- Some units did not require written solicitations for all competitive procurements over $50,000, even though state regulations do.
- Several entities’ policies did not address how sealed bids and proposals are to be opened and secured, or did not clearly require awards to be made to the lowest bidder or the offeror most advantageous to the state.
- Thresholds for internal approval of large competitive contracts and sole-source procurements were sometimes far higher than the levels that would trigger Board of Public Works review for non-exempt agencies.
- Many policies either did not mention intergovernmental cooperative purchasing agreements or did not require written justification that using another government’s contract would save money, improve efficiency and not be used to sidestep state procurement law.
- Seven of the nine units reviewed did not require publishing contract awards, and others lacked timeframes or did not cover all procurement types.
- Several entities did not clearly set overall MBE participation goals or require each procurement to be evaluated for an appropriate MBE goal.
Auditors did not test individual contracts under the exemptions or assess why some units lacked required elements, noting that the work was a special review rather than a full performance audit.
Prior audits flagged issues
The special review also summarized recent audit findings at several exempt or partially exempt entities, including the Maryland African American Museum Corporation, Maryland Food Center Authority, University of Maryland Global Campus, Frostburg State University, Morgan State University, the Department of Natural Resources and Maryland Public Broadcasting Commission.
Those prior audits identified problems such as contracts awarded without proper competition, large service arrangements that were never competitively bid, emergency or sole-source contracts extended for years without adequate justification, and failures to publish awards or retain procurement records in line with state rules.
Possible legislative fixes
The Office of Legislative Audits did not issue formal recommendations in the special review but outlined several “considerations for improvement” lawmakers may weigh.
Among them: consolidating all exemptions into a single statute; designating a central oversight body such as the Board of Public Works to monitor exempt procurement policies; narrowing or redefining existing exemptions; requiring publication of solicitations and awards and certain approval thresholds even for exempt entities; and clarifying that exempt units should generally follow state procurement law unless there is a documented reason not to for a particular purchase.
The report also suggests the General Assembly consider prohibiting exempt agencies from using their status to make purchases on behalf of non-exempt entities and establishing a mechanism to track and report the volume of exempt procurement activity statewide.
Read the full audit report below:
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So this is why our state has a deficit.
Why does it NOT surprise me that the Maryland State Lottery and Gaming Control Agency is one of the four that’s NOT in compliance? Racketeering comes to mind.
Right into spend Moores pockets
When Governor Hogan left office we had a surplus and now there’s 8.5B of spending irregularities. Perhaps the taxpayers of Maryland should refuse to pay anymore taxes until Governor Spendmore gets the house in order!