Maryland’s New ‘Tech Tax’ Explained

Morning Coffee is a robust blend of links to news around the internet concerning the Naval Air Station Patuxent River economic community. The opinions expressed here do not reflect opinions of the Leader’s owners or staff.

Maryland Comptroller Brooke Lierman (D) has issued guidance to help businesses prepare for a 3% tax that will take effect July 1 on the sale and use of several informational technology services, reports Maryland Matters. The tech tax, as it is often called, on IT services is a result of the state legislature’s efforts to raise revenue amid a $3 billion state budget deficit. The comptroller’s legal division offered these questions and answers to provide information on the application and administration of the new taxable services in a bulletin released last week. Find the comptroller’s Get Ready Maryland Businesses Checklist here.

During discussions in the General Assembly about the proposed tax, Del. Brian Crosby (D) said the IT services tax drove his decision to move his business to Virginia, Maryland Matters reported in March. His business works as a subcontractor on defense IT contracts.

Data center growth and the environmental impacts in the Chesapeake Bay region dominated a workshop hosted by the Choose Clean Water Coalition last month, reports Bay Journal. The growing presence of these warehouse facilities housing the world’s computing power has implications for quality of life, land, energy, and water across the region, clean water advocates say.

An artificial intelligence-related provision in the One Big Beautiful Bill Act could restrict state-level legislation of data centers, and it is raising bipartisan objections, reports Wired. A 10-year moratorium would be placed on state AI regulations, if the bill passes. Rep. Thomas Massie (R-KY) said a decade-long block on states regulating artificial intelligence could “make it easier for corporations to get zoning variances, so massive AI data centers could be built in close proximity to residential areas.” He said the bill undermines the ability of local communities to decide where the data centers would be built. Supporters of the moratorium say that the proliferation of state AI laws creates policies that will stifle innovation if they continue to be passed.

Campuses in the University System of Maryland were warned last week to brace for another 7% cut to their budgets in the coming year, reports Maryland Matters. That cut is on top of the 4% the system was forced to absorb as part of statewide budget challenges. A video message from USM Chancellor Jay Perman said that personnel cuts should be a last resort. But he noted that “for some universities, personnel actions cannot be taken off the table.”

A poll from The Associated Press-NORC Center for Public Affairs Research found that six in 10 Americans said that President Donald Trump’s military parade was “not a good use” of government money, reports Military.com. Estimates put the cost at tens of millions of dollars.

The latest poll from Quinnipiac University find that the president’s approval rating has dipped to 38%, reports The Hill. This is the lowest rating in his second term. In the June poll, 38% of registered voters approved of the way Trump is doing his job, while 54% disapproved.

Speaking before the Senate Armed Services Committee, NavSec John Phelan told senators he believes sailors should be able to repair equipment that they are trained to operate without having to wait for contractors to do the work, reports Seapower Magazine. The issue concerns contract agreements that sometimes contain language preventing service members from doing the repairs because of intellectual property rights.

The US Navy will consolidate its two largest unmanned surface vessel programs, with plans to begin developing the new unmanned ship by 2027, according to the Government Accountability Office, reports Breaking Defense.

The US’ role in the AUKUS pact signed during the Biden administration with the United Kingdom and Australia to ward off China’s growing influence is under review by the Pentagon, reports Politico. The deal called on the three countries to jointly develop hypersonic weapons and nuclear-powered submarines, a security partnership that was intended to strengthen seapower gaps in the Pacific region. Pentagon policy chief Elbridge Colby — who has expressed skepticism about the program’s worth — is running the review.

Palantir, Meta, and OpenAI executives will be commissioned at the rank of lieutenant colonel into the US Army Reserve to form Detachment 201, reports Breaking Defense. The execs will lead the new innovation corps inside the Reserve component. “Detachment 201 is being created to bring in tech innovation executives, leaders to help the Army … on broader conceptual things like talent management, how do we bring in tech-focused people into the ranks of the military, and then, how do we train them,” a spokesman for the Army Chief of Staff said.

The US Air Force would cut its F-35A purchase for fiscal 2026 roughly in half under the White House’s draft defense budget, reports Air Force Times. The service typically buys about four dozen of them each year, with some years’ purchases topping 60. The service would procure 24 F-35s next year, for a cost of nearly $4 billion, according to a draft budget document.

RADM Todd Evans has assumed command of the Naval Air Warfare Center Aircraft Division from RADM John Dougherty IV during a ceremony at NAS Pax River on June 11, reports The Southern Maryland Chronicle on MSN.

Some Department of Veterans Affairs employees were told last week that the VA is eliminating a pay increase for thousands of them, reports Federal News Network. The Biden-era wage hike aimed to help recruit and retain human resources staff as the agency rolled out one of the biggest expansions of benefits in VA history.

The Georgia National Guard company is the first in the Army tasked directly with electromagnetic warfare, including direct cyberattacks and drone defense, reports Task & Purpose. The 111th Electromagnetic Warfare Company was activated as part of the GNG’s 221st Intelligence and Electronic Warfare Battalion.

Ukraine and NATO are slated to stage a trial of unmanned aerial vehicle technologies aimed at addressing the threat of Russian first-person-view drones with fiber-optic cables that cannot be brought down with electronic interference, reports Defense News. The event is set to take place June 20 in Estonia.

Joint Chiefs of Staff Chair Gen. Dan “Razin” Caine told the Senate Appropriations subcommittee last week that he does not believe Russian President Vladimir Putin will stop at Ukraine if he succeeds in overtaking the country, reports The Hill.

US troops at the southern border started detaining migrants earlier this month as part of the “Deep South Campaign” to prosecute individuals found trespassing in National Defense Areas, reports The Hill. The US-Mexico border between El Paso to Fort Hancock, Texas, is an NDA alongside the land line marking the country’s boundaries in New Mexico.

The crew of the USS Oscar Austin received Unit Combat Action Ribbons for providing combat support to US naval forces in the Red Sea against Houthi rebels, reports Navy Times. Those aboard the destroyer were awarded the military decorations after completing Austin’s first forward-deployed Naval Forces-Europe patrol in the US Sixth and Fifth fleets.

Rep. Darrell Issa (R-CA) has introduced the Valor Has No Expiration Act, reports Army Times. The bill would allow the Medal of Honor to be awarded to service members for acts of valor that occurred decades ago. “Valor never expires,” Issa said in a recent news release. The bill would waive the five-year limitation for consideration.

Contracts:

General Atomics Aeronautical Systems Inc., Poway, California, is awarded a $27,873,450 modification (P00002) to a firm-fixed-price, cost-plus-fixed-fee order (N0001924F5565) against a previously issued basic ordering agreement (N0001922G0006). This modification adds scope to provide for the development and integration of a Smart Sensor System capability, to include procurement of associated hardware and software in support of the successful operational capability for the MQ-9A Reaper Marine Air Ground Task Force Expeditionary Medium Altitude Long Endurance Unmanned Aerial System. Additionally, this modification procures spares for the Detect and Avoid System and Smart Sensor System. Work will be performed in Poway, California (60%); Patuxent River, Maryland (30%); and various locations outside the continental US (10%) and is expected to be completed in July 2028. Fiscal 2025 aircraft procurement (Navy) funds in the amount of $20,214,480; and fiscal 2025 research, development, test and evaluation (Defense Wide) funds in the amount of $3,242,667, will be obligated at the time of award, none of which will expire at the end of the current fiscal year. This modification was not competed. Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.

The Johns Hopkins University Applied Physics Laboratory LLC, Laurel, Maryland, has been awarded a ceiling $388,800,000 modification (P00007) to previously awarded, indefinite-delivery/indefinite-quantity contract HR001122D0001 with cost-plus-fixed-fee term and completion task orders contemplated for essential research, development, and engineering capabilities. The modification brings the total cumulative face value of the contract to $1,128,800,000 from $740,000,000. Work will be performed in Laurel, Maryland, with an expected completion date of November 2027 for all task orders. No funds are being obligated at the time of award. The Defense Advanced Research Projects Agency, Arlington, Virginia, is the contracting activity.

CACI Inc.-Federal, Chantilly, Virginia, is being awarded a maximum $84,999,720 fixed-price and labor-hour contract for Comptroller mission applications systems support. Work will be performed in Chantilly and Arlington, Virginia, with an expected completion date of June 15, 2030. The contract has a 12-month base period with four individual one-year option periods. This contract is the result of a competitive acquisition for which one quote was received. Fiscal 2025 Office of the Undersecretary of Defense (Comptroller) defense-wide operations and maintenance funds in the amount of $15,572,255 are being obligated at the time of the award. The Defense Finance and Accounting Service, Contract Services Directorate, Columbus, Ohio, is the contracting activity (HQ042325FE049).

Leidos Inc., Reston, Virginia, is awarded a $24,522,883 firm-fixed-price, indefinite-delivery/indefinite-quantity contract (N64498-25-D-4001) for engineering and technical services of design, development, fabrication, test, delivery, and fleet implementation of digital video surveillance system. Work will be performed in Sterling, Virginia, and is expected to be completed by January 2030. Fiscal 2025 other procurement (Navy) in the amount of $346,840; and fiscal 2023 shipbuilding and conversion (Navy) in the amount of $3,391,474, will be obligated at time of award and will not expire at the end of the current fiscal year. This contract was competitively procured via the System for Award Management (SAM) website, with one offer received. The Naval Surface Warfare Center, Philadelphia Division, Philadelphia, Pennsylvania, is the contracting activity.

Northrop Grumman Systems Corp., Baltimore, Maryland, was awarded a $16,995,686 cost-plus-fixed-fee contract for research and development. This contract provides for algorithm development for multiple sensors including but not limited to electro-optical, infra-red, and both active and passive radio frequency. Work will be performed at Baltimore, Maryland, and is expected to be complete by Sept. 1, 2030. This contract was a competitive acquisition where one solicitation was posted, and one offer was received. Fiscal 2025 research and development appropriations funds in the amount of $466,583 are being obligated at the time of award. The Air Force Research Laboratory, Sensors Directorate, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA2377-25-C-B031).

Thermo Fisher Scientific, Rockville, Maryland, is awarded a $94,514,992 indefinite-delivery/indefinite-quantity contract (N00167-25-D-0005) for the procurement of the Navy’s next generation dosimetry system and an updated database management software system called the Naval Radiation Exposure Management System. This contract includes a five-year ordering period, with the maximum value of $94,514,992, if the full contract ceiling is utilized. Work will be performed in Oakwood Village, Ohio (47%); the Czech Republic (25%); Spain (13%); Germany (13%); and the United Kingdom (3%). Fiscal 2025 other procurement (Navy) funds in the amount of $15,595,127 will be obligated at time of award and will not expire at the end of the current fiscal year. This contract was competitively procured via the Procurement Integrated Enterprise Environment Solicitation Module, with two offers received. The Naval Surface Warfare System Carderock Division, Bethesda, Maryland, is the contracting activity.

Lockheed Martin, Mission Systems and Training, Baltimore, Maryland, is being awarded a $7,755,462 cost-plus award-fee order, N6278622F0021, against the previously awarded basic ordering agreement (N00024-19-G-2319) to provide engineering and management services for LCS 25 Post Shakedown Availability. Work will be performed in Mayport, Florida (51%); Virginia Beach, Virginia (21%); Washington, DC (14%); and Moorestown, New Jersey (14%). This delivery order is expected to be completed by Nov. 30, 2025. Fiscal 2017 shipbuilding and conversion (Navy) funding in the amount of $5,150,251 (66%) will be obligated at time of award and will not expire at the end of the current fiscal year. The Supervisor of Shipbuilding, Conversion, and Repair, Bath, Maine, is the contracting activity.

North Star Scientific Corp., Kapolei, Hawaii, is awarded a $13,746,890 firm-fixed-price, cost-plus-fixed-fee order (N0001925F0217) against a previously issued basic ordering agreement (N0001924G0014). This order provides modeling, hardware design and construction, testing and data analysis in preparation for and execution of full-scale testing in support of Small Business Innovation Research Phase III, Topic N06-125 “L-Band Solid-State High-Power Amplifier for Airborne Platforms.” Work will be performed in Honolulu, Hawaii (44.39%); Oklahoma City, Oklahoma (44.99%); San Leandro, California (7.70%); Newark, Delaware (1.13%); and Warminster, Pennsylvania (1.79%), and is expected to be completed in June 2027. Fiscal 2024 research, development, test and evaluation (Navy) funds in the amount of $13,746,890 will be obligated at time of award, all of which will expire at the end of the fiscal year. Naval Air System Command, Patuxent River, Maryland, is the contracting activity.