Responders to bids or requests for proposals (RFPs) can expect fairness in the public body’s evaluation of their response to a bid or RFP. The right to expect fairness in the context of a response to an RFP is illustrated in a protest involving a public body that was recently settled.
A public entity issued an RFP for insurance. Two parties responded, “A” and “B”. The executive of the public entity favored “A” for personal reasons. The executive ordered an independent analysis of the proposals. The expert recommended “B.” The executive sought another opinion. The second opinion criticized both “A” and “B”. Immediately the entity issued a determination that the RFP had been inadequate and determined to use its emergency procurement powers to obtain its insurance. “B” protested.
“B” alleged that the entity acted arbitrarily in cancelling the RFP when its proposal had been found to be the best by one expert and had not been found to be inadequate by either expert although it was criticized by the second expert. “B” alleged that the “emergency” claimed by the entity was manufactured because the entity had known from the beginning about the pretextual reasons it used to say the RFP itself was inadequate.
“B” alleged the cancellation was demonstrably capricious since (1) each of the criticisms was either patently false or could be easily remedied and (2) one of the key distinctions between an RFP and a hard bid is that RFP responses are inherently negotiable. Where a bid states a certain result the entity wants, an RFP states a problem the entity has and seeks a proposal for responding to it.
“B” also alleged that the executive had a personal conflict of interest in that the executive’s brother stood to gain financially if “A” was selected.
The protest was to be decided under the entity’s procurement policy. The entity was not a state agency. Therefore the South Carolina Consolidated Procurement Code did not apply although a state statute required that the entity’s procurement policy be “substantially similar.” The entity first argued that cancellation of a solicitation is not protestable. The procurement policy, however, said “Any …offeror... who is aggrieved in connection with the solicitation of a contractor shall protest…with in fifteen days of the Request for proposal….”
After “B” ’s bid protest unequivocally demonstrated that “B” ‘s proposal (a) was better than “A” ’s (b) met the entity’s needs and (c) the executive was acting out of self interest, the matter was settled. The moral of the story is that public entities have an obligation to the public to avoid arbitrary and capricious behavior in public procurement.
Monday, September 8, 2008
Thursday, September 4, 2008
DOT Forced to Play by the Rules
Two weeks ago the South Carolina Supreme Court decided a case that forced a state agency to play by its own procurement rules. Edward D. Sloan, Jr. frequently brings suits where he believes that governmental agencies are disregarding their responsibilities to follow the rules to the public’s detriment. In this case Sloan challenged an emergency procurement on a road construction project.
The contractor was consistently behind and was terminated for default which meant that its performance bond surety needed to step in and finish the project at no cost to the DOT. DOT received great pressure from the local populace to get the project completed. Turning the project over to the surety would likely cause a 6 month delay and following the standard procurement policy would cause a 4 month delay.
In response to the pressure, DOT changed the termination for default to a termination for convenience and invoked emergency procurement procedures. DOT gave the contract to a subcontractor which was already on the job and was able to start almost immediately. The effect was 6 months saved but an extra cost of $4 million.
Mr. Sloan sued to have the decision set aside arguing there was no emergency which justified DOT’s use of a negotiated contract.
The case was decided under a statute particular to highway procurement rather than the SC Consolidated Procurement Code (SCCPC). DOT argued that it had the power as long as the DOT Director agreed and road safety conditions created the emergency. Sloan argued there was no emergency either as the word is usually understood or under the SCCPC definition of emergency. The Court found that emergency means a sudden, unexpected onset of a serious condition. The road safety concerns existed from the beginning. The court held there was no emergency.
For the full opinion see Sloan v. DOT Op. No. 26534 filed 8/25/2008
The contractor was consistently behind and was terminated for default which meant that its performance bond surety needed to step in and finish the project at no cost to the DOT. DOT received great pressure from the local populace to get the project completed. Turning the project over to the surety would likely cause a 6 month delay and following the standard procurement policy would cause a 4 month delay.
In response to the pressure, DOT changed the termination for default to a termination for convenience and invoked emergency procurement procedures. DOT gave the contract to a subcontractor which was already on the job and was able to start almost immediately. The effect was 6 months saved but an extra cost of $4 million.
Mr. Sloan sued to have the decision set aside arguing there was no emergency which justified DOT’s use of a negotiated contract.
The case was decided under a statute particular to highway procurement rather than the SC Consolidated Procurement Code (SCCPC). DOT argued that it had the power as long as the DOT Director agreed and road safety conditions created the emergency. Sloan argued there was no emergency either as the word is usually understood or under the SCCPC definition of emergency. The Court found that emergency means a sudden, unexpected onset of a serious condition. The road safety concerns existed from the beginning. The court held there was no emergency.
For the full opinion see Sloan v. DOT Op. No. 26534 filed 8/25/2008
Tuesday, September 2, 2008
Experience and Past Performance as an Aspect of Bidder Responsibility
Experience and Past Performance
A third consideration in determining bidder responsibility is the bidder’s experience. A poor performance history or lack of experience could cause the bidder to be non-responsible.
The SC Consolidated Procurement Code allows the procurement officer to issue a request for qualifications (RFQ) before issuing the bids. The RFQ “must require information concerning the prospective bidders’ product specifications, qualifications, experience, and ability to perform the requirements of the contract.”
In negotiated procurements, the use of past performance data plays a heightened role. Recent changes to FAR Part 15 require the evaluation of contractor past performance in most negotiated procurements. Interestingly, performance history is considered twice: first in determining whether the bidder is responsible and then in evaluating his proposal.
A Procurement officer’s determination concerning whether experience is adequate will be upheld if it is reasonable.
Past performance and experience are easily confused. Past performance focuses on the quality of the contractor’s work in prior jobs while experience focuses on the type of work the contractor has performed.
Finally, in order to avoid the conundrum set up by an inexperienced contractor being barred form contracting because of a lack of experience and never being able to gain experience because of his lack of experience, the FAR provides: “A prospective contractor shall not be determined responsible or non-responsible solely on the basis of a lack of relevant performance history, except as provided in FAR 9.104-2.
FAR 9-104-1(c)
A third consideration in determining bidder responsibility is the bidder’s experience. A poor performance history or lack of experience could cause the bidder to be non-responsible.
The SC Consolidated Procurement Code allows the procurement officer to issue a request for qualifications (RFQ) before issuing the bids. The RFQ “must require information concerning the prospective bidders’ product specifications, qualifications, experience, and ability to perform the requirements of the contract.”
In negotiated procurements, the use of past performance data plays a heightened role. Recent changes to FAR Part 15 require the evaluation of contractor past performance in most negotiated procurements. Interestingly, performance history is considered twice: first in determining whether the bidder is responsible and then in evaluating his proposal.
A Procurement officer’s determination concerning whether experience is adequate will be upheld if it is reasonable.
Past performance and experience are easily confused. Past performance focuses on the quality of the contractor’s work in prior jobs while experience focuses on the type of work the contractor has performed.
Finally, in order to avoid the conundrum set up by an inexperienced contractor being barred form contracting because of a lack of experience and never being able to gain experience because of his lack of experience, the FAR provides: “A prospective contractor shall not be determined responsible or non-responsible solely on the basis of a lack of relevant performance history, except as provided in FAR 9.104-2.
FAR 9-104-1(c)
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