Today's topic for discussion in the Pacific Daily News was, what can GovGuam do to make sure road projects are completed on time? Its editorial is Ensure: DPW must do much better job overseeing island road projects.
Much of the related comment, including the editorial, mentioned the need to make sure bidders were capable. The point was often made that we just cannot take the low bidder and hope for the best.
Under competitive bidding procedures, the contract award does not go to the low bidder unless the bidder is determined to be both responsive and responsible. Any award made to a bidder who is determined to be nonresponsible is illegal.
So let’s look at the question, who is responsible?
The procurement regulations provide guidelines, but no bright line test (2 GAR § 3116). The test of responsibility is not a check list. It is to be judged against many “standards of responsibility”. No particular standard is determinative. The test is not “one size fits all”. And, it is situational: a bidder may be responsible in the context of one project but nonresponsible for another.
The important thing is that the procurement officer is given a great deal of latitude in making the determination of responsibility. A procurement officer has very little discretion to determine if a bid is responsive because responsiveness is determined by the specifications. On the other hand, a procurement officer is given very much discretion to determine if a bidder is responsible because it is fundamentally a judgment call.
The legal definition of a responsible bidder is “a person who has the capability in all respects to perform fully the contract requirements, and the integrity and reliability which will assure good faith performance.” (5 GCA § 5201(f).) Looking at this closely and in a nutshell, responsibility requires two showings: capability and reliability.
First, the bidder must be capable to perform the contract. No matter how reliable the bidder may be, with the highest integrity, if the bidder does not have the capacity to perform the particular contract, the bidder is, in the context of the particular bid, nonresponsible. That is not a reflection on the bidder’s character or honesty; it is a simple assessment of ability to perform that particular task.
Second, the bidder must be reliable. There must be some calculable expectation that the bidder will do what it takes to get the job done as required. Note that this does not mean that the determination of reliability must be so tight as to be a guarantee of performance. But it must be based on reasonable expectations of performance.
So, what does a procurement officer look at as evidence of capability and reliability? He or she must look to a variety of factors, any or all of which indicate “standards of responsibility”. There is no comprehensive list of such factors, but the regulation does point to these for starters:
(i) available appropriate financial, material, equipment, facility, and personnel resources and expertise, or the ability to obtain them, necessary to indicate its capability to meet all contractual requirements;
(ii) a satisfactory record of performance;
(iii) a satisfactory record of integrity;
(iv) qualified legally to contract with the territory; and
(v) supplied all necessary information in connection with the inquiry concerning responsibility.
The determination of responsibility is not intended to take place at bid opening, nor is the information that may be required to be supplied in the bid packet. The procurement officer is empowered, indeed expected, after bid opening, to make appropriate inquiries, not just of the bidder, but of any other source which could supply information relevant to the various factors affecting the standards of responsibility.
But, before a contract is awarded, “the Procurement Officer must be satisfied that the prospective contractor is responsible”. It is interesting to note that the procurement officer is not required to make any record of the determination of responsibility. As mentioned, that determination is given discretion and it may at times be difficult to articulate. On the other hand, if the determination is made that the bidder is nonresponsible, there must be a reasoned and written determination of that finding placed in the procurement record, and the bidder found nonresponsible would have a right to contest such a finding, to protect honor and professional standing.
So is that the end of it then? No, not by a long shot. The “procurement process” is intended to include the entire contract performance of the contractor, not just the assessment of the bidders. The Procurement Law provides a process whereby irresponsible contractors can be suspended or disbarred from bidding for contracts for, among other reasons, “a recent record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contracts, provided, that failure to perform or unsatisfactory performance [is] caused by acts beyond the control of the contractor”. (5 GCA § 5426.)
The PDN editorial puts its finger on this issue when it says,
The agency needs to do a much better job at ensuring that bidders for road projects are capable. Those who do bad work need to be prevented from bidding on future projects. Once a contract is awarded, regular and routine checks must be made to ensure the work being done meets standards and is on track to meet completion deadlines.You might consider that “any member of the public” can petition GovGuam to take such action against a contractor. So, if the government is not enforcing satisfactory performance standards, you can.
The capability and reliability of the contractor should be determined every day on the job. That requires diligent and intelligent contract oversight by the government. In my judgement, that is also where the system tends to break down most. By the nature of solicitation, new and unknown potential contractors are often popping up, thank goodness, to provide competition. Their capability and reliability may not be fully known before job performance. If, however, they are allowed to complete the job in the face of observable deficiency of material, incompetent personnel or whatever else, that is the failure of the contract administrator, not the solicitation process.
And if irresponsible contractors are thereafter allowed to get another award (without strong showing of mending its ways), it is a failure of both contract administrators and solicitation.
But, it should be pointed out, that unfortunately happens everywhere. Just search the terms “GAO contractor oversight” to see that this is a billion dollar problem with the Federal government, too. Just as the Feds are taking steps to try to deal with their problems, so should we on Guam.
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