Labels and Tags

Accountability (71) Adequate documentation (7) ADR in procurement (4) Allocation of risks (6) Best interest of government (11) Best practices (19) Best value (15) Bidder prejudice (11) Blanket purchase agreement (1) Bridge contract (2) Bundling (6) Cancellation and rejection (2) Centralized procurement structure (12) Changes during bid process (14) Clarifications vs Discussions (1) Competence (9) Competition vs Efficiency (29) Competitive position (3) Compliance (35) Conflict of interest (32) Contract administration (26) Contract disputes (4) Contract extension or modification (9) Contract formation (1) Contract interpretation (1) Contract terms (3) Contract types (6) Contract vs solicitation dispute (2) Contractor responsibility (20) Conviction (4) Cooperative purchasing (3) Corrective action (1) Cost and pricing (13) Debarment (4) Determinations (8) Determining responsibility (37) Disclosure requirements (7) Discussions during solicitation (10) Disposal of surplus property (3) Effective enforcement requirement (35) Effective procurement management (5) Effective specifications (36) Emergency procurement (14) eProcurement (5) Equitable tolling (2) Evaluation of submissions (22) Fair and equitable treatment (14) Fair and reasonable value (23) Fiscal effect of procurement (14) Frivolous protest (1) Good governance (12) Governmental functions (27) Guam (14) Guam procurement law (12) Improper influence (11) Incumbency (13) Integrity of system (31) Interested party (7) Jurisdiction (1) Justification (1) Life-cycle cost (1) Limits of government contracting (5) Lore vs Law (4) market research (7) Materiality (3) Methods of source selection (33) Mistakes (4) Models of Procurement (1) Needs assessment (11) No harm no foul? (8) Offer & acceptance (1) Other procurement links (14) Outsourcing (34) Past performance (12) Planning policy (34) Politics of procurement (52) PPPs (6) Prequalification (1) Principle of competition (95) Principles of procurement (25) Private vs public contract (17) Procurement authority (5) Procurement controversies series (79) Procurement ethics (19) Procurement fraud (31) Procurement lifecycle (9) Procurement philosophy (17) Procurement procedures (30) Procurement reform (63) Procurement theory (11) Procurement workforce (2) Procurment philosophy (6) Professionalism (17) Protest - formality (2) Protest - timing (12) Protests - general (37) Purposes and policies of procurement (11) Recusal (1) Remedies (17) Requirement for new procurement (4) Resolution of protests (4) Responsiveness (14) Restrictive specifications (5) Review procedures (13) RFQ vs RFP (1) Scope of contract (16) Settlement (2) Social preference provisions (60) Sole source (48) Sovereign immunity (3) Staffing (8) Standard commercial products (3) Standards of review (2) Standing (6) Stays and injunctions (6) Structure of procurement (1) Substantiation (9) Surety (1) Suspension (6) The procurement record (1) The role of price (10) The subject matter of procurement (23) Trade agreements vs procurement (1) Training (33) Transparency (63) Uniformity (6) Unsolicited proposals (3)

Wednesday, April 27, 2011

A conflict of views on organizational conflicts of interest

Proposed OCI regs would allow government to tolerate conflict of interest
Acquisition officials representing both the military and civilian branches of government released the much-anticipated proposed regulations April 26. Among the main changes from the status quo in them is the addition of acceptance to the three current methods of addressing conflict of interest, which are avoidance, neutralization and mitigation.

Contracting officers could propose acceptance only when the potential danger is to government business interests as opposed to the integrity of the acquisition process. An example of the latter would be risk of a contractor obtaining an unfair advantage in competing for a future government contract, whereas an example of the former would be risk of a contractor offering up advice to the government "in a way that degrades the value" of the advice.

Acceptance would "generally" have to combined with other methods, particularly mitigation, but a contracting officer could accept the mitigation plan even if it does not remove all the risk of a conflict, the proposed regulations say.

Read more: Proposed OCI regs would allow government to tolerate conflict of interest - FierceGovernmentIT http://www.fiercegovernmentit.com/story/proposed-oci-regs-would-allow-government-tolerate-conflict-interest/2011-04-26#ixzz1KlzVJhc2
Subscribe: http://www.fiercegovernmentit.com/signup?sourceform=Viral-Tynt-FierceGovernmentIT-FierceGovernmentIT

Obama offers different vision of conflicts of interest
The Obama administration and the Defense Department apparently view organizational conflicts of interest from different perspectives. The administration has put out a potential rule on OCIs that differs from the DOD's 2010 draft. It allows the government to accept more risk and raises questions about conflicts among business affiliates.

The White House kept the general framework of the DOD’s proposed OCI rule with its preference for mitigation, but gives contacting officers more flexibility when faced with potential harm to the government and other vendors, according to the new proposal published April 26.

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council, along with the Office of Federal Procurement Policy, propose two types of harm that arise from OCIs. One type hurts the integrity of the competitive acquisition system. The other affects the government and its business interests alone.

While the DOD prefers mitigation, the administration's new proposal would allow contracting officers to accept risk if it’s appropriate. The risk factor would apply after the government and contractor first attempt other avenues.

“The risk of harm to the government’s business interests may sometimes be assessed as an acceptable performance risk,” according to the proposal.

Prior posts on this subject

Procurement controversies -- Sarasota, Florida

Review: Sarasota County purchasing flaw-riddled
The consultant hired to help fix problems with Sarasota County's purchasing practices found things in such disarray that he joked to his co-workers that he ought to get hazardous duty pay.

The report is preliminary and draws few conclusions, but Brady and Berry depict a working environment that lacks the checks and balances that are supposed to govern spending — a system left wide open to waste and fraud.

The Clerk of Courts and county government are also reviewing practices after the bribery arrest of a county mid-manager in late March. So far, six county employees have lost jobs for violating ethics and purchasing policies.

The preliminary findings show problems at almost every step of the process.

Purchasing involves six different computer systems, the rules are in a constant state of flux and the county has no set procedures for determining job specifications.

Builders and contractors have long complained that specifications were being written narrowly to steer contracts to companies favored by county staff.

The NIGP's preliminary findings also show more clearly why a company would offer gifts and trips to an employee like Rodney Jones, a former project manager arrested last month in a corruption inquiry. Project managers have wide latitude to renegotiate a contract with a vendor who is doing work for the county.

The following column provides some local perspective on things to do to make the Sarasota procurement regime more effective. I've only listed some of them, ones particularly pertinent to the consideration of Guam Legislative Bill 160-31 currently being heard today. You should read them all.

County should follow these purchasing rules By Eric Ernst
Each year, Sarasota County government spends millions of dollars on goods and services. Its expense budget represents a sizable chunk of the local economy, and creates jobs for those who do the selling or the work.

With that in mind, here are 10 suggestions that most reasonable citizens would probably support:

• Eliminate the $2,000 charge for protesting any phase of the bidding and contract award process. This charge does nothing but intimidate critics and discourage smaller businesses from complaining even if they have legitimate issues to raise.

• Stop piggybacking in most cases. Sarasota has belatedly adopted rules to stop the practice of amending existing contracts to avoid putting new work out to bid. That's good because it opens the process to more competition and presumably better prices.

• Avoid declaring "emergencies" to waive bidding procedures. There aren't that many real emergencies.

• Establish fair bidding procedures. Sometimes, county staff have set up bid specifications in a manner so narrow that only one firm, probably their choice, would qualify. This bid rigging makes a mockery of the process.

• Ban vendors from setting bid specifications for contracts on which they will bid.


Same song, second verse:

Warning signs before county purchasing scandal
The warning signs date at least to late 2007, when a mid-manager in county government sent a detailed letter to commissioners outlining many of the same abuses being uncovered today. Mark Utz said that when he tried to fix problems, he was "flippantly discounted."

He also lost his job. Utz says it sent a message to other would-be whistle-blowers.

"Now they're going to go in and get religion and be ethical and do due diligence?" he said. "That's not the way it was. Nobody listened, nobody took corrective action. The reality is, the executive team and Mr. Ley had no incentive to fix that."

Perhaps the most persistent person in pointing out flaws has been St. Petersburg-based engineer John Minder. A prolific emailer, Minder has sent the county hundreds of notes warning of favoritism and mismanagement.

Minder says he filed 26 bid protests over the past two years, more than half of the total protests filed. The county denied all of his protests.

Last year, the county initiated a $2,000 charge for some appeals, and Ley took to forwarding Minder's notes to other county staffers for answers.

Minder wound up being one of the first to warn commissioners — in February of this year — about a criminal investigation of Wellington-based Chaz Equipment Co. A month later, commissioners and Ley said they were shocked by Jones' arrest. The charges centered on Jones' relationship with Chaz, which got a contract for sewer repairs via piggyback, a purchasing shortcut that allows for reuse of a competitive bidding process from elsewhere.

Problems with the way the county uses piggybacks were evident three years earlier.

You simply must read the whole story.

Monday, April 25, 2011

Procurement controversies -- Delaware State University

In this article, there are three main players, State Auditor Thomas Wagner, Delaware State University administrator in charge of campus facilities, and former Legislator and Wagner associate, Richard C. Cathcart, and finally, Robert Hicks, the whistle-blower former Deputy Auditor.

Delaware State Auditor R. Thomas Wagner suppressed report criticizing powerful friend
The investigation focuses on DSU using state funds to award nearly $1.5 million in no-bid contracts to a heating, ventilation and air-conditioning company, according to a draft of the report obtained by The News Journal. Many of the contract awards violated state bidding law and the work was performed without the necessary city permits, DSU and state officials acknowledge.

DSU's purchasing and contract procurement is overseen by Richard C. Cathcart.

State Auditor R. Thomas Wagner Jr., a fellow Republican, said he initially "stayed hands-off" from the investigation because it affected Cathcart, and he wanted to make sure "nobody could say there would be a conflict of interest." But as the report approached its final draft last fall, Wagner said, he intervened to hold it back because he had concerns about its conclusions.

"It was a work product that was not going to go out under the banner of the auditor's office," he said.

"Anytime you do an investigation, it can be blown out of portion, as [Hicks] is obviously attempting to do in this case," Wagner said.

Wagner offered few specific criticisms of the audit Hicks performed but did say the initial draft report failed to account for DSU's rationale for not bidding the contracts.

"The bottom line is, should they put that stuff out to bid? Yes. Did they? No," Wagner said. "Did they have an argument for why they didn't? And the answer is yes, they did. And they can stand on that argument."

DSU officials no longer stand by that argument, however.

Cathcart's office approved the exclusive agreement with Absolute HVACR Inc., owned by Robin F. Thompson, for all of the school's heating and air-conditioning work, according to documents obtained by The News Journal.

"Their argument was that the company they used was the licensed company to do Trane products or whatever the products were," Wagner said.

In some instances, DSU split single jobs into multiple purchases to decrease the size of contracts and avoid bidding requirements, according to the still-unreleased audit. State procurement laws require agencies to get three quotes for jobs costing $25,000 to $49,999 and to have a formal public bidding process for contracts exceeding $50,000.

"I never really questioned why I worked exclusively," Thompson said. "People would say, 'Hey, it seems like you're getting a lot of work.' I just took it under the assumption that I was doing good work the way they liked it and the way I said I would do it."

"We kind of got made the scapegoat, which I thought was a little unfair," said Thompson, adding he rarely worked directly with Cathcart but rather Cathcart's employees. "You ask for a bid, I'll give you a bid. If you give me the job, you give me the job. Whether you got a bid from two other people isn't in my world."

State law allows agencies to enter into exclusive agreement for products or services if approval is granted by the state. DSU did not obtain state approval.

Procurement managers should rely on a single provider of a product or service as little as possible, otherwise such arrangements will inflate costs, according to purchasing experts.

Most organizations engage in so-called "sole source procurement" only for "very rare services only one person could provide," such as a specialized software program, said Meri M. Stockwell, a purchasing and procurement consultant. Heating and air conditioning would not fall into that category, she said.

"No, definitely not," she said. "That's something where it should be the more competition the better. ... There's probably many service providers that provide that same service."

The audit found DSU should have obtained bids or quotes for between $884,350 and $1.02 million of the work, according to the draft reports.

Euro Business Champing at bit to get piece of China procurement pie

Eurocham Releases Damning China Procurement Report
The European Union Chamber of Commerce in China has just released a 54 page report on the findings of European businesses bidding for procurement contracts in China. In a hard hitting study, the findings demonstrate that foreign businesses are effectively barred from the US$1 trillion public procurement market in China due to poor and opaque implementation of procurement regulations.

An unprecedented number of complaints concerning foreign companies bidding for Chinese contracts were received by the chamber last year, which stated that rules were “disjointed and inconsistently implemented, causing substantial missed opportunities for European businesses.”

European companies attack Chinese procurement policy
The report says a core problem lies in having two different laws on government procurements in China.

A relatively small range of contracts – such as office equipment and the car fleets of central government ministries – fall under the government procurement law. But the vast majority of what are commonly defined as public contracts in other countries – such as public infrastructure contracts and state-owned enterprise tenders – are governed by the bidding law, which offers much less clarity on eligibility requirements for suppliers.

Chinese procurement rules shut out European firms
Common challenges encountered by European business competing for public contracts included;

• The difficulty of obtaining timely, accurate information about upcoming projects.
• A lack of communication of projects’ evaluation criteria.
• The trend towards decentralisation of tender information - leading to higher costs and less transparency.
• The unfair implementation of public procurement awards.
• An unsatisfactory appeals procedures.

EuroCham China's Position Paper on Doing Business with China.

EuroCham China's European Business Experiences Competing for Public Contracts in China
Before describing the current public procurement system in China, it is worth bearing in mind the unique characteristics of China’s public procurement system. As a socialist country, direct and indirect state spending accounts for a larger proportion of economic activity than in most countries and most ministries have significant budgets. In the former command economy, there was no distinction between government and the market; demand was government driven and production was state planned. All ministries awarded tenders based on their own policies and procurement was seen as an administrative task to control government investment. Authorities were supplied almost exclusively by state owned enterprises (SOEs). Bidding did not exist.

In the opening up of the 1980s, the state council began to view procurement as a means to economic reform and new bidding provisions were introduced by government agencies in charge of works construction. After this, various authorities at both local and central level began to issue their own bidding regulations and set up bidding agencies. This led to a fragmented procurement market with conflicting rules and policies. In 1999, the State Planning Commission (later the NDRC) enacted the Tendering and Bidding Law, introducing market-based bidding mechanisms. Yet while this was in drafting, a parallel initiative for reform was launched and the National People’s Congress began to consider government procurement reform. The Government Procurement Law was enacted in 2002 and the Ministry of Finance took charge of implementation of this new law.

Thus public procurement in China has been fragmented, with regulation by different ministries and different levels of government. Such complexity and uneven implementation have increased the risk of corruption in China. Reforming China’s public procurement is therefore not only a means of improving economic performance, but of fighting official corruption.

Three characteristics differentiate the EU approach from the Chinese approach:
• Transparency: a clear scope of application of relevant EU laws, access to information and time for companies to bid. For example, procuring entities in several sectors organize public seminars to invite all potential bidders for them to discuss and promote solution options.
• A united appeals process for both the public sectors directive and the utilities directive.
• Level-playing field: All EU companies and companies from GPA signatory countries (and more: EFTA, Mexico, Chile) enjoy equal rights to compete for public procurement contracts in the EU. This level-playing field means that China’s GPA accession will open market access for Chinese companies to public procurement in the world’s largest economy. That said, Chinese companies competing for government contracts in the EU must grapple with a complex legal framework. They encounter national rules and European rules, implemented and administered by different authorities in each member state.

Many of the barriers to competition in public procurement tend to relate to national policies on issues such as market opening (for example in defence and transport), market liberalisation, state aids and remaining barriers to the Single Market. Continued action is needed in each of these areas to achieve a genuine EU Single Market. In recognition of this, in 2010 the European Commission launched a comprehensive EU-wide evaluation of the impact of EU procurement policy to guarantee transparency and equal treatment for economic operators. The Commission also launched a review of service procurement in order to consider more extensive regulation of procurement in services.
The report then analyzes the data it received from its review of Euro Business experience, against the context of the China procurement regime(s). That part definitely should be read.

It concludes with a discussion of some recommendations, including:
6.1 Ensure all bidders have equal access to information at the start of the bidding process

6.2 Enforce Transparency and Fair Evaluation during the Tendering Process

6.3 Mind the impact of public procurement on other policies areas. De-link Indigenous Innovation from Government Procurement at all levels.

6.4 Streamline the Legal Framework for Public Procurement in China- in particular, ensuring uniform enforcement of public procurement regulations nationwide.

Friday, April 15, 2011

Incumbent on government to level playing field

This is from a protest that was filed with the US Government Accounting Office.

As a general proposition, government should promote competition. As a practical proposition, incumbents always have a leg up over competitors. If the government enhances that incumbent advantage it, in effect, fashions a sole source procurement.

In this case, in the existing contract, the government obtained the beneficial use of certain equipment provided under, and pay for by, the incumbent contract. The government then solicited for a new contract but, in effect, gave a credit bid to the incumbent for having already provided certain equipment which will also be necessary to do the work under the new contract.

In this protest, GAO criticized the government for giving advantage to the incumbent, but had to dismiss the action because of lack of jurisdiction over the dollar limitation of the value of the task order.

In the Matter of: Qwest Government Services, Inc., File: B-404845, March 25, 2011
The [solicited] “hosting services” in question consist of providing a facility, power, network connections, and building security services for USCIS servers and other equipment. An order for the services will be issued to one of the three awardees under a General Services Administration indefinite-delivery/indefinite-quantity (IDIQ) contract for telecommunications services (the Networx Universal contract).1 The protester objects to language in the RFQ providing for the addition of approximately $14 million to the evaluated prices of contractors other than the incumbent service provider, Verizon, to take into account costs that the agency will incur if the services are provided in a new location. Qwest argues that this price evaluation approach is fundamentally unfair and is a de facto sole-source award to the incumbent.

While we do not have jurisdiction to entertain the protest, we point out that the above evaluation scheme appears to be inconsistent with Federal Acquisition Regulation (FAR) § 45.202, which provides that the offered prices of contractors possessing government-furnished property should be adjusted by applying, for evaluation purposes, a rental equivalent evaluation factor. The stated scheme appears to be inconsistent with this guidance in that it attributes to the evaluated prices of offerors other than the incumbent the full cost of the new equipment to be acquired by the government, as opposed to merely its rental equivalent value; the stated scheme also appears to be inconsistent FAR § 45.202 in that it fails to provide for application of a rental equivalent evaluation factor to Verizon’s offered price to take into account the value of the government-furnished equipment already in its possession.

The Guam regulations, taken from the ABA Model Code, recognizes the inherent advantage of incumbent contractors and attempts to alleviate that benefit from fair competition, in particular in case of multi-term contracts.
2 GAR § 3121 says,
The objective of the multi-term contract is to promote economy and efficiency in procurement by obtaining the benefits of sustained volume production and consequent low prices, and by increasing competitive participation in procurement which involve special production with consequent high start-up costs and in the procurement of services which involve high start-up costs or high phase-in/phase-out costs during change-over of service contractors.

A multi-term contract may be used when it is determined in writing by the Procurement Officer that:
(1) special production of definite quantities or the furnishing of long term services are required to meet Territorial needs; and
(2) a multi-term contract will serve the best interest of the territory by encouraging effective competition or otherwise promoting economies in territory procurement.
The following factors are among those relevant to such determination:
(i) firms which are not willing or able to compete because of high start-up costs or capital investment in facility expansion will be encouraged to participate in the competition when they are assured of recouping such costs during the period of contract performance....

Que spotlight, fade in slowly

Contractor database goes public - with limits
A database housing performance reviews of federal contractors is available to the public, beginning Friday. But the public won't find much there, at least initially.

That's because only contractor performance information posted on or after April 15 will appear on the site.

The Federal Awardee Performance and Integrity Information Systems (FAPIIS) site shows actions taken against contractors in the course of their work with the government. Contracting officers are supposed to use the year-old database to review companies' past behavior before awarding a contract.

Members of the public must submit a Freedom of Information Act request to access any information before April 15.

Read more.

Thursday, April 14, 2011

Procurement reform - Nova Scotia, Canada

New Public Procurement Act Introduced
The Public Procurement Act, introduced by Percy Paris, Minister of Economic and Rural Development and Tourism, is part of the Provincial Government Procurement Initiative and a jobsHere commitment.

“We estimate that public sector entities procured more than $2-billion last year,” said Mr. Paris. “It’s our job to ensure this money is being spent wisely and all public sector entities are working together to be more efficient.”

The act will allow for the development of a new procurement governance structure, including a chief procurement officer for the province. A Procurement Advisory Group of public procurement professionals throughout the province will be created to identify efficiencies, share best practices, and implement greater standardization.

The act also mandates supplier debriefing sessions, a common vendor complaint process, a code of ethics for all public procurement professionals and posting tender notices, winning bidder and award amounts online.

The act will replace the Government Purchases Act, which no longer fits government’s procurement objectives.

Wednesday, April 13, 2011

Procurement controversies -- Beaumont, Texas

TEA: Beaumont ISD contracts did not meet state guidelines
The action came as a result of an audit conducted by the TEA which was investigating a number of contracts that were awarded within the last three years.

The TEA audit raises questions about whether the district violated Texas Education Code when entering into a contract with Walker's Electric Company.

The agency also questions whether Walker's Electric's master electrician had a valid license while performing work BISD.

Auditors also took issue with BISD declaring "emergency procurement status" to approve several contracts without going out for bids following Hurricane Ike.

One of those contracts was awarded to Healthy Resources Enterprises, Inc for more than $19 million. The contract was the second phase of a two-phase repair project to Smith Middle School. While the TEA says the first phase, worth $434,000, was properly awarded under emergency status, they say the second phase of the project, worth $18.8 million, is beyond the amount allowed "under a job order contract process."

BISD used emergency procurement status to explain bypassing TEC procurement requirements before awarding a contract to SeTex Construction Corporation for repairs to Martin Luther King Middle School following Hurricane Ike.

The district entered into a contract totaling $1,520,000 in December 2008 for cleanup, repairs, and damage mitigation, then entered into an additional contract with SeTex for additional repairs in February 2009 for nearly $5.4 million.

The Auditors agree that the first phase of the contract would be allowable under emergency procurement status.

Yet, auditors stated that the time between September 2008, when Hurricane Ike hit southeast Texas, and February 2009 would have been enough time for BISD to seek competitive bids for the second phase under TEC procurement requirements.
There are several issues raised in the story for you to read about, but it was this last transgression that really got my attention. The discrimination shown in separating the immediate emergency from the follow-on work arising from an emergency is something I have written about before, in this post: Since when is failure to manage and budget an emergency? There I wrote:
Since emergency procurements preempt the preferred competitive bidding and other forms of bidding, only the minimum amount of goods and services as will alleviate the "imminent" condition should be acquired by emergency, while the goods and services that cannot or need not be applied to the imminent condition should be acquired by other methods.
I was pleased to see this position reflected in the actions taken by the Texas Education Agency.

Tuesday, April 5, 2011

Who's Responsible Here?

Note: This originally was published as a column I wrote for the Mariana's Business Journal. I cannot get a public link to it however, so it is printed here in full.

Who's Responsible Here?
Frustration with government contracting often tends to focus on contract performance, more so than on the solicitation process, though that, too, receives its fair share of cop. In contract performance, the issues tend to divide between failure of contract administration and failure of contractors to adequately perform, but usually blame gets sheeted home to poor contractor performance.

This has led to many complaints about “responsible” bidders: why don’t we just give bids to the “best bidder”, regardless of low price? An illustration of this desire is found in the Guam Supreme Court procurement rules where, a few years back, the competitive sealed bidding rule dropped the whole requirement that bids be both responsive and responsible, requiring only that bids be responsible. (The Court’s experimental rule reverted to the responsive and responsible requirement subsequently, indicating that any effort to focus solely on the responsibility of bidders in the solicitation process is not the best idea.)

Under GovGuam competitive bidding procedures, the contract award does not go to the low bidder unless the bid is evaluated to be responsive and the bidder is determined to be responsible. Any award made to a bidder who is determined to be non-responsible 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).) 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, even 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 to be nonresponsible would have a right to contest such a finding.

The determination of responsibility is a bit more complex than outlined here, as more fully discussed in the Guam Procurement Process Primer (see links on the sidebar).

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. Contractors who fail to perform can and should be ousted from the project and have their bonds enforced.

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.)

A recent PDN editorial put its finger on this issue when it said,
“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 administration by the government. In my judgement, that is also where the system tends to break down most, rather than at the solicitation stage.

By the nature of solicitation, new and unknown potential contractors are often popping up to provide competition, thankfully. 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.

Responsibility of contractors, suppliers and service providers is essential for the government to get bang for its procurement buck. But, so is determination to keep costs down to the lowest bid.

We do not know who will be the best bidder, because the rejected bidders never get a chance to strut their stuff. At the solicitation stage, we need to independently look at low price, responsiveness and responsibility. At the performance stage, we need to insist on good performance and punish bad performance; in short, to hold the contractor responsible for the bargain.