Working a good man hard

As previously presaged, Professor Steven L. Schooner came to Guam to spread the faith in effective procurement to True Believers and skeptics alike.

And he was spread thin, putting on two seminars over two days, a presentation to the students and faculty at the University of Guam, giving a talk to the Guam Chamber of Commerce, and enlivening morning talk radio with Ray Gibson, not to mention charming the socks off policy makers from all branches of Guam government and private business in private conversations.



I can't thank him enough, nor recount the typhoon-wind itinerary, but the following links give a glimpse of the media storm he created:

Lecture on procurement in business and government

Thankfully, a professional is on-island, enlightening and educating those in both the public and private sector about procurement, its processes and opportunities.

Steven L. Schooner, the Nash & Cibinic Professor of Government Procurement Law and Co-Director of the Government Procurement Law Program at George Washington University, gave a free lecture at the University of Guam yesterday. He is also the featured speaker at the Guam Chamber of Commerce's Procurement Seminar.

Schooner stressed that the way most governments function today is heavily dependent on the private sector.

“(The) government can't do anything without the private sector. So in effect, we have outsourced the business of government,” he said.

“Politicians believe that if we purchase more effectively, we'll be able to get more. It's incredibly naïve to think we'll get more goods, services, roads and bridges for less money. There are potential savings if the governments did this more effectively,” he added.

Another thing Schooner spoke about was the opportunity of getting into procurement, since governments don't have enough people qualified to do the job.

As it is, the first thing that most governments lack, Schooner pointed out, was their lack of knowledge or preparation regarding the business of procurement.

I don't know how long these links will last, but here are others:

Seminar deals with public sector procurement (KUAM TV report and video)

And these links here and here will take you to a streaming "audio" page and a "download" link to an mp3 recording of the interview with Ray Gibson on radio K-57.

Bus stops competition

New bus policy putting businesses in jeopardy

Government officials and a newly formed lobby group are arguing that new tendering procedures for school bus contracts enacted by the Ministry of Education this year are putting local transportation companies in real jeopardy.

Passed by the Ontario Legislature in 2010, the Broader Public Sector Accountability Act does a number of things, including setting out new rules for lobbyists. But it does something else as well.

The act also dictates new rules that institutions or organizations that receive more than $10 million in public money must follow when awarding tenders.

That change essentially made it illegal to use preferential treatment when awarding contracts through a competitive process.

What this has done is change the landscape in Ontario when it comes to awarding things like school bussing contracts.

It used to be perfectly legal for school boards to use preferential treatment when awarding bus contracts: local businesses were protected and outside competition was minimized.

Now, the playing field is wide open, and organizations like school boards are forced to open competition to any school bus operator that can bid.

RURAL SCHOOL BUSSING CRISIS – A BIG CITY FIX THREATENS RURAL BUSINESSES

School busing has historically been a stable industry with fair rates of return and an exemplary safety rating. Over the years, it has evolved into a sole-purpose industry, and with consolidation of school boards, most bus operators now have one customer. Due to procurement scandals in other government contracts, the provincial government has determined that “the status quo is not an option”. Now, a “one-size-fits-all” procurement process, which fails to take into account the unique economics of school bussing, threatens to put small businesses out of business overnight.

School busing tenders causing concern for local companies

Concern is rising over the fact that Northern School boards are approving tenders with large multinational transportation companies in a bid to save money on school busing costs.

Local companies such as Schumacher Bus Lines and Kamiskotia Bus Lines have been providing services for decades. Schumacher Bus Lines is at risk of closing their doors and Kamiskotia Bus Lines will be closing because of lost contracts.

The Independent School Bus Operators Association’s (ISBOA) Position on
the Current Proposal for Competitive Procurement of School Bus Transportation in Ontario

Ontario’s Independent School Bus Operators Association (ISBOA) is concerned about the current direction the province is taking in regards to mandating competitive procurement of school bus transportation. The Independent School Bus Operators represent the backbone and the pioneers of the school bus industry in Ontario. They have a long history of providing safe, secure and on-time transportation for the children of Ontario, many with operations going back over 60 years.

Family-run bus company decimated by process

A long-time local bus company has lost 75% of its school business after trying to outbid larger operators in a new provincial process that has "decimated" other small, family run coach lines.

Guy and Rose Ravin are the only ones left at Ravin's Coach Lines, started in 1947 by Guy's grandfather, on Rouse Street in Tillsonburg, but they had to sell their property.

Recently the couple lost all of its 19 bus and van routes in Oxford County after unsuccessfully bidding against much larger companies who offered much lower prices the Ravins could not match.

"We had 19 drivers we had to let go, but hopefully we'll have five of them come back," Rose Ravin said.

Oxford County is one of a few counties where the provincial government has tested out a system that puts the school bus contracts out to tender, soliciting bids and pitting small bus companies such as Ravin's against large ones like First Student.

Ravin said they can't compete with the bids of larger companies because they don't buy buses, parts, gas or insurance in bulk, which gives big corporate competitors a discount.

The process of filling out the 88-page proposal package alone was costly and time-consuming, taking Ravin nearly a month to complete because she had no administrative staff to help her.

When the Ravins received the letter in March saying they were not renewed to service the 19 Oxford County routes, Rose said she was shocked.

"I was horrified," she said. "I felt sick to my stomach. I couldn't even read what was in the letter to my husband."

"It was really tough at first. Much more for Guy because it's been his family's business for three to four generations."

They felt even more slighted because they have purchased $10,000 worth of manuals to help them make sure the operation and drivers were up to date and provincial standards for the RFP.

"Safety is a big issue here," she said. "We scored extremely well when it came to safety and the technical requirements in the RFP."

"I've written a letter to (Minister of Education) Leona Dombrowsky pointing out that the process is not just about the lowest price, which she says it isn't, but it is."

"Why is local better?" she said. "If a bus goes off the road in the winter, we know the county people who can go help, while a big company will call from far away to get someone who isn't local to go help who might take 45 minutes to get there. That's more time those poor kids will have to spend out in the cold. We also know the roads and the conditions better."

She wondered, if the business goes belly up, would other community events and groups such as free swim and skate days for children, churches, sports teams and nursing homes get the same kind of service they are accustomed to with Ravin's.

All of Ontario's school bus routes are due to be subject to a request for proposal process by 2013.

The Ravins are hoping the province will put a moratorium on the bidding process before it puts more small bus operators out of business.

Around 15 to 18 companies have already been "devastated by the process" in Ontario, including Cook Bus Lines in Mount Forest.

The association says the competitive bidding might save the provincial government money in the short term, but it will lead to a monopoly as bidding drives small operators like Ravin's out of business.

Ontario school children: could their lives be placed at risk?

March, 2011 a multinational operator took 90 per cent of all the school runs in Timmins. As many as 12 operators were put out of business overnight. In Kenora, they lost their only school bus operator to a large corporation operating out of the United Kingdom.

Thirteen years ago, Sudbury Student Service Consortium abandoned annual negotiations in favour of five-year competitive contracts. Sudbury went from 23 local bus companies to just a few multinational companies. Their latest five-year contracts have risen over 10 per cent
.
Who is going to bid when these contracts are up if all the local school bus operators are gone? Is your local operator going to sit on one, 10, 20 or 25 buses for five to seven years at a cost of $100,000 each? Presently you may see a savings, but when the competition has been eliminated who is going to challenge the multinationals’ pricing? No one, soon the sky will be the limit!
Are you aware that some multinational’s central dispatches are outside of Canada? Currently (in most cases) local school bus operators are your neighbours. They grew up in the same area that your children now live. Who do you want to be accountable for your children? Will it be your neighbours (your local school bus owner) that you have known for years or a huge corporation out of the United States or the United Kingdom?

In the school bus industry, there are three safety standards on a school bus; maintenance of the school bus, training programs, and drivers wages. Due to these competitive contracts, larger multinational companies are undercutting the local operators. As stated in the Listowel Banner, “Lesa McDougall has heard from bus companies that have submitted bids far lower than what is needed to remain sustainable and that have artificially suppressed their rates as a way to win the tender and avoid losing business”. They can not operate like this forever. The operators have been financially squeezed over the last decade. What has to be given up to make ends meet? Maintenance of the school bus? Reduced training programs? Is it safe to put your child on a school bus under these circumstances? McGuinty needs to stop the RFP process before it results in a serious injury or death of a child!

Ontario freezes changes to school bus contract rules

The Liberal government has suspended a new tendering process that is being blamed for ruining small, family-run school bus companies and destabilizing the entire school bus industry across Ontario.

The province has been working on new rules for school boards to pick their bus operators. The contracts are worth about $800 million a year.

But at boards where the new rules have been tested — forcing companies to compete for routes in a tendering process for the first time — small companies that drove kids to school for generations have packed it in. Other independent operators lucky enough to have won busing contracts admit they bid so low, they don’t know how they’ll cover their costs.

No one seems sure exactly why the accountability exercise, in the works since about 2008, hasn’t worked.

“Was it the paperwork (operators) didn’t complete properly? Was it that they didn’t know how to sell themselves?” Donaldson said. “It’s become a black hole of decision making and nobody understands why.”

Education Minister Leona Dombrowsky said Thursday she’s heard the complaints and is declaring a six-month moratorium on the procurement pilot projects.

“We’ve listened to the bus operators,” she said. “They wanted us to take a little more time to step back and review the process that’s in place.”

The government is setting up a task force consisting of bus operators, school boards and independent accounting experts to review the process and recommend changes, Dombrowsky said.

But that’s too late for operators like Ruth Anne Staples. She and her brothers have been forced to sell eight of the 10 buses owned by their company, Epoch’s Bus Lines, in Kenilworth, about an hour’s drive west of Orangeville.

Last year, Epoch lost all but one of its 10 routes in the new bidding process.

“We lost basically everything. We could not pay the loans on (the buses) and we had to sell them at a reduced price,” Staples said.

APIPA conference focuses on procurement fraud

Pacific auditors meeting to target key procurement problems

The annual conference of auditors and government accountants from United States-affiliated islands will tackle procurement fraud prevention as one of a number of key financial management courses to be held in Majuro early next month.

The Association of Pacific Island Public Auditors annual conference is the largest gathering of auditors and government finance managers in the United States-affiliated Pacific area. The main goal of APIPA is to provide a single forum to promote efficiency and accountability in member islands.

“It’s a big group,” Marshall Islands Auditor General Junior Patrick, whose office is hosting the July 4-8 event, said earlier this week. “Over 300 people have already registered to participate.”

The annual conference has continued to grow in recent years because the event that in the 1990s involved only auditors now includes financial managers from many government departments in each U.S.-affiliated island group. Auditors and finance managers are expected to attend from Palau, Guam, the Northern Marianas, the four islands in the Federated States of Micronesia and American Samoa.

“The conference was established mainly for auditors in 1988,” Patrick said. “But later, auditors recognized that audit work depends entirely on the accounting function. Over the past 10 years, they’ve expanded training courses for accountants and financial managers.”

The five-day conference features a variety of courses that auditors and government accounting staff take to update their skills. One of the key conference training sessions is on identifying and preventing procurement fraud, which is highly relevant to all islands in the region, Patrick said. “Procurement is the heart of everything (in government financial management),” he said. “It’s the biggest (problem area) everywhere.”

The Marshall Islands Attorney General’s Office is in the midst of prosecuting 12 people for alleged theft of more than $500,000 in U.S. funding, all of which revolves around fraudulent procurement activity.

“The procurement fraud session will help everyone to improve,” he said, adding that all recent audits for the Marshall Islands government have pointed out procurement problems.

Outsourcing services requires insourcing contract managment

In light of the significant deficiencies in Guam schools reported lately (see this and this and this), and passage of an outsourcing school maintenance contract bill (allowing a 15 year maintenance contract) by the legislature in exasperated response, I found this controversy at Vancouver Community College to be an instructive experience.

Violations 101

"the College had no competitive procurement process for 31 years of facility services awarded to the contractor. This direct awarding of contracted services was contrary to B.C. public-sector procurement policy."

In fact, VCC had no written agreement with the company on file since 1990, and that one was only a draft.

"No effective oversight of this contractor's performance, leading to significant non-compliance with life-safety laws," the audit concludes.

VCC safety violations cited in government audit

Vancouver Community College is a trades, music and languages school that bills itself as "B.C.'s Number One College."

The college is subject to city fire bylaws, the B.C. Fire Code, Worksafe B.C. regulations, and B.C. and federal environmental regulations. At times, most of these were violated.

"No effective oversight of this contractor's performance, leading to significant non-compliance with life-safety laws," the audit concludes. Moreover, an independent review commissioned by the college in June 2007 noted that "much of the maintenance and upkeep of electrical facilities and mechanical equipment at both campuses reflected general neglect over a long period of time."

And the true scope of the problem is still unknown, the auditors wrote, because they had been partially stonewalled.

VCC did not supply the records requested for their investigation, even though "there were legal requirements for the College to have kept such records... Where we could not reach a conclusion in regard to some of the complainants' concerns regarding life safety, this was because of a lack of adequate documentation being made available to us."

The auditors noted other management failings, and "partially confirmed" a complaint that "the contractor charged for regular service services PPM [planned preventative maintenance] work not fully performed." Moreover, "An important control instituted by the College in 1995 to help prevent and detect any double-charges of the contractor's staff time between regular and extra services was allowed to lapse."

The VCC audit still has value as a cautionary tale. Could such a situation as described in it happen again? Perhaps, says Gregory Thomas, B.C. director of the Canadian Taxpayers Federation, who adds he has never seen anything like the VCC case before, but he is ultimately not surprised by it. "There is not the level of oversight in these public institutions that we see in the private sector," he said. "It's incumbent on all the public, and not just the students who are harmed by this, to insist on more accountability."

Read more: http://www.vancourier.com/safety+violations+cited+government+audit/5001790/story.html#ixzz1QFa6wH9D

Charting the life cycle of the acquisition of a weapon system

I have occasionally made the simple statement that the life cycle of the procurement process is much broader than typically conceptualized.

Not only is it broader, it is infinitely more complex than I had imagined.

(Click to enlarge; right click to open in new tab/window.)

The picture above is a static chart developed as

"a classroom aid for Defense Acquisition University students. It provides a notional illustration of interfacesamong three major decision support systems used to develop, produce and field a weapon system for national defense. Defense acquisition is a complex process with many more activities than shown here and many concurrent activities that cannot be displayed on a two-dimensional chart. Supporting information is on back of this chart. For more information, see the Defense Acquisition Portal (http://dap.dau.mil)."

The actual chart is active with many live links to other definitions and sources, which simply adds even more complexity to the whole process. You can get an interactive view of the chart, or a hyperlinkded pdf version of it, here.

For people who might say, "procurement is not rocket science", I'd just refer them to this chart. It may not be rocket science, but it is high level management.

Announcing New Version 2.1 of the Guam Procurement Process Primer

To coincide with next weeks' procurement seminars with Prof. Steven Schooner, I have today announced that V2.1 of my Guam Procurement Process Primer is now available for free download via Scribd.Com.

This new version 2.1 updates and expands the Primer since the last release (v2.0) in August 2010.

Just click the link in the top right sidebar, and follow the instructions.

Needs assessment in cutting edge technologies

There's an old carpenter's adage that says "measure twice, cut once". That is a good philosophy to guide needs assessment.

Needs assessment is the first step in preparing solicitation specifications. Specifications are what you tell other people you need. If you can't articulate your own needs, you don't have much chance of having anyone actually giving you what you need. You'd better do your measurements at least twice before you go out to bid. Vendors who make the cut may not make what you really require.

That, anyway, was a take-away I got from the following article:

DoD Cybersecurity Spending: Where’s the Beef?

To cash in on the increased spending on cybersecurity, a number of big defense contractors acquired many cybersecurity firms over the last few years.

Now that the defense industry has positioned itself in the cybersecurity market, the US Department of Defense wants to expand its cooperation with cybersecurity contractors to improve defenses for military computers and networks.

Not only are defense contractors positioning themselves for cybersecurity business, but also the Pentagon has indicated it plans to spend a lot more on cybersecurity despite cuts in the overall budget.

n its FY 2012 budget proposal [PDF], the Pentagon said it plans to spend $2.3 billion on cybersecurity capabilities. It said the money would go toward programs like the new US Cyber Command, construction of a Joint Operations Center for Cyber Command at Ft. Meade, Md., $500 million for new related technologies, and funds for training and improved situational awareness.

However, the Air Force said that it would spend $4.6 billion alone in FY 2012 on cybersecurity. In response to this discrepancy, NextGov queried the Pentagon and they came up with a revised figure of $3.2 billion in cybersecurity spending department-wide, including the services. The Pentagon attributed the discrepancy to the Air Force including a broad range of spending not directly related to cybersecurity and information assurance, such as IT infrastructure.

There has (sic) been problems with fuzzy definitions before, particularly between the terms “information assurance”, the more traditional Pentagon phrase, and cybersecurity. Information assurance includes “measures that protect and defend information and information systems by ensuring their availability, integrity, authentication, confidentiality, and nonrepudiation,” according to the Defense Acquisition Guidebook (DAC).

By contrast, cybersecurity is a much broader, more amorphous term; it is difficult to find a DoD definition of the term. The Obama administration’s cybersecurity legislation proposal [PDF], submitted to Congress on May 12/11, defines cybersecurity services as “products, goods, or services intended to detect or prevent activity intended to result in unauthorized access to, exfiltration of, manipulation of, or impairment to the integrity, confidentiality, or availability of an information system or information stored on or transiting an information system.” Cybersecurity threat is defined as “any action that may result in unauthorized access to, exfiltration of, manipulation of, or impairment to the integrity, confidentiality, or availability of an information system or information stored on or transiting an information system.”

This confusion about definitions could lead to discrepancies in budget figures as well as problems with the procurement process. “The flaws in the definitions will follow into the procurement cycle and you will end up with the government buying maybe what it doesn’t need,” said Robert Burton, who served as the top career federal procurement official in the White House Office of Federal Procurement Policy during the George W. Bush administration.

“When people can’t even agree about the most basic terminology, you know there is going to be a lot of confusion,” said Noah Shachtman, a nonresident fellow at the Brookings Institution and a contributing editor at Wired magazine. “The chances there aren’t billions of dollars in redundancies are slim to none.”

It appears that the bulk of the Pentagon’s spending on cybersecurity is going to traditional information systems security programs, a total of $1.9 billion. DoD information systems are defined by the DAC as “entire infrastructure, organization, personnel, and components for the collection, storage, processing, maintenance, use, sharing, dissemination, disposition, display, or transmission of information.”

Protecting these systems is the bread and butter of most traditional cybersecurity firms—firms which the big defense contractors are busy buying up. So they should be well positioned to cash in on this spending.

By contrast, DARPA is looking to spend millions on advanced cybersecurity programs.

See also, this GAO report (11-469), Defense Acquisition:

DOD Should Clarify Requirements for Assessing and Documenting Technical-Data Needs:

Because many systems remain in DOD’s inventory for decades, decisions that officials make during the acquisition process to acquire or not acquire rights to technical data can have far-reaching implications for DOD’s ability to sustain the systems and competitively procure parts and services.

Weapon systems are costly to sustain in part because they often incorporate technologically complex subsystems and components and need expensive spare parts and logistics support to meet required readiness levels. According to DOD, at least 70 percent of a weapon system’s life-cycle costs are incurred to operate and support a weapon system after it has been acquired, with the percentage depending on how long a system remains in the inventory.

Congress passed the Weapon System Acquisition Reform Act of 2009, which required in part that the Secretary of Defense is to ensure the acquisition strategy for each major defense-acquisition program includes measures to ensure competition, or the option of competition, in contracts for the program throughout its life cycle.

The Department of Defense (DOD) needs access to technical data related to its weapon systems in order to control costs and maintain flexibility in the acquisition and sustainment of those weapon systems. Technical data—recorded information used to produce, support, maintain, or operate a system1—can enable the government to complete maintenance work in house, as well as to competitively award contracts for the acquisition and sustainment of a weapon system.

Competition produces huge cost reductions

There's a bit of a goldrush mentality on Guam these days, especially heated by expectations far outpacing realities and practicalities, brought about by the global realignment of US military posturing and the emphasis on the Western Pacific region in particular as we begin the New Pacific Century.

It's the biggest thing since Magellan. Once again, the world, and the US, discovers the unique geographic significance of this Marianas Islands chain across the top of Micronesia, at the Heart of the Lei of the Lands that form the curtain between East and West Pacific. Guam is the Crossroads of the East and West, North and South Pacific.

Although the buildup may be seen to be driving up some costs for scarce local resources, the competition for scarce dollars in an economy-challenged world is driving down the anticipated cost of the buildup:

Military Construction Costs on Guam Drop Up to 30% Amidst Fierce Bidding for Contracts

Guam Contractors Association President James Martinez says costs are falling because of fierce competition for the construction jobs that are out there, as well as improvements in cost saving technology which have resulted in lower bids from construction companies.

With bids on many federal jobs coming in at 25% to 30% under the originally estimated cost, that is translating into huge savings for the Federal Government on the multimillion-dollar buildup projects DoD is offering.

If you are a contractor and want to follow the construction and other buildup news, an excellent one-stop shop is the Guam Buildup News site.

One bid received vs one bid solicited

I came across this useful site for those wanting to track who got what from government contracts, at least large contracts of $5 million and up:

http://www.defense.gov/contracts/

It's a day-by-day list of Defense contracts let. I didn't have time to "play" with it, but two things popped out at me. First, it also seems to be a handy portal and search facility to other sources of contracting news and information.

Second, the number of "One bid was solicited with one bid received" contracts let seems predominant, at least on June 15, 2011.

On that last point, I had a post last year about the dilemma of one bid received. The "one bid solicited one bid received contract" is not the same thing; this latter appellation is otherwise known as "sole source". The dilemma of one bid received comes about in a competitive solicitation, and sole source is obviously not a competitive bid.

Congress.org reported earlier this year on the magnitude of single bid contracts:

Pentagon contracts: No bid required

The lack of competitive bidding in Pentagon contracts is notorious. But the problem extends well beyond the highly publicized cases that stem from a cozy or even possibly corrupt relationship between Pentagon officials and contractors. It includes cases, such as the roller deal, where the Pentagon gets locked into a single supplier because of the terms of the contract. It includes one-bid deals, in which a competition is structured in a way that draws only a single company. And it is exacerbated by a consolidation in the industry, meaning fewer big players available to go after Pentagon business.

The result, according to newly available Defense Department data, is that more than half the Pentagon’s total budget obligations for contracting last year were spent without effective competition or with no competition at all. That comes to about $188 billion, according to numbers provided by the Pentagon.

But the lack of competition is simply how the Pentagon normally does business. As a result, it gets locked into inflexible contracts, guaranteeing lucrative long-term deals for favored contractors and probably costing the government billions of extra dollars each year.

No-bid, or sole-source, contracts accounted for $140 billion of the overall $366 billion defense contracting budget in fiscal 2010, the Defense Department said in response to a query. The one-bid contracts totaled $48 billion.

As lawmakers begin to comb through the federal budget looking for ways to slash government spending without harming the military’s combat capabilities, these contracting practices are likely to receive new scrutiny.

Indeed they have. Just a couple of months ago, the Director of Defense Procurement and Acquisition Policy in the Office of the Under Secretary of Defense issued this directive and reiterated a slightly earlier one:

SUBJECT: Improving Competition in Defense Procurements - Amplifying Guidance

The focus of my [prior] memorandum was on maximizing competition in situations where only one offer is received in a procurement utilizing competitive procedures. The purpose of this memorandum is to amplify that guidance in response to questions that have been raised.

[T]he use of [referenced] exceptions does not mitigate the need for competition nor the requirement for a determination that the price is fair and reasonable.
Unless an exception applies or a waiver is granted, the following procedures apply:
• If the solicitation was advertised for fewer than 30 days and only one offer is received, then the contracting officer shall cancel and resolicit for an additional period of at least 30 days; or
• If a solicitation allowed at least 30 days for receipt of offers and only one offer was received, then the contracting officer shall not depend on the standard at FAR 15.403-1(c)(ii) in determining the price to be fair and reasonable. Rather, the contracting officer shall use price or cost analysis in accordance with FAR 15.404-1 to make that determination. If the contracting officer believes that it is necessary to enter into negotiations with an offeror, the basis for these negotiations shall be either certified cost or pricing data or data other than certified cost or pricing data, as appropriate, in accordance with FAR 15.403-l(c), DFARS 215-403-l(c) and FAR 15.403-3(b). The negotiated price should not exceed the offered price.

I recognize that implementation of this policy may have the unintended consequence of increasing the contracting community's workload, but given today's scarcity of resources we need to ensure effective competition to the maximum extent possible. Every dollar saved through effective competition benefits the warfighter and the taxpayers.

In this context, a GAO report to Congress in 2010 is also instructive:

Opportunities Exist to Increase Competition and Assess Reasons When Only One Offer Is Received

Scratching around in the web, I also found this forum which discussed one other economic aspect of the double-edged sword that comes from maximizing low price in search of competition. The forum consists of contractors and players in the school bus industry, and this particular thread was kicked off by this article:

Schools try to attract more bus contract bidders

According to school district officials, one is indeed a lonely number.

That’s how many vendors bid on the department’s bus contract during the past few bidding periods, eliminating any chance for the district to find any cost savings through market competition.

Part of the problem is the higher cost for vendors to do business. Rising fuel prices and more government-mandated safety features in school buses have limited the field of candidates equipped to provide services to a large district like Framingham.

In addition, many towns have had to cut back on busing to save money in their school budgets. Framingham reduced its fleet by 10 buses last year.

As the district bears down for another difficult budget season this year, officials are pulling out all the stops to attract more bids, and possibly find a better deal than the five-year contract they have with their current vendor, First Student, which expires in June.

Unlike in past bidding years, this year’s RFP will give more options to potential bidders, officials said. Vendors can either submit a bid to provide buses only or a full busing service with drivers included. New this year, there is also an option for bids for buses of varying sizes.

“We’re certainly willing to do anything that makes sense,” said school business director Edward Gotgart. “We wanted to see if there was anything we could do to … entice more vendors to participate in our bid.”

The problem with only having one bid is that the district has no way to know if it’s being overcharged.

Comments from the forum include these:

~~ One is the only number when districts wipeout the competition through low-balling. This story seems to me more a propaganda release than reality. The competition has been wiped out by years of low-ball bidding that districts attached to like investment parasites. Now that the competition is gone some of these districts are whining about no competitive bids?

~~ Although others have the capability to fulfill a busing contract for school district, they don't have the capability to secure bids, whether on price or on the ability to get on the school district's radar, so to speak.

~~ States like Mass have laws that basically discourage and prohibit certain contractors from bidding. Having three year contracts when the cost of equipment and providing good operations is rising is just foolish. We look to bid in states and areas where customers want good service, good equipment and long term partnerships to work through the issues we all face today. Longer term agreements with good specifications and tough requirements are whats needed.

~~ Bottom line is this industry needs an enema. This industry has nothing to do with children anymore!

Aston Carter, undersecretary of defense for acquisition, technology and logistics, ran a short opinion piece in the Wall Street Journal not long ago addressing some of these issues and others facing an economically challenged federal defense department:

The Pentagon Is Serious About Saving Money

Last year, we identified savings in the defense budget by cancelling unnecessary programs. Now we must find savings within programs and activities we do need.

Last year, the Pentagon awarded $55 billion in contracts that were supposed to be competitive but for which only one bid was received, usually from an incumbent contractor. Yet simple changes in how we structure evaluations and work with industry have been shown to reduce by 50% the incidence of single bids by incumbents. Competition is not always available, but the evidence is clear that the government is not availing itself of all possible competitive situations.

My plan covers five major areas.

First, ... we will establish affordability requirements that have the same force as high-priority performance requirements. We will also insist that our acquisition professionals and suppliers plan according to what programs should cost, not according to self-fulfilling historical estimates of what they will cost, as if nothing can be changed in how we do business.

Second, to incentivize productivity and innovation in industry, we must strengthen the connection between profit and performance in our business practices. Among other things, we are exploring ways... to reward contractors who control their costs and demonstrate exemplary performance.

Third, we must remove obstacles to effective competition. That means we should stop deluding ourselves with the idea that "directed buys" from two designated suppliers represent real competition.

Fourth, we will more aggressively manage the more than $200 billion we spend annually on services such as information technology services, weapons-systems maintenance and transportation. When most people think of the defense budget, they think of ships and planes. But more than 50% of our contract spending is for services. Believe it or not, our practices for buying such services are even less effective than for buying weapons systems.

Fifth, to reduce unproductive processes and bureaucracy, we are sifting through the mass of reports that we produce year after year and eliminating those that add no value. Even more worthy of scrutiny are the reports that the Pentagon requires from contractors, who dutifully write them and then bill the taxpayer for their busy-work.

UPDATE ALERT July 2019 FAR Council Introduces Limits on the Single-Offer Adequate Price Competition Exception (The firm Crowell & Moring LLP have issued the article cited and linked.)

On June 12, 2019, the FAR Council issued a final rule amending the FAR to address an exception from certified cost or purchasing data requirements when price is based on adequate competition. In particular, the final rule amends the definition of “adequate price competition” in FAR 15.403-1(c) for submission of certified cost or pricing data to DoD, NASA, and the Coast Guard so that the adequate price competition exception now applies only when “two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement.”

This means that if only one offer is received, even if submitted with the expectation of competition, the exception no longer applies. For all other agencies, the exception still applies even when only one offer is received, provided there is a reasonable expectation that two or more responsible offerors would submit offers, or price analysis demonstrates that the proposed price is reasonable.

Though this rule represents a change to the FAR, we note that a similar rule has existed in the Defense Federal Acquisition Regulation Supplement at 215.371-3 for a number of years.

Then say what you mean

March Hare: `Why is a raven like a writing-desk?'
Alice: 'I believe I can guess that.'

`Do you mean that you think you can find out the answer to it?' said the March Hare.
`Exactly so,' said Alice.
`Then you should say what you mean,' the March Hare went on.
`I do,' Alice hastily replied; `at least--at least I mean what I say--that's the same thing, you know.'
`Not the same thing a bit!' said the Hatter. `You might just as well say that "I see what I eat" is the same thing as "I eat what I see"!'
`You might just as well say,' added the March Hare, `that "I like what I get" is the same thing as "I get what I like"!'
`You might just as well say,' added the Dormouse, who seemed to be talking in his sleep, `that "I breathe when I sleep" is the same thing as "I sleep when I breathe"!'
`It IS the same thing with you,' said the Hatter, and here the conversation dropped, and the party sat silent for a minute, while Alice thought over all she could remember about ravens and writing-desks, which wasn't much.

-- Lewis Carroll, Alice in Wonderland
__________________________________________________


Suppose you have legislation that says, "In the event of A, B, or C, do this ...."

Subsequent legislation is then passed amending the first bit which says, "Notwithstanding any other law, in the event of C plus X, do this other thing...."

Suppose then that you have an 'A' event. Do you use the original legislation or do you use the subsequent one?

Would it make any difference to your decision if you knew in your heart of hearts that the Legislature really meant the subsequent legislation to also apply to 'A' when there was an A plus X event?

That is the question put to the Office of Public Accountability in a recent case. And the Public Auditor ruled, in the event of A plus X, use the subsequent legislation anyway.

This case was very Carroll-esque from the gitgo, from the time the subsequent legislation, Public Law 31-12, was conceived and sprang into being.

PL 31-12 (now codified as 5 GCA § 5425A) was the result of several belated attempts and bills to get a "take the money and run" expedited procurement procedure to exploit the ARRA funds available to Guam. Its final form was dramatically altered from its introduced form, as a review of the legislative file for PL 31-12 (see link above) reveals.

After running through the legislative concrete mixer, the ARRA law (§ 5425A) says the following:

"Notwithstanding any other provision of this Chapter and any rules promulgated therefore, if an actual or non-selected vendor, contractor, or service provider is aggrieved by an award or a contract funded, in whole or in part, by the funds allotted to the Guam Department of Education from the 2009 American Recovery and Reinvestment Act (ARRA), the procedure for protest outlined in this Section shall apply...."

Now compare that to the original, general "other provision of this Chapter" (§5425):

"Any actual or prospective bidder, offeror, or contractor who may be aggrieved in connection with the method of source selection, solicitation or award of a contract, may protest...."

As you see, the general provision applies to bidders and offerors as well as contractors, in respect of the source selection, solicitation or award of contract. The ARRA provision does not apply to bidders or offerors nor in respect of source selection or solicitation; it applies to contractors and awards and contracts.

Applying the effect of these different provisions, the general provision extends from pre-opening and pre-award issues all the way through the award of the contract to the contractor. The ARRA provision, however, by excluding its application to bidders and offerors or to protests over source selection and solicitation, does not apply to the full extent as does the general protest law; it does not apply to pre-opening and pre-award issues or bidders or offerors.

So, back to the simplified formula above (where A = source selection, B = solicitation and C = award of contract), the general law applies to A, B and C, and the ARRA law only applies to C but only when ARRA funds are used; it does not apply to A or B at all.

In the OPA case, OPA-PA-11-008, the Carroll-esque nature of this story continues.

Using the simple formula I started with, the issue could be framed like this: The general law would say, "in the event of A, B, or C, then do things this way" and the ARRA law would say, "notwithstanding the general law, in the event of C when the contract involves ARRA funds, then do things this way".

In the application of the real law, this formula is applied to the effect that, if you have a complaint with the (A) source selection, (B) solicitation or (C) contract award, protest to the head of the purchasing agency (or Chief Procurement Officer or Director Public Works if applicable) under the general law, but if you have a complaint with the (C) contract award, when ARRA monies are used to pay for that contract, protest to the Public Auditor.

The protester in the OPA case had a pre-opening, pre-award complaint about the solicitation, particularly the bid specification for bonding. Recognizing that the pre-opening condition was not expressly included in the ARRA law, but cautious about the reach of the law, the protester protested to the CPO and the Public Auditor, but not to the head of the purchasing agency, and asked the CPO and Public Auditor to sort things out.

The Public Auditor looked at the matter and essentially said, I know what the law says, but the Legislature intended to grant original protest jurisdiction to our office to allow quick access to the ARRA funding, so we're claiming jurisdiction over the protest, a jurisdiction the office does not have under the general procurement law. The purchasing agency said, that's OK with us, and the protester was just glad to have someone, anyone, deal with it.

The Public Auditor's Decision says point blank,

"[p]ersons aggrieved in connection with DOE contract awards or solicitations involving ARRA funds, in whole or in part, shall submit their protest to the Public Auditor. 5 G.C.A. § 5425A(a))."

Now, go back one last time to look at the actual wording in the general protest provision (§ 5425) and compare it with the ARRA protest provision (§ 5425A). Do you see the word "solicitation" in the general protest provision? Do you see that word anywhere in the ARRA protest provision?

The Public Auditor's analysis and conclusion on the bonding issue was spot on, but should it have any right of jurisdiction to make a decision over the protest?

Only the legislature can grant jurisdiction, and if it has not done so it cannot be granted by agreement nor proclamation. The Legislature, whatever its intent, did not grant jurisdiction over protests related to pre-opening and pre-award solicitation controversies to the Public Auditor. Even the March Hare could have seen that.

Are you experienced?

If you can just get your mind together
Then come on across to me
We'll hold hands and then we'll watch the sunrise
From the bottom of the sea

But first, are you experienced?
Have you ever been experienced?
Well, I have

-- Jimi Hendrix, Are You Experienced

Beauty and other such judgmental idiosyncrasies are, as they say, in the eye of the beholder. I'd put in that basket, as well, "best value" and "experience". Whenever we allow specifications to drift too far from objective criteria, we open ourselves wide up to appearance, if not application, of favor. When subjective criteria are absolutely necessary, they should be minimized as much as possible, demand articulable justification in the first instance when made part of the specifications and in the second when applied, and be balanced by objective standards as much as can possibly be obtained.

These two stories, the first from the State of Mississippi and the second from the State of Florida, are about experience, and beg the question, "first, are you experienced; and, second, have you ever been experienced". Apologies to Jimi.

Jail bid raises ire

Flintco, which submitted a [higest] bid of $13.847 million, was awarded the contract on Monday as the "lowest and best bid," after the other two companies were disqualified from the process for failing to meet very specific criteria which mandated experience in jail construction amounting to having constructed two jails within the last five years at $8 million each.

Murphy and Sons submitted a bid of $13,563,900. Next lowest at $13,718,000 was the bid from Panola Construction.

Panola Construction had built jails at $3 million and $6 million, below the specifications threshold. Panola Construction is presently building a $20 million jail facility in Washington County.

Murphy and Sons most recently built Lake Cormorant High School, Center Hill Middle School and DeSoto Central Primary, along with animal shelters and other school renovation projects across DeSoto. Murphy and Sons constructed the Olive Branch Police Department which includes jail facilities, according to Murphy.

"The paragraph thrown in there was to disqualify the other bidders, Gary Murphy said of the two-jail, $8 million cost each requirement in the bid specifications.

Michael Childress, architectural consultant on the jail project, said the bid criteria was made public seven days prior to the bid date and if any questions needed to be asked they should have been made prior to submitting a bid.

Vanessa Lynchard, director of administrative services and procurement, cited several state statutes which empowered the county to set the bid criteria as it did.

Lynchard said state statute "clearly says you can ask for experience."

She cited a May 18, 1983 Mississippi Attorney General's Opinion which stated job experience can be cited in a project's bid criteria.

Lynchard also said she contacted Charlie Sharman of the State Board of Public Contractors who informed her any county can include any such requirement it deems important in the bid specification process and "in no way does it (Item 5 rule) relieve a contractor's responsibility to meet bid specifications."

Irb Benjamin, a jail consultant who has been involved with the construction of several jails across Mississippi, said Flinto was not given any unfair advantage.

"When we originally started working on this, the architects wanted someone who had experience with jails," Benjamin said. "We wanted to make sure we didn't end up with a contractor who couldn't do the job. We had no contractors in mind when we (set it out for bid). But when you set criteria you either meet it or you don't. These specifications were written to benefit DeSoto County and be sure you end up with a quality product."

Another Sarasota County bid gone awry

The saga of the canal-clearing contract is a study in how Sarasota County has struggled to fairly award government work and a lesson in why county officials now find themselves mired in scandal.

The problems started in 2008, with the expiration of a contract between the county and ECo Consultants to rid canals of debris and plants so they do not flood. The expected price range for the new two-year contract was between $1.5 million and $2 million.

A selection committee of county employees formulated a new contract and prepared to seek bids, knowing at least four companies, including ECo Consultants, were interested.

Almost from the start there were concerns that some committee members favored ECo Consultants.

According to a former county employee who sat in on pre-bid meetings, county staff sought to disqualify lower bidders on technicalities and purposely crafted bid documents to make sure ECo Consultants kept the contract.

At one point, the county wrote into bid requirements that whoever was hired must have extensive experience clearing canals. The requirement was so specific that it said companies that had not cleared over 700,000 feet need not apply.

That disqualified all of ECo's competitors.

The canal-clearing contract selection committee began meeting in the summer of 2008. After receiving the first round of bids, the committee decided to disqualify the two low bidders and give the contract to ECo, the third-highest bidder.

Procurement officials charged with overseeing and guiding the committee said that was unfair. The committee needed to start over.

So in February 2009 the committee went back to the drawing board, inserting language into the bid specifications that would require a company to have experience clearing over 700,000 feet of canals.

Rick Richards, owner of Rick Richards Inc., protested those specifications, saying they were so narrow that only ECo could win.

County Procurement Manager Jennifer Slusarz agreed with him and dropped the requirement down to 250,000 feet.

After some back-and-forth with the County Commission, the requirement was eventually removed. Another round of bids were accepted.

And ECo won again. The firm had dropped its price by $350,000, becoming the low bidder.

Richards is convinced ECo was told by county employees how much to bid, based on conversations he had with the committee members. An ECo manager said he had no knowledge of this and that the company has never asked for preferential treatment.

While there are no records to prove ECo was tipped off on how much to bid the second time, documents do show the company was contacted by committee members during the selection process and told the project was going out for rebid before a final decision was made. Such contact is forbidden by county code.

The matter went before the County Commission in February 2010.

Commissioners voted to give the contract to Richards after he presented evidence ECo had been cited by the U.S. Department of Labor for withholding overtime pay to some employees.

Four months later, ECo protested the award to Richards.

A year later, ECo is still clearing canals for the county, and Richards has not cleared any.

Since there is no contract, ECo has been granted an extension on its 2005 contract and has been paid more than $1.5 million since September 2008, records show.

[This takes on characteristics of my ongoing saga against Guam Dept. of Education's continued contracting with one equipment supplier for over two decades. See this and this and this.]

The ability of a handful of employees to favor one company over another is exactly what Sarasota County has been criticized for since a former county worker was arrested on a corruption charge in March.

A national group of purchasing experts who visited Sarasota recently said the county did not have the basic policies in place to ensure the bid selection process was fair and above-board. Those basic policies include having someone from the procurement department ultimately responsible for selecting bid requirements and making sure that those involved in the selection process are qualified to evaluate the bids.

The county has already changed the way it crafts bid specifications, and more changes are recommended by the national purchasing experts who visited in April.

Now, contract specifications must be reviewed by two executive directors and must be informally posted for viewing before a formal call for bids.

More "struggle" in Indian procurement

Not long ago I had a post about the "struggle" to balance risks and rewards in India's highway procurement programs. The struggle, it seems, is more widespread than highway projects, as these two perhaps unrelated current stories suggest.

Procurement reforms in jeopardy after rift in govt panel

A government exercise to draft a comprehensive public procurement policy has run aground. In what is seen as a bid to guard own domain, five members, all of the rank of secretaries to government, in the 11-member committee are set to append notes of dissent to the report.

The opposition to change is principally from secretaries in ministries that are the big spenders, railways and defence.

Following Congress party president Sonia Gandhi’s speech at her party’s plenary session here last year, where she spoke about streamlining government procurement to prevent corruption, a committee of retired and serving bureaucrats, headed by Vinod Dhall, ex-head of the Competition Commission of India, was tasked with revamping policy and draft new legislation for public procurement.

The committee was to have studied model procurement laws and guidelines of the United Nations Commission on International Trade Law, the World Trade Organisation Agreement on Government Procurement and that of the Organisation for Economic Cooperation and Development, tailoring these to Indian conditions.

It was to have drafted a national law, unified regulations, a centralised e-procurement portal, a bid-challenge framework and training for officers. The panel’s mandate was to ensure transparency, competition, value for money, and the same treatment to foreign and Indian firms in procurement.

But most members felt there was no need, in their respective ministries, to change procurement rules.

After Raid, Indian Guru’s Protest Stirs a Firestorm

A sobbing but defiant Swami Ramdev vowed Sunday not to be intimidated by a police crackdown that dispersed thousands of followers massed for a hunger strike to protest corruption. He blamed the governing Congress Party for turning a peaceful protest into chaos.

The swami had focused his protest on the issue of “black money,” the untold billions of misappropriated dollars stashed in foreign banks.

Last week, ministers met with him several times to explain government initiatives on the issue as part of their effort to head off the hunger strike, and on Saturday he announced that the government had met his demands. But after the government announced publicly that there had been an agreement and that Swami Ramdev had promised to end the strike, he angrily vowed that the strike would go on.

The police raid quickly transformed what had been a quirky mixture of yoga sit-in and political protest into a political firestorm. Leaders of the Bharatiya Janata Party, or B.J.P., the country’s main opposition party, assailed the Congress Party as having mishandled the hunger strike and described the police action as “a shameful chapter in the democracy of this country.”

But Congress Party leaders were hardly apologetic and instead accused Swami Ramdev of trying to deliberately stir up trouble as a proxy for the Bharatiya Janata Party and right-wing Hindu groups. “You cannot allow people like Ramdev to run riot in the capital,” said Digvijay Singh, a powerful Congress Party leader who has been outspoken in his criticism of the swami. “He was trying to incite people. Therefore, the action of the police is justified.”

Search links - World Bank country procurement reports

From time to time I look at web statistics to see if and how posts to this blawg turn up in related, or unrelated, web search queries. It often leads to very interesting new threads of thought and information.

For instance, one such search included a link to a World Bank Operational Procurement Report for Tonga. Looking further, I found a huge index of such World Bank reports for other countries and entities around the world. That link may prove useful to your own studies, so here it is.

The writes and wrongs of specification drafting

“BuyBoard” Official Admits: TASB Administered Agency Allowed Vendors to Write Own Bid Specs

Chapter 791 of the [Texas] Government Code allows units of government to rely on pooled resources through cooperatives for the purchase of goods and certain services. This is often a successful tool for school districts and other municpalities to rely on for economies of scale in their procurements.

“BuyBoard” [is a] a non-profit purchasing agency serving [Texas] school districts, municipalities & counties.

The head of the “BuyBoard” admitted his “agency” allowed a roofing vender to write roof repair specifications that required the use of the vendor’s products.

Legislators are expected to vote on HB 800 by Rep. “Doc” Anderson, perhaps before the end of the legislative week, to stop such unscrupulous roofing vendors from manipulating bids & contracts at taxpayer expense.

Road woes continue for Chelsea

Town Manager Angela Gordon, who serves as road commissioner, wrote bid specifications for road work that selectmen have deemed unacceptable.

Town attorney Stephen Langsdorf said Gordon was asked to draft the documentation before she went on vacation this week. But all she produced were blank contracts, he said. "She started working on the project before she left and tried to use the same type of bidding documents used by Carole (Swan)."

Swan is accused of accepting kickbacks from Whitefield contractor Frank Monroe, who is alleged to have paid her $10,000 in 2010 at a time he retained the town plow contract without bidding. A year later, Swan is accused of going back to Monroe for kickbacks related to the town's purchase of road sand. That precipitated her arrest on charges of aggravated forgery, attempted theft and two counts of improper compensation for services.

In light of Swan's arrest, Board of Selectmen Chairman Linda Leotsakos said the board voted at a previous meeting to put road contracts out to bid with "specific specifications."

Specifications in requests for proposals consist of the body of information a contractor would need to do the work. They help formalize the bidding and pricing process so prices can be easily evaluated and compared.

officials will be seeking help from the Maine Department of Transportation and the Maine Municipal Association.

"There are many, many resources available to all town managers to solve all kinds of problems and learn how to do things like bidding and other jobs that managers may not have the initial training for," she said. "There's MDOT's Maine Local Roads (Center) and we are a member of MMA, which affords all kinds of resource help."

Peter Coughlan, director of the Local Roads Center within the Maine Department of Transportation, said the center provides training and technical assistance to municipalities.

He said www.mainedot.gov, which links to the center's page, provides all kinds of information including grading specifications, how to pave roads and information on snowplow training.

"We have grading specifications right there on the website," he said. "All they have to do is tweak it for what they need."

He said much of the information available can be referenced back to specifications MDOT uses in its own requests for proposals.

"Whether it's signs or guardrails or pavement, DOT does all this stuff," he said. "Towns reference these things all the time and (Chelsea) should do the same."

Procurement Chutzpa of the Day Award, June 3, 2011

I was struck by the audacity of the contractor, and its surety, when reading the Louisana Supreme Court's decision in STATE v. INFINITY SURETY AGENCY, L.L.C., of date May 10, 2011, reported at Leagle.com.

The decision has limited legal value given its narrow technical procedural posture, but it raises some interesting points for debate.

As I read it, the case, in a nutshell, involved a bid for a construction project; the bid required a bid bond and the contract award required a performance bond. The surety for the bid bond was the same surety proposed for the performance bond. It came to light, when the award was made, the contract signed, and the performance bond was required to be submitted, that the surety was not actually authorized to issue either the bid bond or performance bond, and the contractor was unable to obtain a replacement surety for a performance bond.

So, the State sued the contractor and surety on the bid bond, based on contract and misrepresentation legal theories. The contractor and surety argued the state failed to state good legal grounds to sue because, they said, the State should have rejected the bid because, since the bid bond was not authorized, the bid was non-responsive. That's right: they say we aren't responsible to you because you should have rejected our bid!

There are a lot of contract law issues here that I won't go into, except to say that contracts can sometimes be classified as "unilateral", that is when acceptance of an offer is required to be in the form of performance, or "bilateral", that is when the acceptance of an offer is required to be in the form of a promise to perform. A bid solicitation might be characterized as a unilateral offer to fairly consider a bid for award in exchange for the contractor's performance by submitting a bid. The government then promises to enter into a contract with the prospective contractor, which recites the parties' mutual promises, one of which is that the contractor promises to provide a performance bond upon signing of the contract. The solicitation phase could be described as a unilateral contract but for the many decisions which hold that the government is not bound by contract law when it issues a bid.

But apart from strict contract law and the conflicting decisions in that area, it is long part of procurement law that a bid bond is a contract, at least insofar as the surety is concerned. It is insurance paid by the contractor to assure, if the awarded contract is not made, that the State will be compensated for damages arising from having to rebid a project and all the damages that reasonably flow from that circumstance.

The procurement text, Federal Government Construction Contracts, Branca, Silberman and Vento, published by the ABA (2010), discusses the bid bond this way:

"The purpose of a bid bond is to ensure that, in the event that a principal refuses to enter into the contract on which it successfully bid, the government is protected for the additional costs of reprecourement.
***
It is important to note that, while a surety issuing a bid bond agrees to provide a payment and performance bond, the bid bond does not guarantee performance of the contract. Rather, failure of the surety to provide a performance and payment bond subjects the surety to liability up to the penal limits of the bid bond...."

The text also notes various defenses a surety might raise, but bidder non-responsiveness is not one of them. The text does note, however, one trial court case supporting the proposition, "[i]f the government fails to follow its own solicitation procedures, theoretically, this can be grounds for both the contractor and the surety to avoid performance."

The case cited is Hanover Area Sch. Dist. v. Sarkisian Bros., Inc., 514 F.Supp. 697 (M.D. Pa., 1981). That case is similar to the Infinity Surety case in that it also involved failure to obtain the performance bond after award, but not exactly the same. In Infinity, the surety was not authorized to issue any bond in the first place; in Hanover, the surety had authority to issue both bonds, but, based on the bid instructions, would not issue the performance bond unless a signed contract was made. After bids were opened, the government adopted a resolution requiring the performance bond before the contract documents were presented, and by the time the government prepared and presented the contract, the 60 day "price guarantee" period had lapsed Since the contractor could not keep the price after that date, the contract was never signed.

In Infinity the bid bond itself was infirm; in Hanover, the contract formation process was infirm.

The Hanover court relied on prior Pennsylvania case law, excerpts of which held as follows:

A contractor normally may not withdraw a proposal without forfeiting its security. This principle is known as the "firm bid rule." However, a bid default cannot occur until "the conditions for bond forfeiture ... fully ripen". The conditions of forfeiture are included in the instruction to bidders, all of which, of course, form a material part of the contract between the parties. Compliance, therefore, is necessary for the enforcement of rights and obligations arising thereunder. In the instant case, forfeiture could not take place unless the bidder either withdraws his bid within 30 days after the bid opening or refuses to execute and deliver the contract documents within ten days after receiving written notice of acceptance. Here there is no indication that these conditions of forfeiture had actually ripened. Rudy merely requested to withdraw its bid, a request which the Commissioners apparently misidentified as an actual withdrawal. The Commissioners, therefore, mistakenly failed to notify Rudy of the acceptance and failed to present the company with the contract papers for execution and delivery. Thus, it is impossible to determine now whether or not Rudy, if put to the test by the Commissioners, would have undertaken the project as the company was obligated to do. Instead, the contract was awarded to another bidder. However, inadvertent their actions may have been, the Commissioners did not perfect their right to collect on the forfeiture of the bid bond.

The Hanover Court concluded that the government had changed the terms of the bid after bid opening to require the performance bond to be produced prior to the contract's execution, and this so materially changed the solicitation procedures that the bid bond could not be enforced.

In Infinity, there was no change in the solicitation procedure. In all of the cases cited in the Hanover case, there were deviations from prescribed procedures by either the government or the bidder; not one of them involved a case of the government failing to detect bid non-responsiveness prior to contract performance. In Infinity, there were affirmative representations made by the surety that it was authorized to issue the bid bond.

It is not a solicitation irregularity, I would argue, when the government relies on that affirmation in making its decision to award the contract. Unless, of course, the bid instructions clearly require the government to test the bona fides of the surety's affirmations prior to award.

There is an old maxim of jurisprudence to the effect that "No one can take advantage of his own wrong". Whether that Common Law notion applies in Civil Law Louisiana, however, I would not know.