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Sunday, August 30, 2015

Take the money and run -- amuck

Billy Mack is a detective down in Texas
You know he knows just exactly what the facts is
He ain't gonna let those two escape justice
He makes his livin' off of the people's taxes

Bobbie Sue, whoa, whoa, she slipped away
Billy Joe caught up to her the very next day
They got the money, hey
You know they got away
-- Take the Money and Run, by Steve Miller Band

GAO Report is a Good Reminder to Bidders on Federal Procurements: Agencies Don’t Always Follow the Rules! by Zachary D. Jones of law firm Stites & Harbison
Congress typically funds federal agencies through annual appropriations. An elementary principle of federal fiscal law is that if an agency’s appropriations are not obligated by the end of the fiscal year in which the appropriation was made, those funds expire and generally become unavailable to the agency. Often, agencies spend their appropriated funds late in the year in an effort to save some “dry powder” early on in case an unforeseen need arises. With Congress always looking for ways to cut spending, agencies do not want to end a fiscal year with unobligated funds. In Washington it is hard for an agency to justify to lawmakers the need for more money if the money Congress appropriated last year—money the members of Congress had to explain to their constituents was needed then—was not used. Accordingly, at the end of each fiscal year agencies resolve this dilemma by finding ways to close the gap between the portion of their appropriation obligated and the portion faced with becoming expired on September 30. This August and September is likely to set a blistering pace of federal contract awards.

In late July, the Government Accountability Office (GAO)—tasked with investigating how the federal government spends taxpayer dollars—released what many are calling a scathing report. The report explains that many federal agencies fail to follow the procurement regulations found in the Federal Acquisition Regulations (FAR). The report is a good reminder for contractors who bid on federal procurements to be watchful of procurements that appear to deviate from the rules. Data suggest not only that these agencies are breaking the rules, but also that protestors who call them on it are increasingly getting some relief.

In GAO report (available online at http://www.gao.gov/products/GAO-15-590), GAO evaluated a sample of procurements made by federal agencies under the Federal Supply Schedule (FSS). The FSS is used by agencies to purchase certain goods and services, typically the type of commercial items one would expect to find on the shelf, and represents a small percentage of overall federal spending (in FY2014 it was $33.1 billion or only about 7% of federal contract dollars). The individual contracts, however, can be substantial. For example, one of the procurements the GAO report examined exceeded $120 million.

In total the GAO looked at 60 procurements made under the FSS. What it found, among other things, is that of those 60 procurements, in only 23 did the procuring agency actually bother to get three or more prices or quotes from contractors—a fairly clear requirement in the FAR. Basically, what the report found was that federal agencies do not appear overly concerned with ensuring competition for the taxpayer’s procurement dollars.

Sometimes, agencies have a valid (or at least excusable) reason for not getting multiple prices or quotes from contractors. One reason is that some items the government purchases are simply not items widely available on the market. In other words, for some procurements there just was not enough contractors who could supply the good or service sought. Unfortunately, as the GAO report makes clear, sometimes the agencies simply issue solicitations which either overly restrict competition or are not offered to enough potential bidders. For example, in one of the procurements studied, an agency specified only a single brand of a commonly used filing system. To make matters worse, the agency then failed to solicit any contractors that sold the specified brand. The result was the agency failed to receive a single response to the solicitation. When it failed to get a response to the solicitation, the agency procured the specified brand under the FSS directly from the manufacturer—with absolutely no competition from anyone. When confronted by the GAO, the agency admitted that many other brands would have met their needs. Essentially, the agency admitted that it failed “to specify its needs and solicit offers in a manner designed to achieve full and open competition, so that all responsible sources are permitted to compete.”

Because bid protests based on unduly restrictive solicitations (like the agency above who specified a single brand when other brands would have met the agency’s needs) must be filed prior to the agency receiving bids, the best explanation for the rising effectiveness of protests is agencies are increasingly likely to agree to expand a solicitation’s competitiveness if a bidder or potential bidder raises a valid concern about the solicitation’s competitiveness prior to bid time. In those instances where the agency takes such corrective action, the bid protest is recorded as effective even though it is not sustained.

The next month and a half will prove telling. In 2013, The National Bureau of Economic Research (NBER), a private, nonpartisan research organization, found that the annual dash to spend our cash—or as they politely put it, agency “year-end spending”—results in a significant drop in the quality of goods procured. One conclusion from all of this data is that as federal agencies rush to obligate their appropriations, there is likely to be a rash of procurements which do not abide by the rules.
As usual, do not rely on this rendition, which is edited and perhaps distorted for my own uses. Make sure you read the whole piece at the link.

The problem with friends in high places

Lockheed Martin pays $4.7 million to settle charges it lobbied for federal contract with federal money
Over five years, starting in 2009, a Lockheed Martin subsidiary — which was being paid by the federal government to run Sandia National Laboratories — lobbied members of Congress and senior Obama administration officials for a seven-year extension of the contract, according to the settlement the Justice Department announced Friday.

The case opened a window on the inner workings of power and influence in Washington. It’s not surprising that a big, politically connected defense contractor would lobby hard to keep a lucrative slice of federal business. But this case went further. Taxpayers, not Lockheed’s corporate lobbying arm in Bethesda, Md., were paying for the influence peddling.

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, alleges that Sandia Corp., the Lockheed subsidiary, used federal money to lobby Congress and other federal officials from 2008 and 2012 “to receive a non-competitive extension” of its contract in violation of federal law. ompany executives, who allegedly hired a former New Mexico congresswoman to help them, didn’t just press people with influence to continue a relationship worth $2.4 billion a year to Lockheed, as Energy Department Inspector General Gregory Friedman concluded in an investigation last fall. They also urged that the contract be closed to competition.

Lockheed has contracted with the Energy Department to run Sandia since 1993. The research lab is part of the government’s nuclear weapons complex, with facilities in Albuquerque and Livermore, Calif. Wilson, who left Congress in 2009 after an unsuccessful run for the Senate, has publicly denied that she took part in any lobbying involving the Sandia contract.

To clinch the contract extension, Sandia labs officials hired high-priced consultants — including Heather A. Wilson, the former New Mexico congresswoman, who allegedly was paid $226,000 — to write up a “contract extension strategy.” Among the tactics allegedly suggested by Wilson was “working key influencers” by targeting then-Energy Secretary Steven Chu’s staff, his relatives and friends, and his former colleagues at another federal lab — all with the goal of keeping Lockheed Martin in charge of Albuquerque-based Sandia.

Wilson, who left Congress in 2009 after an unsuccessful run for the Senate, has publicly denied that she took part in any lobbying involving the Sandia contract.

Energy Department Inspector General Gregory Friedman alleged that Sandia hired Wilson’s consulting firm and two unnamed former employees of Energy’s National Nuclear Security Administration, which oversees the nuclear labs. Wilson’s company, Heather Wilson LLC, gave explicit guidance to the Sandia team on how to influence important people in Washington who would decide whether Lockheed’s contract would be renewed, authorities say. “Lockheed Martin should aggressively lobby Congress, but keep a low profile,” she advised, according to meeting notes authorities say were obtained by the inspector general’s investigation.

The inspector general said that Sandia’s push for a long-term no-bid contract extension under the Obama administration was not the lab’s first lobbying attempt at taxpayers’ expense. “Perhaps [Sandia] felt empowered because it had improperly directed Federal funds to similar activities in the past,” investigators wrote last fall.

Heather Clark, spokeswoman for Sandia National Laboratories, said the lab “has agreed to settle with the Department of Justice to put the matter behind us, take action on what we learned and focus on our important national security mission.” She said Sandia executives “believed our actions for a contract extension fell within allowable cost guidelines,” but now realize that they “acted too early and too independently in planning for a possible contract extension.”

The investigation has “clarified” Sandia’s understanding of “our legal obligations on interacting with public officials,” Clark said.
Read more of the story at the link above.

Thursday, August 27, 2015

It's no contest

With all the focus on protest, and the slew of aspersions about "frivolous" protests and delays caused by procurememts, consider these two articles popping up on my radar today.

No Protests After $9 Billion Pentagon Contract
When Leidos and its partners, Cerner and Accenture Federal, secured a monster Pentagon health records contract worth up to $9 billion in late July, eyes turned to losing bidders IBM and Computer Sciences Corp., expecting a bid protest.

That hasn’t happened. IBM and CSC – big players in the defense contracting space – would only protest if they felt the financial reward of a win trumped both risk to damaging DOD relations and a prolonged legal battle. “After receiving a debrief from the government and careful consideration, CSC’s Global Health Alliance did not protest the DHMSM award,” said CSC spokesperson Heather Williams. “CSC is a long-standing partner to the Department of Defense and strong supporter of military personnel and their families. As such, we wish the program much success and will move forward focused on the future.”

The Defense Healthcare Management Systems Modernization contract’s based value is $4.3 billion over 10 years, with an 18-year lifecycle valued at up to $9 billion. The contract charges Leidos with building a next-generation health records system that will eventually be responsible for DOD’s 9.6 million beneficiaries, deployed at more than 1,200 DOD sites.

Lot's more at the link above.
Milpitas Sports Center pools to close for nine months of repairs
Milpitas City Council voted Aug. 18 to authorize and execute a more than $1.4-million contract to Glendora, Calif.-based California Commercial Pools Inc. to repair the pools at 1325 E. Calaveras Blvd. The council's vote also authorizes the city's engineer to execute contract change orders for the sports center pool repairs in an amount not to exceed $144,000.

In June, the city council approved the project plans and specifications and authorized the advertisement for construction bid proposals for the Milpitas Sports Center Pool repairs project. The engineer's estimate for the project was $1.5 million. The project was later advertised and three sealed bid proposals were received in July.

Bid pricing ranged from $1.34 million to $2.29 million and no bid protest was filed.
The best defense against protests is planning and flawless execution of the solicitation.

We judge bidders against their record of past performance. We also judge governments, particularly government acquisitions, by the same standards. Nothing puts the light on a truly frivolous protest than one popping up against a backdrop of proper procurements.

Tuesday, August 25, 2015

Who's your Daddy?

State Auditor: SCC contract award OK, but purchasing rules still unclear
The State Corporation Commission is essentially the state's fourth branch of government, created by the state constitution and not subject to all the same rules as the rest of Virginia state government. It regulates businesses, including utilities.

A 2009 "eFile" contract for technological services with CGI, a major IT company, increased via eight modifications from $2.9 million to $6.9 million. The SCC determined that there was "no outside influence exerted" in the approval of a $28.5 million "Commission 2.0" contract, awarded last year to CGI for a major SCC systems upgrade.

Four former SCC employees specifically said the executive head of the SCC steered contracts to CGI, approved large post-award price increases and rebuffed their concerns over protocol. The latest State audit found no evidence of favoritism in the State Corporation Commission's award of the major technology contract, but repeats a more than 2-year-old suggestion that the commission  "clarify what procurement rules and regulations apply to them as an independent department of government."

SCC spokesman Ken Schrad said "Legal considerations remain that must be addressed because of the constitutional nature of the SCC as an independent department of state government." Schrad pointed to multiple reviews, both internal and from the state auditor, that found no evidence of contract tampering.
It seems to be a repetitive story that the more we take the procurement leg irons off any particular government spenders, the more the paranoia rises that we should put hand cuffs on them. No-bid contracts are the chief vehicle for creating this distrust, which is lodged in basic and simple notions of fair and equitable treatment, accountability and transparency.

Thursday, August 20, 2015

Risky business

Is government spending meant to be risky? Is it meant to facilitate "creative destruction"? Or, is it meant to minimize risk to a manageable, even prudent, degree?

Consider the following articles (which I've cut up, rephrased or otherwise hashed to my own end -- so read the article itself at the links for accuracy of its message).

Defense Spending Red Tape Endangers Cybersecurity
The Navy is using Windows XP because complicated spending rules have prevented a better upgrade. [I only quit using XP recently at home because my computer crashed -- and I couldn't buy a new one with it.   It was not a spending rule that prevented me; it was the industry that didn't want me to go there notwithstanding my serenity with what I already had.]

The Navy renewed its contract to operate its computers using Windows XP.  But, the Navy entered into a $9 million contract with Microsoft to continue to provide security patches for it. [What would the cost have been to upgrade its entire computer architecture to, say, Windows 8?]

The government is moving too slowly to fund and acquire the latest technology, which could not only waste taxpayer dollars but also endanger federal cybersecurity. A panel of experts on Monday noted that the conservative procurement practices of the federal government can't keep up with the high-risk culture of tech industry startups, which innovate at a rapid pace and are increasingly a target for acquisition by larger businesses.

Cybersecurity is one area in which agencies appear to have failed to take advantage of private sector innovation. “Products for IT get overlapped by new software within six months,” Erica McCann, director of federal procurement for the Information Technology Alliance for the Public Sector tech trade association, explains. Agencies like the Defense Department use outdated software because procurement rules at the General Services Administration require programs to be on the market for two years to be eligible for government use, she said.

“Selling to the federal government is so arcane that many companies opt out, especially start-ups or newer IT companies that are used to a much faster pace,” James Lewis, a cybersecurity researcher at the Center for Strategic and International Studies, says. “Funding for start-ups runs into problems over who owns the intellectual property. [Intellectual property] is the single biggest asset for most startups and federal rules can put it at risk, making it unattractive to do business with the U.S. government.” Startups have to be particularly patient when working with the government since receiving funding can take months or years, as can the process of meeting government regulations, he says.

“The political system is not good at making long-run investments with uncertain impacts,” Ben Bernanke, former chairman of the Federal Reserve said during the panel discussion. Michael O’Hanlon, a research director at the Brookings Institution think tank, said “the overall system is not fundamentally broken; there are parts of it that are broken, in my mind.” Congress and agencies, however, are working harder than ever to make it easier to buy products from the tech sector, McCann says.

Defense Secretary Ashton Carter has recently tried to attract programmers to work with the government to boost its IT staff instead of taking a higher paying job at a private sector firm. These efforts included opening a full-time DoD outreach office in Silicon Valley, called the Defense Innovation Unit Experimental.
Defense Department's New Definition of "Commercial Item" Will Save Money
The Department of Defense (DoD) is taking a major step in stopping the waste of taxpayer dollars. DoD sent a legislative proposal to Congress to narrow the definition of a "commercial item" to mean goods or services that are actually sold to the general public in "like quantities." This proposal is a huge improvement over the current definition, a broadly worded definition open to abuse because it includes good or services “of a type” that are “offered” for sale or lease.

Why does this matter? Once a good or service is considered “commercial,” the government has little to no information about the relative cost of a good or service, and has little ability to audit the numbers behind the cost that the government is paying. If the new definition becomes law, DoD will no longer have to buy C-17s, C-130Js, or billions of dollars of specialized weapons-related subsystems (see pages 8-10) as commercial items. This should yield savings for taxpayers, as it has in the past. In 2006, for example, the conversion of the C-130J from a commercial item, which caused the repricing of 39 aircraft, resulted in “institutional net savings of $168 [million]” — thank you, Senator John McCain (R-AZ, who was credited with the Air Force’s actions).

Our most recent recommendation to alter the definition of a commercial item came in 2011, when we asked Congress to re-establish the taxpayer-protection checks and balances that have been removed from the contracting system, including requiring contractors to provide cost or pricing data to the government for all contracts except those where the actual goods or services being provided are sold in substantial quantities in the commercial marketplace.

Unfortunately, many government commercial item purchases have been awash in wasteful spending based on the elasticity of the current definition. Items with little or no commercial market availability were easily labeled as commercial, and were purchased on a sole source basis (i.e., non-competitive contracting) with no objections by government acquisition staff or reviews by auditors. The “commercial item” definition was developed by industry and enacted into law in the 1990s (as part of so-called “acquisition reform”) precisely in order to prevent the contracting agencies from obtaining cost or pricing data when adequate price competition—which exists in real commercial markets—does not exist. The law should more accurately have been called the “sole source contracting without cost or pricing data act.”

Not surprisingly, the contracting industry is opposing DoD’s proposal, claiming that competition will suffer as certain companies won’t do business with the federal government because of stricter contracting rules. The benefit of the current definition—for contractors at least—is that it permits sole source without cost or pricing data. This is because once an item or service is labeled as “commercial,” (under an extraordinarily creative definition), the government is legally denied access to certified cost or pricing data which is used to ensure that the items or services being purchased are reasonably priced.

Years ago, a DoD Inspector General (IG) audit report about an $860 million contract for spare parts used on weapon systems found that “higher prices were paid for commercial items” because “there was no competitive commercial market to ensure the reasonableness of prices.” According to the report, the contractor, Hamilton Sundstrand Corporation, “refused to provide [Defense Logistics Agency] contracting officers with ‘uncertified’ cost or pricing data for commercial catalog items, and terminated Government access to the Sundstrand cost history system”; and “guidance on commercial items qualified any item ‘offered for sale … to the general public’ as a commercial item without clearly addressing commercial pricing concerns, particularly when DoD was the primary customer procuring significantly larger quantities than other commercial customers.”

The DoD proposal would put an end to the kinds of disputes highlighted in that report. In fact, DoD’s analysis states:

For example, GAO Report 06-838R dated July 7, 2006, cites “adequate pricing” as one of five key area vulnerabilities of the DoD. In part, the report states that “Also, DoD sometimes uses commercial item procedures to procure items that are misclassified as commercial items and therefore not subject to the forces of a competitive marketplace. While the use of commercial item procedures is an acceptable practice, misclassification of items as commercial can leave DoD vulnerable to accepting prices that are not the best value for the department.”

These amendments of the law would prompt commensurate adjustments of the Federal Acquisition Regulation and ensure that commercial goods and services are acquired by the DoD and other Federal agencies only at fair and reasonable prices consistent with comparable sales actually observed in the competitive marketplace.

Further reading:

GAO: Commercial Item Test Program Beneficial, but Actions Needed to Mitigate Potential Risks
the Coast Guard's Aviation Logistics Center used the test program for 139 of 370 new awards that fell within test program thresholds, whereas its Headquarters Contract Operations used the test program for only 3 of 164 new awards. Coast Guard officials explained that the commercial nature of the parts and services bought by the Aviation Logistics Center lends itself to using the test program, while the headquarters office used existing contracts, which can be another means to fulfill recurring needs for commercial supplies such as information technology services.
DOD: Commercial Item Handbook

DOD: Guidebook for the Acquisition of Services

GSA/DOD: Improving Cybersecurity and Resilience through Acquisition
The cost of not using basic cybersecurity measures would be a significant detriment to contractor and Federal business operations, resulting in reduced system performance and the potential loss of valuable information. It is also recognized that prudent business practices designed to protect an information system are typically a common part of everyday operations. As a result, the benefit of protecting and reducing vulnerabilities to information systems through baseline cybersecurity requirements offers substantial value to contractors and the Government.

The baseline should be expressed in the technical requirements for the acquisition and should include performance measures to ensure the baseline is maintained and risks are identified throughout the lifespan of the product or service acquired. Due to resource constraints and the varying risk profiles of Federal acquisitions, the government should take an incremental, risk-based approach to increasing cybersecurity requirements in its contracts beyond the baseline.
THE Department of Defense Cyber Strategy April 2015
Over the last ten years Internet access increased by over two billion people across the globe. Yet these same qualities of openness and dynamism that led to the Internet’s rapid expansion now provide dangerous state and non-state actors with a means to undermine U.S. interests. We are vulnerable in this wired world.

The Internet was not originally designed with security in mind, but as an open system to allow scientists and researchers to send data to one another quickly. Without strong investments in cybersecurity and cyber defenses, data systems remain open and susceptible to rudimentary and dangerous forms of exploitation and attack.

Governments, companies, and organizations must carefully prioritize the systems and data that they need to protect, assess risks and hazards, and make prudent investments in cybersecurity and cyber defense capabilities to achieve their security goals and objectives. Behind these defense investments, organizations of every kind must build business continuity plans and be ready to operate in a degraded cyber environment where access to networks and data is uncertain. To mitigate risks in cyberspace requires a comprehensive strategy to counter and if necessary withstand disruptive and destructive attacks.

To succeed in its missions the Defense Department must operate in partnership with other Departments and Agencies, international allies and partners, state and local governments, and, most importantly, the private sector.
The Future is Coming Much Faster than we Think, Here’s Why

Samsung Unveils The World's Largest Hard Drive, Boasting 16 TB In A 2.5-Inch Case
This is a pretty significant announcement. Flash memory is generally faster than its disc-spinning counterpart, although it generally doesn't offer the highest amounts of storage. This drive, however, offers much more than the largest conventional drives made by Western Digital or Seagate, which max out at around 10 TB.

So how is Samsung able to make such a large hard drive – its actual capacity clocks in at 15.36 TB? The secret is the company's new 256-GB NAND flash die, which is two times as impressive as the 128 GB NAND dies that were put into commercial use by storage makers last year. Samsung announced the new tech by showing off a server with 48 of these new hard drives at the summit in California. It is able to handle up to 2 million input/output operations each second.
The Flash Storage Revolution Is Here
You’ve likely heard about Samsung’s 16TB hard drive, by far the world’s largest. That is an eye-popping number, a large enough leap forward that it’s difficult to fully process. And the most exciting thing about that 16TB hard drive? It’s just a hint of what’s coming next.  It won’t be long at all, though, before they find their way into personal computers, even laptops. “I would expect in three to five years, for a 2.5-inch 16TB SSD to be in a workstation-class notebook,” says Patrick Moorhead, president and principal analyst of Moor Insights & Strategy.

Moorhead notes that despite our recent migration to the cloud, hard drives of that magnitude would obviate much of the need to borrow some massive, faceless tech company’s digital locker to stash our stuff. That amount of room could enable localized smart home solutions that offer more privacy and security than leaning on the cloud currently does.

Intel and Micron recently announced that they’re working on something quite similar, though they don’t expect to produce consumer devices based on the technology until early next year. Toshiba has dabbled in 3D NAND, with products expected by the end of next year. All of them have the systems in place to produce equally, if not more, impressive drives. Samsung left the starting block first, but that may not matter much in a race that will be measured in years.

The implications of storage breakthroughs like this go beyond data centers and laptops, though. “Memory and storage are the two things that are holding up huge innovations in biotech, in design, and for that matter even artificial intelligence,” Moorhead says. “They’ve become a fundamental building block for moving the industry forward. These big innovations at the top trickle their way down into cars, into phones, over a five to seven year period.”
As exciting as a 16TB SSD may be, it still represents an iterative step, a manufacturing trick that found new ways to stuff the same basic pieces into increasingly smaller spaces.
The potentially much bigger breakthrough? Intel and Micro’s 3D XPoint (pronounced “crosspoint”) technology, which completely rethinks the way we’ve been making memory for years. “I think the design change is more exciting,” says Moorhead. “It’s a radical, different design that nobody has, versus taking your memory to the next node, which is essentially Moore’s Law.”

Rather than rely on transistors to store information, as traditional flash memory does, 3D Xpoint deploys a microscopic mesh of wires, coordinated by something called a “selector” that can be stacked on top of one another.

The result is “non-volatile” storage, meaning it holds onto its data even when the power’s off, that’s 1,000 times faster than NAND flash, and 10 times denser than the volatile DRAM (dynamic random access memory) that PCs use to keep track of temporary data. In other words, it’s a single solution that can handle both memory and storage, and do both better, in most ways, than anything currently available. “Any artificial intelligence or object recognition you want to have on a device works a lot better with XPoint … The more you can put into that really fast memory space, the better your artificial intelligence is going to be,” says Moorhead.

Intel has said not to expect any 3D Xpoint products until next year, but when they appear they’ll be in a position to transform multiple industries, from the esoteric to the squarely consumer-focused.
Intel, Micron develop 3D XPoint as an eventual successor to NAND flash memory
This development comes at a crucial time during these early days of the Internet of Things. 3D XPoint, which can write up to 40 terabytes per day; SSD NAND, which can write up to 40 gigabytes in a day. 

Memory speeds were already proving to be a constraint on processor operations in 2013, when the world generated a total of 4.4 zettabytes, or the equivalent of 1,000,000,000,000,000,000,000 bytes.  By 2020, that annual global data generation rate is expected to climb to 44 zettabytes, an increase by a power of 10. By 2050, when it is expected that 50 billion devices will be outfitted with computing processors for digital services, the amount of data generated every year could skyrocket. , will be much more suited for that atmosphere than
Imagine the impact this will have on robotics (drones), holographics, down range autonomy and basic research and modeling, 3D printing, sending intelligent machines to the stars. And imagine how quickly that will make redundant whatever it is we buy today.  Anything we buy that's based on proprietary hardware or software is likely to be more ball and chain than progress.  Think Motorola.  

Government technology buyers must approach issues prudently, which means not betting the house on any one gambit.  Standardization perhaps should give way to some nodes of autonomous experimentation and incrementalism, however more expensive that may be in the near term. 




A counterproductive way to deal with emergency no-bid acquisitions

New board approves millions in no-bid contracts (Read full story at the link)
The revamped Personal Services Contract Review Board is part of a contracting reform bill the state Legislature passed this year after much debate, with the Senate watering down sweeping House proposals.
It appears the Legislature, in its wrangling over contract reform, may have inadvertently given agencies a potential out on competitive bidding.

Numerous agencies requesting approval of contracts and exemptions from bidding quoted the new law that allows exemption if “utilization of a competitive bid procurement would have been counterproductive to the business of the agency.” Now agencies appear to be using it as their reasoning for not competitively bidding contracts.

The legislation was driven by a Mississippi Department of Corrections bribery and kickback scandal. Former state Corrections Commissioner Chris Epps ran one of the largest and longest-running criminal conspiracies in state history. He took about two million in bribes over eight years in exchange for steering hundreds of millions of dollars in prison contracts to a former lawmaker co-conspirator.

The contracts subject to Epps’ malfeasance had been approved by the state Personal Services Contract Review Board. After the prisons bribery scandal, state leaders — and a task force created by Gov. Phil Bryant to recommend reform — criticized agencies’ use of “emergency contracts,” exempt from bidding, for goods and services that did not appear to be emergencies.

The reform legislation revamped the board to include citizen members appointed by the governor and lieutenant governor. The board, holding its second monthly meeting Tuesday, has only four members because Lt. Gov. Tate Reeves has not filled his appointments. The directors of the State Personnel Board and Department of Finance and Administration also serve on the board.

On Tuesday, the PSCRB questioned numerous “emergency” contracts approved by agencies, including two recently inked by MDOC worth more than $60 million combined. MDOC entered into an $11.6 million emergency contract with Valley Services for feeding inmates and a $48.8 million one with Centurion of Mississippi for medical services for inmates. Both are for a year.

New board member Bill Moran of Tupelo questioned why feeding inmates and providing medical care were deemed emergencies and the contracts not put out for bid. “Why can’t you at least take the time to get RFPs?” Moran said. “This is $60 million, and nobody’s put a pencil to it. Have you not had time to do that?”

Stanley Brooks, MDOC director of prison agriculture enterprises, said the agency did attempt to get quotes but ran into problems with the previous PSCRB and the contracts were running out, so feeding and caring for inmates became an emergency. At the board’s direction, Brooks said MDOC would try to quickly get RFPs from vendors — within a couple of months — and can back out of the emergency contracts with a month’s notice.

Moran also questioned several emergency contracts worth more than $200,000 from the state Oil and Gas Board — extensions to previous emergency contracts — for companies to plug and abandon oil and gas wells. “How is it an emergency when these wells have been sitting there for years?” Moran said.


House Accountability, Efficiency and Transparency Chairman Jerry Turner, who authored the House reform bill, said this is the result of the Senate stripping out much of the House plan before it passed the bill. Turner said the new board has the authority to establish tougher rules and regulations on bidding and emergency contracts and to force state agencies to seek best prices. He said he hopes it will. “But if they can’t, we can go back in the Legislature and put new language in there,” Turner said. “We are not going to sit by and watch all those problems we’ve had still be allowed because of misinterpretation of the language.”
I might note, Guam procurement law (5 GCA § 5030(x)) defines "emergency" as:
"a condition posing an imminent threat to public health, welfare, or safety which could not have been foreseen through the use of reasonable and prudent management procedures, and which cannot be addressed by other procurement methods of source selection."

Focus on market research and planning to understand and get what is needed

City hires firm to help rethink its procurement approach
New York City has hired a firm called Citymart in its effort to make its procurement processes more flexible and better able to accommodate new technologies and smaller vendors. The contract entails a plan for five challenges until June 2017, working within existing procurement rules to use different platforms, Merritt said. The goal is greater participation by more diverse vendors, and earlier in the process — especially to find solutions or providers the city might not have known about otherwise.

“When [people] look at a procurement, they think that the actual RFP is sort of the beginning of the process — and in some ways, by that point in time, a lot of the work has already happened," he explained. "So the early stage is really working with agencies to identify the tough problems, the problems where they don't know the solution that's out there."

"Our goal isn’t to turn every single procurement into a call for innovations. Rather, it is to identify the areas that we think perhaps a traditional RFP might not be the best way to really work in partnership with agencies to really flesh out those problems," he said. "And when we put out a solicitation, our partners in the private sector, non-profit sector, academic sector can really understand what is the issue that government is trying to solve, and what are their ideas and proposals for addressing it."

Procurement controversies --Sheepish in New Zealand, Policing training in Nigeria

Saudi tender process reeks of SkyCity approach
"The $6m contract for the Saudi sheep farm was awarded to Brownrigg Agriculture - long-time business associates and now partners of the Saudi businessman Hmood Al-Khalaf. This is separate to the $4 million cash payment to the Al Khalaf Group.

"During the contracting process Brownrigg Agriculture was paid to provide advice on the so-called business case and was paid by MFAT to travel to Saudi Arabia as part of a team to develop it. The planned second phase of the competitive contracting process was then cancelled and Brownrigg Agriculture was awarded the contract.

"This directly contravenes Rule 21 of the Government Rules of Sourcing that states: ‘an agency should not purchase procurement advice from a supplier that has a commercial interest in the contract opportunity, because to do so would prejudice fair competition’.
Saudi sheep deal 'broke Govt's own rules'
The controversial Saudi sheep deal contravened the Government's own procurement rules for fair competition when the contract was given to a company that was paid to provide advice on the business case, Labour says.

Brownrigg, as the lead provider of sheep, was previously revealed to have been responsible for nearly 200 of the ewes sent to Saudi Arabia coming from Awassi NZ's Hawke's Bay farm. Parker said Brownrigg Agriculture was paid by the Ministry of Foreign Affairs and Trade to provide advice on the business case and was paid to travel to Saudi Arabia as part of a team to develop it.

The competitive contracting process was then cancelled and Brownrigg was awarded the $6m contract for the sheep farm.

McCully on Tuesday said the Government was "comfortable with the process that was followed in relation to the Agrihub.
Staff Training Contract: Police Commission Circumvented The Rules-BPP
According to a letter by the Bureau of public procurement (BPP) to the chairman of the police service commission (PSC), Mr Okiro, deliberate attempts were made by the commission to circumvent the process of approval of the training programme. The BPP said that the PSC adopted restrictive tender method and invited only three firms to organise the training for its workers in violation of procurement rules and regulations. It further stated that the PSC method of requesting and obtaining proposals from the shortlisted firms for the procurement, without the explicit approval of the BPP, violated Section 40(i) of the Public Procurement Act 2007.

“The commission considered that due to the limited time frame available to which to utilize the funds till the elections, it became impracticable to embark on a Competitive Bidding exercise. The bureau opines that this delay might have been deliberate, given that the Nigerian General elections is an every four years event which permits more than ample time to plan, prepare and perform all procurement procedures associated with the elections. “Therefore the Commission’s assertion that it was impracticable to embark on Competitive Bidding due to the insufficient time before the 2015 elections’ indicates a dilatory conduct on the part of the procuring entity.”

The BPP also picked holes over the non-disclosure of the source of funds for the training, affirming that the quoted figures by the commission were inconsistent with what the contractors demanded. “The provision of N53 million for consultancy fee for the Abuja training programme is rather excessive, as similar training programmes recently certified by the bureau show that Consultancy fees were charged within 10 – 15 per cent of the training cost.
Read the full stories at the links.

Thursday, August 13, 2015

Models of procurement

You can go your own way
Go your own way
You can call it another lonely day
You can go your own way
Go your own way
by Fleetwood Mac

Here we look at several of the multitude of models of procurement (from various U.S. states)  in  articles brought to us via Lexology and provided by the law firm Husch Blackwell LLP.   I keep finding more of these state reviews and have tacked them on, and Husch Blackwell is to be commended for cataloging these various state versions, because we can better learn what works, what works well, and what doesn't seem like such a good idea after all (but of course, that all depends on what you are trying to achieve -- a matter for other posts).

Of course, as always here, you need to refer to the original article at the links provided, as I may take considerable liberty with editing, paraphrasing, etc., typically leaving out vital information you will want if you are particularly interested in the subject.

Missouri bid protest procedures by Lowell Pearson and R. Ryan Harding.
Public procurement in Missouri is conducted according to statutes and the rules published by the Division of Purchasing and Materials Management within the Missouri Office of Administration. Although many protesters opt to bring their protest actions directly in court, there are voluntary procedures for the submission and resolution of bid protests involving purchases by Missouri state government agencies.

How and when to file a bid protest

A protest challenging the award of a Missouri contract may be submitted in writing, setting out the usual matters (basic description of the protestor and solicitation as well as legal and factual grounds of protest, with supporting documentation) to the Director of the Division of Purchasing and Materials Management (“DPMM”) or to another person designated to receive the protests. A timely protest of a contract award must be received by the director of the DPMM or the designee within ten business days after the date of the contract award. If the tenth day falls on a weekend or a state holiday, the deadline extends to the next business day.

There is no published regulation establishing a procedure for the resolution of pre-award protests in Missouri. If they cannot be resolved informally before the submission of bids, a challenge to the specifications, contract provisions, or other solicitation provisions would have to be addressed in a court proceeding.
How is a Missouri bid protest resolved?
A timely and complete bid protest will be reviewed and decided by the director of the DPMM or the designee. An incomplete protest or one that does not establish that the protester has standing to challenge the award will be summarily denied. A decision addressing the merits of the protest will contain findings of fact and an analysis of the issues presented in the protest. The decision will sustain or deny the protest. If the protest is sustained, available remedies include canceling the award. Recognize that the administrative procedure set out in the regulations is not mandatory and deciding not to use it does not bar a court action.

An adverse decision on a bid protest may be challenged in court through a Writ of Mandamus, a declaratory judgment action, or other judicial means. A court action is generally filed in the Cole County Missouri Circuit Court. Challengers (particularly incumbent vendors who do not receive the new contract) often want injunctive relief to prevent a transition of the contract, and the administrative bid protest procedure does not stay the transition. Accordingly, it is common for unsuccessful bidders to go directly to court.
Can a successful protestor recover attorney’s fees?
The award of reasonable attorney’s fees to parties that prevail in agency proceedings or civil actions may be allowed. But, fees are not available if the court or the agency finds that “the position of the state was substantially justified or that special circumstances make an award unjust.” That is a high burden, and the statute also imposes caps on the size of the fee applicant and on the hourly rate. For these reasons, fee awards are not common.
South Carolina bid protests by Christopher A. Smith and Elizabeth A. Bozicevic
South Carolina law provides a statutory procedure for the submission and resolution of bid protests. Under South Carolina’s Consolidated Procurement Code and procurement regulations, bid protests relating to procurements greater than $50,000 may be initiated with a letter directed to the appropriate chief procurement officer (“CPO”). A protest must be in writing and must set forth the grounds of protest and the relief requested with enough particularity to give notice of the issues to be decided.

The submission of a bid protest is "short" [but not as short as Guam's, and many other jurisdictions in the US, such as Tennessee as the third article below reveals). If challenging the terms of a solicitation, a prospective bidder must file the protest within 15 days of the issue date of the invitation for bids or request for proposals. If an amendment to the solicitation is at issue, the protest must be filed within 15 days of the amendment. The deadline for protesting the award or intended award of a contract is even shorter. Unsuccessful bidders must file such protests within 10 days of the date of award or notification of intent to award, whichever is earlier. The protest can be amended after it is filed, but such amendments must be filed within 15 days after the date of award.

A protest bond is not required for protests to the terms of a solicitation. A bond is not automatically required for post-award protests but the CPO can require security if the agency requests and if the contract at issue is: (a) solicited under Article 5 of South Carolina’s Consolidated Procurement Code; and (b) valued at $1 million or more. If the CPO requires a bond, it must be in an amount equal to one percent of the potential contract value. The CPO’s decision to require a bond is not appealable.

Before a protest is considered on its merits, South Carolina law directs the CPO to make a “reasonable attempt” to settle the protest by mutual agreement with the protester. Settlement negotiations can take place with the CPO, the head of the purchasing agency, or their designees, and the CPO has authority to approve any mutually agreeable settlements.

If a protest cannot be settled at the outset, the CPO is required to promptly conduct an “administrative review.” The CPO must issue a written decision resolving the protest within 10 days of completing the administrative review and must “state the reasons for the actions taken.” The decision must be posted as well as mailed “or otherwise furnished” to the protester and any intervening parties immediately.

A party that is adversely affected by a CPO’s decision on a bid protest may seek administrative review with South Carolina’s Procurement Review Panel, which is comprised of two South Carolina employees and five individuals from private industry. The members of the Procurement Review Panel are appointed by the Governor. A written request for this administrative review must be submitted within 10 days of the posting of the CPO’s decision. The request should describe the reasons behind the protestor’s disagreement with the CPO’s decision; it must be limited to issues raised in the protest and cannot raise new protest grounds, even if those grounds are newly discovered. The Panel is required to convene in response to a bid protest within 15 days of receiving the request or to schedule a hearing to facilitate the administrative review. T he Panel reviews the CPO’s decision under a de novo standard of review. The Panel must record its determination within 10 working days, unless the matter is designated as complex, in which case the Panel 30 days to record its determination.

A timely filed bid protest imposes an automatic stay that stops the procurement or the award of a contract until 10 days after the CPO posts its administrative review decision. The automatic stay remains in effect during an appeal to the Procurement Review Panel. The agency involved in the solicitation and/or the party who was awarded the contract may request a lift of the stay. The stay may be lifted if the CPO, in consultation with the head of the agency, determines that the immediate solicitation or award of the contract is necessary to protect the best interests of the state. There is no automatic stay when a protest action is filed in the circuit court.

The decision of the Procurement Review Panel may be appealed to the circuit court. The circuit court’s review generally is confined to the record before the Procurement Review Panel and the court may overturn the Panel’s decision only in accordance with certain specific grounds.

If it is determined that the protestor should have been awarded the contract under the solicitation but was not, the protestor may request and be awarded a reasonable reimbursement amount, including reimbursement of bid preparation costs and the costs of providing a bond or other security at the agency’s request. If the Procurement Review Panel determines that a protest was frivolous, the Panel may require the protesting party to pay the fees and/or costs of the parties who responded to the protest. A protest is “frivolous” if it is not well grounded in fact; and is not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and is posed for an improper purpose, such as to harass, limit competition, or cause unnecessary delay.
The Tennessee bid protest process by Steven A. Neeley Jr. and Hillary L. Klein
Tennessee law explicitly provides interested parties the right to protest the terms of a solicitation for a contract with a state agency or the award or intended award of a state government contract. In each case, Tennessee’s procurement code and procurement regulations require the submission of a protest letter directed to the “Chief Procurement Officer” located in Nashville. Bid protests be submitted in writing and identify all of the reasons for the protest. They should be presented in the form of a letter that identifies the solicitation and the interested parties and summarizes the grounds for the protest.

Pre-award protests addressing ambiguities or defects in a solicitation that are apparent before bid opening or the closing date for receipt of initial proposals must be submitted within seven calendar days after the solicitation has been posted to the website of the Central Procurement Office or the Delegated State Agency. Post-award protests must be submitted within seven calendar days after the notice of award or notice of intent to award the contract is issued, whichever is earlier. Issues raised after the seven-day period will not be considered. The notice of award or notice of intent to award usually specifies a date on which the agency’s procurement files will be open to bidders; they contain the agency’s proposal evaluations. This is known as the “Open File Period.” Under Tennessee law, bidders are deemed to know all of the facts in the agency’s files on the first day of the Open File Period, so a post-award protest must be submitted within seven calendar days from the start of the Open File Period.

Although there are exceptions for small businesses bidding on contracts under $1 million, a bid protest in Tennessee must be accompanied by a bond or other security. The amount of the bond is five percent of the lowest evaluated cost or five percent of the estimated maximum liability established in the solicitation. The bond will be forfeited if the protest is not well-grounded or is filed in bad faith.

Tennessee law imposes an automatic stay that goes into effect upon the state’s receipt of a protest and supporting bond. There is a procedure that allows the state to override the stay if it is necessary to protect the interests of the state.

The Chief Procurement Officer, in consultation with the head of the state agency, has the authority to resolve a bid protest. The Chief Procurement Officer is generally required to resolve a protest within 60 calendar days after it is filed. The final determination of the Chief Procurement Officer is made in writing and is submitted to the protesting party, the Protest Committee, and the Comptroller of the Treasury. A protest may be resolved in the protester’s favor only under one or more of five circumstances—
• the contract award was arbitrary, an abuse of discretion or exceeded the authority of the Central Procurement Office or the State Agency;
• the procurement process violated a constitutional, statutory, or regulatory provision;
• the Central Procurement Office or the Delegated State Agency did not follow the rules of the procurement set forth in the solicitation in making the award, and their failure to follow the rules of the procurement materially affected the contract award;
• the procurement process involved responses that were not independently arrived at in open competition, were collusive, or were submitted in bad faith; or
• the contract award was the result of a technical or mathematical error during the evaluation process.
A protester may challenge a decision by the Chief Procurement Officer by appealing to the State Protest Committee within seven calendar days of the decision. An appeal may also be filed directly with the State Protest Committee if the Chief Procurement Officer fails to acknowledge the protest within 15 calendar days after receiving it, fails to resolve the protest within 60 calendar days, or consents in writing to a direct appeal to the Protest Committee.

Decisions issued by the State Protest Committee may be appealed to state chancery court. Court review is limited to the record made before the protest committee and involves only an inquiry into whether the protest committee exceeded its jurisdiction, followed an unlawful procedure, or acted illegally, fraudulently, or arbitrarily without material evidence to support its action.

Tennessee law does not specify the recovery of costs for filing a protest. Because each prospective contractor could justifiably expect fair consideration of its offer by the state, in rare cases, a protester may be able to recover attorney’s fees as well as protest and bid preparation costs under the theory of promissory estoppel. (Attorneys’ fees are also available in a successful challenge to bid specifications under the Tennessee Freedom in Contracting Act (“FICA”), but those are very limited circumstances that rarely occur. The FICA only prohibits solicitation provisions that establish or require relationships with labor organizations or which discriminate against workers.)
Bid protests in Virginia by Brian P. Waagner
An actual or prospective bidder seeking to challenge the award of a Virginia government contract must submit a protest to the procuring agency or to an official designated by the agency. The protest must be submitted in writing. It must include the basis for the protest and the relief sought. A bid protest must be submitted no later than ten days after the award or the announcement of the decision to award, whichever occurs first. This deadline is extended if the protest depends on obtaining access to documents. In those situations, the protest must be submitted within ten days after the records are made available. The VPPA does not specifically allow for the submission of a pre-award protest that challenges the terms and conditions of a solicitation.

If a protest is timely filed, the award and performance of the contract is automatically stayed unless the agency determines in writing that “proceeding without delay is necessary to protect the public interest or unless that bid or offer would expire.”

Parties that are not satisfied with the initial decision on a Virginia bid protest have a right of appeal, but they must take action within ten days of receiving the initial decision. If the agency has established a procedure for hearing appeals, the appealing party may choose to invoke the administrative appeal process. Upon the conclusion of the administrative appeal, a party that is not satisfied with the result may proceed with an action in state court. Although a party that invokes an administrative appeal must complete it before beginning a court action, a protest decision can be appealed directly to a state court without even beginning the administrative appeal process.
Colorado bid protests by Fred Miles
The Colorado Procurement Code grants the right to submit a protest to “[a]ny actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract.” A protest must be submitted in writing within seven working days after the protester knew or should have known of the grounds for the protest. [This indicates the Colorado regime is, like the South Carolina law above, as well as the Guam law, modeled on the ABA Model Procurement Code.] The purchasing agent for the agency may settle and resolve protests concerning the solicitation and contract award. Absent a settlement, a written decision is required within seven working days after the protest is filed. This decision is to be based on and limited to the issues raised in the protest. It must explain each of the factors taken into account in reaching the determination and must advise the protester of its appeal rights.

Two options are available for a party seeking to appeal an unfavorable initial protest decision. An appeal may be filed with the Executive Director of the Colorado Department of Personnel and Administration. This agency encompasses Colorado’s State Purchasing Office. Appeals are usually determined by this agency’s designee, the State Purchasing Director.

It is also possible to appeal an initial protest decision through a court action in the District Court for the City and County of Denver, which hears most legal challenges to Colorado state agency decisions.

Unlike federal bid protests and the procedures followed in many other states, the automatic stay of the contract award pending the result of a solicitation or bid protest is extremely limited in Colorado. The primary provision providing for an across- the-board stay while all protests and appeals were pending was repealed in the early 1980s. Under current law, an automatic stay of the award of a contract is available only while the initial protest is pending.

When a protest is sustained by the agency’s purchasing agent, full relief may be accorded to the protester, including an order requiring the agency to conduct a new procurement. The availability of relief is much more limited in a protest that is sustained on appeal. If the contract has already been awarded and the party awarded the contract has not acted fraudulently or in bad faith, the contract still may be ratified or affirmed as being awarded to this party if it is determined to be in the best interests of the state. Alternatively, the contract may be terminated, in which case the party awarded the contract shall be compensated for the actual expenses reasonably incurred under the contract prior to termination, plus a reasonable profit. Even when a protest is upheld on appeal, the protesting party is entitled only to the reasonable costs incurred in connection with the solicitation or bid, including solicitation or bid preparation costs. Under this statutory provision, reasonable costs do not include attorney fees. [Again, these last limited remedies rhyme with Guam law.]

There is a lot to be learned by comparing different procurement regimes, in the first place, then studying outcomes of those regimes, in terms of efficiency, inclusiveness and fostering competition, and governance issues, such as fair and equitable treatment, integrity of the process and accountability.

NASPO, the National Association of State Procurement Officials, publishes A Practical Guide to State & Local Government Procurement, which attempts to collect and summarize the procurement processes in the U.S. It's latest iteration has a long history dating back to the late 1940's. There are also models of procurement published by the American Bar Association (which South Carolina and Guam tend to follow), the UN, the World Bank, The Asia Development Bank, as well as the plethora of national regimes of the various countries around the world. 

NASPO's Practical Guide notes:
State and local governments are not carbon copies of each other. They act as natural laboratories for differing approaches to public procurement and other public services. Keep that in mind when analyzing survey results or reading about trends.  A substantial majority may not constitute a consensus.  Every procurement program has its strengths and weaknesses attributable to governing law, operating rules, quality of management, political tradition, and availability of resources. [This kind of study] is a road map with effective procurement as the destination rather than a detailed blueprint that limits ingenuity and innovation.

Tuesday, August 4, 2015

The FEMA bone is connected to the hip-pocket bone

Report: El Paso County agency did not follow protocol when awarding disaster contracts
Federal regulators frequently find issues with contracts awarded during disasters, and sometimes rescind grants if bidding protocol is not followed, said Marilyn Gally, who helps local governments apply for FEMA aid through the CDHSEM. In Colorado, as elsewhere, audits have found that cities tend to rely on pre-established contracts to handle disaster repairs when the projects should be open to competitive bidding, Gally said. Particularly during the chaos of a disaster, agencies don't record their hiring decisions, which can cost them federal reimbursement money, Gally said.

"The procurement part is probably our biggest ongoing challenge to make sure that applicants are following all of those rules," said Kevin Klein, director of the Colorado Division of Homeland Security and Emergency Management (CDHSEM).

Audits are routine when FEMA allocates disaster recovery funding, DeFelice said. In recent years, Colorado has been subject to a several audits, including one released in June that recommended Boulder County return $2.5 million of FEMA funds that it didn't use for recovery from September 2013 floods.

Two years after the Black Forest fire, potential issues with Mountain View's contracts serve as a good lesson to local agencies applying for federal aid after El Paso County's latest federally recognized disaster - spring flooding. Rains in May and June caused more than $24 million in damage across the county, most of which local officials hope will be eligible for federal reimbursement.

During a Monday information session in Colorado Springs, Gally cautioned a packed room of county agencies to get at least two bids for every contract, even in the heat of an emergency. While skipping a bidding process might sometimes be necessary when safety is a concern, "we don't encourage it," Gally said.

"I'd prefer you just didn't resurface contracts," Gally told the audience.

Mountain View Electric Association oversees power to eight of Colorado's southern and eastern counties, including eastern regions of El Paso County. In 2013, the Black Forest fire destroyed 488 homes and damaged 25 miles of overhead power lines that. During the first year after the fire, the association spent about $7.4 million repairing lines and restoring power to hundreds of neighborhoods in Black Forest, according to the report. About $2.9 million went to removing thousands of dead trees around the lines.

All of the projects were approved by FEMA, an approval which promised to bring reimbursement for 75 percent of the projects' costs, if auditors found no issues with the work.

The need for competitive bidding is typically waived when agencies and cities respond to ongoing disasters, the report said. FEMA can grant exceptions to procurement standards, and the agency has no problem if municipalities skip bidding processes for emergency repairs if there is an existing contract for that scope of work, Gally said. But all other projects - those not deemed essential to saving lives and property or do not have existing scope-of-work contracts - should be subject to competitive, well-documented bidding that also considers minority-run or women's businesses, according to federal regulations.

All of these requirements were violated by Mountain View, the report found.

In the first month following the fire, Mountain View did not use competitive bidding to find a contractor to restore power to 250 homes that had survived the blaze. This was an acceptable time to waive competitive bidding, the federal report said. But when Mountain View hired a contractor to restore power to hundreds of destroyed homes in the year after the fire, it relied on a contractor that handled maintenance work for the company before the fire and did not conduct open bidding. Work to remove 19,367 trees near power lines was subject to competitive bidding, but the process did not take into account minority businesses, the report found.

The report claimed that part of the problem in Colorado stems from the state, which is charged with monitoring the procurement processes and making sure federal requirements are being met. While the state did offer education to agencies applying for FEMA money, it did not follow up with Mountain View to make sure that the awarded contracts would pass federal scrutiny, the report said.
Read the whole article at the link above.

See related: When corners are cut, even for great reasons (e.g., war), the way is opened for fraud

Saturday, August 1, 2015

Questioning process of evaluation is not same as questioning evaluation judgment

World wide UK founded legal services firm Pinsent Masons LLP through its online legal news site Out-Law.com reports, in a couple of articles, an apparently groundbreaking procurement contract award decision. 

As usual, you should read the original at the link, as I take liberal editorial liberties that may, however unintentionally, distort the content or intent of the authors.

High Court orders ‘unsatisfactory’ public contract award to be set aside
In finding against Milton Keynes Council, Mr Justice Coulson was the first judge in an English court to set aside a public body’s contract award decision under the 2006 Public Contract Regulations. The judge noted that procurement laws allow the courts to overturn a public body’s contract award in circumstances where it had “committed a manifest error”. However, he commented that these were often harder to prove than transparency or equality breaches as the contracting authority has a “margin of appreciation” when making its assessment. Despite this fact, he went through each of the award criteria one by one.

On two particular points, the judge found that the council had awarded EAS a 10/10 score when it should legally have awarded the company zero. He said that the scoring criteria were “a matter of law” and that, if a response did not meet the council’s requirements or was unacceptable in accordance with the council's own scoring methodology, then it required to be given a zero score. That the council had not done so in one particular case was “incapable of rational explanation”, the judge said.

“In my view, an informed reader would think that the EAS answers were almost studiedly vague, strong on aspiration and management-speak, light on detail,” he said. “The Woods’ answers, on the other hand, could fairly be said to bristle with detail and commitment.”

On the “unsatisfactory” scoring notes provided by the council, he said that the absence of clear reasons to explain certain scores created a “lack of certainty in the nature of the council’s case”.

"This is a significant decision because it is the first time that an English court has set aside a procuring authority's contract award decision under the Public Contracts Regulations," said procurement law expert Ben Lasserson of Pinsent Masons, the law firm behind Out-Law.com.

"Essentially, this case boiled down to whether the council's evaluation exercise had been conducted lawfully. In the past, such a challenge would have been very difficult for a claimant to sustain because the courts were always reluctant to 'second guess' a procuring authority in matters of evaluation.
Council expected to pay damages after conducting flawed procurement process
Mr Justice Coulson said that Woods Building Services (Woods) was entitled to damages after losing out on the contract on the basis of a flawed procurement run by Milton Keynes Council.

Woods also asked the High Court to order Milton Keynes Council to award the contract to it. However, that request was rejected. Mr Justice Coulson said that "requiring A to contract with B, in respect of a contract which might last for years, would be an exceptional order for the court to make".

"In principle, it might be open to the Court to order a mandatory injunction requiring the Council to enter into a contract with Woods," the judge said. "But it is trite law that a mandatory injunction, which would here require the Council to enter into a contract which would last for many years, will only rarely be granted."

"Whilst I do not suggest that a mandatory injunction of the type which they seek would never be granted in a procurement case, I am satisfied that it would only be granted in exceptional circumstances, and there are no such circumstances here," he said.

Mr Justice Coulson cited a number of reasons for not awarding Woods the contract by way of remedy, including stating that it would have been wrong to award the contract to Woods after determining that the procurement process had been flawed.

"Woods were right to challenge the procurement and, all other things being equal, they would have been awarded the contract," Mr Justice Coulson said in his judgment. "In those circumstances, it would be absurd if, having lost so badly, the Council could then avoid the natural consequence of those breaches, namely an award of damages in favour of Woods."

Public procurement law expert Christopher Murray of Pinsent Masons, the law firm behind Out-Law.com, said that it was unusual for legal challenges brought under public procurement legislation to reach a hearing on remedies.
The typical procurement law in the US is that, whilst deference is paid to agency decisions on the facts of a decision, the decision must be made based on the factors specified in the solicitation and required by law or regulation. 

Thus, the distinction is understood: if a decision is rationally made, it will not be set aside, but it must be shown that the process of deliberation was undertaken and supported by rational application of the facts to the issues. In effect, a court will not set aside a procurement decision that it considers wrong or bone-headed so long as it was clear that a rational thought process had taken place and the judgment was not a bare conclusory opinion.

And it is not at all unusual for a court, or reviewing administrative body for that matter, to set aside an award or contract that was in violation of law. See, e.g., Guam Code Annotated §§ 5451 and 5452.