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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.

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