Incumbency as a double edged sword

Aha, aha, mmm, hmm, mmm, hmm

Gonna get along without you now

Aha, aha, mmm, hmm, mmm, hmm

Gonna get along without you now

Got along without you before I met you

Gonna get along without you now

Gonna find somebody that's as twice as cute

'Cause I didn't like you anyhow

--- Popularized by Patience and Prudence, lyrics by MetroLyrics

This is a decision of the GAO. It involved the eventually unsuccessful protest of a best value award of a contract to provide security-rated linguists. It was noted in the RFP that the grant of security status was not under the control of the using agency, and experience in passing though that minefield, and managing the flow of applicants through the process, would be essential.

The protester is "SIG", the incumbent under the existing contract. The award was made to "CWU". As usual, this is not a complete or necessarily accurate rendition of the decision and you are most encouraged to read the original at the link below rather than rely on the presentation here. There are other interesting comments and issues in the decision not here presented.

Matter of: Strategic Intelligence Group, LLC, B-410881.3, June 23, 2015

The RFP provided for award on a best-value basis, considering the following factors (in descending order of importance): (1) technical, including subfactors for technical approach and management approach; (2) past performance; and (3) cost/price.

The final evaluation matrix looked like this:

In comparing the proposals, the SSA ("source selection authority") noted that SIG’s proposal was the second highest-priced proposal and one of the lowest-rated proposals, while CWU’s and another offeror’s proposals were both higher-rated and lower-priced than SIG’s.  The SSA selected CWU’s proposal for award, noting with respect to SIG’s proposal that “it would not be in the best interest of the Government to justify paying a higher price [for SIG’s proposal] than proposals that were rated as OUTSTANDING and are lower priced.”

With regard to past performance, the solicitation specified that the agency would assign a performance confidence assessment based on the relevancy and quality of offerors’ performance on recent efforts.

CWU’s proposal was rated overall outstanding under the technical factor based upon an outstanding rating under the technical approach subfactor and a good rating under the management approach subfactor. CWU’s outstanding technical approach rating was based on several evaluated strengths. The SSA concluded that CWU's“[e]xceeding the minimum requirements to facilitate security processing identifies a level of preparedness to ensure successful transition and to maintain a higher pipeline capacity.”

In contrast, SIG’s proposal received only a single strength under the technical approach subfactor, based on SIG’s approach to transition (that is, start-up and continuity of services in transition from an existing contract to the new contract). Specifically, the SSA noted that, since SIG is the incumbent contractor, transition would involve minimal phase-in activities. Thus, SIG’s proposal was rated only acceptable under the technical factor overall.

SIG challenges the agency’s evaluation under each of the evaluation factors, and argues that the resulting selection decision was unreasonable because it was based on a flawed evaluation. In reviewing protests challenging an agency’s evaluation of proposals, our Office does not independently evaluate proposals; rather, we review the agency’s evaluation to ensure that it is consistent with the terms of the solicitation and applicable statutes and regulations. In this regard, the evaluation of proposals is a matter within the discretion of the procuring agency; we will question the agency’s evaluation only where the record shows that the evaluation does not have a reasonable basis or is inconsistent with the RFP. Here, we find the evaluation and source selection decision to be reasonable.

As an initial matter, SIG challenges the agency’s equal rating of both SIG’s and CWU’s past performance as satisfactory confidence, asserting that the past performance evaluation was unreasonable and failed to recognize differences in the offerors’ past performance. Our Office will examine an agency’s evaluation of an offeror’s past performance only to ensure that it was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations, since determining the relative merit of an offeror’s past performance is primarily a matter within the agency’s discretion. While an agency may provide for an evaluation of relevance, the agency is not required to evaluate the past performance of the incumbent contractor as superior to its competitors simply because the incumbent has the most relevant past performance.

Here, we find the agency’s past performance evaluation to be reasonable. Of the several contracts cited by SIG for proof of its past performance, only the incumbent contract was rated as relevant, because of the gross difference between the price (well over $100 million) of the new contract compared to the other proposed contracts. And, in considering the past performance of the incumbent contract, it was noted that the performance was less than stellar. For example, when asked whether SIG satisfied performance requirements, the reviewer stated:

Overall, I find this vendor’s performance acceptable. That said, as discussed below there were, are, and continue to be both cost and schedule concerns associated with executing this effort, however at this time they have not risen to the level of unacceptability.

Likewise, in the area of meeting required performance schedules, the reviewer stated as follows:

Rated overall acceptable, however this vendor is on the low end of the scale [with regard to] fulfilling all CME [Contract Manpower Equivalent] requirements under this task order. The government did issue the vendor a letter of concern to ensure an acceptable number of candidates was routinely submitted for government consideration. That said, the untimely nature of government security vetting processes continues to be a major impediment to vendor success

.
Similarly, when asked whether SIG stayed within cost estimates, the reviewer stated:

Rated overall acceptable, however this vendor is on the low end of the scale [with regard to] cost performance under this firm fixed price contract. While the government arguably neglected to articulate a number of issues in the solicitation that ultimately required an equitable adjustment, at the same time, the government was forced to take action (above and beyond the equitable adjustment issues) to facilitate the vendor’s ability to maintain their current level of performance (see schedule above) by providing increased contract reimbursable compensation to their employees. One could argue that the vendor proposed less than market competitive compensation rates to win the solicitation.

SIG does not challenge the agency’s conclusion that its performance under the “very relevant” incumbent contract merited a rating of satisfactory confidence.

With regard to the disregard of the other proposed contracts, deemed to be less than relevant, even if the agency erred in its evaluation of SIG’s non-incumbent contracts, there is no basis to question the agency’s overall rating of SIG’s past performance as satisfactory confidence given SIG’s performance problems on its “very relevant” incumbent linguist contract.

In any case, prejudice is an essential element of every viable protest, and we will not sustain a protest when it is clear from the record that a protester has suffered no prejudice as a result of an agency evaluation error.

SIG also challenges the agency’s evaluation under the technical factor, which included an evaluation "to determine the extent to which successful performance is contingent upon proven devices and techniques.

SIG complains that the agency unreasonably failed to assign a strength to SIG’s technical proposal as a result of its experience as the incumbent contractor. Specifically, SIG contends that it deserved a strength due to its “well-developed process and procedures for recruiting, qualifying, and retaining linguists,” that were developed through its incumbency. SIG further argues that the agency erred by failing to recognize that the firm is “uniquely positioned” as the incumbent to process linguists using an approach the firm developed under the incumbent contract, and that SIG’s “significant experience” as an incumbent indicated a better understanding of the recruitment and approval cycle. The protester also contends that the agency engaged in unequal treatment by assigning a strength to CWU’s proposal for its “robust pipeline” of qualified linguist candidates while ignoring the fact that SIG already has many of the needed linguists vetted and in place due to its incumbency.

SIG’s arguments are without merit. As noted, the evaluation was to include consideration of whether offerors had proposed “proven devices and techniques.” The record reflects that SIG has struggled to meet the requirements of the incumbent contract, thus belying the claim in its proposal that “our current pipeline . . . along with continued recruiting efforts, is sufficient to meet the . . . levels required.”  For example, SIG’s technical proposal acknowledged that, under SIG’s incumbent contract, there are currently unfilled category III linguist positions.   Given SIG’s acknowledged, significant shortfall in satisfying the linguist requirements under its incumbent contract, we find that the agency reasonably concluded that SIG’s proposed approach, based on its incumbent contract, did not exceed the solicitation’s requirements so as to warrant the assignment of a strength.

In contrast, the evaluators found that CWU’s proposal provided “very detailed information” demonstrating its ability to meet the solicitation’s requirement to provide the required number of linguists. For example, CWU’s proposal indicated that the firm already has linguists that have been security vetted and would be available to perform under the contract. The evaluators also noted that the awardee’s proposal indicated that CWU’s pipeline of linguists contains hundreds of linguists who previously held or currently hold security clearance. In addition, CWU’s proposal stated that the firm anticipated hiring some of the incumbent workforce. In these circumstances, we find that the agency reasonably concluded that, although CWU is not the incumbent, its proposal exceeded the solicitation’s requirements for filling the linguist positions required under this contract.

Next, SIG challenges the agency’s decision to assign equal strengths to both SIG and CWU in evaluating offerors’ transition risk. In this regard, SIG contends that its proposal was superior because only SIG, as the incumbent, could offer a "no-risk" transition. The protester contends that the agency’s assignment of a strength to CWU’s proposal for offering a low risk transition essentially and unreasonably treated SIG’s transition risk as equivalent to CWU’s transition risk.

Evaluation ratings and the number of strengths and weaknesses assessed are merely a guide to, and not a substitute for, intelligent decision making in the procurement process.   The relevant question is whether the record shows that the agency fully considered the actual qualitative differences in vendors’ proposals.

Here, the record provides no support for the protester’s challenge to the agency’s assessment of strengths for both offerors’ transition approaches. First, the evaluation report and selection decision show that the evaluators and the SSA were aware of, and acknowledged, the differences in the offerors’ proposals with regard to transition. Specifically, with regard to SIG, the evaluators acknowledged that as the incumbent, it would have minimal transition risk, which SIG described as a “no risk” solution. With regard to CWU, the agency concluded that CWU’s detailed proposals increased the likelihood of an early transition without any degradation of service, thereby exceeding the solicitation requirements such as to merit a strength. While SIG may disagree with the agency’s assessment that this proposed approach to transition merited a strength, the protester has failed to demonstrate that the agency’s evaluation in this regard was unreasonable or inconsistent with the record.

Sierra Leone's buses: A question of need

Sierra Leone’s whopping $12 million buses – has government violated procurement rules?

Freetown is one of the most congested cities in the world, with a population of over two million people and hundreds of thousands of vehicles, plying the narrow and poorly maintained roads. Every single day of the week, over 70% of the population spend hours angrily competing for access to the woefully inadequate and poorly maintained, yet expensive passenger transport service. And when they do manage to get on board, a five mile one-way journey would normally take hours, in sweltering heat or pouring rain, as drivers struggle to navigate their way through narrow roads and congested traffic.

Freetown’s inefficient public transport system has a lot do with the poor availability of suitable and reliable public transport. But the main problems for transport operators are; traffic congestion, narrow streets, and the sheer mass of pedestrians and traders encroaching on to traffic lanes.

It is estimated that traffic congestion is costing the country over two hundred million dollars a year in productivity loss, fuel costs, and loss of earnings for those commuters for whom time is money. The Koroma government says it has prioritised the country’s transportation problem. But so far, despite spending millions of dollars on importing dozens of buses, there has been little impact, if at all.

Most of the 40 buses brought into the country two years ago to help solve the transport problem, are hardly functioning today. Last year the government announced that it has signed a contract with a Chinese company for the supply of 100 new buses at a cost of $120,000 each. But there are far more serious questions to be asked, about how the government arrived at the decision to spend $12 million on just 100 buses, each costing $120,000, at such difficult time for the people of Sierra Leone.

Sierra Leone is one of the poorest nations in the world, and relying on donor funds to cover 60% of its current spending. Last year, when thousands of people were dying of Ebola, the government said it had no money to pay doctors, nurses and burial teams, nor did they have money to buy adequate protective wear to save the lives of medical staff. Yet it could find $12 million to hand over to the Chinese for 100 buses. Is this not misplaced priorities?

Why did the government fail to go out to public tender for these buses, so it could buy them cheaper elsewhere? What was the business case for spending $12 million on 100 buses at $120,000 each? On what basis was the manufacturer chosen as the preferred contractor, given the fact that there are several other manufacturers in China and elsewhere, who could have competitively bid for the contract to ensure value for tax payer’s money?

Investigation carried out by the Sierra Leone Telegraph shows that most bus manufacturers in the Far-East, can supply a sixty seater bus (freight on board) at a cost of between $30,000 and $40,000.

The Bigger Question: What really is the problem, and what is needed to address the real problem?

Why is the government paying $120,000 for each of the 100 buses, when the congested roads can hardly cope with the existing volume of traffic? How can $12 million be spent on 100 buses to ease the problem of traffic congestion in Freetown, given the fact that the problem of congestion is caused by too many vehicles using the extremely narrow streets in the capital? How can the government justify spending $12 million on 100 buses, when there are far too many pedestrians and market traders encroaching on traffic lanes causing traffic congestion?

How can $12 million be spent on 100 buses that can only add to the traffic congestion, given the sheer mega size of each of those buses? How does the government justify spending $12 million on 100 buses, with the problem of poor parking on most major roads and streets in the capital, exacerbating the problem of traffic congestion? Why has the government not focussed its energy on measures aimed at easing traffic congestion, including ensuring that major roads and streets are not used as rubbish dumps?

But more importantly, why has the government failed to encourage the private sector to invest heavily in the transportation sector, with government using its finance as leverage? Government has no business running a transport business.

This $12 million Chinese contract not only violates the country’s public procurement regulations, but is a bad spending decision that will fail to yield best value for tax payers money.

China Technical Team to arrive ahead of 100 buses

With 100 buses purchased in China by the Government of Sierra Leone slated to arrive the shores of Sierra Leone July 8, a six man technical team will be leaving China on the 4th July for Freetown to receive and handover the said buses to Government through the Sierra Leone Roads Transport Cooperation, and also undertake a training program for staff of SLRTC. In March 2015, a Pre-Delivery Shipment Inspection was conducted by officials from the SLTRC and Sierra Leone Roads and Safety Authority on the (100) one hundred Buses, manufactured by Zhongtong Buses, in Shandong Province.

Chargé d’ Affairés, Sierra Leone Embassy, Madam Kumba Alice Momoh expressed optimism that with the arrival of the buses in Sierra Leone, the challenges in the country’s public transport sector could be addressed. General Manager, SLRTC, Bockarie Lewis Kamara, at the time, said, “the Manufacturers went by the technical specification which takes into account value for money and upholding safety proposals like seating capacity and number of doors in each Bus”. Engineer Lamin A. Koroma, Consultant from the Sierra Leone Roads and Safety Authority, disclosed at the time of inspection, that “…the work done by the Manufacturers was impressive and the manufacturing requirements as per contract signed were met.”

This is a great article for pointing out that procurement should begin with carefully assessing a need, not with a desire to spend (or bend to a vendor's desire to sell).

UPDATE: Sierra Leone bus procurement investigated by anti-corruption agency

Concerns had been raised about the procurement whereby funding for the purchase was financed by China in a deal that meant the contract must go one of its state-owned companies.

Compliance integrity: the too hard basket

Trade Agreement prevents policing of government contractors?

U.S. Sided With Tax-Avoiding Companies Over Contracting Ban

The Obama administration quietly handed a victory to U.S. companies that avoid taxes by claiming a foreign address, suggesting that virtually all of them are still eligible for government contracts. A March 2013 memo was submitted to Homeland Security by one of the country’s largest inverted companies, the manufacturer Ingersoll-Rand Plc. The company argued in part that U.S. trade agreements with foreign governments invalidated the law that would prohibit it from winning federal contracts.

It’s unclear whether Homeland Security endorses all three of Ingersoll-Rand’s arguments or just one or two of them. In addition to arguing the entire law is invalid, the memo puts forth two other arguments that would cripple the contracting prohibition. Ingersoll-Rand argued that companies like itself that inverted to one foreign country and then switched to a third shouldn’t be considered inverted anymore. Under the law, it said, companies have to start out as U.S. firms to be inverted, and during its 2009 address change Ingersoll-Rand wasn’t American anymore.

That logic would also apply to many other inverted companies that fled Bermuda and the Cayman Islands to Switzerland or Ireland, such as oil-services providers Weatherford International Plc and Transocean Ltd. It would also mean that inverted companies could qualify for contracts simply by switching their legal address a second time.

Ingersoll-Rand also argued that firms that have business operations in their new corporate homes -- even modest ones -- should be allowed to bid on contracts under an exception in the law for companies with “substantial business” in their new domicile.

Ingersoll-Rand’s decision to switch its tax address from New Jersey to Bermuda in 2001, after more than a century as an American industrial icon, helped cut hundreds of millions of dollars from its tax bills and spur Congress to pass the 2002 contracting ban.

The company later changed addresses again, to tax-friendly Ireland in 2009, after increased U.S. scrutiny of tax havens. The top executives never left the U.S., and Chief Executive Michael Lamach now runs the company from a suburb of Charlotte, North Carolina. The company makes Club Car golf carts, Trane air conditioners, and Thermo King refrigerated trucks.

The Department of Homeland Security last year endorsed a legal memorandum that argued in part that a 2002 law banning such companies from federal contracts was invalid, according to a copy of the memo obtained by Bloomberg News. Although President Barack Obama later began publicly criticizing the tax maneuvers known as inversions, there’s no sign that he has reversed the department’s decision.

In a written response last year, a Homeland Security lawyer cleared Ingersoll-Rand for government work without explaining his reasoning, saying only that “we do not have reason to disagree” with the company’s argument. While it was known that Ingersoll-Rand received a green light, it hadn’t been reported that the government accepted a line of reasoning that called the whole law into question.

The correspondence came during a record wave of corporate address changes, including moves by Burger King and medical device-maker Medtronic Plc. Almost 50 companies have now inverted, most of them in the past five years, and a Congressional panel estimated last year that future inversions would cost the Treasury $19.5 billion in forgone revenue over the following decade. That’s good news for corporate expatriates like Medtronic, Eaton Corp. and Tyco International Plc.

Ottawa relaxes integrity rules for firms doing business with government

Procurement rules, introduced in March of 2014, made Canada far stricter than the U.S. and Europe, where convicted companies can win reinstatement and reduce their disbarment for coming clean and taking action to fix the problems. It also created the possibility that several major contractors – including Hewlett-Packard Co., Siemens AG and Montreal’s SNC Lavalin Group Inc. – would find themselves on Ottawa’s black list. That prompted SNC CEO Robert Card – who has been cleaning up the scandal-plagued engineering company he joined in 2012– to threaten that his company could “cease to exist” if Ottawa’s “meat cleaver” approach stood.

Canada’s business lobby lined up to pressure Ottawa to ease up and adopt the carrot-over-stick approach used elsewhere. Last February, the chiefs of Canadian Manufacturers & Exporters, the Canadian Council of Chief Executives and the Information Technology Association of Canada jointly wrote Ms. Finley that the integrity rules were “significantly out of step with Canada’s trading partners” and “negatively affecting investment in Canada now.”

Now, the Canadian federal government has softened the tough new anti-corruption rules. The changes ease what were considered draconian standards for suppliers who sell products and services to government, ranging from BlackBerrys to bridges. Under the new procurement rules, a supplier can still be barred from winning Public Works and Government Services Canada contracts for 10 years if it or any board members have been convicted or discharged in the past three years of a range of offences here or abroad. Those include bribery, money laundering or extortion. However, the decade-long ban can now be cut in half if the supplier co-operates with authorities and takes remedial action. With the previous regulations, no reprieve existed unless there were no other suppliers to do work deemed in the public interest.

“Under this new regime, companies who are criminally convicted or face ethical violations will bear the cost of proving to the government that they are a reliable business, not taxpayers,” Public Works Minister Diane Finley said in a statement.

The move comes after intense lobbying from industry, which warned of spreading economic damage because of the regulations introduced just 16 months ago. The changes could open the Conservatives to pre-election criticism that it has caved to corporate interests. “The government can rightly say it has improved some of the more blatant deficiencies of the previous system,” said Paul Lalonde, a Toronto lawyer who chairs the legal committee of Transparency International Canada, an anti-corruption group. “Will some critics say that it has watered it down in some ways? Likely yes.”

Procurement controversies series -- Puerto Rico school buses

School bus company owners indicted for bid-rigging and fraud in Puerto Rico by attorneys Jennifer A. Dixon and Deirdre A. McEvoy

A federal grand jury in San Juan, Puerto Rico indicted five individuals for bid rigging and fraud conspiracies in connection with an auction for public school bus transportation contracts. The Justice Department filed a seven-count felony indictment in U.S. District Court of the District of Puerto Rico against the five school bus transportation company owners. The first count alleges that the bus owners conspired to rig bids and allocate the market for public school bus transportation services in Caguas municipality, a violation of Sherman Act § 1. Each defendant faces a maximum sentence of ten years in prison and a $1 million fine on this charge.

According to the Justice Department, the conspiracy occurred from around August 2013 until May 2015, and related to a 2013 auction to award four-year contracts for public school bus transportation. According to a statement by Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division, “The defendants are charged with depriving taxpayers, the Municipality of Caguas and the Puerto Rico Department of Education of the benefits of a competitive bidding process for school bus contracts.”

This indictment is part of an “ongoing effort to investigate and prosecute financial crimes” in the District of Puerto Rico. In particular, this is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in Puerto Rico’s school bus transportation services industry.

Plus ça change ...:

According to the Spanish historian Carlos Madrid, in his book Beyond Distances (Saipan, Northern Mariana Islands Council for Humanities, 2006), there was an uncommon distress in the Marianas Islands in 1876, brought about by a combination of factors, chiefly Spain’s forcible introduction into the Islands of hundreds of political and other criminal deportees from Spain, but also typhoon and drought. The situation on Saipan had become particularly dire. 

As he tells the story

“Chamorros and Carolinians together with the deportees were facing a famine without precedent that could bring the island to catastrophe. Martín [the Saipan Spanish authority] wrote Governor Brabo [the Guam-based Governor of the Marianas] with an urgent request for provisions, since in a few days they would literally have nothing to eat. In Guam this request would have been received with great concern as resources in Agaña were also extremely limited. But the situation in Saipan was nevertheless so pressing that Governor Brabo authorized, on his account, the purchase of all the necessary rice, which was to be sent in the launch San José as soon as possible.

The obligatory legal procedures, which mandated that government requisitions had to be contracted through free and open auction, still had to be fulfilled. The gobernadorcillo of Agaña, following the custom, ordered the prominent display of the notice announcing the public auction in the busiest areas of the capital. At the same time the pregonero, or town crier, spread the news in the streets for three consecutive days. In order to save time, knowing that in the whole of the Marianas only George Johnston could provide the necessary quantities of meat from his leasehold in Tinian, the request for the purchases of barrels of cured pork was directly made to his representative Vicente Calvo. The barrels were to be sent to Saipan in the amount of a pound daily per deportee.

The conditions of the auction of palay or unthreshed rice were basically to be able to provide dry rice, free of dust and preferably from the last harvest. The minium quantity for each bid being ten cavanes, it had to be delivered to the Tribunal in Agaña within forty-eight hours. In return, it was guaranteed that the payment would take place on the day after delivery, which was an incentive to all who knew that the colonial administration was a late and often bad customer.

The auction was held in the government offices on the ground floor of the Palace, at ten o’clock in the morning of Monday, July 26, 1876. To speed up the process, bids were submitted not in writing but vocally. All the bidders must have agreed on a price among themselves before the auction, as everyone offered the same bid of two pesos per cavan. “The mention of these individuals is very significant since they undoubtedly represented a social class of means.

What was the social background of these people? How the principalía of the villages and the capital had the right to use the title “Don” was earlier discussed, but in actual fact many individuals not belong[ing] to the principalía were also referred to as “Don” or “Doña” probably because [of] their social or economic ascendancy."

How Draconian are those procurement time limits, really?

This is a question the answer to which has evolved dramatically in the last 25 years. 

The question is whether the time limit in question is determined to be “jurisdictional”. If it is, then the time limit cannot be waived or extended for any reason, and any decision made in violation of the time limit is void, an issue that can be raised at any time. The result of a decision that a time limit is jurisdictional, thus mandatory, can be drastic, as the US Supreme Court is acutely aware. “Jurisdictional rules may also result in the waste of judicial resources and may unfairly prejudice litigants.” (Henderson ex rel. Henderson v. Shinseki, 131 S. Ct. 1197 (2011).)

If a time limit is not jurisdictional, then rules of equity can apply to defer or extend or excuse missing a time limit. These rules of equity are not, however, an open barn door to endless litigation (as sometimes breathlessly claimed, notwithstanding the actual experience in the courts for the last 25 years). “Federal courts have typically extended equitable relief only sparingly.” (Irwin v. Department of Veterans Affairs, 498 US 89 (1990).) Garden variety negligence or failure to diligently pursue your own cause will not get you equity.

The two most common forms of equity seen in procedural time limit cases are equitable tolling and equitable estoppel. "While equitable tolling extends to circumstances outside both parties' control, the related doctrines of equitable estoppel and fraudulent concealment may bar a defendant from enforcing a statute of limitation when its own deception prevented a reasonably diligent plaintiff from bringing a timely claim." (Justice Sotomayor concurring, Sebelius v. Auburn Regional Medical Center, 133 S. Ct. 817 (2013).)

The Irwin decision, above, after recognizing inconsistency in its and other prior cases, and the tendency to decide the matter on an ad hoc basis, announced a “general rule”:

"Time requirements in lawsuits between private litigants are customarily subject to "equitable tolling". Once Congress has made [] a waiver [of sovereign immunity from suit], we think that making the rule of equitable tolling applicable to suits against the Government, in the same way that it is applicable to private suits, amounts to little, if any, broadening of the congressional waiver. We therefore hold that the same rebuttable presumption of equitable tolling applicable to suits against private defendants should also apply to suits against the United States."

The decision also alluded to acceptance of the extenuating notions of equitable estoppel or fraudulent concealment, as described by Justice Sotomayor, above, saying it is available “where the complainant has been induced or tricked by his adversary's misconduct into allowing the filing deadline to pass”.

In Henderson, above, the US Supreme Court analyzed the situation.

For purposes of efficiency and fairness, our legal system is replete with rules requiring that certain matters be raised at particular times. We have urged that a rule should not be referred to as jurisdictional unless it governs a court's adjudicatory capacity, that is, its subject-matter or personal jurisdiction. Other rules, even if important and mandatory, we have said, should not be given the jurisdictional brand.

Among the types of rules that should not be described as jurisdictional are what we have called "claim-processing rules." These are rules that seek to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specified times. Filing deadlines are quintessential claim-processing rules.

At the federal level, the rules applicable to procurement appeals to the General Accountability Office (GAO) recognize tolling and estoppel by regulation: 4 CFR 21.2(c): “[GAO], for good cause shown, or where it determines that a protest raises issues significant to the procurement system, may consider an untimely protest.”

In aiding the analysis of a statutory regulation, such as a time limit, to determine if it is jurisdictional or a claim-processing rule, the US Supreme Court has provided a formula:

To ward off profligate use of the term ‘jurisdiction,’ we have adopted a ‘readily administrable bright line’ for determining whether to classify a statutory limitation as jurisdictional. We inquire whether Congress has ‘clearly state[d]’ that the rule is jurisdictional; absent such a clear statement, we have cautioned, ‘courts should treat the restriction as nonjurisdictional in character.’ This is not to say that Congress must incant magic words in order to speak clearly. We consider ‘context, including this Court's interpretations of similar provisions in many years past,’ as probative of whether Congress intended a particular provision to rank as jurisdictional. (Sebelius, above.)

The US Supreme Court’s inquiry “whether Congress has clearly stated the rule is jurisdictional” has probably reached its most extreme result in the recent case, United States v. Wong __ US __ (2015). The language of the Federal Tort Claim Act provides that claim against the United States "shall be forever barred" unless the claimant meets two deadlines. First, a claim must be presented to the appropriate federal agency for administrative review "within two years after (the] claim accrues." Second, if the agency denies the claim, the claimant may file suit in federal court "within six months" of the agency's denial.

The majority in Wong held, against a strident dissent, that "shall be forever barred" was not a clear expression of Congress that the time limit is intended to be jurisdictional; thus, it “conclude[d] that courts may toll both of the FTCA's limitations periods”. The Court held

“Given those harsh consequences [flowing from a finding the time limit is jurisdictional], the Government must clear a high bar to establish that a statute of limitations is jurisdictional . ... [T]raditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences. ... And in applying that clear statement rule, we have made plain that most time bars are nonjurisdictional. ... Congress must do something special, beyond setting an exception-free deadline, to tag a statute of limitations as jurisdictional and so prohibit a court from tolling it.”

The majority found that "forever barred'' was typical of the statutory language used in the time in which the FTCA was written, and was not universally applied to "forever bar" a time limit even as thus described. [The “forever barred” language] “is mundane statute-of-limitations language, saying only what every time bar, by definition, must: that after a certain time a claim is barred.” 

Thus, a time bar does not imply jurisdiction; it simply prescribes "rules requiring that certain matters be raised at particular times".  In elaboration, the Court noted,

"The language is mandatory—"shall" be barred—but (as just noted) that is true of most such statutes, and we have consistently found it of no consequence. Too, the language might be viewed as emphatic—"forever" barred—but (again) we have often held that not to matter. What matters instead is that §2401(b) "does not speak in jurisdictional terms or refer in any way to the jurisdiction of the district courts."

"This Court has often explained that Congress's separation of a filing deadline from a jurisdictional grant indicates that the time bar is not jurisdictional. So too here. Whereas §2401(b) houses the FTCA's time limitations, a different section of Title 28 confers power on federal district courts to hear FTCA claims. Nothing conditions the jurisdictional grant on the limitations periods, or otherwise links those separate provisions. Treating §2401(b)'s time bars as jurisdictional would thus disregard the structural divide built into the statute."

There are die-hards who refuse to accept the long (if a "mere" two and a half decades is long) held acknowledgement that our legal system is replete with non-jurisdictional claim-processing rules requiring that certain matters be raised at particular times, and that mindless application of such rules often causes waste of judicial resources and prejudice to innocent parties, without advancing the purpose of allowing those claims to be brought in the first place (which is what imbuing jurisdiction over claims by waiver of sovereignty is intended to do). They are not in step with the current law of the land as it has developed in the US Supreme Court.

On Guam, there is a similar last stand. See, e.g., the 2009 Decision of the Public Auditor in The Appeal of Guam Pacific Enterprises, Inc. (OPA-PA_09-003):

"The Public Auditor is required by the applicable law to strictly adhere to statutory time limits and has no discretion to consider personal circumstances or equity. Time provisions for filing an appeal are considered jurisdictional and cannot be waived. The U.S. Supreme Court held in United States v. Holpuch, 328 US 234 (1946), that a contractor's claim was "outlawed" by reason of the contractor's failure to appeal within the prescribed time."

More recently, in March of this year, the Governor of Guam, on advice of his legal counselors, vetoed a procurement reform bill (Bill 20-33) principally because of language in the bill that codified the case law noted here that the time limits are not jurisdictional. More pertinent, Guam law has kept pace with the US Supreme Court law.

In 2001 the Guam Supreme Court specifically adopted equitable tolling, in GHURA v. Dongbu, 2001 Guam 24. This case involved an insurance claim by a government agency against its carrier. The Court clearly explained the equitable rational for the doctrine, with examples clearly analogous to the protest claims process. 

In 2004, the Court applied equitable estoppel to a filing deadline, noting that the doctrine of equitable estoppel is codified in Guam law (Mobile v. Lee, 2004 Guam 24). 

In 2007, the Court applied the equities of tolling and estoppel to an administrative civil service claim made against the government (Limtiaco v. Guam Fire Department, 2007 Guam 10). 

Meanwhile, in the Guam Superior Court, two cases recognized that estoppel was applicable in procurement cases, one applying the doctrine to extend a time requirement, the other finding the facts did not justify it. (Pacific Security Alarm v. DPW, CV 0591-05, D&O, July 11, 2006 (applying tolling); and, TRC Environmental v. OPA, SP 160-07, D&O, Nov. 21, 2008 (not applying but specifically acknowledging "Limitations periods can be tolled on an equitable basis....")

It is simply quite amazing that this last decision in 2008, TRC Environmental v. OPA, was ignored by OPA in the Public Auditor's 2009 decision in the Guam Pacific Enterprises, above, adhering blindly to the hard line that "The Public Auditor is required by the applicable law to strictly adhere to statutory time limits and has no discretion to consider personal circumstances or equity."

Ai adai.

UPDATE SEPTEMBER 30, 2015

Note the following dealing with a procurement case in Ireland applying an equitable estoppel concept to extend, in legal theory anyway (based on procedural posture of the case). 

Also note that opponents of accepting equitable defenses to procurement timelines (and other administrative procedures) typically cannot help but exclaim Pandora's Box will be opened, releasing all the evils of the world. Pandora, like Eve in Abrahamic tradition, was supposedly the first woman in the world.  

Thus, Mommy's understanding hand should be kept far away and locked up from Daddy's firm fist.  According to that view.  For those of us who embrace the adoption of fair and equitable principles in the enforcement of time limits, it is worth remembering that the last little thing out of Pandora's Box was Hope.

The article was written by Peter Curran of Eversheds LLP, published on the Lexology website.

Bringing procurement challenges out of time: Pandora’s Box opened?

On 15 June 2015, the Irish High Court provided another potentially significant procurement decision in the case of Forum Connemara Ltd.-v- Galway County Local Community Development Committee.

The Court heard a preliminary application to strike out the legal proceedings on the grounds that they were commenced under an incorrect provision of the Rules of the Superior Courts and after a delay of several months. The Court’s approach to the issue of delay is particularly noteworthy.

Galway County Local Community Development Committee (the ‘Committee’), a statutory body, made a decision on 30 September 2014 to treat all of County Galway as a single lot for the purposes of a tender for a contract to distribute more than €1m of Government funds. From that date, Forum Connemara objected to both the decision itself and the manner in which it was made by a sub-group of the Committee. It argued that it made little sense for funds to be centrally distributed in Galway and that local distribution mechanisms were necessary in the west of the County, but its objections to the Committee were in vain.

Forum Connemara subsequently tendered for the contract to distribute the funds following the issue of an invitation to tender on 20 October 2014. It was notified that it was unsuccessful in March 2015, which prompted it to commence legal action in the High Court challenging the decision of 30 September 2014 to award the contract by way of a single lot.

The Committee sought to strike out the action on the ground that the statutory limitation period for challenging procurement decisions (generally 30 days) had long expired. Under Irish procurement law, procurement challenges must generally be brought within 30 days of the challenger being notified of a decision or within 30 days of the date the challenger knew or ought to have known of the infringement, although the Court has a discretion to extend this limitation period where it considers that there is ‘good reason’ to do so.

The Court accepted that this was a case in which the claim was brought well out of time. However, it considered that there were good reasons to allow the litigation to proceed.

The Court clearly had sympathy for Forum Connemara’s predicament and did not criticise it for failing to bring proceedings within 30 days of the decision on 30 September 2014. It took into account that Forum Connemara was a communitybased organisation, which had a ‘genuine fear’ of incurring significant legal costs in the High Court.

In taking a such an approach, the Court was aware that it could be accused of opening “a Pandora’s Box in which all manner of miseries will now be visited on contracting authorities in the form of challenges to their decisions”. However, it sought to distinguish the case on its facts, judging that it was unique and presenting characteristics which were unlikely to be present together in many (if any) other procurement cases. The Court pointed to the following in particular:

>There were governance issues arising in relation to the making of the decision on 30 September which the Court considered were unlikely to present in other procurement cases.
>It was alleged that Forum Connemara received assurances from central Government that the funds would be distributed on a different basis from that decided upon on 30 September, which gave rise to arguments as to legitimate expectation.
>The Court found that the case gave rise to ‘genuine public and political’ concern in Galway, to an extent which was not common in procurement cases.
>The contract concerned the disbursement of limited funds to vulnerable persons and the need for the affected public to ‘buy into’ the grant or refusal of funds was an important consideration.

All of these factors, when present together, persuaded the Court that there was good reason to allow Forum Connemara’s challenge to the decision of 30 September to proceed despite that challenge being initiated months later and only after Forum Connemara had been unsuccessful in the competition.

There is undoubtedly a balancing exercise to be conducted between the ‘need for speed’ in procurement cases and the need to protect fair procedures. In this particular case, the latter appears to have taken precedence.

The Court was at pains to explain that the circumstances of this case were ‘entirely unique’, however it does seem inevitable that the decision will be relied upon in the future by unsuccessful bidders who do not commence their procurement litigation within the standard 30 day limitation period. This will result in significant uncertainty for awarding authorities who may have previously considered they were relatively safe once the 30 day period expired.

This is an important decision in the Irish procurement context. It seems that, despite the endeavours of the Court to distinguish it on its own facts, this case is bound to lead to considerable uncertainty among awarding authorities as to when potential claims can be safely judged ‘out of time’. Pandora’s Box may well have been opened and it will be interesting to observe the extent to which disappointed bidders seek to exploit the uncertainty going forward.

Special needs and higher education

I'm not quite sure what it is about public universities and their yearning freedom from a scrutable contracting regime that is good enough for the rest of tax-supported government enterprise. The prior post was about plans to exempt Illinois colleges from common procurement practices of the state. Today I read of another such move afoot in Wisconsin:

UW funding cut trimmed

Lawmakers on the powerful budget committee trimmed Gov. Scott Walker’s proposed $300 million two-year funding cut to the University of Wisconsin System and introduced significant changes to faculty tenure and shared governance that will take away some power from faculty, students and staff and give more power to campus chancellors and the UW System Board of Regents, who are appointed by Walker. The proposed changes by the Joint Finance Committee also officially put an end to Walker’s proposal, supported by top System officials, to spin the system off from state control to be operated as a public authority.

The lawmakers restored at least in part two key operating flexibilities that were included in Walker’s public authority model. They’d be exempt from state oversight on purchasing and procurement once the regents develop their own rules governing them. They’d also be exempt from state rules on building projects provided the projects are funded entirely through gifts or grants.

The first proposal reminds me of a prior post about the University of Hawaii, and the second one of a post about the University of South Carolina.

The situation in Hawaii is particularly worth recalling.

UH’s procurement privilege could release $337M, May 23, 2010

The University of Hawaii system will be exempt from following the state’s public procurement code, which it has largely blamed for its backlog of deferred maintenance and capital improvement projects, under a new law that takes effect July 1.

University officials say the exemption, effective for two years, will help the 10-campus system operate more efficiently and with greater flexibility in awarding contracts for goods and services, including construction work. The university system has pointed to the existing code, which requires larger contracts to be awarded through a competitive sealed bidding process, for tying up projects and increasing costs as a result.

“This will allow the university to get construction projects started more efficiently and at a faster pace — and it has the added benefit of saving taxpayers’ money by allowing us to take advantage of current construction costs, which are coming in 30 [percent] to 40 percent lower in some cases.”

House Bill 347, which Gov. Linda Lingle signed into law May 6 as Act 82, allows the statewide public university system to come up with its own procurement process “in lieu of” the state procurement code. This was the sixth consecutive year that UH asked lawmakers for the exemption. It previously had flexibility from 1998 through 2004.

And how did that work out for them?

UH to lose procurement exemption as bill flops Apr 27, 2012

University of Hawaii Procurement Under Fire for Wasting Millions of Dollars on Fraud and Corruption March 12th, 2013

Local construction industry leaders are questioning as the University doles out a total of $622 million in contracts including $206 million for major contracts now underway, $229 million of major projects being procured and $187 million in health, safety, code and repairs and maintenance projects.

Dennis Mitsunaga, a successful and politically connected government contractor who has worked for virtually every state agency over the last 40 years, sent shock waves through his industry when he testified at a recent Senate hearing about waste, fraud and abuse that he witnessed firsthand in the University’s procurement system. Mitsunaga, a practicing structural engineer since 1969 and a general contractor since 1971, has worked on several projects including the University of Hawaii Chemistry building, the University of Hawaii Cancer Research Center, the Rainbow Baseball Stadium, and the University of Hawaii- Hilo Housing Project, Phase 1.

He focused much of his criticism on Brian Minaai, a University administrator who has overseen the capital improvement projects for all of the campuses since March 2008. “Brian’s process for selection of non-bid contracts is highly suspect. His selection committee consists of two ‘yes men’ assistants and a third member from the department involved in the project. In essence he controls two out of the three votes he himself makes each selection. He selects only friends from a pool of hundreds of qualified architects and engineers in Honolulu. An investigation will show that the consultants he selected were very small and not the best qualified for the projects he gave them,” Mitsunaga added.

Mitsunaga, who has two companies, Mitsunaga and Associates and Mitsunaga Construction, said Minaai directed him to replace his own civil engineering company on the job with Minaai’s pick, Wesley Segawa, even though Mitsunaga and Associates had applied for and was selected for the project as the civil engineer of record. Segawa charged the University another $293,260 for the civil engineering work and Mitsunaga and Associates had to add a 10 percent coordination fee of $29,326 plus General Excise tax; boosting the cost of the project by $30,000.

Minaai also directed Mitsunaga and Associates to replace Kimura International as the environmental assessment consultant with Wilson Okamoto and directed Mitsunaga and Associates to use Palekana Permitting and Planning to do the permit and processing at a cost of $23,000. “That work is usually covered by the companies involved so the $23,000 was an additional cost, plus a 10 percent coordination fee and GE Tax,” Mitsunaga said.

On another job for the University of Hawaii Cancer Research Center in Kakaako, Palekana Permitting and Planning charged $120,000 to process the permits even though the Kakaako district is currently exempt from such permitting.

Other architects and engineers have privately confirmed Mitsunaga’s claims. One claimed on average on University construction jobs, a construction management firm will charge 10 to 28 percent of the construction contract instead of 5 to 6 percent other state agencies would allow for the same service. Similar allegations were made public when the University of Hawaii agreed to pay $2.5 million to settle a lawsuit that alleged cronyism played a role in the award of a key development contract at the $120 million Cancer Research Center of Hawaii.

The University of Hawaii received a great deal of autonomy in 1999 from Legislature, including management of its own legal affairs, tuition and salaries and contracting.

But some senators said their own investigations have shown the University administration is failing in all of these areas. In addition, students have complained about tuition skyrocketing at the school, making it unaffordable for many local residents, because tuition has been increasing by 141 percent over the last 11 years.

Senate President Donna Mercado Kim proposed several bills this session that would take some of the power away from the University administration and its president, MRC Greenwood, including procurement responsibilities, and help bring what some legislators believe is excessive spending under control. However, during two recent Senate hearings, University officials opposed the plan to transfer procurement responsibilities to the state, and maintained autonomy is necessary.

The procurement bill passed the Senate Higher Education Committee this session, but was killed by Senators,

Procurement too difficult, to a degree

Bill would change procurement rules for public universties, including NIU

House Bill 4215, the Illinois College Procurement Reform Act, would allow public university boards of higher education to develop their own procurement rules. As it is, universities are required to follow regulatory processes outlined in the Illinois Procurement Code. State Rep. Mark Batinick has filed the house bill.

The procurement process is complicated and often requires universities to jump through administrative hoops, Batinick said. Some of the regulations include a strict approval process and competitive bidding requirements, Batinick said.

Paul Palian, NIU director of media and public relations said university officials would like to see the process streamlined to conserve time and resources and allow the school to attract the best options for business partners.

You Paid For It: Univ. purchase rules cost millions

A law to prevent corruption has had some unexpected consequences, and it could be costing taxpayers millions. State Senator Chapin Rose (R-Champaign) said it’s gotten so bad, universities take advantage of opportunities to buy out of state.

The university’s deputy comptroller Mike Bass said the university could run a cheaper, more efficient purchasing system on its own. He said it would still comply with all of the states transparency and ethics requirements. [But not competition, compliance and accountability ones?] "We should operate in the most nimble fashion that we can to get the job done for our constituents,” Bass said.

He said colleges often take higher bidders because of lower ones forget or have trouble filling out the dozens of forms required or because the system delays the actual purchase and prices go up. [Have you ever tried to apply to get in a college, or register, or change a class? Or teach, get tenure, get permission to obtain a grant in one? Educational institutions are amongst the most bureaucratic, yet authoritarian, institutions in the country, yet they can't run a simple procurement regime like the rest of government?]

Bass said colleges often take higher bidders because of lower ones forget or have trouble filling out the dozens of forms required or because the system delays the actual purchase and prices go up. "The whole procurement process can extend and when you do that, not only could the price point change but you could lose other competition,” Bass said.

Chief Procurement Officer for Higher Education Ben Bagby said there has been nothing to back up university claims of million dollar losses. He said the state is attempting to give exemptions for time sensitive grants. He said he isn’t convinced the university proposal will actually save money.

“We should be doing things right,” Bagby said. “The universities have not shown that moving to a separate procurement office will save money.”

"Those folks should be allowed to control their own destinies. Who cares that somebody in Springfield has to sign off a piece of paper to buy a pencil. Buy the pencil,” Sen. Rose said.

I feel pretty sure it's not about the pencil.