US States mostly flunk transparency and integrity audit: no political will, not a voter issue

Secrecy, corruption and conflicts of interest pervade state governments

The comprehensive probe reported in the 2015 State Integrity Investigation, a data-driven assessment of state government by the Center for Public Integrity and Global Integrity, found that in state after state, open records laws are laced with exemptions, and part-time legislators and agency officials engage in glaring conflicts of interests and cozy relationships with lobbyists while feckless, understaffed watchdogs struggle to enforce laws as porous as honeycombs.

When first conducted in 2011-2012, the State Integrity Investigation was an unprecedented look at the systems that state governments use to prevent corruption and expose it when it does occur. The 2015 grades are based on 245 questions that ask about key indicators of transparency and accountability, looking not only at what the laws say, but also how well they’re enforced or implemented. The “indicators” are divided into 13 categories: public access to information, political financing, electoral oversight, executive accountability, legislative accountability, judicial accountability, state budget processes, state civil service management, procurement, internal auditing, lobbying disclosure, state pension fund management and ethics enforcement agencies.

The results are “disappointing but not surprising,” said Paula A. Franzese, an expert in state and local government ethics at Seton Hall University School of Law and former chairwoman of the New Jersey State Ethics Commission. “It’s not the sort of issue that commands voters,” she said.

Aside from a few exceptions, there has been little progress on these issues since the State Integrity Investigation was first carried out in 2012. In fact, most scores have dropped since then, though some of that is attributable to changes made to improve and update the project and its methodology.

Since State Integrity’s first go-round, at least 12 states have seen their legislative leaders or top Cabinet-level officials charged, convicted or resign as a result of ethics or corruption-related scandal. Five House or Assembly leaders have fallen. No state has outdone New York, where 14 lawmakers have left office since the beginning of 2012 because of ethical or criminal issues, according to a count by Citizens Union, an advocacy group. That does not include the former leaders of both the Assembly and the Senate, who were charged in unrelated corruption schemes this year but remain in office while they await trial.

Though every state in the nation has open records and meetings laws, they’re typically shot through with holes and exemptions and usually have essentially no enforcement mechanisms, beyond the court system, when agencies refuse to comply. In most states, at least one entire branch of government or agency claims exemptions from the laws. Many agencies routinely fail to explain why they they’ve denied requests. Public officials charge excessive fees to discourage requestors. In the vast majority of states, citizens are unable to quickly and affordably resolve appeals when their records are denied. Only one state — Missouri — received a perfect score on a question asking whether citizens actually receive responses to their requests swiftly and at reasonable cost.

“We’re seeing increased secrecy throughout the country at the state and federal level,” said David Cuillier, director of the University of Arizona’s School of Journalism and an expert on open records laws. He said substantial research shows that the nation’s open records laws have been poked and prodded to include a sprawling list of exemptions and impediments and that public officials increasingly use those statutes to deny access to records. “It’s getting worse every year,” he said.

Florida bombs public integrity test

How Missouri got a D-minus in national ethics report

Kentucky gets D+ grade in 2015 State Integrity Investigation: yawning gaps in oversight remain

Texas Gets a D- in 2015 State Integrity Investigation

Maryland receives ‘F’ grade in public access to information

Hawaii gets D+ grade in 2015 State Integrity Investigation: Lobbyists thrive in land of sunshine

How does your state rank for integrity?

The investigation shows that states have their work cut out for them:

>>  Most states are still grappling with the provision of meaningful and responsive implementation mechanisms to provide citizens and journalists with access to public information. Some — if not most of these barriers — seem to be rooted in the lack of political will, rather than genuinely technical hurdles.
>>  ‘Open data’ is not yet a reality across state governments. While many governments do not make available any open data in particular sectors, electoral data and campaign finance data make a noticeable exception with a few state governments making data sets available in open formats.
>>  Many states fail to ensure their accountability institutions are truly independent. In other cases states reverse hard won gains. Instead, institutions such as independent ethics entities, audit institutions or access-to-information monitoring agencies regularly lack resources and/or their mandates are curtailed.

Unfortunately, the report does not look at US Territories, such as Guam. It would be interesting to see how the whole USA stacks up.

FOLLOW UP:

There is and will be more to this story, as it travels around the states, such as:

Michigan ranks last in laws on ethics, transparency

Michigan, which already had a distinction as one of only two states where both the governor and the Legislature are exempted from state open records laws, has moved backward since 2012.... Of the 245 "corruption risk indicators" in 13 categories examined in the study, Michigan ranked last for laws and systems related to executive accountability, legislative accountability, judicial accountability and management of pension funds. Michigan also received grades of F, but did not get ranked last in the nation, in categories related to public access to information, political finance, civil service oversight, procurement, lobbying oversight and ethics oversight.

EDITORIAL: Massachusetts public records reform can't wait

Trouble at the Statehouse: secrecy, questionable ethics and conflicts of interest

Ohio graded D+ in report on integrity — but that was 6th best among 50 states

“While Ohio has many appropriate ethics rules and a strong Sunshine Law, there are simply too many loopholes,” Catherine Turcer, a veteran government watchdog with Common Cause-Ohio, said in the report.

New report a blow to ethics reform in Georgia

The Georgia Legislature has done very little to improve our ethics laws in the past three years, enforcement of open meetings and records laws is non-existent, and we have experienced unprecedented scandals with our state ethics commission that included interference with ethics investigations by the Office of the Governor.

Meaningful ethics reform has not happened in our state in decades, and this 2015 State Integrity Investigation will be the death knell to ethics reform for many more years to come.

The Canadianization of military procurement

Iain Hunter: Defence procurement is not about war

Last week, Public Works Minister Diane Finley outlined for defence contractors and lobbyists a new strategy to be run by a secretariat in her department that will challenge expressed military requirements and emphasize “international sales opportunities” for Canadian companies engaged in filling them. She said conditions attached by military planners to procurements “too often appear to be set to achieve pre-determined outcomes.”

In other words, the brass is setting specifications that are so precise that they favour the plane or truck they think is best, and therefore one bidder. And with one bidder in the running, the price inevitably is higher, and better economic spinoffs might be lost.

It wasn’t long ago that nations acquired things like tanks, ships and planes solely for the purpose of fighting wars. Today, the tanks, ships and planes are called platforms and their purpose is not just military.

Defence procurement in Canada also is about things like industrial and regional benefits, value to the Canadian economy, global markets and thriving domestic defence contractors.

There might be some retired colonels and commodores who find this odd, but in an age when so much stuff rusts out before it can be used in battle, and when new technologies have to be found to meet rapidly changing threats, a lot more than defence of the realm is at stake.

And as new “platforms” become more expensive, it makes sense to upgrade and maintain existing ones. Canadian defence analysts say that for every dollar, or million dollars, spent to acquire a new engine of war, five dollars or $5 million will be spent to keep it working over a life cycle of 30 years or more.

And that means that when the shiny new engine is unpacked, Canadian firms must find in the crate a guarantee that they have the terms and conditions, including access to intellectual property, to do the maintenance.
- See more at: http://www.timescolonist.com/opinion/iain-hunter-defence-procurement-is-not-about-war-1.842878#sthash.EHTfhdGE.dpuf

Canada revamps military procurement policy after controversies

Defense is one area where countries are allowed under international trade rules to favor their own industries. The question then becomes one of how much more governments are willing to pay to get domestic benefits. In addition to the governance changes, Finley will also now require that bidders for major projects put together a "value proposition" that will show what industrial spinoffs and subcontracts would go to Canadian companies. This would be given a 10 percent weight, suggesting that companies promising rich industrial benefits to Canada could still win even if their costs are slightly higher than those of their rivals.

Leveraging Defence Procurement to Create Jobs and Economic Growth in Canada

The three key objectives of the Defence Procurement Strategy (DPS) are to: deliver the right equipment to the Canadian Armed Forces (CAF) and the Canadian Coast Guard in a timely manner; leverage our purchases of defence equipment to create jobs and economic growth in Canada; and streamline defence procurement processes.

The Defence Procurement Strategy (DPS) represents a fundamental change in the Government of Canada's approach to defence procurement.

New plan for military procurement dilutes power of defence department

Finley sought to assure Canadians “that the capability of our men and women in uniform will remain paramount.” But she also left no doubt that the government is counting on industry turning $240 billion in planned defence spending over the next two decades into high-value, high-skill jobs.

“The defence procurement strategy underlines the goals that our government has had from the start,” she said. “Jobs, growth and economic prosperity. That’s what we pledged to Canadians. And that’s what we’ve been delivering.”

Defence officials had quietly expressed concern about military procurement being shifted too far towards business interests, warning in a secret briefing in November 2012 that National Defence “would, all things being equal, likely obtain less equipment and services.” The warning is rooted in fears the government will end up paying a premium to buy Canadian or boost otherwise boost Canadian industry, which is what is already happening with the government’s $38-billion national shipbuilding plan.

Canada Unveils Sweeping New Procurement Rules

The government’s initiatives closely follow a report from the Canadian government’s procurement adviser issued last year, which recommended that foreign defense companies be required to provide domestic companies with quality offset work in a number of key areas such as cybersecurity, training systems and soldier protection. The 88-page report, titled “Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities,” was aimed at addressing growing frustration among Canadian defense firms that complain they have seen little quality work from the billions of dollars of military contracts announced in the past several years by Canada’s Conservative Party government. Those include the purchases of tanks, helicopters and transport aircraft.

The report from Tom Jenkins, special procurement adviser, noted that the Canadian government intends to invest CAN $240 billion (US $216 billion on new defense equipment in the next 20 years.

It recommended developing, at least initially, key industrial capabilities in six areas: Arctic and maritime security, soldier protection, command and support, cybersecurity, training systems, and in-service support. Foreign firms that want to bid on Canadian defense contracts would be required to provide offsets in those areas and would receive better consideration for their bids if they provide Canadian companies with work on international programs.

In their announcement Wednesday, Finley and Nicholson noted that an export strategy will also be developed to support international sales of Canadian defense products. Key industrial capabilities that the government wants to promote among industry will also be identified and highlighted.

The government also plans to provide more information to industry about military procurements, including informing companies early on about projects and publishing an annual acquisition guide to outline its priority programs.

The Defence Procurement Secretariat to be established within Public Works would provide expertise needed to oversee purchases of military equipment. The secretariat will use the principles of early and frequent engagement, independent advice and efficient decision-making to streamline defense procurement processes, the ministers stated.

An independent, third-party Defence Analytics Institute to provide expert analysis to support the objectives of the Defence Procurement Strategy will be established.

Tim Page, president of the Canadian Association of Defence and Security Industries, called the move a “critical and positive milestone” that will enhance security and economic interests. The association represents more than a 1,000 defense and security companies in Canada.

Ottawa to curb military’s role in procurement after costly delays

The dysfunctional record of military procurement in the last eight years – from light-armored combat vehicles to joint support ships to F-35 fighters – has hurt the Conservatives’ carefully cultivated reputation as prudent stewards of the public purse.

Wednesday, Mrs. Finley and Mr. Nicholson will announce they’re going to require that military suppliers provide more high-value industrial spinoff work for Canadian companies and well-paying jobs. The government is dissatisfied with the industrial regional benefits it received for several big purchases of military aircraft.

Major military purchases in Canada have frequently lacked what critics call a single point of accountability because as many as three or four government departments play a part in selecting what to buy – decisions that are sometimes made in isolation from one another.

National Defence currently has particularly strong influence because it first draws up specifications for what features it needs in equipment – which can result in the department effectively picking a supplier before a competition is held.  Defence officials will still have a central role in deciding what to buy for the Canadian Armed Forces, but other departments and outside advisers will now have the ability to properly question what is being requested.

This will change with what is unofficially called the “super secretariat,” a term the government does not embrace but which captures the concentration of decision-making taking place.


For instance, as one person who was familiar with the Wednesday announcement said, if the request is for a “Cadillac and you actually need a Corolla” then the system needs someone who “has the authority to ask why do you need this Cadillac?”

Part of the focus Wednesday will be on using defence spending to develop a competitive advantage in certain technologies. Foreign companies play a large role in supplying Canada’s military needs, yet in the past 30 years, this country has shied away from using defence policy to promote and build domestic industries.

Military defeated in war over procurement reform

Liberal defence critic Joyce Murray on Wednesday seemed prepared to hold her most serious criticisms to see if the government's proposed changes might have a positive effect. "It’s good that the government has admitted their failure," Murray said.

"I hope, as I think most Canadians hope, that they can do a better job ... with this new procurement mechanism. At the same time, you have to wonder whether adding a layer of bureaucracy and continuing to add additional ministers and deputy ministers into the pot, is actually going to be the correction that is needed. I don’t see clear improvement here," she added. "But let’s be optimistic. They can’t do a lot worse than has been done so far."

Behold the best value

I have had a continuing discomfort with the rush to embrace best value, for at least a couple of reasons. Mind you, this is just the opinion of an observer.

Chiefly, "best" is always in the eye of the beholder, as in a beauty contest. It makes an objective review of the decision practically redundant, given the need to almost have to prove fraud to set aside an agency decision on the matter. An in awarding any contract, but particularly large contracts, it's the little things that appeal to one eye and not another that makes it a rich environment for dissatisfaction among participants and observers alike. If every finish is perceived to be a photo finish, suspicion turns on the judges by human nature.

Secondly, as practiced, best value has tended to turn to proven performance as the deciding factor to provide some degree of objectivity to ameliorate the first concern. While that is an necessary factor to be determined, when it becomes the essential factor it leads to an old boys network of routine providers who then become too big to jail. Ultimately, relying on the records of those who have survived early contest bouts tends to become anti-competitive.

But I have detected recently a few signs of new focus under the best value rubric, back towards price as an objectively supportable criteria when others tend to fail. What was becoming overlooked is the relevance of price in determining not just best value but best interest of the government. "Best" value is now becoming to be seen as "in a range of best" with price becoming more critical; the government is once again concerned with fiscal stress.

This takes us back to an earlier concept of lowest price, technically acceptability; what the ABA Model Code world recognizes as "multi-step" competitive bidding. On Guam, that is allowed by code in 5 GCA §5211(h), and more usefully described in regulation 2 GAR §3109(r).

The following GAO protest appeals case, as excerpted and reported below, is representative of what I'm talking about here.

Matter of: M&N Aviation, Inc., B-409048, December 27, 2013

M&N Aviation, Inc. (M&N), of San Juan, Puerto Rico, protests the award of a contract to Tradewind Aviation, LLC, of Oxford, Connecticut, by the Department of Justice, U.S. Marshals Service (USMS), under request for quotations (RFQ) for air charter services in support of the agency’s Justice Prisoner and Alien Transportation System (JPATS). M&N argues that the agency made award based on lowest price, rather than based on best value, as required by the solicitation. M&N asserts that had the agency conducted a proper price/technical tradeoff, it would have received award of the contract, and not Tradewind.

Quotations were to be evaluated based on technical, price and past performance criteria, with a contract to be awarded to the offeror whose quote, conforming to the RFQ, represents the best overall value to the government. When combined, technical and past performance were to be significantly more important than price. However, the RFQ instructed offers that where quotes were considered substantially technically equal, total evaluated price was to be the determining factor for award. Quotes were submitted by several offerors, including one from M&N, the incumbent contractor, and Tradewind.

After an initial evaluation, M&N’s quote was rated good under the technical factor, and satisfactory under the past performance factor. With respect to past performance, M&N provided three references, two of which responded to the past performance questionnaire. Tradewind’s quote was rated acceptable under the technical factor and was not rated under past performance. The record shows that Tradewind’s past performance was not evaluated as the firm did not provide any references.

The agency set a competitive range consisting of M&N and Tradewind. In its discussion letter to Tradewind, USMS identified one weakness and one deficiency. The discussion letter to M&N did not identify any significant weaknesses, deficiencies or adverse past performance; it simply provided M&N the opportunity to revise its price quote. M&N did not submit a revised technical proposal, whereas Tradewind did. A new technical evaluation was conducted of Tradewind’s revised proposal, resulting in an upgrade of its technical rating from acceptable to good. A review of Tradewind’s past performance information resulted in a rating of satisfactory.

In its final proposal submission, M&N revised its total price from $2,278,100.00 to $2,240,700.00. AR, Exh. 9, Award Decision, at 3. Tradewind’s price remained unchanged at $1,945,022.20.

The contracting officer determined that both M&N and Tradewind’s quotes were substantially technically equal. Based on this finding, she determined that award to Tradewind based on its lower-priced quote was in the best interest of the government.

While M&N does not specifically challenge the agency’s evaluation of its proposal, the firm does challenge the agency’s determination that its proposal was technically equal to the proposal submitted by Tradewind. A review of the record does not support M&N’s allegation, that award was made based on “best price and NOT by best value criteria.” The award decision clearly reflects the agency’s consideration of the relative technical merits and offered prices of both proposals. The contracting officer ultimately concluded that the proposals submitted by M&N and Tradewind were substantially technically equal and made award based on Tradewind’s lower price. However, it is clear that the contracting officer did consider relative technical merit in reaching this conclusion. In this regard, the contracting officer’s award decision comports with the stated evaluation criteria.

We also find no reason to question the agency’s evaluation of the offerors’ respective proposals. The evaluation of an offeror’s proposal is a matter within the agency’s discretion. A protester’s mere disagreement with the agency’s judgment in its determination of the relative merit of competing proposals does not establish that the evaluation was unreasonable. In reviewing a protest that challenges an agency’s evaluation of proposals, our Office will not reevaluate the proposals, but will examine the record to determine whether the agency’s judgment was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations.

In its protest, M&N lists various aspects of its proposal, which we infer to be offered as support for M&N’s position that its proposal is technically superior to the proposal of Tradewind. However, the protester did not address in its comments any matters related to its own evaluation, despite being provided with the agency’s evaluation documentation. Consequently, we view any challenge to the evaluation of M&N’s proposal as abandoned by M&N and will not consider it further.

With respect to Tradewind’s proposal, the protester primarily argues that the awardee did not offer aircraft that complied with the Statement of Work's requirement of “provisions for a minimum of 7-11 passenger seating” and should have been disqualified from the competition. M&N argues that the aircraft available to Tradewind are certified by the manufacturers to have a maximum of 9 passenger seats, and that such capacity does not meet the solicitation’s requirements. M&N appears to contend that the solicitation requires vendors to offer aircraft with capacity to seat the maximum of the range established in the solicitation, i.e., 11 passengers.

The RFQ nowhere stated that only an aircraft that could seat 11 passengers would satisfy the capacity requirement; instead, the RFQ identified a range between 7 and 11 passengers as its minimum requirement. While it appears to be M&N’s view that the solicitation requires aircraft that seat a minimum of 11 passengers, the RFQ’s statement of the capacity requirement in terms of a range suggests that seating capacity within that range would be considered. As a result, the agency’s reading of the requirement is consistent with the solicitation, and we have no basis to question its determination that Tradewind’s quote met the requirement.

M&N also argues that the agency treated the offerors disparately in the conduct of discussions, to its prejudice. Specifically, M&N asserts that while the agency informed Tradewind of weaknesses and deficiencies found in its proposal, it failed to inform the protester that one of its three past performance references did not return its past performance questionnaire. Second, M&N argues that while Tradewind was given the opportunity to revise its quote and address identified weaknesses and deficiencies, M&N was only given the opportunity to revise its price.

When an agency engages in discussions with an offeror, the discussions must be meaningful. In order to be meaningful, discussions must be sufficiently detailed so as to lead an offeror into the areas of its proposal requiring amplification or revision in a manner to materially enhance the offeror’s potential for receiving award. An agency may not, through its questions or silence, lead an offeror into responding in a manner that fails to address the agency’s actual concerns; may not misinform the offeror concerning a problem with its proposal; and may not misinform the offeror about the government’s requirements. While the precise content of discussions is largely a matter of the contracting officer’s judgment, such discussions must, at a minimum, address identified deficiencies, significant weaknesses, and adverse past performance information to which the offeror has not yet had an opportunity to respond.

With respect to M&N’s first allegation, it is not objectionable to evaluate an offeror’s past performance based on fewer than the maximum possible number of references the agency could have received. Here, the RFQ did not specify a minimum required number of past performance references, nor is there any evidence that the agency treated the absence of a response from one of M&N’s three past performance references as adverse information. To the contrary, M&N received the highest past performance rating of satisfactory. As such, we do not believe that the agency was required to inform M&N of the absence of the questionnaire during discussions.

With respect to M&N’s second allegation, there is no evidence that the agency found any deficiencies or significant weaknesses in M&N’s proposal. There is also no evidence that the agency identified any adverse past performance information regarding M&N.

Finally, the record does not reflect that the agency limited the protester’s ability to revise its proposal. Our review of the record leads us to conclude that the agency’s discussions with M&N were meaningful and the firm was not treated unequally vis-a-vis Tradewind.

The protest is denied.

Is government contracting private market dominance in public interest?

UK government auditor questions reliance on big contractors

Two NAO reports on government contractors, based largely on information from Capita, G4S, Serco and Atos, will form the basis of two Public Accounts Committee (PAC) hearings later this month. A review of Britain's use of big companies to run services from prisons to hospitals raised questions about whether the rise of a few major contractors was in the public interest, the National Audit Office (NAO) said on Tuesday.

In some markets, such as private prisons, child custody and medical assessments, there are only a few large providers which the NAO said could be considered "too big to fail". Some 3 billion pounds of the 40 billion spent by central government each year on suppliers is with the four firms in the report.

"I asked the NAO to carry out this work after looking at case after case of contract failure ... in each case we found poor service; poor value for money; and government departments completely out of their depth," Margaret Hodge, the lawmaker who chairs the PAC said. "These reports together raise some big concerns".

The political spotlight is firmly on Britain's 187 billion pound public sector contracting market after a series of high-profile contract failures. The NAO said transparency on profit made from government contracts was limited, with firms' tax affairs hard to understand, setting the agenda for a parliamentary grilling of some of the state's biggest suppliers next week.

James Moore: Now the Government’s outsourcing responsibility for contractor debacle

In the wake of the recent scandal involving accusations of overcharging by Serco and G4S, combined with numerous previous foul-ups, you might think the industry was due a zinger. The NAO doesn’t quite deliver one. Its tomes are lengthy, and discursive, and sometimes have the air of a concerned but benevolent schoolteacher telling Humphrey from the civil service and Harry from the contractor that they could perhaps see their way to doing a bit better.

In outsourcing services, the Government has sought to outsource its responsibility for them. That needs to end.

Has government become too aggressive with outsourcers?

The NAO notes that from 1 January 2006 to 30 September 2013, the value of these businesses on the stock market has risen much more than the value of FTSE 100 companies in general. In that period, the FTSE 100 index increased 26%, whereas Capita's share price rose 141% and G4S's 94%. That would suggest investors aren't remotely worried that the profitability of government contracts is too slim. It implies that the reliability of the revenues from these contracts is what matters, and that therefore the profit margins are quite satisfactory.

Or to put it another way, the perceived balance of risk on rewards on these outsourced deals is changing, to the detriment of the private sector businesses.

But, and this is quite important, the story of the relationship between the private-sector providers and the government is - ahem - evolving. Since the 2010 general election, the Cabinet Office has aggressively tried to exercise greater central control over the awarding of outsourcing contracts.There have been big management changes at Serco and G4S, and their share prices have both fallen by around a sixth since May.

So probably the most interesting conclusion by the NAO is the one that goes against the grain of typical political and public discourse about private sector providers. The NAO warns the Cabinet Office that there is a limit to the financial squeeze it can put on the likes of the big four, and that it may not be too long before there will be a loss of "innovation and investment" which "could pose a risk to value for money in the longer term".

The watchdog takes seriously the private sector providers when they say they may choose not to bid for future contracts in certain public services. And that could be a problem, because - with so much outsourced since the 1980s - it is not obvious that the public sector retains the competence and skills to take back some of these services.

Pulling the blanket back

The following story is interesting for illustrating the issues when a government agency cancels a solicitation. While there is a great deal of latitude allowed to do so, the discretion to do so is not without limits. As will be discussed below, the regulations under the ABA Model Procurement Code that Guam has adopted places conditions on cancellation of bids and offers, which differ depending on when the the process the cancellation is done.

It is unfortunate that we get so little fact from the story. It is not the fault of the reporting, however, but of the redaction made in releasing it. Who would have thought that a simple moving contract should be so secretive? As usual I have edited the story to suit myself and make the use of it as a hypothetical more convenient. Always read the story at the link to reveal the original story line.

A parade of protests as FBI scraps moving contract

The FBI issued four blanket purchase awards to four companies that it hired to provide relocation and moving services. The FBI first awarded BPAs to three companies — Allegiance Relocation Services, Lexicon and WHR Group — on March 15. One week later, another company, Brookfield Relocation Inc., filed a protest with the Government Accountability Office. GAO dismissed the protest as academic when the FBI issued a BPA to Brookfield. The substance of Brookfield’s complaint remains unclear because of redactions in the complaint filed by Lexicon.

The hiring of Brookfield, however, did little to keep bid protest lawyers at bay. In fact, the move only prompted more protests. TRC Global Solutions protested the Brookfield award, though the GAO dismissed that complaint, saying the company couldn’t prove it was next in line for award. Likewise, Capitol Relocation Services filed a protest over the Brookfield award.

Weeks later, on July 16, the FBI canceled all of the BPA’s, telling GAO that it planned to start all over. Lexicon Government Services filed a complaint Monday in U.S. Court of Federal Claims, arguing that the FBI’s decision to scrap the procurement and start all over again was “arbitrary, capricious and contrary to law.”

“The FBI’s proposed corrective action to cancel Lexicon’s award and the solicitation was arbitrary and capricious because there has not been any legitimate change in the FBI’s needs that would merit the cancellation,” Lexicon argued in its Federal Claims Court complaint Monday. The company wants a judge to keep the FBI from canceling the award to Lexicon, according to the complaint.

So, what is a BPA? A Blanket Purchase Agreement is a method of source selection whereby the government establishes open accounts with a variety of vendors or service providers for specified commonly needed goods or services, to avoid repetitive competitive acquisition of these products.

The model regulations adopted on Guam at 2 GAR § 3112.1 define a BPA as

"a simplified method of filling anticipated repetitive needs for supplies or services by establishing “charge accounts” with qualified sources of supply and is to be used only if the services or supplies cannot be properly identified as to the quantity and the type of services or supplies required."

Further, Guam law limits the use of BPAs to the dollar limits applicable to "small purchases", generally under $15,000. Emphasizing the repetitive nature of the need, the regulations illustrate the circumstances justifying a BPA:

The following are circumstances under which BPAs may be approved:

1. If there is a wide variety of items in a broad class of goods (e.g. hardware) that are generally purchased but the exact items, quantities, and delivery requirements are not known in advance
and may vary considerably.
2. In any other case in which the writing of numerous purchase orders can be avoided through the use of this procedure.

They are essentially an indefinite quantity, indefinite delivery requirements contract.

One of the conditions for use of a BPA is the "all competitive sources should be given an equal opportunity to furnish supplies or services under BPAs. Therefore, if not impossible, then to the extent practical, BPAs for items of the same type should be placed concurrently with at least three separate suppliers to assure equal opportunity."

So, now, what about that cancellation issue?

The regulation regarding cancellation of solicitations is found at the same link as mentioned for BPAs above, at § 3115. The central principle applicable to cancellation of solicitations is that

"Preparing and distributing a solicitation requires the expenditure of government time and funds. Businesses likewise incur expense in examining and responding to solicitations. Therefore, although issuance of a solicitation does not compel award of a contract, a solicitation is to be cancelled only when there are cogent and compelling reasons to believe that the cancellation of the solicitation is in the territory's best interest."

The conditions allowed for cancellation of a solicitation differ depending of whether the cancellation is made before the opening of bids or offers, or afterwards.   In fact, a solicitation may only be cancelled before opening.

Conditions allowed for cancellation before opening are

"that such action is in the territory's best interest for reasons including but not limited to:
(i) the territory no longer requires the supplies, services, or construction;
(ii) the territory no longer can reasonably expect to fund the procurement; or
(iii) proposed amendments to the solicitation would be of such magnitude that a new solicitation is desirable."

After opening and before award, cancellation is not allowed, however a similar result might be reached if all bids or offers can properly be rejected in whole.  

Rejection of all bids is conditioned on a determination

"that such action is in the territory's best interest for reasons including, but not limited to:
(i) the supplies, services, or construction being procured are no longer required;
(ii) ambiguous or otherwise inadequate specifications were part of the solicitation;
(iii) the solicitation did not provide for consideration of all factors or significance to the territory;
(iv) prices exceed available funds and it would not be appropriate to adjust quantities to come within available funds;
(v) all otherwise acceptable bids or proposals received are at clearly unreasonable prices; or
(vi) there is reason to believe that the bids or proposals may not have been independently arrived at in open competition, may have been collusive, and may have been submitted in bad faith."

As is often the case, the rules in US federal government contracting are different, though principles may be the same or similar, as illustrated in the following GAO Decisions.

Matter of: Rand & Jones Enterprises Company, Inc., File: B-296483, Date: August 4, 2005

The RFP provided for the award of a fixed-price contract for the expansion and renovation of the VA’s Medical Center in Northport. Offerors were requested to propose fixed prices for a base contract line item number (CLIN) and other items.

The RFP incorporated the standard “Instructions to Offerors--Competitive Acquisition” clause of Federal Acquisition Regulation (FAR) sect. 52.215-1 that informed offerors that the agency would award a contract to the responsible offeror whose proposal represented the best value to the government considering the factors and subfactors identified in the solicitation. But, no technical or non-price related evaluation factors were identified in the solicitation.

[As an aside, I find this amusing, since GovGuam often checks the box in the general terms that says bidders must supply substantiating documentation for a bid item "as specified", but never actually specifies anything -- and then complains that substantiating documentation was not provided.]

On September 2, the contracting officer was notified by VA’s Acquisition Assistance Division that the RFP did not provide any technical evaluation factors. Thereafter, the RFP was amended to require the submission of a bid bond. The agency did not, however, amend the solicitation to provide any technical evaluation factors.

VA received proposals from four firms, including Rand & Jones and Arrow Construction/BKC, Inc. VA publicly opened the proposals and disclosed the firms’ proposed prices. VA again amended the RFP to provide a new set of construction drawings (but did not add technical evaluation factors) and to establish March 24 as a new closing date for submission of offers.

VA received revised proposals from the four firms, and again publicly opened the proposals and disclosed the firms’ proposed prices. Rand & Jones was found to have proposed the lowest price for the base CLIN. Arrow, which submitted the second lowest price for the base CLIN, protested to VA, but subsequently “withdrew” the challenge. Instead, the contracting officer cancelled the RFP because it failed to contain any technical evaluation factors and informed the offerors that the agency would issue an invitation for bids (IFB) for this requirement.

This protest by Rand & Jones of the cancellation of, and the failure to make award under, the RFP followed.

As a general rule, in a negotiated procurement the contracting agency need only demonstrate a reasonable basis to cancel a solicitation after receipt of proposals, as opposed to the “compelling reason” required to cancel an IFB where the bids have been opened. See FAR sect. 14.404-1(a)(1). The standards differ because, in procurements using sealed bids, competitive positions are exposed as a result of the public opening of bids, while in negotiated procurements there is no public opening.

In situations like this one, our Office has stated that cancellation of an RFP, even after one or more of the offerors’ prices have been revealed, is proper where the agency has a reasonable basis to cancel, and the record contains plausible evidence or a reasonable possibility that a decision not to cancel would be prejudicial to the government or the integrity of the procurement system.

Here, the record contains no evidence, or even argument, that the government or the integrity of the procurement system would be prejudiced if the RFP were not cancelled and award were made thereunder. VA’s only asserted basis for cancellation is that the RFP did not contain evaluation factors.[6] However, where, as here, a negotiated procurement does not provide technical evaluation factors, award is to be made to the responsible offeror with the lowest-priced, technically acceptable offer. Thus, the competition for award under the RFP was solely based on price.

The agency does not assert that it will change any of its requirements but will issue an IFB, under which the sole basis for award is price, for the same requirements. Thus, since the basis for award under the RFP and IFB would be the same, the agency lacks a reasonable basis to cancel the RFP. Moreover, not only is neither the government nor the integrity of the competitive procurement system prejudiced by not cancelling the RFP here, but Rand & Jones, whose low competitive price for this same requirement has been been publicly disclosed, would be prejudiced if this requirement were recompeted on the basis of price.

We sustain the protest.

See also, Matter of: Gonzales-McCaulley Investment Group, Inc., File: B-299936.2, Date: November 5, 2007:

Agency’s decision to cancel a solicitation, after a protest was filed, due to a lack of valid delegated procurement authority, was essentially pretextual when no other solicitations issued under the invalid delegation were cancelled. GMIG protested that the agency’s decision to cancel the solicitation was solely for the purpose of having its protest dismissed. In response, the agency argued that its decision to cancel was reasonable because the acquisition was unauthorized as it was conducted under an invalid delegation of acquisition authority and that the reason for cancellation was not pretextual.

A contracting agency need only establish a reasonable basis to support a decision to cancel a request for quotations. So long as there is a reasonable basis for doing so, an agency may cancel a solicitation, no matter when the information precipitating the cancellation first arises, even if it is not until quotations have been submitted and evaluated.

As here, however, where a protester has alleged that the agency’s rationale for cancellation is but a pretext to avoid awarding a “contract” on a competitive basis or to avoid the resolution of a protest, we will closely examine the reasonableness of the agency’s actions in canceling the solicitation.

Here, it appears from the record that HHS is correct in its assertion that the GETA acquisition authority had not been validly delegated to HHS-U. We believe that this lack of authority would ordinarily provide a reasonable basis to cancel a solicitation. However, based on our review of HHS’s actions here, we conclude that the cancellation of this solicitation was pretextual. The record shows that this was the only acquisition, out of the hundreds that had been conducted by HHS-U without properly delegated authority, that was cancelled when HHS became aware of the lack of authority, even though a number of the other HHS‑U acquisitions were ongoing.

Nevertheless, even where the cancellation of a solicitation was a pretext to avoid further scrutiny and review of a protest, we will not sustain a protest of the cancellation on this basis unless the protester was prejudiced, for example, if its initial protest would have been sustained but for the cancellation. While it may be that there was a reason that GMIG should not have been selected to provide these courses, the record here shows that HHS-U’s Center Manager did not attempt to reasonably investigate her suspicions of plagiarism prior to rescinding GMIG’s selection and, on this record, we find the rescission was not reasonably based.

See also, Matter of: Superlative Technologies, Inc., File: B-310489; B-310489.2, Date: January 4, 2008

Agency did not have a reasonable basis for canceling solicitation where agency states that cancellation was necessitated by the agency’s disclosure of source selection information, which the agency believed gave an “unfair advantage” to at least one offeror, and where the agency subsequently awarded a sole-source contract to a contracting team that included the same contractor to whom the source selection information was disclosed.

The solicitation contemplated award of a contract for a 12‑month base period, with four 12-month option periods, and a total estimated value of $13.5 million. The solicitation provided for award based on the proposal “most advantageous to OJP,” and established various technical and cost/price evaluation factors, stating that “technical merit is more important than cost or price.” Proposals were submitted by three offerors, including SuperTec and ManTech. Thereafter, the agency determined that, although ManTech’s proposal “came the closest” to meeting the solicitation requirements, none of the initial proposals met all of the solicitation requirements, and that discussions were necessary.

the ITSD director, who was also the contracting officer’s technical representative (COTR) and had been involved in developing the statement of work (SOW) for this solicitation, sent an email to the contracting officer and the deputy chief information officer stating that she (the COTR) should be “recused from further proceedings.” The email revealed that, prior to submission of proposals, the COTR had “consulted with ManTech and [the third offeror]” regarding “requirements, pricing and labor categories,” and that her communications “may have provided an unfair advantage to ManTech and [the third offeror] because they had an idea what the labor categories might be in advance.” She concluded that she “needed to disclose what [she] had done in order to protect the reputation of OJP as well as [her own] reputation as Director of ITSD.”

Thereafter, the contracting officer cancelled the solicitation, summarizing the basis for cancellation as follows: "Prior to receipt of revised proposals, [I] learned of a potential procurement integrity issue that occurred during market research activities. The COTR, an OCIO employee, engaged in activity that appeared to raise concerns about the integrity of the pending procurement because of the disclosure of information about pricing and labor categories to the offerors."

the agency states that it “conducted additional market research in order to identify other schedules and procurement vehicles.” In this regard, the record contains an email from the COTR to the contracting officer in which, under the heading of “Contract Vehicles,” the COTR lists various existing contracts--all of which are ManTech contracts.

On August 24, the agency issued RFQ No. 2007Q-045, which contained a SOW virtually identical to the SOW contained in the cancelled solicitation.

On September 19, in response to a request from SuperTec regarding the status of the procurement, the agency advised SuperTec that the contract “will be a directed source...." [Sole sourced, essentially.]

SuperTec protests, among other things, that the agency’s cancellation of RFQ No. 2007Q-025 was merely a pretext to avoid conducting a competitive procurement and resolving a potential bid protest. Because we find, based on the specific facts presented, that the cancellation was improper, we sustain the protest on this basis.

We recognize that contracting agencies generally enjoy broad discretion in determining whether to cancel a solicitation, and need only have a reasonable basis for doing so. In this regard, a contracting agency’s determination that the integrity of a procurement has been compromised may form a reasonable basis for cancellation.

Nonetheless, where a protester has alleged that an agency’s rationale for cancellation is but a pretext, that is, the agency’s actual motivation is to avoid awarding a contract on a competitive basis or to avoid resolving a protest, we will closely examine the reasonableness of the agency’s actions in canceling the acquisition. Further, in considering a protest raising that concern, we view an agency’s discretion, though broad, as not unfettered. In that regard, the overarching guidance of the FAR has direct relevance:

Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct. The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.

Based on the record here, we conclude that the agency did not have a reasonable basis for canceling the RFQ. Specifically, as explained above, the COTR disclosed information to ManTech that she believed may have provided ManTech with an “unfair advantage.” Thereafter, the agency cancelled the procurement citing concerns about “the integrity of the pending procurement,” “potential organizational conflicts of interest,” and “a possible bid protest”--but then awarded a sole-source contract for the canceled requirements to a contracting team that included ManTech. Further, the sole-source award was based on a ManTech-developed proposal that was substantially similar to the earlier ManTech proposal for which the COTR suggested ManTech had obtained an “unfair advantage.”

African states debate whether procurement rules aid or hinder growth

Rwanda: Continued Engagement On Public Procurement Critical

According to officials in the Ministry of Finance and Economic Planning, when procurement is carried out in a proper and transparent manner, it enhances efficiency and service delivery, thus contributing greatly to economic growth.

In Rwanda, public procurement has come of age. Today, it is responsible for up to 16 per cent of the Gross Domestic Product (GDP).

In the yesteryears there was no such a thing as competitive bidding for government contracts. Bureaucrats only handpicked service providers, often times causing heavy losses to the treasury, especially through shoddy work or uncompleted projects. Today, we can confidently say that we have since managed to reverse the trend. Public officials now know that you cannot spend taxpayers' money without due process.

Nonetheless, some service providers and experts have raised concerns over what they call long-winded procedures and vagueness of the current law on public procurement. They argue that legislation doesn't provide specific guidelines for the day-to-day practices in the sector, thus difficult to implement in some cases.

Under no circumstances should Rwanda's commitment to strict adherence to proper tendering procedures be compromised. We have all seen the fruits of this policy, the most recent being Rwanda's emergence as the least corrupt African country, and among the 'cleanest' in the world, ranking 13th globally, according to Transparency International's Global Corruption Barometer, released last week.

Nonetheless, the Rwanda Public Procurement Authority and other relevant organs, should keenly examine complaints with regard to the existing law, and subsequently initiate the necessary adjustments to help improve service delivery, eliminate red-tape and plug any other potentially costly loopholes.

But, over in Zambia ...

Tedious public procurement processes delaying the pace of national development-Minister

Home Affairs Deputy Minister Nickson Chilangwa says long and tedious public procurement processes are delaying the pace of national development. Mr. Chilangwa said the PF government is failing to execute some of its urgent plans because Zambia’s public procurement processes take long to complete.

He said some of the requirements in public procurement are unnecessary and create an opportunity for corruption. “We have to reform our procurement laws, there is no way we could develop this country if it will take us six months to procure anything for the good of the nation,” Mr Chilangwa said.

He cited the procurement planned procurement of modern crowd control equipment for the Zambia Police Service as one which is being frustrated by the long procurement processes. “Everybody knows that we need to get modern equipment for our officers. There are now more riots breaking out and our officers need better protection and everybody knows the urgency of the matter but if the Permanent Secretary or the IG wakes up one day and say buys the equipment, everybody will start saying abuse of office. This is nonsense and we have to change this.”

He warned that Zambia will continue lagging behind unless serious public procurement reforms are under taken.

Beware of Ministers bringing "reforms".  Sometimes, often times, that word "reform" does not mean what we think it means.

Paving the way for PPPs

I recently made the comment to the effect that the fundamental problem, from the public's point of view and finances, is that it cannot match wits with the private sector when it comes to complex or big infrastructure acquisitions. See Out gunned and out classed.

The following article shows an example of how a government might respond to that situation. Might. Perhaps. Please consider.

Why You Won’t Own Your Road

Cash-strapped states such as Virginia are turning to the private sector to help finance large infrastructure projects. But it may just be a way of forcing drivers to pay more in the long run.

The Virginia Transportation Department is fighting to keep afloat a $2.1 billion public-private tunnel project in the Hampton Roads region after a Portsmouth judge ruled in May that the accompanying toll hike was unconstitutional. The case will likely wind up at the Virginia Supreme Court, putting at risk the department’s ability to negotiate tolling authority with private investors, a near-essential component of public-private partnerships.

Dusty Holcombe, a 13-year veteran of the Virginia Transportation Department, had never heard of Tony Kinn, the man tapped to head the commonwealth’s newly minted Office of Transportation Public-Private Partnerships. That’s because Kinn had spent most of his career far away from government, honing marketing and business-development strategies for clients such as Macy’s, General Foods, and Procter & Gamble. Kinn’s boisterous personality, his white hair, his overstuffed frame, his mile-a-minute chatter—it all seems to clash with the bureaucratic nothingness of this public office building in downtown Richmond.

The office was the brainchild of the state’s sometimes controversial Republican governor, Bob McDonnell, who has a geek streak when it comes to transportation. McDonnell is one of the few high-level elected officials to openly declare what transportation gurus have been saying for a decade without being heard: The gas tax is an antiquated way to fund roads. Without changes, highway coffers will dwindle over time as cars become lighter and more fuel-efficient. McDonnell was pilloried from both the right and the left for his proposal to replace Virginia’s gas tax with new sales taxes, but he is to be commended for pointing out the elephant in the room. His gas-tax replacement bill became law in March.

Kinn was just the type McDonnell wanted for the job: a business-first operator who isn’t happy unless investment opportunities are moving, moving, moving. Kinn met his team for the first time at an alehouse across the street from their Richmond office. “I talked to these people, and I thought, ‘My goodness, if they just allowed these people to do their jobs, we can do just about anything we want,’ ” he says.

His attitude toward his staffers, whom he says he dearly loves, is an odd mix of contempt for government culture and awe of their individual expertise. It drives him crazy to see their ingenuity squelched in bureaucracy, and he insists they have to rise above it. “If I want the private-sector industry to play with us, then our people have to be held to a higher standard,” he says. “They have to deliver.”

Holcombe, not Kinn, is the one you can picture leafing through back issues of Public Works magazine that lie in his office’s reception area, the ones with profiles of heavy-duty excavator buckets and track-mounted crushers. Holcombe talks like this: “Our goal is to try to mature a project enough before we take it out for procurement. Get the environmental petition in place. Make sure sketch-level traffic and revenue studies are done. Make sure you’ve done your business model to define that it brings value.”

Holcombe and Cromwell, who each have decades of civil-service experience, are critical players in fashioning deals that are attractive to the private sector. They make sure permits are delivered on time and concurrently with construction plans. They navigate the matrix of federal, state, and local rules for the private companies. They schedule public meetings and contact all the stakeholders. They let the private partners in on the construction planning early so they can seek their own contracts in non-bureaucratic ways.

“You’ve got contractors that are not looking so much for change orders or more money or more time out of a traditional contract. They’re looking to deliver on time, on budget for less than what they told you,” Cromwell says. “It’s a completely different way.”

Together, Kinn and Holcombe form the perfect blend of bureaucratic know-how and private-sector competitiveness, a relationship that is increasingly vital as state and federal budgets shrink. Like phosphorus and sulphur on a match, their combined aptitudes are intended to spark new and cheaper ways to allow people to travel about Virginia with less hassle.

Their solution is to woo corporate partners who aren’t shy about boosting their own bottom lines. Such an unvarnished quest for profits can be off-putting to residents who just want the roads to be pothole-free. Why should a Wall Street firm make money from a taxpayer-supported utility? Typical public-private arrangements, such as leased roads or privately tolled tunnels, are often met with grumpy skepticism by drivers, who are just as likely to complain about traffic snarls along the Capital Beltway or I-264 into Norfolk.

Is the United States ready to make the shift from the Eisenhower-era national highway network—in which the public owns the roads and highways it supports with tax dollars—to a partially private, profit-based system that invites partners from Wall Street and even other countries?

The benefits of such a shift are rooted deeply in the tenets of capitalism, if not public works. The disadvantages lie in the public’s potential lack of access to a needed utility. If private companies run the roads, it’s possible that those who are able to pay more would get better access because they could assume the higher cost of tolls.

Former Gov. Mitch Daniels in Indiana succeeded in completing a public-private deal to finance the 157-mile Indiana Toll Road, which secured $3.8 billion for the state. Yet critics still complain that truck tolls could increase more than 3,000 percent over the 75-year deal. Economists say the private dollars were a windfall for the state when the deal closed in 2006, but the agreement will wind up being a net loss for future generations. “It’s almost a kind of confidence game, where you’re continually putting more debt into the future,” says Phineas Baxandall, a federal budget and tax analyst with U.S. PIRG.

Skeptical taxpayers and sketchy economics be damned: Officials such as Kinn and Holcombe are looking for creative ways to attract private investors to develop roads, tunnels, and government land because they see no other options. State budgets are not going to increase anytime soon, and tax increases are politically unpalatable. What’s more, when private investors are looking for places to put their capital, why not take advantage?

Public-private partnerships make sense only for the biggest and most complex infrastructure projects. Simple road paving, for example, needs nothing more than a standard “design-bid-build” process to seek out cost-effective contractors. It doesn’t need a lot of up-front money, and the job can be completed in a few months or years.

Bigger projects that span five, eight, or 10 years—and probably a few electoral cycles—benefit from private-sector partners because the firms can infuse a state with cash at the front end. They can also provide consistency in the design and construction phases even if political administrations change. No matter how sophisticated an infrastructure contract gets, private-sector partners add a tricky new dimension to an already difficult process. Unwieldy projects can run amok for any number of reasons, and that makes some people suspicious of the private partners from the get-go.

The biggest concern the public expresses, although often not in an organized fashion, is lack of accountability. Citizens carry the impression, true or not, that a big project is being turned over to a company that has no roots in the community and no reason to take the public’s preferences into account. The reality tends to be more complex. Municipalities often have dueling political goals. Large projects tend to cross several local jurisdictions, which can make the political talks messier. Even without these local problems, transportation analysts acknowledge that elected bodies will always end up ceding some of their authority to a private entity in the course of these deals (witness the recent dustup over flaws in the Silver Spring Transit Center in suburban Maryland). That doesn’t always sit well with the locals.

There is truly a lot more to this article than I've extracted here, and I strongly urge you to click the link and read it all. It is well researched and covers the controversial ground in classic journalistic style, such as,  "It is ironic that one of the most socialized parts of American society, the national highway system, came about out of fear of being overrun by communism. ... Less well-known is that Eisenhower originally proposed that the national highway system be funded by tolls."

My own take is that all of these public projects, however complex, require some kind of cooperation between government and private actors. But what kind?  How are risks and rewards best shared -- in the public interest?

If politicians had any backbone to put in place these social infrastructures, like the Hoover Dam and Eisenhower's interstate highway system, they could see it through. But they don't because a lot of toes get stepped on and a lot of mistakes get made and many people sometimes die, as with the Hoover Dam project, and pollies just don't stand up to that heat when the time frame of the project extends beyond the election cycle.

So, if you just want to get the job done, don't look to the pollies. Look to the private sector, and be prepared to pay your own way. This stuff ain't free no matter where it comes from.

Procurement controversies -- Hawaii

The following controversy underlines the cost of improper procurement. If the procurement had been conducted with an eye to cost in the first instance, there would have been substantial savings to the government. Now it will cost the government more money to pay the damages done by the wrongful procurement.

It might be noted that the State of Hawaii, as is Guam, is an ABA Model Procurement Code jurisdiction. This does not mean that the local law is identical to the ABA Model. Neither is Guam's. There are occasional differences in particulars, often substantial difference, but the principals remain the same.

From The Maui News and its news services March 23, 2012

$1.2 million to end vote machine dispute

The Hawaii Attorney General's Office is requesting $1.2 million to settle a 2008 protest filed over a contract for electronic voting machines.

Hart InterCivic Inc. was awarded a $43.3 million contract for new electronic voting machines through the 2016 elections, with an option to extend to 2018. Another vendor submitted a competing bid of $18 million.

Attorney General David Louie's office says former Chief Election Officer Kevin Cronin violated state procurement code when he awarded a multi-term contract for voting equipment without conducting the required analysis of the proposals.

The contract in this case appears to be, effectively, a 10 year "multi-term" contract.

The ABA Model Code contemplates the use of multi-year contracts (§ 3-503). They are allowed only for supplies or services "for any period of time deemed to be in the best interests of the [state] ...."

But what is meant by "the best interests of the state"? The Code provides the answer: "A multi-year contract is authorized where ... such a contract will serve the best interests of the [state] by encouraging effective competition or otherwise promoting economies...." (§ 3-503(2)(b).)

It should be noted that this results from a settlement, not an administrative or judicial adjudication.

It is hard to justify accepting a $43 million award for such a long contract term over an $18 million alternative unless the lower offer is demonstrably nonresponsive to the real needs of the government. The fact that this was settled suggests the difficulty in proving absolutely the responsiveness of the lower bid in this case, but also stands as a testament to the "stink" test.

This case reminds me of a similar action I brought to Guam's Public Auditor a few of years ago. See the Decision in that matter here.

In the Best Interests of the Government

The following article, by your blogger, was published in the Guam Business Magazine, Vol. 28, January/February 2012.

In the Best Interests of the Government

The law considers and construes the “best interests” of the government in a variety of contexts, not just procurement law. But, in procurement law generally and Guam particularly, it is not only a broad consideration invoked by courts to defer to sovereign rights, but also is used as a specific condition of law that must be satisfied before certain actions are taken. Certain things are allowed to be done only when in” the best interests of the Territory”.

But isn’t “best interest”, like beauty, in the eye of the beholder? What is meant by it, who determines it, and by what standard, if any? We will explore those questions by looking at some of the instances in which it is used and possibly misused.

By my search, the term “best interest” of the government is used eight times in the whole Procurement Act, thirty-one times in the Regulations. One instance is when the government issues an IFB (or RFP) and then decides to cancel the solicitation. § 5225 of the law allows a solicitation to be cancelled (or all bids to be rejected) only “when it is in the best interests of the Territory in accordance with regulations”. The regulations elaborate the law, with specific reasons for cancellation all premised on a determination, in writing, from the highest procurement authority, that the cancellation “is in the Territory’s best interest”.

A recent Public Auditor’s decision dealt with that situation. The appeal of Joeten Development, Inc. involved an IFB by the Department of Revenue and Taxation for a lease of office space. After bids were solicited and opened, publicly disclosing Joeten’s bid, DRT decided to cancel the bid. DRT claimed it didn’t have sufficient funds to pay the bid price and would later issue a new bid. (In my experience, this is not an isolated practice, and is indeed quite frustrating and troubling.)

On review by the Public Auditor, she held “it was not in the public's interest to cancel the IFB due to insufficient funding.” She analyzed the Departments budget, the amount it was already paying for rent, dismissed DRT’s claim of insufficient funding, and concluded DRT would recognize substantial savings by awarding the contract to Joeten.

Thus we see that DRT (and in this case GSA’s Chief Procurement Officer) made the determination of the government’s “best interests”, in the first instance. But, the Public Auditor did not take DRT’s word for that. She independently scrutinized the situation to see if there were any facts supporting or negating any such conclusion, and came to her own determination that the protestor’s bid was in the Territory’s best interest. How DRT reached its decision is anybody’s guess.

The Public Auditor is given a special power of review, called de novo review, which allows her to disregard the agency determination. Her standard of review allows her to cast her own judgment of what is the Territory’s best interest.

The Public Auditor’s standard of review is broader than the traditional standard of review exercised by courts. There are a number of names to describe the court standard of review (e.g., “substantial evidence rule”) in , all reflecting judicial deference to the agency decision, but the result typically applied in practice is to accept an agency determination unless it is “clearly erroneous, arbitrary, capricious or contrary to law”.

Guam courts use the “clearly erroneous” standard when reviewing all agency determinations. But the Guam procurement law suggests they should not be so deferential to agency determinations in all procurement cases, and the determination of “best interest” in the bid cancellation situation is one of those cases.

§ 5245 of the Guam procurement law is specific about which determinations in procurement law are subject to the deferential “clearly erroneous” standard, and, by implication, which are not. That statute specifies eleven other statutes in the procurement law that are subject to the “clearly erroneous” standard of review.

The statute dealing with cancellation of bids, § 5225, is not on that list. Presumably, a court reviewing whether an agency’s determination that cancellation of a solicitation is in the Territory’s best interest would apply greater scrutiny of the underlying reasons and justifications than the “clearly erroneous” standard would allow.

It is noted that other procurement statutes containing “best interest” conditions are on the list, so a review of an agency’s best interest determination would tend to defer to the agency’s determination, unless “clearly erroneous”. Examples of “best interest” on the clearly erroneous list include § 5212(g), dealing with bid security, and § 5235, dealing with election of contract types)

Similar to “best” interest is “substantial” interest. A bid protest imposes an automatic stay of a solicitation. The stay can be lifted by following certain procedure, including the making of a written determination that lifting the stay is necessary “to protect substantial interests of the Territory”. “Substantial” would not seem to be the same as “best”.

In GCIF’s protest of the JFK High School solicitation, the Public Auditor did not question the detailed determination of substantial interest in that case (but ruled the stay was not necessary in the circumstances). It might be noted that the determination of substantial interest in this instance is also not one of the determinations to be reviewed by the “clearly erroneous” standards identified in § 5425.

The best interest of the Territory is not simply in the eye of the beholder. It is a determination, first of all, and determinations must be objectively based in fact and reason. The absence of articulable fact and reason is evidence that a declaration of best interest is subjective, arbitrary and capricious.

Moreover, whenever weighing the “best” interests of the Territory, it always important to remember that the principles and purposes of the Procurement Act are themselves also important interests of the Territory to be considered. Those principles include properly planned procurement, providing safeguards for a procurement system of quality and integrity, and providing for increased public confidence in the procedures followed by public procurement.

Whatever exigent circumstance may be put forward as a “best interest of the Territory”, it had better be more ”best” than those principles. Too often, close scrutiny will show a “best interest of the Territory” to be the best interest of an agency official or other interested party.

Best value vs. Best intetersts

Sandeep Verma has published another very useful discussion of procurement principles in the Indian Business Standard. In the article below, he distinguishes the concepts of "Competitive Negotiation" and "Competitive Dialogue". Indeed, as he points out, these are not abstract concepts but policy frameworks for, respectively, US federal procurement procedure and European Union procurement procedure.

Competitive negotiations in government procurement

Competitive Negotiations are practiced extensively in the United States covering almost 80-90% of its Federal procurement dollars, and provide for simultaneous one-to-one discussions between contracting officers—COs—and individual bidders/ offerors.

Bidders are allowed to make repeatedly improved offers, both technical and commercial, in as many rounds of negotiations as may be determined by the CO to be appropriate. These discussions eventually culminate in inviting Best and Final Offers (BAFOs) from all offerors in the last round, and the CO evaluates all BAFOs on a 2-axis matrix of price and quality, making subjective assessments such as “unacceptable quality”, “satisfactory price”, “excellent quality”, “poor on price”, etc.

In addition, the US Federal Acquisition Regulation allows a CO to accept the initial responsive offers for the purposes of bid comparison, without holding any negotiations at all: an option many COs exercise so as to avoid the practical risk of inadvertently holding unequal discussions with competing offerors—a situation that can seriously jeopardise the successful award of a procurement contract should a dissatisfied bidder challenge contract-award on grounds of unequal discussions.

A contract is awarded to a party whose offer is determined by the CO as representing Best Value for Money for the US Government; and this again is a subjective decision, without the CO being required to compute an objectively-weighted comparison based on price and quality assessments of competing offers.

These new, private sector-like methods of public procurement were introduced in the US in the 1990s under the leadership of academician-administrators Steve Kelman and Steven Schooner.

The system places a great degree of trust on COs who are barred from revealing details of one bidder’s technical or commercial offers to its competitors during various rounds of discussions; and this trust is effectively supplemented by strong law enforcement with respect to maintaining integrity of the procurement process.

On the other hand, Competitive Dialogue is a method of procurement practiced in the EU in the award of complex contracts, typically in cases where the Government lacks the capabilities to arrive at all technical and commercial/ legal details of procurement on its own at the start of the procurement process.

Extensive techno-commercial discussions are conducted with short-listed potential bidders, who are then all called upon to make responses to a RFP that evolves during these discussions.

In effect, it resembles a simplified version of Competitive Negotiations, and appears to be driven by EU’s core vision of an integrated European market, constrained as it is by the high degree of possible subjectivity in a fully-blown competitive negotiations method that could be abused by procuring entities to cherry-pick their own domestic bidders, leaving bidders from other EU member-states as hapless spectators in the procurement process.

The prime advantage in using these modern methods of procurement is their utility in achieving Best Value for Money for the Government through simultaneous negotiations, but use of these procedures requires that risks of unequal discussions and unauthorised transmission of bid information by COs are effectively contained through strong enforcement and contractual oversight.

It seems fair to surmise that both procuring entities and competing bidders may need to exercise a great degree of vigilance over inadvertent or deliberate miscarriage of bid information or unequal discussions under the new procurement procedures [proposed in India].

As Mr. Verma suggests, the very intrinsic subjectivity of the selection process in the "negotiation" or "dialogue" procedure presents a situation where the very appearance of prejudice is inescapable. Given the ever-present headline story of one and another bidding gone awry, it does little to shore up public confidence in government if there is any hint of hanky-panky in the selection process. Thus, it must be handled very carefully.

There are two foundations upon which such a system must rest. First, there must be a trained and professional (independent minded) procurement staff. Second, there must be a critical review process. It is one thing to give judicial review deference to procurement staff when they are well trained and independent of political and commercial influence, and when the selection criteria are objectively verifiable, and another to give such deference, thereby turning a purposefully blind eye, to subjective decisions easily masking favor or fortune or laxity.

I'd suggest as one prong to any determination of "best value", that there be a separate determination of how the selection is in the "best interests" of the government. Too often, I'd suggest, the evaluation of best value is made in the blinkered context of the particular solicitation, without taking into consideration the broader interests of the government in fostering competition, broadening the industrial base that the government depends on, or other such interests.

I am not suggesting that such interests dominate the selection process, but by at least having a nod in that direction might uncover the instances where, for instance, incumbency is intrenched or commercial interests of the vendors preferred.

Overriding the GAO automatic stay override

This post is about the '''best interest" of the government. The vehicle for this discussion is the government's right to override an automatic stay of a contract or award when there is a protest of a US federal government solicitation to the Government Accountability Office (GAO).
The government can choose to override the automatic stay when it is in the government's "best interest" or, alternatively but similarly, there are "urgent and compelling circumstances that significantly affect the [government's] interest".

A body of law is developing from cases reviewing the government's decisions to override the automatic stay. This serves a broader purpose as an analogous approach to analyze other cases in procurement law of actions that can only be taken in the "best interest" of the government. +

For instance, under Guam law, the government can only cancel a bid if there is a written determination, made by the highest procurement authority in the purchasing agency, that such cancellation is in the "best interest of the Territory". Also, comparable to the "significant interest" prong in federal law, Guam law allows, among other requirements, the automatic stay to be lifted upon a showing by the agency or Attorney General of substantial government interest. Though the standards of review may vary, the analysis may be similar in either case.

The following is excerpted from an outstanding review of the developing body of law regarding the override of agency override of the automatic stay in the Air Force Law Review, Vol 66, beginning at page 135, written by highly credentialed authors, Lieutenant Colonel Kevin J. Wilkinson and Captain John M. Page. It is a follow-up work done by them from a previous article in the Air Force Law Review in 2007.

You really need to read the whole article from the linked Volume 66 to fill in the many blanks created by this brief excerpting. The footnotes in the article are especially helpful.

CICA STAYS REVISITED: KEYS TO SUCCESSFUL OVERRIDES

The Competition in Contracting Act (CICA) of 1984 provides for the automatic stay of a contract award and suspension of performance of a newly awarded contract after the timely filing of a bid protest at the Government Accountability Office (GAO) and notice to the procuring agency. Agencies must withhold contract award when they receive notice of a protest from GAO.

Although the “CICA stay” is automatic, there are narrow ways around it. Under both CICA and the Federal Acquisition Regulation (FAR), agencies may override a CICA stay if they meet certain defined circumstances. If the protest is in the pre-award stage, an agency may only override the stay where “urgent and compelling circumstances that significantly affect interest of the United States will not permit waiting for the decision of the Comptroller General.” If the protest comes post-award, the urgent and compelling circumstances standard still applies, but CICA adds an alternative “best interests” standard as well. Under the “best interests” standard, an agency may override the stay “upon a written finding that performance of the contract is in the best interests of the United States.”

In the original article, we showed how, in the beginning, CICA stay overrides had become so common that it appeared that the exceptions were swallowing the rule.

Agencies commonly justified an override with procurement circumstances that did not present truly urgent, compelling, or sufficiently significant Government interests, as least not as the courts interpreted and applied those standards.

As a result, a protester (frequently the incumbent) often turned to the only avenue of relief available and filed suit in federal court alleging a CICA violation. Faced with obvious examples of Government overreaching in CICA stay overrides, the courts did not hesitate to prevent agencies from awarding or continuing the performance of an awarded contract where the court found the agency’s justification for an override decision to be weak or unsupported.

Since our article was published, seven published opinions addressing CICA stays provide exclamation marks to our existing recommendations and expressly address other areas of emphasis. These recent cases all highlight the need for thorough, objective decision making in the CICA stay override process.

2006 was a watershed year for CICA stay override cases. The U.S. Court of Federal Claims (COFC) overturned four CICA stay overrides. In a fifth override-related case, the court let the agency’s override stand, but only after the agency’s third attempt at demonstrating that the contract at issue involved “interests of national defense and national security.” Before 2006, the history of CICA stay jurisprudence in the federal courts was deferential to the agency, and sustaining agency overrides was the rule more than the exception.

Most notable among the 2006 cases is Reilly’s Wholesale Produce v. United States. In Reilly’s, Judge Allegra distilled from prior COFC cases the “relevant” factors—i.e., factors the agency “must consider” and address when considering an override decision—and those that are “offlimits” —i.e., “irrelevant.” The “must consider” factors include:

(i) whether significant adverse consequences will necessarily occur if the stay is not overridden;
(ii) conversely, whether reasonable alternatives to the override exist that would adequately address the circumstances presented;
(iii) how the potential cost of proceeding with the override, including the costs associated with the potential that the GAO might sustain the protest, compare to the benefits associated with the approach being considered for addressing the agency's needs; and
(iv) the impact of the override on competition and the integrity of the
procurement system, as reflected in the Competition in Contracting Act.

Judge Allegra’s two “irrelevant” factors are

(i) that the new contract would be better than the old one, and
(ii) that the agency would prefer override and continuation of the contract.

As noted, for its override decision to be upheld, the agency must not only sort through relevant and irrelevant factors, addressing the relevant ones; it must also base its decision and findings on the relevant factors that do not “run[] counter to the evidence before the agency.”

The court did note that some of the cases it cited for the factors that are legally relevant and irrelevant were cases in which the agency override decision was based upon the “best interests” standard. However, “in the court’s view, the rationale employed in those cases has, where indicated, application to the review of an override decision based upon urgent and compelling circumstances.”

Over the last three years [2007 - 2010] seven published COFC opinions involved CICA stay overrides. The seven cases show mixed results when the Government attempts to override a CICA stay.

In e-Management Consultants, Superior Helicopter, and Nortel Government Solutions, the court found against the Government, holding in each case that the Government’s decision to override was arbitrary, capricious, and contrary to law. In e-Management, the National Highway Traffic Safety Administration (NHTSA) justified its override by claiming that continuing with the contract was within the Government’s best interests. The court methodically went through each of the Reilly’s factors and found that the Government had not passed the test.

The court in the other cases came to similar conclusions, again relying on a thorough analysis of the Reilly’s factors to determine whether the Government complied with the law. In each case, the court found that the Government had failed to meet all of the factors, noting in Nortel Government Solutions that “[f]ailure by an agency to consider just one of these factors is fatal to an override decision based on urgent and compelling circumstances.”

On the other hand, in three other cases, EOD Technology, PlanetSpace, and Analysis Group, the court sided with the Government and upheld the Government’s decision to override the CICA stay. Contrary to EOD Technology, the PlanetSpace court specifically ignored the Reilly’s factors, saying, “We did not consider the Reilly factors at the hearing because Congress limited the court’s review of an agency’s decision in a CICA override action to the Administrative Procedure Act standards.”

This was followed by the October 2009 Analysis Group case in which the court listed the “four Reilly factors” and stated “while these four additional factors may be helpful in analyzing the agency’s override decision, they are not dispositive.” The court cited PlanetSpace, following its holding that “when considering injunctive relief in override cases, the Court should only apply the APA four-factor test for injunctive relief and not the additional four Reilly factors.”

These cases make clear (whether the override is upheld or not) that the analytical approaches cross the spectrum. They range from the assertion of strict APA review and express rejection of any consideration of the Reilly’s factors, (PlanetSpace and Analysis Group) all the way to considerably heightened scrutiny and the full application of the Reilly’s factors (Superior Helicopter and Nortel Government Solutions).

As we acknowledged in the 2007 article, the outcome seems to rest largely on which judge has been assigned to the case. The lack of unified precedence among COFC cases seems to prompt “luck of the draw” decisions, although there have been no appeals of the COFC decisions and no demand in academic circles for the Court of Appeals for the Federal Circuit to lay the factors to rest.

In light of the 2006 cases, we labeled our advice as “keys to ensuring overrides are reasonable, supportable, and less vulnerable to attack” and heavily footnoted our observations and recommendations with case law. This [article] supplements such advice.

The agency should assert interests of national defense and national security when they are present; however, be sure not to overstate the interest, because the courts are clearly wary when this assertion is made and demand that the record back it up. Also remember that all other issues pertaining to overrides must be addressed as well.

In Nortel Government Solutions, the court recognized that the Drug Enforcement Agency was “essentially asserting a national security argument regarding the necessity of the override.” The court quoted Superior Helicopter, saying, “Ultimately, the public’s interest in a fair, competitive federal procurement system outweighs unsubstantiated claims, even those related to the public safety.”

Again, a word of caution: justifications cited as “interests of national defense and national security” must be legitimate, significant— paramount to the procurement itself—and above all supported by the record. Do not overstate or make bald assertions that the record cannot support.

Some of the recent cases addressed supplementing the administrative record, usually with discouraging results for the Government. The e-Management Consultants court decided that “in an override case ‘the focal point of judicial review should be the administrative record already in existence.’” The court denied the agency’s request to add to the record with Supplemental Declarations, finding that “the information contained in the [administrative record] and [override memorandum] is sufficient for this court to conduct ‘meaningful judicial review.’” The court also found that “the Supplemental Declarations [were] written, intentionally or not, with the perspective obtained through the ‘lens of litigation’” and so should be treated with skepticism.

Our observations and recommendations are to inform decision makers and reviewers that their decisions to override CICA stays must be made judiciously and are subject to intense scrutiny. Gone is the era of extreme deference to the agency.

Access Systems demonstrates a reasonable compromise between competing interests of necessary performance of a contracted service and complying with the letter and spirit of Congressionally mandated CICA stays. Agencies will have to consider the reasonableness of properly tailored bridge contracts as an alternative for each override. As Reilly’s showed, courts are willing to treat bridge contracts as overrides and overturn them. Therefore, just as with overrides themselves, agencies should not abuse the use of bridge contracts.

In terms of general fairness and integrity of the procurement system, bridge contracts are plausible alternatives to overrides provided they are tailored appropriately to bridge gaps in necessary services and not to circumvent federal procurement law.

The Court of Federal Claims jurisprudence in CICA stay override cases remains unsettled. The prudent approach [for an agency] in deciding whether to override a stay would be to:

(1) start with the four APA factors,
(2) because the “Reilly's factors” still linger, agencies must consider them, and,
(3) because the courts are mixed on whether injunctive relief or declaratory relief is necessary, agencies have to consider that the court will apply the four factors for injunctive relief.

Nothing short of such a comprehensive analysis will do.

POST UPDATE October 2014 (posted 9 September 2015):

Court Upholds Bid Protest Stay Override

The U.S. Court of Federal Claims ruled against a bid protester seeking to stop performance on NASA's $6.8 billion commercial space program. The court's ruling upheld NASA's unusual decision to override the automatic stay of contract performance during a GAO bid protest. In addition to highlighting an unusual wrinkle in the normal bid protest process, this case also underscores the importance of venue selection in bid protests. Protests generally may be filed with the GAO, the Court of Federal Claims or the agency itself. Filing at the court usually is slower, more expensive and does not trigger the automatic CICA stay. On the other hand, as part of its bid protest procedure, the court can grant an injunction prohibiting the agency from moving forward. An agency might well face a tougher fight arguing against an injunction than it would in overturning the CICA stay.

While a GAO protest triggers the CICA stay, only a federal court maintains the authority to direct a federal agency to enforce the stay. So, if an agency like NASA decides to override the stay, then the protester's only recourse is to request an injunction from the U.S. Court of Federal Claims. The court could have enjoined NASA from continuing in performance of its contract. Instead, the court sided with NASA and allowed NASA to continue working with Boeing and SpaceX pending the protest decision.

POST UPDATE 16 JUNE 2012:

See, also the ARMY CONTRACTING AGENCY CICA Automatic Stay Override Guide April 2004.

POST UPDATE 6 April 2012:

WIFCON.com has a page devoted to "4 CFR 21.6: Withholding Award, Suspending Contract Performance, Override of Stay, Injunction", which keeps an ongoing review of cases related to the topic in this post above.