Tuesday - Avoiding Bid Protests

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AVOIDING BID PROTESTS

and

HANDLING THE ONES THAT HAPPEN

Nancy Brooks

Director of Purchasing

Iowa State University

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

1

Overview

What Is A Bid Protest?

• A formal complaint against some aspect of a procurement process which asserts either:

– A violation of policy, procedure or law; or

– A decision that lacks any rational basis

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

2

Overview

• What is a decision lacking a rational basis?

– A decision or action that lacks logical support at all

– A decision based on materially mistaken or erroneous facts

– A decision contrary to the solicitation

– A decision based on improper motives

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

3

Common Protestable Issues

• Failure to advertise the solicitation as required;

• Specifications give one bidder an unfair advantage over its competitors;

• A bidder had improper communications or relationship with contracting officer which gave the appearance of impropriety;

• Winning bidder failed to satisfy minimum qualifications or was not responsible or responsive;

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

4

Common Protestable Issues

• Evaluation criteria were applied that were different from those stated in solicitation;

• More weight was afforded to one evaluation area than was disclosed in solicitation;

• Irregularities in receipt or opening of bids

(acceptance of late bid or opening at different times)

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

5

Common Protestable Issues

• Source selection not rational or consistent with the evaluation criteria;

• Past performance evaluations may appear unfair or not supported by facts;

• Improper discussions or debriefings; or

• Conflict of interest created by awardee’s involvement in certain activities.

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

6

Common Protestable Issues

• Sole source contracts;

• Best-value determinations; or

• Abuse of discretion and disparate treatment of bidders.

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

7

Bid Protest Trends

• Federal procurement protest increased

– 1,652 in 2008 to 2,475 in 2012

• Why?

– Difficult economy

– Shrinking pots of public money

– Law firms specializing in bid protests

“Leading name in bid protests – team of attorneys have been nationally recognized for their work in pre-award and post-award protests.”

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

8

Protests

• Court Cases

– Blue Cross & Blue Shield of Rhode Island v. Najarian,

(Rhode Island Supreme Court, 2005)

• Trial Court sustained a protest against the award & issued an injunction

• Supreme Court reversed

– While the contract award was not handled perfectly (at least partly due to understaffing), a “fair and open bid process was conducted in good faith and we must afford a presumption of correctness to the State’s decision. Any mistakes made during the process simply do not rise to the level of palpable abuse of discretion.”

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

9

Protests

• Court Cases

– Glidepath, LLC v. Columbus Regional Airport Authority,

(Ohio Court of Appeals, 2012)

• Evaluation committee determined Glidepath was not responsible. Airport’s finance director on committee and analyzed financial statements & D&B reports. Company had late payments to subs and limited project mgmt. experience.

• “Airport performed its duties in a lawful manner. Made qualitative determinations regarding Glidepath’s resources, capacity, and overall ability to perform…..determination was supported by logic and reason.”

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

10

Protests

• Court Case:

– Professional Building Maintenance Corp. v. School Board of County of Spotsylvania (Virginia Supreme Court, 2012)

• County held 2 post-award meetings with vendor

• (1st) emphasized weakness in Environmentally Preferable

Purchasing Program and (2 nd ) gave reasons regarding responsibility, transitioning plan, and method of conducting background checks.

• Found that award decision was arbitrary and capricious.

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

11

Protests

• Court Case:

A&A Industrial Piping, Inc. v. County of Passaic (New

Jersey Supreme Court, 2012)

• Protested award to low bidder on grounds that apparent awardee was not prequalified by county. County realized it inadvertently omitted prequalification in solicitation so cancelled it.

• Court sustained the county’s decision that it did not abuse its discretion in determining it needed to rebid. Court reasoned that this put potential bidders on an equal footing .

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

12

Protests

Avoidance is best practice

Protests are time consuming and costly

Damages relationships

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

13

HOW TO AVOID BID PROTESTS

Sometimes You Can’t!

Even when you are confident with your award

YOU MAY BE CHALLENGED

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

14

EXAMPLES OF PROTESTS

• Emergency Generator & Transfer Switches awarded to low compliant bidders (in-state)

– Protest: From low non-compliant bidder (out-of-state)

– Based on: Price

No local preference clause in bid

Failure to notify all bidders with bid tab within 7 days per state statute (?)

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

15

Examples of Protests

• Disposable Gloves for Dining Services awarded to low bidder (local WBE)

– Protest: From bidder with higher price (out-of-state)

– Based on: Awardee’s bid was materially non-responsive by failing to answer all questions listed in

Section D or including mandatory electronic copy in their proposal.

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

16

Examples of Protests

• Vending Machine Energy Control Units awarded to low compliant bidder

– Protest: From bidder with higher price

– Based on: “Violation of NAEP Code of Ethics Rules #7 –

Use only by consent original ideas & designs devised by one vendor for competitive purchasing purposes”

“Request a 3 rd party review of protest – Rule #8 – be willing to submit any major controversies to arbitration or other 3 rd party review insofar as established policies of institution permit.”

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

17

Examples of Protests

• Version Control Software awarded to low compliant bidder with best solution

– Protest: From other bidder

– Based on:

1.

Challenged the evaluation process and criteria

2.

Bid process be reopened and allow them to engage more in decision making process

3.

Keep request confidential

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

18

Examples of Protests

• Tent Rental and Event Set-Up Contract awarded to second low bidder based upon reference checks indicating poor communications and damage to grounds

– Protest: From low bidder (local company)

– Based on: Low bid and lack of evidence that company could not perform.

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

19

Protest Avoidance Strategies

• Published policy and procedure for vendor disputes

• Develop RFP to remove the appearance of an arbitrary or proprietary process

• Post RFPs on Internet

• Communicate your decision with all respondents prior to final award (debriefing)

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

20

Protest Avoidance Strategies

• Keep communication lines open

• Always respond to questions/protests in diplomatic manner.

• Keep conversations factual and objection

• Be consistent with evaluation criteria stated in RFP

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

21

Protest Avoidance Strategies

• Understand your position and institution’s will to support your decision

• Be consistent and follow your policies & procedures

• MAKE SURE YOU CAN DEFEND YOUR EVALUATION

& AWARD DECISION

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

22

Protests

Avoidance is best practice

Protests are time consuming & costly

Damage relationships

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

23

THANK YOU

QUESTIONS?

Annual Meeting

April 7 - 10, 2013

Orlando, Florida

24

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