procurement case law beth fleming, cpsm, c.p.m., cppo director of purchasing denton county

Procurement Case Law

Beth Fleming, CPSM, C.P.M., CPPODirector of PurchasingDenton County

Types and Sources of Contract Law

Uniform Commercial Code (UCC) statutes for wide range of commercial topics relative to the

purchase and sale of goods Written law

constitution, statutes, ordinances and charters Administrative law

rules and regulations and entity policy AG Opinions

written interpretation of existing law. They do not address matters of fact, and they are neither legislative nor judicial in nature.

Common Law based on customs and traditions of English settlers – decisions by

judges – also referred to as case law

In the common law tradition case law regulates, via precedents, how laws are to be understood, based on how prior cases have been decided. Case law governs the impact court decisions have on future cases. Common law systems follow the doctrine of stare decisis in which lower courts usually make decisions consistent with previous decisions of higher courts.

Process

Review case facts and positions of each party Small groups review facts and determine how they believe

the case was judicially resolved and why Review case decisions Discuss decisions and ramifications for public purchasing

Case 1

Planning and Design Solutions v. City of Santa Fe

Planning and Design Solutions v. City of Santa Fe, 885, P.2d 628 (NM 1994)

Case 1: Planning and Design Solutions (PDS) v. City of Santa Fe

In 1992, City published RFP for professional services for developing a mixed-use community

RFP listed and weighted 4 evaluation factors 25% Project Approach 10% Project Schedule 30% Experience and Expertise of the Firm 35% Experience and Expertise of Assigned Personnel

Purchasing Manual (and Code) states committee shall select and rank no less than 3 firms deemed to be the most highly qualified based on listed criterion and recommend a contract

Locality is a criterion which the City may legitimately consider, but it was not listed on this RFP

Regulations state “No criteria may be used that are not set forth in RFP”

PDS, a California company, inquired whether local firms would receive preference and was verbally informed they would not


City received 11 proposals which were evaluated by a selection committee

Committee determined PDS submitted the most advantageous proposal

Mazria and Associates, a New Mexico company, was ranked 4th

Committee negotiated contract with PDS and which was approved by Finance Committee, but the contract required ratification by City Council

City Council could have responded to the recommendation: Approve it or table it; Appoint a new selection committee or renegotiate the

contract; Disqualify the recommended bidder based on new

information; or Reject all bids and re-advertise

Case 1: Planning and Design Solutions v. City of Santa Fe

Contract with PDS was presented to City Council who voted unanimously to award to Mazria “the highest local firm on list”

PDS filed bid protest and suit with District Court District Court enjoined City from awarding contract to any other

business other than PDS At next meeting, City Council rescinded award to Mazria and voted

to reject all 11 proposals City Council further decided to reissue RFP and change evaluation

criteria to include locality City filed a summary motion with District Court District Court denied the motion stating City violated its own

Purchasing Manual and ruled that PDS should be awarded its costs in preparing the bid

District Court ruled the contract to Mazria was unlawful and that although they rescinded the contract, it did not cure its previous unlawful action

City filed an appeal stating they did not have a contract with PDS How would you rule and why?


Appeals Court affirmed the District Court ruling stating: City violated its own Purchasing Manual rules Although there was no formal contract with PDS, there was

implied contract that City would consider bids in accordance with Code

Judicial relief is available to the disappointed bidder when a City acts in an arbitrary and capricious manner and violates the integrity of the Code

The City could not evade the Code “under the color of a rejection” in this case where the contract to Mazria was unlawful and that although they rescinded the contract, it did not cure its previous unlawful action

Strict enforcement of the procurement laws and penalties for their violation will serve the public interest

PDS was awarded bid preparation costs at $25,769.93

Planning and Design Solutions v. City of Santa Fe, 885, P.2d 628 (NM 1994)

Case 2

Professional Building Maintenance Corporation (PBM) v. School Board of County of Spotsylvania

Professional Building Maintenance Corp. v. School Board of County of Spotsylvania,

No. 110410 (Virginia Supreme Court, 2012)

Case 2: PBM v. School Board of Spotsylvania

School Board published a “Best Value” IFB for custodial services in various schools

Evaluation factors were: 50 pts – Expertise and experience 5 pts – Experience of personnel 5 pts – Supplies and equipment 10 pts – Quality control program 30 pts – Price

Specifications indicated the intent to award contract to highest score according to the points given

PBM submitted the lowest cost but did not receive the award and filed suit arguing School Board violated Act and: did not award to lowest responsive and responsible bidder; considered criteria not stated in IFB; and failed to describe method for awarding points


School Board filed demurrer stating contract was to be awarded to best value bidder, not the lowest responsible bidder

Circuit Court sustained School Board’s demurrer finding “Best Value” is a method permitted and the IFB sufficiently meets the requirements of the law for a “Best Value” solicitation

PBM files an appeal stating Circuit Court erred and did not consider the complaint of the School Board violated its Act and considered criteria not stated in IFB; and failed to describe method for awarding points


PBM claims the School Board acted arbitrary or capricious, and specifically states:

At the first debriefing, PBM was told they failed to adequately describe the supplies and equipment

At the second debriefing, PBM was given 2 reasons it was not successful (neither of which were listed in criteria): Failure to address a transition plan Failure to identify how background checks would be

handled Act requires the basis for evaluating bids must be stated in

IFB and at debriefing, School Board was unable to articulate the factors considered in how the points were allocated or how the points were awarded

How would you rule and why?


Supreme Court overrules the Circuit Court stating: School Board’s actions were arbitrary and capricious and

did not comply with the distinct best value statutory mandate

The criteria, factors and basis for consideration of best value and process for the consideration of best value shall be as stated in the procurement solicitation

Different reasons were given during debriefings for the unsuccessful bid of which the second debriefing explanations were not listed in the criteria

Professional Building Maintenance Corp. v. School Board of County of Spotsylvania,

No. 110410 (Virginia Supreme Court, 2012)

Case 3

Jasper Seating Company vs. New Jersey Division of Purchase and Property

406 N.J. Super. 213; 967 A.2d. 350; 2009 N.J. Super. LEXIS 72

Case 3: Jasper Seating vs. NJ Div. of Purchase

2006 - Division issued RFP for non-modular furniture with intent to make one state-wide award for each brand listed in RFP

Contract would cover all cooperative agencies for a term of 18 months

Specs mandated that published price lists submitted should be adequate for the evaluators to analyze proposal

Specs state: It is the sole responsibility of the bidder to be knowledgeable of all addenda

Addenda issued to further clarify that: There will be no adjustments to price lists and only most

updated manufacturer’s preprinted price lists will be acceptable

The price list submitted must not contain any sticker increases, up-charges, etc. and discount being bid will be taken directly from the price list submitted


Sept. 2006 - Jasper submitted bids on behalf of two of its divisions Jasper included pre-printed list price catalogs with stickers

on the covers indicating prices would increase by 4% effective January, 2007

Three other bidders also submitted bids with price increase stickers

All were rejected as non-conforming

Jasper protested stating that in spite of the sticker, no price increase was to be applied and resubmitted price lists with stickers crossed out


Division issues a Final Agency Determination rejecting Jasper’s protest Determination that Jaspers bids constituted a non-waivable,

material deviation from the RFP which required rejection in its entirety

Jasper’s attorney argued: his signature guarantees the prices in the catalog sticker was non-issue because the sticker would be

ignored as per terms of the RFP

Division’s final determination stands

Jasper hires another attorney and re-argues: They believe the RFP meant that the sticker would be

disregarded

Jasper is notified that recourse is available through courts Jasper files suit with appellate court



Appellate Court affirms the Division’s determination citing: Generally, courts will not interfere with a Final Agency

Determination which pertains to contract awards unless there is a finding of bad faith, corruption, fraud or gross abuse of discretion.

The Director could not waive the deviation from the terms of the RFP and controlling addenda and the bids were properly rejected as non-conforming.

Waivers of an RFP deviation which would permit “post-bid . . . manipulation of the results have been declared unlawful. “Such post-bid manipulations are repugnant to our public bidding laws.”

To reverse the Director’s determination in this matter, and grant one disappointed contractor a statewide re-bid, would be a costly and unnecessary exercise.

406 N.J. Super. 213; 967 A.2d. 350; 2009 N.J. Super. LEXIS 72

Case 4

Language Line Services v. Pennsylvania Department of General Services

991 A.2d 383; 2010 Pa. Commw. LEXIS 109

Case 4: Language Line v. Pennsylvania DGS

2008 – DGS issued RFP to procure statewide interpretation, translation and language services

RFP listed evaluation criteria in order of importance: technical, cost, disadvantaged business participation (DB), enterprise zone small business participation, and domestic workforce utilization

Prior to opening, relative importance was established as: 50% Technical 30% Cost 20% DB

Six proposals were received on Lot 1 and all were deemed to be responsive RFP established only 2 mandatory responsiveness

requirements – timely submitted and properly signed


Language Line’s (LL) proposal did not include a DB submittal and received no points in that category

LSA qualified as a DB and received 170 points in that category LSA received second highest overall score of 832.01 LL was fifth with overall score of 708.0

DGS proceeded BAFO with those reasonably susceptible of being selected for award

BAFO request was sent to top 3 who all scored within 100 points of each other (LSA was included, but not LL)

BAFO evaluation resulted in LSA with highest score and award


LL filed timely protest claiming LSA’s misclassified employees as independent contractors and did not qualify as DB (must have less than 100 employees for small business)

DGS issued determination denying protest indicating: employees were properly classified and LSA had 87 employees competitive range was acceptable as those within 100 points of

the highest scoring firm RFP established only 2 mandatory responsiveness

requirements – timely submitted and properly signed

LL filed suit stating DGS erred in determining LSA’s interpreters were independent contractors

Court rules that no errors of law were committed and the necessary findings of fact were supported by substantial evidence


LL appealed stating: DGS erred in determining LSA’s interpreters were

independent contractors

Even if it is found that they qualified for DB status, they now employ more than 100 people and do not qualify for DB – in fact they grew to more than 100 between submittal and award

Asserted that DGS did not treat all offers with fair and equal treatment and that DGS was required to accept BAFO’s from all responsible offerors

DGS erred in awarding contract to LSA when it failed to meet several non-waivable requirements in RFP



Appellate Court affirmed DGS’s determination to deny LL’s bid protest stating:

Did not find that LSA’s DB status was erroneous

DGS properly determined that LSA was qualified for DB status at the time of scoring the proposals

LL misinterpreted the statute for “fair and equal treatment” as a competitive range may be selected before BAFO

Only 2 mandatory requirements in RFP and all other deficiencies were evaluated and scored properly

991 A.2d 383; 2010 Pa. Commw. LEXIS 109

Case 5

Peabody Construction v. City of Boston

Peabody Construction Co, Inc. v. City of Boston, 28 Mass. App. Ct. 100 (1989)

Case 5: Peabody Construction v. City of Boston

City of Boston issued bid specifications for construction project

City states in bid and requires at time of bid: Set aside portion of work for M/WB enterprises Must be in city directory as certified by city Or, submit with bid a copy of certification from state and

application for city certification

Bid Language states: If bidder failed to submit such data (M/WB), then city

reserves right to rule the omission as an informality and bidder is allowed to submit data within 5 days


Bids were received: Peabody - $10,879,000 Suffolk - $11, 243,200 Sciaba - $11,582,200

Peabody submitted subcontractor K&R as certified by state, but did not include certification or application

Day after bid opening, City notified Peabody bid was rejected, on the same day, city received application and certification

City signed contract with Sciaba (unknown why award was not made to Suffolk)


Peabody files suit and argues: that the city was compelled to exercise its right to treat

Peabody’s omission as an informality that the city, in its bidding documents, made compliance

with M/WB procedures permissive rather than mandatory

City argues: that they retained the right in the bidding documents to

reject as non-responsive a bid that does not comply with requirements

No language that compels a city to treat an omission as an informality

Fact that bidder is substantially low does not divest the city of its discretion in the matter



Motion judge denied injunction and concluded that Peabody not only did not demonstrate a likelihood of success on the underlying merits, but also did not demonstrate a sufficient showing of irreparable harm

Peabody files appeal

Appeals court affirmed decision KASS, Justice (concurring). “Courts, in general, should not

second-guess the honest exercise of discretion by bidding authorities for the excellent reason that a bidding authority is in a better position to evaluate the significance of an apparently minor deviation than a judge is. Nevertheless, I give voice to my concern that the city of Boston has acted with undue rigidity and perhaps without sufficient regard to the public interest--$703,200 worth of public interest (the difference between Peabody's bid and Sciaba's bid).”

Peabody Construction Co, Inc. v. City of Boston, 28 Mass. App. Ct. 100 (1989)

Beth D. Fleming, CPSM, C.P.M., [email protected]

mailto:[email protected]

procurement case law beth fleming, cpsm, c.p.m., cppo director of purchasing denton county

Documents

city of santa fe city

city council city council

city of santa fe contract

locality city

city acts

city of santa fe planning

proposals city council

city of santa fe appeals