The NM Procurement Code & Dealing with Bid

Protests

By Ramon Vigil & John F. Kennedy

Cuddy & McCarthy, LLP

NMSBA 2010 Leaders’ Retreat

July 13, 2012

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Procurement Code Overview

Invitations to Bid (ITBs) Procedures for Procurement Small Purchases Sole Source Purchases Procurement Through Existing Contracts Requests for Proposals (RFPs) Bid Protests

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Procure

To Obtain; To Acquire; To Purchase;

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NM Procurement Code

Statutes Enacted by Legislation § 13-1-28 through § 13-1-199 NMSA 1978 Provide Guidelines & Requirements for the

spending of State funds in New Mexico http://www.generalservices.state.nm.us/spd/i

ndex.html Legal Procurement Methods

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NM Procurement Code Allows:

Three Types of Procurement Competitive Sole Source Cooperative Agreements

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Competitive Procurement

Procurement through competition is the Code’s preferred method

Invitations to Bid (ITBs) Request for Proposals (RFPs) Vendors compete for business

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Invitations to Bid (ITBs)

Fastest, generally easiest competitive procurement method

Used to acquire commodity-type products and services

Number of vendors/suppliers can provide the same item at various bid prices

Procurement is advertised with specifications and response requirements to registered vendors

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ITBs continued

Sealed bids received Publicly opened on closing date Responsible bidder Supplier’s product or service meets the

specified requirement(s) Lowest price will receive the award No ability to select a particular vendor, or to

negotiate the price

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Request for Proposals (RFPs)

More complex and time consuming Used when varying products or services that

could potentially meet the needs Detailed evaluation of the offeror’s product or

solution is necessary to determine which offered product or solution will provide the “Best Value”

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RFPs continued

Entails development of a detailed statement of the work defining the entity’s needs

Provides/Explains the criteria to be employed by the evaluation committee in rating the proposals

Frequently used criteria for evaluation Technical compliance to requirements; stability of

offeror; experience and education of key personnel; and price offered

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RFPs continued

Unlike ITB process, cost is not the sole criteria in the evaluation

Proposal providing the lowest price will not necessarily receive the bid

Typically used for Professional Services exceeding $50,000.00

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Sole Source (13-1-126)

Sole Source Procurement is disfavored Pricing and terms and conditions are difficult or

impossible to negotiate No open market to ensure reasonable pricing When alternative available – issue a contract or

agreement for a limited term to provide product or service

Maintenance of proprietary systems and proprietary software are examples of sole source providers

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Cooperative Agreements

§ 13-1-44 NMSA 1978 “Cooperative Procurement” is procurement

conducted on behalf of more than one state agency or local public body.

§ 13-1-135 NMSA 1978 authorizes cooperative procurement

CES – Cooperative Educational Services RECs – Regional Educational Centers

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Small Purchases (13-1-125)

Adopt a local policy regarding procurement of services, construction or items personal property having value not exceeding $20,000

Less than $10,000 – Best Obtainable Price $10K - $20K - Informal Procurement (3 Valid

Quotes) $20K or greater – Formal Procurement (ITB

or RFP)

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Small Purchase – Professional Services (13-1-125)

Professional Services – require specialty skills

Examples: Consultants, Attorneys, Auditors Less than $50K – informal procurement 50K or greater - RFPs

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Emergency Purchases (1-13-127)

Exists a threat to public health, welfare, safety or property requiring procurement under emergency conditions

Made with completion as is practicable under the circumstances

Basis of emergency and for selection of particular contractor – included in the procurement file

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Emergency Purchase (cont.)

Floods, epidemics, riots, equipment failures or similar events

Seriously threaten Functioning of government Preservation or protection of property Health and safety of any person

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Procurement Under Existing Contracts (13-1-129)

Called “Piggyback” contracts May contract for services, construction or

items of tangible personal property without use of competitive bids or sealed proposals

With business that has price agreement with state purchasing agent or purchasing office of other local public body meeting same standards and specifications

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Procurement Under Existing Contract (cont.)

Quantity purchased does not exceed the quantity which may be purchased under the applicable price agreement;

The purchase order adequately identifies the price agreement relied upon

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Irregularities in Bids / Proposals (13-1-132)

A central purchasing office may waive technical irregularities in the form of the bid or proposal of the low bidder or offeror which do not alter the price, quality or quantity of the services, construction or items of tangible personal property bid or offered.

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Rejection or Cancellation of Bids or RFPS (13-1-131)

CFB or RFP can cancelled All bids or proposals can be rejected When in the best interest of the public body New CFB or RFP must be issued If bids or proposals for second CFB or RFP

are unacceptable or no bids are received, then central purchasing office may purchase in the open market at best obtainable price

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Right to Protest (13-1-172)

Any bidder or offeror who is aggrieved in connection with a solicitation or award of a contract may protest

Protest must be In writing Within 15 calendar days after knowledge of the

facts or occurrences giving rise to the protest

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Written Protest

May be from vendor who submitted bid or proposal

May be from Attorney representing vendor who submitted bid or proposal

May be a letter signed by vendor but obviously from an attorney

Involve your attorney to assist in response/determination to protest

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Procurements after Protest (13-1-173)

In event of timely protest, shall not proceed further with the procurement

Unless, central purchasing office makes a determination that the award of the contract is necessary to protect substantial interests of the local public body

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Authority to Resolve Protests (13-1-174)

A central purchasing office or a designee shall have the authority to take any action reasonably necessary to resolve a protest of an aggrieved bidder or offeror

May not award money damages or attorney’s fees

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Bid Protests Procedures - 1

Send letter to all bidders/offerors Let all bidders/offerors know about the bid protest Copy of the bid protest written letter Ask for responses and information from the bidders that

may assist in the determination of the bid protest Set a date specific for all responses for prompt

determination Attorney can assist with this and Local Purchasing Office

can designate Attorney to assist in the determination procedures

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Bid Protest Procedures - 2

Send copy of all responses from bidders/offerors to other bidders/offerors

Use information obtained from all sources to determine whether bid protest is valid

Review applicable facts Review applicable laws Make a determination If complex issues – use attorney to assist you

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Bid Protest Procedures - 3

Local purchasing office may use a hearing instead of reviewing facts and laws through correspondence – Local Purchasing Procedures

Bidders can provide testimony and documentary evidence Protesting bidder submits evidence first Apparent low bidder submits evidence Both parties can provide legal arguments

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Bid Protest Procedures - 4

13-1-175 Promptly issue a determination relating to the

protest Reasons action taken Inform protestant of right of judicial review of the

determination pursuant to section13-1-183

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Bid Protest - Determination

Reasons Findings of Facts Findings of Law Conclusion

Right to Judicial Review Pursuant to 13-1-183 and 39-3-1 NMSA 1978

Send copy to all bidders/offerors Required by 13-1-176

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Implement Determination

If determination is that the protest is valid and correct then Disqualify the bidder/offeror in violation and award

to the next best bidder/offeror or Reject all bids/proposals and request new bids or

proposals If determination is that the facts and/or the

law does not support the protest then continue with the award to the lowest bidder or best proposals

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Debarment / Suspension (13-1-179)

Vendors / Contractors may be debarred or suspended for Conviction of criminal offenses related to

obtaining contract or subcontract Conviction of embezzlement, theft, forgery,

bribery, falsification or destruction or records or receiving stolen property; or

Serious violations of Procurement Code (willful or history of failure to perform)

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Debarment & Suspension

Written notice of debarment (up to 3 yrs) or suspension (up to 3 months) Reasons for action taken Right to judicial review per section 13-1-183

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Unlawful Participation (13-1-190)

Employee or Board Member of local public body may NOT participate directly or indirectly in a procurement when the employee /bd member knows the employee / bd member or any immediate family member has a financial interest in the business seeking or obtaining a contract

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Bribes, Gratuities, & Kickbacks Prohibited (13-1-191)

All contracts and solicitations SHALL contain reference to the criminal laws prohibiting bribes, gratuities and kickbacks!!

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Contemporaneous Employment Prohibited (13-1-193)

Unlawful for public body employee / bd. member who is participating directly or indirectly in the procurement process to become or be, which such an employee, the employee of any person or business contracting with the government body by whom the employee is employed

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Contemporaneous Employment Waiver

Board may grant waiver Contemporaneous employment is publicly

disclosed Employee able to perform procurement functions

without actual or apparent bias or favoritism Employee participation is in the best interest of

the local public body

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Civil Penalty (13-1-196)

Person, firm or corporation that knowingly violates any provision of the Procurement Code is subject to civil penalty

Up to $1000.00 for each violation

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Recovery of Value (13-1-197)

An equal of anything transferred or received in violation of the Procurement Code may be imposed as a civil penalty upon both transferor and transferee

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Kickbacks; Additional Penalty (13-1-197)

Upon a showing that a subcontractor made a kickback to a prime contractor or a higher-tiered subcontractor in connection with the award of a contract or subcontract

Conclusively presumed that the amount was included in the price of the subcontract and ultimately borne the local public body

Amount equal to kickback imposed as civil penalty upon recipient and subcontractor

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Misdemeanor (13-1-199)

Any business or person which violates the Procurement Code is guilty of a misdemeanor

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Q & A Contact Information Ramon Vigil, Jr. Cuddy & McCarthy, LLP 7770 Jefferson St. NE, Suite 305 Albuquerque, NM 505-888-1335 rvigil@cuddymccarthy.com John F. Kennedy Cuddy & McCarthy, LLP 1701 Old Pecos Trail Santa Fe, NM 505-988-4476 jkennedy@cuddymccarthy.com

www.cuddymccarthy.com