SURVIVING BID PROTESTS

1. SURVIVING BID PROTESTS Maggie McConnell and Bill Munch March 18, 2014

2. In Memory of Graham Alex Turner Assistant Attorney General Arizona Attorney General’s Office

3. Objectives • Tips for getting yourself in the right frame of mind to draft your response • Writing/drafting principles • Organizational tips • Writing effectively and avoiding “procurement-ese” – actual written responses and how they could have been written better • A look at what can happen on appeal to an administrative law judge

4. Principles of Drafting • Concise (not Wordy) • Assertive (not Argumentative) • Factual (not Presumptive) • Thorough (not Haphazard)

5. Principles (continued) • Direct (no “Sideways” approach) • Unemotional (not Outraged)

6. Preparing to Write • Cool off • Take notes on a copy of the protest • Read and re-read the protest • Organize response in your head before starting to write

7. Preparing to Write (continued) • Outline the response • Use headings • Leave time to let draft “sit” before editing

8. Kinds of Responses • Procedural (dismissal) • Timeliness • Issues Not Protestable • Not Enough Proof

9. Kinds of Responses (continued) • Substantive (denial) • Answer all of the issues

10. Parts of the Response • Introduction • “On October 12, 1999, XYZ Company filed a protest under Request for Proposals No. 234. The Procurement Officer denies the protest for the reasons stated in the remainder of this decision.”

11. Parts of the Response (continued) • Statement of Facts • Short • Only Those Relevant to Protest • Response (procedural or substantive) • Conclusion

12. Answering the Protestor’s Arguments • Restate each argument before your response • Combine arguments if answer to them is the same

13. Answering (continued) • Where argument isn’t clear, say what you think it means (e.g. “It appears Protestor asserts that. . . “ • Characterize Protestor’s arguments • “Protestor misstates the facts.” • “Protestor is wrong.”

14. The Answer Itself • Tell the judge/hearing officer why you are right • Correct any mischaracterization of facts

15. The Answer Itself (continued) • Don’t just cite to a statute/ordinance/rule • Explain how the law supports you • Concede a point (or mistake) if Protestor is right, but tell why it doesn’t matter to the outcome

16. Conclusion • Simple and to the point • Don’t forget to explain why the Protestor isn’t entitled to the remedy it seeks

17. EFFECTIVE PROTEST RESPONSES In Memory of Graham Alex Turner Assistant Attorney General Arizona Attorney General’s Office

18. I See Lots of Protest Responses . . . • Some try to explain the issues, and effectively state why the protest is without merit. • Most do not . . . they simply state factual conclusions that the procurement officer’s conduct was appropriate.

19. I See Too Many Protest Responses . . . • That fail to explain the issues. • That are written in bureaucratic language that assumes the reader is a procurement expert – “procurement latin.” • That cite procurement code statutes or rules without describing what they say. • That ultimately fail to advocate a position.

20. If You Speak In Procurement Latin . . . • The protestant will not understand your explanation of what happened. • The protestant may think you have no real explanation, and that an appeal will therefore surely be successful. • The protestant may think you are trying to bamboozle him, and not only will he appeal, he will appeal mad. • The protestant may even go to a legislator or a reporter, and use your Procurement Latin as an example of an office that should suffer the same fate as ancient Rome – invasion by the barbarians.

21. The Hearing Officer • Probably has little experience in procurement law. • Probably is a little confused. • Probably is looking for a simple, straight-forward explanation of the issues.

22. The Hearing Officer • Probably has little experience in procurement. • You have experience in procurement. • Probably is a little confused. • You are the expert in what happened in the procurement. • Probably is looking for a simple, straight-forward explanation of the issues. • You can explain it all to the hearing officer!

23. Your Golden Opportunity • The Hearing Officer is going to read whatever you write. • You are the expert in the procurement process. • You know what happened in the procurement. • You can provide the simple, straight-forward explanation of what happened. • You can advocate your position. • Make it easy for the Hearing Officer.

24. First Absolutely Correct Statement The Protestant states that the Awardee bid sixty-six (66) items not pictured in its catalog, meaning that 55% of the items on the State’s Products List could only be purchased by searching a non-catalogued list . . . The Protestant’s argument of the non-pictured Products List items not being in the catalog, has no material merit which will alter the decision of the Procurement Officer, as the State has met both the spirit and formal requirements of A.A.C. R2-7-320 in this solicitation effort.

25. First Absolutely Correct Statement - Revised The IFB required all vendors submit pricing for the items listed on the Products List. The IFB did not require that any of the items be shown in a single catalog. Nor did the IFB require vendors submit literature containing photographs of the items on the Products List. The Arizona Procurement Code requires award be made to: “. . . the lowest responsible and responsive bidder whose bid meets the requirements and evaluation criteria set forth in the Invitation for Bids.” A.A.C. R2-7-320(A). As the Awardee was the bidder submitting the lowest price for all of the items on the Products List, it properly received the award of the contract.

26. First Absolutely Correct Statement – Further Revised (continued) Further, the Products List contains basic items such as hammers, nails and bolts. While a catalog with photographs may be convenient, it is difficult to justify disqualification of a vendor with the lowest price in favor of a higher priced vendor providing such items. It is also difficult to accept Protestant’s characterization of the lack of a photograph of a nail to be a “misrepresentation of product.”

27. Second Absolutely Correct Statement Appellant states that it suspects that the Awardee will not be able to honor their delivery requirements, and that they are the only company to invest in a distribution center and retail stores in the State. These issues have been raised by the Appellant for the first time on appeal and will not be considered as part of this protest action pursuant to A.A.C. R2-7-909(B).

28. Second Absolutely Correct Statement - Revised The Appellant raises several issues for the first time on appeal. Issues may not be raised for the first time on appeal. While these issues should therefore not be considered, the Procurement Officer will nonetheless respond in order to demonstrate that they are without merit.

29. Second Absolutely Correct Statement – Revised (continued) The Appellant states that it “suspects” that the Awardee will have difficulty complying with the IFB’s delivery requirement. The Awardee has a satisfactory record of past contract performance (as does the Appellant); there is nothing to support a conclusion that the Awardee will not be able to keep its commitments under the contract.

30. Second Absolutely Correct Statement – Revised (continued) As the Awardee is a reputable company with a satisfactory record of performance, the issue of whether it will keep its commitments under the contract is not an issue of responsibility for award, but rather a question of future contract performance to be addressed by the State if and when the need arises. The State cannot decline to award a contract to the lowest responsive and responsible bidder based on a competitor’s unsupported suspicion that the Awardee will not meet delivery requirements.

31. Second Absolutely Correct Statement – Revised (continued) The Appellant maintains that it is the only bidder to invest in a distribution center and retail stores in Arizona, and therefore is the only company who can serve Arizona’s economic development. The Procurement Code requires that all bidders be treated alike, and that a level competitive playing field be maintained. There is no authorization for the State to provide any price or contract award preference to a vendor based upon the number of Arizona retail stores, distribution centers and employees that it may have.

32. Third Absolutely Correct Statement The protestant argues that the State claimed it did not set forth a training plan for rural areas of Arizona. The protestant’s training plan is inferior to the offerors that received an award, was lacking in sufficient detail and was rated inferior to other offerors by the Evaluation Committee. The evaluators determined that the protestant’s offer was not acceptable for award because, among other factors, it proposed an inferior training plan.

33. Third Absolutely Correct Statement - Revised The protestant argues that the State claimed it did not set forth a training plan for rural areas of Arizona. However, the protestant fails to recognize that its training plan is inferior to those submitted by the offerors that received an award. Specifically, the protestant submitted a two-page “training plan” consisting of several generalized paragraphs. The description furnished was very limited, and lacked the detail present in those plans submitted by other offerors. (See protestant’s “Training Plan” attached as Exhibit “A.”)

34. Third Absolutely Correct Statement – Revised (continued) In contrast, the awardees submitted thorough training plans detailing full action plans of quarterly training throughout the State, and included sample training diskettes and literature. (See awardee’s Training Plans attached as Exhibit “B.”) A simple comparison of these two training plan exhibits makes it clear that it was appropriate for the Evaluation Committee to rate the protestant’s plan lower than those of the awardees.

35. Fourth Absolutely Correct Statement The Protestant claims that the Department’s decision to make a multiple award was based on bias in favor of large firms. The Department’s decision was made in accordance with the Arizona Procurement Code, and was not based on bias or discrimination.

36. Fourth Absolutely Correct Statement - Revised The Protestant claims that the Department’s decision to make a multiple award was based on bias in favor of large firms. The Department’s decision was made in accordance with the Arizona Procurement Code, and was not based on bias or discrimination. Multiple awards of over 80 categories of line items were made to several vendors due to a history of state-wide delivery problems. Further, the protestant is a valued contractor, holding an additional contract for other items with the Department. Payments under that contract during the first five months of this fiscal year alone have totaled over $238,000.

37. The Bottom Line • Use your Procurement Officer’s Decision to advocate your position. • It may avoid an appeal. • Use your advantages of knowledge and experience to provide a simple, straight-forward explanation. • Show you acted professionally, correctly and appropriately.

38. Administrative Law Judge Decisions on Bid Protests and Claims

39. State of Arizona Office of Administrative Hearings • Appeals of State agency bid protest and contract claim decisions under the Arizona Procurement Code are made to the Director of the Department of Administration. • The Director may direct that an administrative law judge hold a hearing on the appeal. • After the hearing, the administrative law judge makes findings of fact, conclusions of law, and a recommended decision. The Director may or may not adopt the decision.

40. State of Arizona Office of Administrative Hearings • Since about 1998, the State Office of Administrative Hearings has had jurisdiction over Arizona State Procurement Code bid protest and contract claims appeal hearings. • http://www.azoah.com/

41. State of Arizona Office of Administrative Hearings • Since 1998, there have been: • 13 bid protest appeals • 4 contract claims appeals • Of the bid protests – • 11 have involved requests for proposals • 1 has involved invitations for bids • One is unknown as the protester/appellant failed to appear at the hearing and the matter was dismissed

42. State of Arizona Office of Administrative Hearings • Of the one protest involving invitations for bids, the judge upheld the procurement officer’s decision to award the contract and denied the protester’s challenge. The ADOA Director adopted the decision.

43. State of Arizona Office of Administrative Hearings • Of those protests involving requests for proposals, here is what OAH did: • Six were denied but, in two instances, the judge had some admonishing words for the agency. • Four were granted entirely. The ADOA Director rejected parts of one decision. • One was partially granted, with the judge requiring the vendor awarded the contract to replace refurbished parts with new ones or otherwise have its contract cancelled. The ADOA Director rejected that decision.

44. State of Arizona Office of Administrative Hearings • Of the four contract claims appealed: • One was denied. • One was dismissed. The vendor claimed that it had been awarded a contract and that failure of the agency to proceed was a breach of contract. The judge held that the state agency had never determined the vendor to be the low bidder nor had it signed any contract documents. • The third, in which a state agency was the claimant, was upheld due to the contractor’s failure to comply with the terms of the contract.

45. State of Arizona Office of Administrative Hearings • The last was originally denied but the claimant appealed to the Court of Appeals. The Court reversed the administrative decision upholding the cancellation of an invitation for bids after contract award as arbitrary and capricious. (The original administrative appeal was decided by the Director without any administrative hearing.) OAH subsequently held a hearing to determine contract damages. The OAH judge recommended the award of damages. The ADOA Director rejected parts of the decision. Unclear whether the award of damages was rejected.

46. State of Arizona Office of Administrative Hearings • You can search for the decisions at: https://portal.azoah.com/search1400/

47. State of Arizona Office of Administrative Hearings • Contract Claims • Ariz. Dept. of Environmental Quality v. Tucson Roll-Offs, Inc., No. 03-0006-ADM (waste reduction assistance grant) - granted • W. Johnson Construction, Inc. v. Az School Facilities Board, No. 02/0008-ADM (school construction) - dismissed

48. State of Arizona Office of Administrative Hearings • Contract Claims (continued) • II K’s Commercial Contracting, LLC v. Az School Facilities Board, No. 04/0001-ADM (school construction) - denied • Appeal of Arizona’s Towing Professionals, Inc. dba Shamrock Towing; Az Dept. Public Safety Contract Claim, No. 99-1010-ADM (towing services) – granting $400,000+ in contract damages for improper cancellation of a contract (after Court of Appeals decision). Director of ADOA rejected parts of the decision-unclear whether it included the damages award.

49. State of Arizona Office of Administrative Hearings • Bid Protests • Oakley’s Garage & Towing v. Az Dept. Public Safety, No. 10F-L9-010/002-ADM –denied due to failure to appear at the appeal hearing • Ikon Office Solutions, Inc. v. Arizona State Procurement Office, No. 03-0004-ADM (office equipment –scanners, printers) – denied • American Management Systems, Inc. v. Arizona State Procurement Office, No. 02-0009-ADM (business reengineering integrated tax system) - denied

50. State of Arizona Office of Administrative Hearings • Bid Protests (continued) • Griffin Foundation v. Az Dept. Economic Security, No. 01.1006-ADM (services providing families with child care options) – denied • Arvizu Advertising & Promotions v. State Procurement Office, No. 01-1001-ADM (Arizona Lottery Hispanic marketing) – denied • Applied Envirosolutions v. Az Dept. Environmental Quality, No. 98-1001-ADM (services associated with accelerating applications for air quality permits) - denied