Is the issue responsiveness or responsibility? are you sure?

1. VAGP Spring Conference March 19, 2014 Al Elias Is the issue responsiveness or responsibility? are you sure?

2. AGENDA IntroductionDefinitions Informality Responsible ResponsiveCases Bean Dredging vs U.S. Facilities department vs City Attorney Great West Contractors vs Irvine School District Madsen-Johnson vs City of Becker, MN PDI-Sheetz Construction - Maryland Board of Contract Appeals W.B. Construction and Sons vs Department of the Army (GAO Appeal)Questions

3. § 2.2-4302.1. Process for competitive sealed bidding. The process for competitive sealed bidding shall include the following: 5. Award to the lowest responsive and responsible bidder.

4. § 2.2-4301. Definitions: • “Informality”means a minor defect or variation of a bid or proposal from the exact requirements of the Invitation to Bid, or the Request for Proposal, which does not affect the price, quality, quantity or delivery schedule for the goods, services or construction being procured.

5. Informality or not? • Bid Form, No Original Signature • No Non-Collusion Certification • Wrong Bid Form • Failure to submit bid bond • Bid Bond, No Original Signature • Addendum Not Acknowledged on Bid Form • Words and Figures Differ • Line item prices omitted from Bid Form • Missing attachments such as safety plans, certifications, licenses, etc.; • Failure to furnish required descriptive literature

6. “Responsiblebidder” or “offeror” means a person who has the capability, in all respects, to perform fully the contract requirements and the moral and business integrity and reliability that will assure good faith performance, and who has been prequalified, if required.

7. “Responsibility, unlike responsiveness, involves discretion and business judgment. …responsibility is determined between the time of bid opening and the time of contract award. Thus, responsibility issues can sometimes be “cured” after bid opening.” • Atty. Gen Ann. Rep. 44: J. Cibinc & R. Nash, Formation of Government Contracts (2nd ed. 1986)

8. “First, a determination of non-responsibility is likely to lead to litigation… Failure to give prior notice and an opportunity to respond subjects the public body to allegations that its actions violated due process or were arbitrary and capricious…” • Thomas Falk, “Contracting with Virginia Public Bodies”, Virginia Lawyer, January, 1993

9. § 2.2-4359. Determination of non-responsibility. • 1. Prior to the issuance of a written determination of non-responsibility, the public body shall • (i) notify the apparent low bidder in writing of the results of the evaluation, • (ii) disclose the factual support for the determination, and • (iii) allow the apparent low bidder an opportunity to inspect any documents that relate to the determination, if so requested by the bidder within five business days after receipt of the notice.

10. “Responsive bidder” means a person who has submitted a bid that conforms in all material respects to the Invitation to Bid.

11. “Responsiveness rests on what the bidder submits prior to bid opening and cannot be cured thereafter. It either exists or not, largely as a matter of law.” • J. Cibinc & R. Nash, Formation of Government Contracts (2nd ed. 1986)

12. Bean Dredging vs U.S. • Bids were let for maintenance dredging of an entrance channel to a harbor. Bidders were required to provide a “Plant and Equipment Schedule” listing the equipment they proposed to use on the project, including the number, type and capacity of dredges. In bold print the schedule was annotated to read: **** IMPORTANT ***** • INFORMATION REQUESTED BELOW MUST BE SPECIFIC. GENERALITIES WILL NOT BE ACCEPTED. FAILURE TO PROVIDE THIS INFORMATION MAY RESULT IN REJECTION OF THE BID.

13. Bean Dredging vs U.S. • Later in the bid the following language was included: • “The Contractor agrees to keep on the job sufficient plant and equipment to meet the requirements of the work.” • “The plant listed on the Schedule is the minimum which the contractor agrees to place on the job…and its listing thereon is not to be construed as an agreement by the government that it is adequate for the performance of the work.” • NATCO was low at $1,549,250 with Bean/Weeks Dredging next at $1,978,800. The intent to award was to NATCO.

14. Bean Dredging vs U.S • Bean/Weeks filed an administrative protest which was denied. They then filed suit claiming that NATCO did not submit the Schedule and therefore did not commit any equipment to performance of the contract. Their representative raised the issue at the bid opening and they were now asking that NATCO be declared non-responsive and they be awarded the contract. • Bean/Weeks claimed that they had adjusted their bid based on the equipment they were obligating to the contract and that NATCO’s bid must be declared non-responsive and rejected since allowing them to submit the schedule after opening was to allow them to correct their bid.

15. Bean Dredging vs U.S By failing to include the “Plant and Equipment Schedule” with its bid was NATCO nonresponsive ?

16. Bean Dredging vs U.SCourt Opinion • Court: • “Responsiveness addresses whether a bidder has promised to perform in the precise manner requested by the government. “ • “A responsive bid is one that, if accepted as submitted, will obligate the contractor to perform the exact thing called for in the solicitation.”

17. Bean Dredging vs U.SCourt Opinion • Court: • “Responsibility addresses the issue of the performance capability of a bidder…” • “In contrast to responsiveness, a bidder may present evidence of responsibility after bid opening up until the time of award.”

18. Bean Dredging vs U.SCourt Opinion • Court: • “Thus, if descriptive data is to be used to determine a bidder’s ability or capacity to perform, the matter will be one of responsibility, and failure to submit information with the bid will have no adverse effect on the bidder…”

19. Bean Dredging vs U.SCourt Decision • Decision • “… this Court finds that the listing of plant and equipment on the Schedule relates to responsibility rather than responsiveness…” • Support for decision: • FAILURE TO PROVIDE THIS INFORMATION MAY RESULT IN REJECTION OF THE BID. • Use of the word MAY “strongly suggests that a bidder might have to present evidence of responsibility in order to be awarded the contract, but that it is not an essential requirement of the solicitation.”

20. Bean Dredging vs U.SCourt Decision • Support for decision: • “The Contractor agrees to keep on the job sufficient plant and equipment to meet the requirements of the work.” • “The plant listed on the Schedule is the minimum which the contractor agrees to place on the job…and its listing thereon is not to be construed as an agreement by the government that it is adequate for the performance of the work.”

21. Facilities Department vs City Attorney • A city Facilities Department issued an IFB for a green roof project. In the qualifications section of the IFB the requirements included documented experience in green roof installation. • The documentation was described as “a letter from the company issuing the warranty that the contractor currently holds the company’s designation as one of the following”: • Carlisle- Centurion Contractor or Excellence in Single Ply Contractor (either is acceptable) • Versico - Excaliber Contractor • Firestone – Master Contractor or Partner in Quality Contractor (either is acceptable)”

22. Facilities Department vs City Attorney • Bids were received with I. M. Good the low bidder followed closely by U. R. Not. • The Facilities staff, with assistance from their A/E consultant, reviewed bid and did the necessary investigations and decided that Good was the lowest responsive and responsible bidder. • Facilities issued an Intent to Award.

23. Facilities Department vs City Attorney • Not challenged contending that Good did not hold any of the designations specified in the IFB (Carlisle, Versico or Firestone). • They were correct. • Facilities position was that this was a responsibility issue and not a responsiveness issue, and after further evaluation, and in consultation with their A/E, Facilities held fast to the decision that the low bidder was qualified and a responsible bidder.

24. Facilities Department vs City Attorney The City Attorney was the point of Appeal. Was Facilities correct and the issue was a matter of responsibility and not a question of responsiveness?

25. Facilities Department vs City AttorneyOpinion • The question was about qualifications which would normally be a consideration when determining responsibility. • However, by specifically calling out the designations in the qualifications section of the IFB, Facilities had made it an issue of responsiveness. • The challenge was upheld.

26. Great West Contractors Inc. vs Irvine School District • The Irvine Unified School District sought bids for the renovation of two elementary schools. All bidders were pre-qualified. Great West was the lowest bid for both projects. • In response to the question in the bid package, "Have you ever been licensed under a different name or license number?" Great West responded "No." The School District subsequently determined that Great West had in fact operated under different license numbers and its president was listed as an Responsible Managing Employee (serves as the qualifying individual on a sole owner, partnership or corporate license) under a different license number.

27. Great West Contractors Inc. vs Irvine School District • Based on the alleged nondisclosure, the district deemed the bid to have been “nonresponsive” and selected instead the third-from-lowest bids for each project. These bids were $300,000 and $500,000 higher than the Great West bids. • Great West sued, arguing, among other things, that: • it had submitted the same licensing information in its prequalification application and had been approved. • it did no business under the other license numbers.

28. Great West Contractors Inc. vs Irvine School District Was the School District right in declaring Great West nonresponsive instead of considering an issue of responsibility and providing a hearing to allow Great West to challenge?

29. Great West Contractors Inc. vs Irvine School DistrictTrial Court Decision • Work continued during the suit and was completed by the time the Court ruled. • The trial court ruled against Great West. The court found: • Great West’s bid was nonresponsive due to its omission of the additional license numbers; and • even if Great West had a due process right to a hearing all it could get by way of relief would be a hearing. • The decision was appealed.

30. Great West Contractors Inc. vs Irvine School DistrictCourt of Appeals Decision • The Appeal Court ruled that: • although the projects were already completed, the question whether failure to list its officers' licenses constituted an issue of bid responsiveness or bidder responsibility was not moot • “the issue is of “great public concern” since “a school district is legally required to award contracts to the lowest responsible bidder and this statutory mandate may be bald-facedly circumvented if the body could simply declare the bid non-responsive, then award the contract to the next (and perhaps favored) bidder.”

31. Great West Contractors Inc. vs Irvine School DistrictCourt of Appeals Decision • At issue was how to distinguish a “nonresponsive” bid from a determination that the bidder was not a “responsible” bidder. • The difference was significant not only to the bidder, but also to the taxpaying constituency of the public entity, because: • a truly nonresponsive bid could be summarily denied by a public entity even if the bid was otherwise monetarily the best for the entity • a determination of non-responsibility entitled the bidder to a hearing where certain minimal elements of due process had to be afforded before the contract could be awarded.

32. Great West Contractors Inc. vs Irvine School DistrictCourt of Appeals Decision • The ruling overturned the trial Court decision and said that the rejection of the Great West bid was an issue of responsibility, not responsiveness. • On the record the Court said that because Great West was not afforded a hearing the district appeared to have paid $800,000 more than necessary to remodel two elementary schools. • AND, ONE MORE THING

33. Great West Contractors Inc. vs Irvine School DistrictCourt of Appeals “favoritism most foul” comment • A competing bidder, who was ultimately awarded one of the contracts and for a reason never adequately explained by the public agency, had access to Great West's bid information within 24 hours and was able to present a bid challenge almost immediately on the allegation that Great West had omitted to disclose some licenses with which it or its principals had been associated.

34. Great West Contractors Inc. vs Irvine School DistrictCourt of Appeals “favoritism most foul” comment • However, when Great West tried to get a copy of that very same competitor's bid, the District did not turn over that information until after the critical first court hearing so it was never presented to the trial Court. • When Great West finally got the information it discovered that its successful competitors had been guilty of the very same omission with regard to the disclosure of all associated licenses that was the ostensible reason that Great West's bid was summarily rejected in the first place.

35. Madsen-Johnson vs City of Becker, MN • The City of Becker sought lump sum bids for the construction of a wastewater treatment plant. • The bid stated that “this bid is based on equipment to be furnished by the following manufacturers” and required fiberglass domes to be furnished by Delta or Syntechnics and sedimentation tank equipment furnished by either Eimco or Envirex.

36. Madsen-Johnson vs City of Becker, MN • Instructions to bidders provided: • 1) substitute equipment would not be considered until after the contract had been awarded. • 2) an opened bid could be withdrawn if the bidder demonstrated to the city’s reasonable satisfaction that the bid contained a material and substantial mistake; and • 3) the city reserved “the right to waive all informalities not involving price.”

37. Madsen-Johnson vs City of Becker, MN • Gridor submitted the low bid at $6,847,000 with Madsen next at $7,178,000. • Gridor’s bid offered fiberglass domes furnished by Martin and sedimentation tank equipment furnished by Amwell.

38. Madsen-Johnson vs City of Becker, MN • The project manager investigated and determined that the Martin domes were $10,200 less than those specifed and that the Amwell equipment was $8,000 less than that specified. • When Gridor learned of the cost variance it offered to provide the manufacturer’s equipment as specified in the bid at its bid price.

39. Madsen-Johnson vs City of Becker, MN • The city decided that the variance was minor and not material and that the Gridor bid was substantially responsive and recommended that the city accept Gridor’s bid. • Madsen then sought a temporary restraining order prohibiting the city from awarding the contract to anyone other than them.

40. Madsen-Johnson vs City of Becker, MN • Madsen argued that: • 1) Gridor’s bid did not substantially comply with the specifications; • 2) the variance was material; and • 3) the city could not, therefore, waive the variance.

41. Madsen-Johnson vs City of Becker, MN Was the city right to declare the variance an informality and award the contract to Gridor despite the failure to bid the specified manufacturer’s equipment?

42. Madsen-Johnson vs City of Becker, MN • Court Discussion: • “Bids for municipal contracts must substantially comply with all requirements relative thereto…” • “A bid’s responsiveness must be determined at the time the bid is opened.” • “A variance is substantial or material when it gives a bidder a substantial advantage or benefit not enjoyed by other bidders.”

43. Madsen-Johnson vs City of Becker, MN • Court Discussion: • “Given the size of the entire project, Gridor’s use of unspecified manufacturers for only two pieces of equipment did not give it an advantage…that was either “relevant and consequential…” • “Further, the $18,200 variance represented only .266% of the entire project cost and was much less than the $330,000 difference between bids.” • Thus the variance “did not give Gridor a “material or substantial advantage…”

44. Madsen-Johnson vs City of Becker, MNCourt Decision • The temporary restraining order was denied. • It was not a unanimous decision. • Majority: • “The city did not abuse its discretion in determining that Gridor’s bid was substantially responsive and in awarding the contract to Gridor. Temporary restraining order denied.”

45. Madsen-Johnson vs City of Becker, MNCourt Decision • Dissent: • Gridor’s use of less expensive unspecified manufacturers rendered its bid nonresponsive. • Public officials may not waive defects that affect the integrity of the competitive bidding process. • Gridor’s later offer to provide the specified equipment ”…cannot convert this…into a responsive bid…”

46. PDI-Sheetz Construction - Maryland Board of Contract Appeals • The State Highway Administration (“SHA”) issued an IFB for “Miscellaneous Roadway Structures Repairs at Various Locations. • Included in “Special Bidding Instructions” was the following: • THE CONTRACTOR IS ALERTED THAT A MINIMUM COST HAS BEEN ESTABLISHED FOR MOST BID ITEMS IN THIS CONTRACT. THE CONTRACTOR’S BIDS SHALL BE GREATER THAN OR EQUAL TO THIS MINIMUM COST. IF A BID PRICE IS BELOW THE MINIMUM COST ESTABLISHED FOR ANY ITEM, THE BID WILL BE CONSIDERED NON-RESPONSIVE AND THE CONTRACTOR’S BID WILL BE REJECTED. THE MINIMUM COST APPEARS BELOW APPLICABLE BID ITEMS IN THE SCHEDULE OF PRICES.

47. PDI-Sheetz Construction - Maryland Board of Contract Appeals • Among the minimum unit prices established was the following: • c. Item No. 4036, “Hours of Work Barge 8 Foot x 16 Foot,” a minimum unit price of $10.80/hour. • SHA issued Questions and Answers posed at the pre-bid meeting, attended only by representatives of Sheetz. • Among these was the following: • [Q.] The Minimums established for Items #4007 and #4008 appear to be switched. • [A.] The items will remain as is for this Contract.

48. PDI-Sheetz Construction - Maryland Board of Contract Appeals • Bid results were: • Allied Contractors $2,334,634 • Mercier $2,342,497.60 • Sheetz at $2,346,878.67 • Difference from Allied to PDI-Sheetz - $12,244.67 • Allied’s bid for Item No. 4036 was $10.00, below the $10.80/hr minimum established. • Mercier’s bid included a unit price below the minimum established for Item Nos. 4002 ($10.00/hr lower) and 4008 ($0.50/hr lower). • All unit prices in the Sheetz bid equaled or exceeded the minimum prices established.

49. PDI-Sheetz Construction - Maryland Board of Contract Appeals • November 1 • SHA rejected both Allied’s and Mercier’s’ bids as non-responsive for failure to comply with the minimum bid requirements. • November 3 • Allied protested SHA’s rejection of its bid. • December 13 • SHA’s procurement officer changed his mind and rescinded his original rejection of Allied’s bid, determining the failure to comply to be a minor irregularity. He then notified Sheetz by letter of his intent to award the contract to Allied. • December 20 • Sheetz protested • January 31 • SHA issued a Procurement Officer’s Final Decision denying the Sheetz protest • February 10 • Sheetz filed a Notice of Appeal to the Maryland State Board of Contract Appeals.

50. PDI-Sheetz Construction - Maryland Board of Contract Appeals Was the procurement officer right the first time (November 1) in rejecting the Allied and Mercier bids as non-responsive, or was he right the last time (January 31), changing his mind and determining that the issue was a minor irregularity and those bids were, in fact, responsive?