NYS Forum IT Procurement Workgroup

1. NYS Forum IT Procurement Workgroup DOING IT BUSINESS WITH NEW YORK STATE AND NEW YORK CITY GOVERNMENT June 9, 2010 LEGAL AND ETHICAL CONSIDERATIONS IN NYS PROCUREMENT

2. LEGAL AND ETHICAL CONSIDERATIONS IN NYS PROCUREMENT AGENDA • Procurement Lobbying Law • Debriefings • Protests • Q & A

3. Procurement Lobbying Law Anne Phillips Associate Counsel NYS Office of General Services

4. Hypothetical State Agency X has determined that it needs to procure widgets that should result in energy efficiency savings. It issues a press release announcing that it plans to release a Request For Proposals (RFP) in the next month. During that month, a potential bidder, the CEO of Company Y, calls the head of the purchasing office at Agency X to inquire whether the RFP will include product specifications for a newer version of widgets that has been on the marketplace for the past year and which is manufactured by Company Y (as well as Companies Z and A).

5. The purchasing officer informs the CEO of Company Y that the draft RFP does not contain those specifications. The CEO then forwards information to assist Agency X in reconsidering its design. A month later, Agency X issues the RFP for widgets. The specifications were revised so that widgets, such as those manufactured by Companies Y, Z and A, can now successfully bid on the RFP. Potential bidders are advised in the RFP that there will be a conference call scheduled to address any questions they may have. Hypothetical

6. In addition, according to the RFP, a representative of any potential bidder may schedule an interview with the head of purchasing to obtain answers to questions that are not satisfactorily answered on the conference call. Jeremy B., who works in Agency X’s Finance office, but is unfamiliar with this particular procurement, is named as the designated contact for the widget bid. State Agency X’s purchasing officer is contacted twice, after the RFP is issued, by the CEO of Company X, who is seeking further information as to how his company can best present its response to meet Agency X’s specifications. The purchasing officer speaks generally with the CEO about the RFP but declines to provide any specific information. Hypothetical

7. Company X is selected by State Agency X as the lowest responsible and responsive bidder on the widget RFP. Company Y protests that decision to OSC in writing and by phoning the Contract Review Section at OSC. In reviewing the procurement record from State Agency X, OSC finds no record of any contact by the CEO of Company Y. Hypothetical

8. Questions: In what ways, if any, does this procurement violate the Procurement Lobbying Law? What is the remedy for the violation(s)? Hypothetical

9. Procurement Lobbying Law State Finance Law §§139-j and 139-k (the Law) restricts communications between the business community (offerers) and the government about procurement contracts. It recognizes there are different kinds of communications. Communications that are an “attempt to influence” have specific rules (referred to as Contacts). The Law requires each Governmental Entity to develop a policy on permissible Contacts and to inform Offerers of the policy. State Finance Law §§ 139-j and 139-k

10. State Finance Law §§ 139-j and 139-k The Law also tells the business community where to direct advocacy efforts. If an Offerer does not follow the Law, the Contacts are considered “impermissible Contacts”. Violation of such rules has severe consequences – including public notice of non-responsibility, non-award of contract and debarment. The Law requires each state agency to conduct a review and investigation about impermissible Contacts. OGS is responsible for maintaining on the Internet lists of businesses that have violated the Law’s requirements.

11. General Rule Offerer can always contact the Designated Contact. Offerer cannot Contact other employees or governmental entities once the procurement has begun and until it is concluded (“restricted period”) unless the communication falls within one of the permissible subject matter exemptions (SFL §139-j(3)(a)(1-9)). State Finance Law §§ 139-j and 139-k

12. Do’s A vendor should try to ascertain the following before talking to an agency. Determine if there is a Restricted Period. If there is a Restricted Period, determine who is the Designated Contact for that procurement; and Direct communications correctly (namely to the Designated Contact). Be mindful if you have other communications with the agency State Finance Law §§ 139-j and 139-k

13. Do’s Follow the processes in the solicitation. Generally, submit all questions be submitted in writing to the Designated Contact listed in the solicitation. Work with agency on agenda for any meetings that are conducted and stick with the agenda. Confirm that a record of Contact is to be recorded – even if you are dealing with the Designated Contact. State Finance Law §§ 139-j and 139-k

14. Don’ts Don’t discuss procurements with other than Designated Contacts in a Restricted Period – it lasts until OSC approves the contract! Don’t miss opportunities for process improvements. Formalize information exchanges with State agency. Follow procurement processes. State Finance Law §§ 139-j and 139-k

15. 2010 Amendments to the Procurement Lobbying Law • The Law’s restrictions can now apply before the issuance of the bid, request for proposal or other method used for commencing a procurement, where the governmental agency (1) has made a determination of need for a procurement, and (2) communicates such determination in a public manner, such as a public announcement or public communication, to any potential vendor. • A new restricted period will apply each time a procurement is amended, extended or renewed, or there is a change order unless the amendment, extension, renewal or change order is authorized and payable under the terms of the underlying contract as it was finally awarded or approved.

16. 2010 Amendments to the Procurement Lobbying Law • The definition of an “offerer” has been clarified so that a person or entity is subject to the Law even if he, she or it does not have a financial interest in the procurement. • A governmental agency that contacts a procuring agency as part of its oversight responsibilities is not subject to the Law. • Persons selected as designated contacts must be knowledgeable about the procurement.

17. 2010 Amendments to the Procurement Lobbying Law • The types of contacts that are permissible now expressly include: • participation in a demonstration or other means for exchange of information in a setting open to all potential bidders provided for in a request for proposals”; • presenting oral protests, appeals or complaints to OSC; • providing information to offerers “regarding the status of the review, oversight, or approval of a governmental procurement that has been submitted to or is under review by that governmental entity”; and • “communications between offerers and governmental entities that solely address the determination of responsibility by a governmental entity of an offerer.”

18. 2010 Amendments to the Procurement Lobbying Law • Any communications that are considered within the Law’s listing of permissible subject matter contacts do not have to be made to a designated contact. • Communications between certain preferred sources and governmental entities are permissible unless they constitute an attempt to influence the governmental entity during a restricted period. • The written affirmation that an offerer signs or otherwise acknowledges signifying that he or she understands and agrees to comply with the governmental entity’s procurement lobbying procedures, is deemed to apply to any amendments to the procurement.

19. Guidance developed by the Advisory Council on Procurement Lobbying, model forms and language and other materials, are present on the internet at http://www.ogs.state.ny.us/aboutOgs/regulations/defaultAdvisoryCouncil.html Access through OGSNow “Procurement Lobbying” at http://ogsnow/ogspolicy/viewpolicy.asp?policyID=169 Access through the public web site under “About OGS” at http://www.ogs.state.ny.us/aboutOgs/regulations/defaultSFL_139j-k.html Business Unit specific policies Resources

20. State Agency X has determined that it needs to procure widgets that should result in energy efficiency savings. It issues a press release announcing that it plans to release a Request For Proposals (RFP) in the next month. During that month, a potential bidder, the CEO of Company Y, calls the head of the purchasing office at Agency X to inquire whether the RFP will include product specifications for a newer version of widgets that has been on the marketplace for the past year and which is manufactured by Company Y (as well as Companies Z and A). Hypothetical

21. The purchasing officer informs the CEO of Company Y that the draft RFP does not contain those specifications. The CEO then forwards information to assist Agency X in reconsidering its design. A month later, Agency X issues the RFP for widgets. The specifications were revised so that widgets, such as those manufactured by Companies Y, Z and A, can now successfully bid on the RFP. Potential bidders are advised in the RFP that there will be a conference call scheduled to address any questions they may have. Hypothetical

22. In addition, according to the RFP, a representative of any potential bidder may schedule an interview with the head of purchasing to obtain answers to questions that are not satisfactorily answered on the conference call. Jeremy B., who works in Agency X’s Finance office, but is unfamiliar with this particular procurement, is named as the designated contact for the widget bid. State Agency X’s purchasing officer is contacted twice, after the RFP is issued, by the CEO of Company X, who is seeking further information as to how his company can best present its response to meet Agency X’s specifications. The purchasing officer speaks generally with the CEO about the RFP but declines to provide any specific information. Hypothetical

23. Company X is selected by State Agency X as the lowest responsible and responsive bidder on the widget RFP. Company Y protests that decision to OSC in writing and by phoning the Contract Review Section at OSC. In reviewing the procurement record from State Agency X, OSC finds no record of any contact by the CEO of Company Y. Hypothetical

24. Questions In what ways, if any, does this procurement violate the Procurement Lobbying Law? What is the remedy for the violation(s)? Hypothetical

25. Questions 25

26. DebriefingsState Finance Law Section 163 (9) (c) Vanessa Saiid Attorney Trainee NYS Office of the State Comptroller

27. Good Debriefings Transparency More Viable Competition Better New York State Contracts

28. Debriefings & American Idol American Idol

29. State Finance Law § 163 (9) (c) • Prior to it’s amendment in 2008, SFL 163 (9) (c) was very ambiguous and there was no express, statutory requirement that debriefings be provided. • The amendment to the law added an express requirement that an agency provide a debriefing to any unsuccessful offeror who requests one.

30. SFL § 163 (9) (c) Requirements • Notice of the opportunity for a debriefing must be provided in the solicitation documents. • Reasonable time to request a debriefing must be given. • Upon request by offeror, agencies must provide a debriefing.

31. What May Be Disclosed in the Debriefing • Weaknesses of the proposal submitted by the vendor being debriefed? • Strengths of the winning vendor’s proposal? • Strengths and/or weaknesses of other competitors proposals? • All of the above?

32. What May Be Disclosed in the Debriefing • SFL § 163 (9) (c) specifically requires agencies to disclose the “…reasons that the proposal…by the unsuccessful offeror was not selected for award.” • Clearly, the debriefing must address the deficiencies of the proposal submitted by the vendor being debriefed. • The law does not specifically mandate nor prohibit an agency from disclosing information on the successful proposal. Because of this, agency practices differ widely concerning the disclosure of information during debriefings.

33. 3 Different Agency Approaches to Conducting Debriefings • Full Disclosure: specify why the winning proposal was determined to be better than the proposal submitted by the vendor being debriefed/give a comparative analysis. • Minimum Disclosure: no disclosure of information on the successful proposal, focusing rather on the strengths and weaknesses of the debriefed parties proposal only. • Middle Ground: provide scores and limited information concerning the winning proposal.

34. Do’s in the Procurement Process • DO – Ask questions before submitting the proposal. • DO – Understand what is being asked for in the solicitation and be responsive. • DO – Provide the agency with questions prior to the debriefing. • DO – Come to the debriefing prepared. • DO – Take advantage of the debriefing.

35. Questions 35

36. PROTESTS John Dalton Associate Counsel NYS Office of the State Comptroller

37. AGENDA OSC Bid Protest Procedures Dos and Don’ts in the Protest Process Frequent Issues Raised In Procurement Protests Questions and Answers/Discussion PROTESTS

38. OSC BID PROTEST PROCEDURES PROTESTS

39. Authority to Hear Protests Pursuant to Section 112 of the State Finance Law, most State agency contracts require the Comptroller’s approval Expenditure contracts over $50,000 Revenue contracts over $10,000 In reviewing contracts, the Comptroller reviews both the legal and business bases for contract awards As part of the Comptroller’s review of contracts, OSC will consider protests by interested parties and has promulgated procedures governing such protests.

40. How Protests Come to OSC • Part of Procurement Record • Appeal of Agency Determination Filed with OSC • Initial Protest Filed with OSC

41. Applicability Procedures apply to all contracts submitted to OSC for approval Section 112 of the State Finance Law Contracts voluntarily submitted to OSC for Approval (e.g., Thruway Authority contracts)

42. Definitions Generally, they are consistent with the definitions contained in Section 163 of the State Finance Law However, two are worthy of note: Interested party - “A participant in the procurement process and those whose participation in the procurement process has been foreclosed by the actions of the contracting agency.” Provides for broad scope of parties that could have standing to bring a protest. Contract award - “A written determination from a contracting agency to an offerer indicating that the contracting agency has accepted its bid or offer.” Note, an interested party may file a protest with OSC after the contracting agency has made a “contract award” and need not wait for a final contract to be signed to initiate a protest Pursuant to the Procurement Lobbying Law (see State Finance Law §139-j), a protest can only be made to OSC during the process of contract approval

43. Initial Protest Filed with OSC If the contracting state agency has a protest procedure, and provides notice of its procedure, initial protest should be filed with state agency If not, an “interested party” may file initial protest with OSC

44. Filing Initial Protest with OSC Protest must be in writing and filed with the OSC Bureau of Contracts If provided with notice of the contract award, protest must be filed within 10 days of such notice If no notice was provided, protest may be filed anytime after award and prior to Bureau of Contract’s action on the contract Protesting party must simultaneously file notice of protest with contracting state agency and successful bidder

45. Filing Initial Protest with OSC Contracting agency may file an answer to protest with the delivery of the contract to OSC or 7 days after filing of the protest, whichever is later A copy of the answer must be simultaneously delivered to protestor and successful bidder The successful bidder may also file an answer to the protest, within the same time frame The protestor may file a reply to the answer(s), within 3 days of the filing of the answer(s) Reply should only respond to the answer and should not raise new issues

46. Appeal of Agency Determination Upon receipt of contracting agency’s determination, interested party has 10 days to file an appeal with the OSC Bureau of Contracts A copy of the appeal must be filed with contracting agency, successful bidder and any other participant in the protest process. Appeal must set forth basis on which it challenges contracting agency’s determination

47. Appeal of Agency Determination Contracting agency may file an answer to appeal with the delivery of contract to OSC or 7 days after the filing of protest, whichever is later Contracting agency must copy protestor and successful bidder on answer Successful bidder may also file an answer within the same time frame, and must copy contracting agency and protestor

48. OSC Bureau of Contracts Determination General Authority of BOC in Protest Process: May, on written notice to parties, act on an expedited basis May summarily deny the protest May require further information concerning the procurement May conduct a fact finding hearing (formal or informal) A recent amendment to the Procurement Lobbying Law makes this easier

49. OSC Bureau of Contracts Determination • Bureau of Contracts will issue a written determination of the appeal • Determination will address all issues raised by protest, as well as issues identified in Bureau’s review of procurement • All interested parties will be provided with a copy of the determination • Bureau of Contracts’ determination will either: • Deny the protest and approve the contract • Uphold the protest and require a new procurement (where procurement itself was flawed) • Uphold the protest but leave to agency decision of whether to make a new award (consistent with OSC determination) or conduct a new procurement • Indicate that the protest is moot because of other fatal flaws in the procurement found as part of OSC’s review of the contract

50. General Information Link to OSC G-Bulletin 232 “OSC Contract Award Protest Procedures” http://www.osc.state.ny.us/agencies/gbull/g_232.htm