procurement 2015 winds of change - guam chamber of … · they induced inacon on
TRANSCRIPT
Procurement in the Year 2015
Winds of Change
When the Winds of Change Blow Some Build Walls, Others
Windmills
Origins of Guam Procurement
• Procurement by Execu6ve Order 57‐1 (1957) • Procurement by Legisla6on PL 4‐68 (1958)
– The Legislature bestowed power on Governor to promulgate rules and regula6ons by EO. (EO 57‐1 followed by EO 65‐12)
– Evolved from centralized purchasing office to some dispersed de‐centralized authority
• 16th Legislature started all over with new ABA MPC centralized regime, stripping Governor of procurement authority (PL 16‐124, effec6ve 1983).
• 18th Legislature made comprehensive changes (PL 18‐44, 1986)
Two Building Blocks Adopted • The ABA MPC recommended that a procurement system be buUressed by two ins6tu6ons: – A Procurement Ins6tute – A Procurement Advisory Council
• The Legislature failed to do so originally, but… – Procurement Advisory Council created by PL 31‐093 signed into law in 2011.
– Mandatory Training of GovGuam procurement staff lapsed into law by PL 32‐131 in 2014.
Procurement Advisory Council P.L. 31‐093:1 (Sept. 30, 2011)
If created, such Council shall meet at least once a year for the discussion of problems and recommenda6ons for improvement of the procurement
process. The Procurement Advisory Council may conduct studies, research, analyses, and make reports and recommenda6ons. (ABA MPC)
Procurement Advisory Council Du6es (5 GCA § 5902)
• to conduct studies, research and analysis on all maUers rela6ng to the effec6veness, responsiveness and 6meliness of government procurement
• to cri6cally examine the substan6ve and procedural aspects of the Guam Procurement Act
• to review the legal infrastructure of the government procurement system to ensure the uniformity of law, regula6on and prac6ce; etc.
Procurement Advisory Council Composi6on
Mostly Department heads, e.g., DPW, CPO, DOA, AG, PA, UOG Dean of Business, etc. • Included 4 private sector cons6tuents: • An a"orney in private prac.ce selected by the GBA; • Two Guam residents experienced in procurement,
selected by the Governor: • One from the construc.on industry (who never aUended), and
• The other from the retail or service sector (Judge John Unpingco)
• The Chairman of the Board of Accountancy.
Procurement Advisory Council Accomplishments and Present Status
• Under the leadership of Chairman John S. Unpingco, in 2012, the Council conducted an illumina6ng series of Town Hall mee6ngs. – Key finding: Need for Training and Educa6on
• Has not met since 2013. • The Chairman champions abandonment of exis6ng procurement law, and adop6on of federal acquisi6on rules (“FAR”).
Mandatory Procurement Training P.L 32‐131; 5 GCA § 5141 – Lapsed into Law Feb. 2014
The GCC Basic Training Program
• The GCC four‐module Procurement curriculum includes the following “Modules”, 18 hours each, 72 hours total. – 1. Fundamentals and Principles of Procurement – 2. Solicita6on Process – 3. Procurement Review and Remedies – 4. Management and Administra6on of Procurement
Two Major Reform Bills
In the 32nd Legislature, two major reform bills were introduced.
• Bill 224 would have reformed the review of procurement controversies (Ar6cles 9 & 12)
• Bill 246 would have reformed provisions for methods of source selec6on (Ar6cles 3 & 5)
Significant Features of Bill 224‐32 • Required an aggrieved protestor to be compe66vely placed in line with a chance for award, or, raise “issues significant to the procurement system or its integrity”.
• Set 6me limits for agency to render decision. • Confirmed OPA and federal GAO prac6ce that places a stay on award and performance if protested.
• Allowed a contractor to be disbarred or suspended for failure to pay wage rates.
• Eliminated overlapping jurisdic6on of contract disputes with Claims Act.
• Required judicial review to be conducted expedi<ously.
Major Direc6on of Bill 224‐32 • Following the lead of the Guam Judiciary favoring informal dispute resolu6on procedures, Bill 224 strongly encouraged informal resolu6on and seUlement of complaints and objec6ons up front. – A month spent is a year saved. – Exis6ng regula6ons contempla6ng seUlement of disputes trap unwary complainants.
• Codified judicial decisions recognizing applica6on of equitable estoppel (aka “tolling”) to prevent surprise and prejudice to facilitate seUlement and resolu6on of protests.
4 Based on a protester obtaining some form of relief from the agency, either as a result of voluntary agency corrective action or sustaining the protest, as a percentage of all protests closed this fiscal year. 6 Percentage of cases resolved without a formal GAO decision after ADR.
US GAO Appeal Sta6s6cs
Bill 32‐224 • Bill 224‐32 was unanimously passed
• (Bill 246‐32 was tabled) • The Governor vetoed Bill 224‐32. Why?
– Bill 224 changed exis<ng law to allow “non‐aggrieved persons with no compe66ve posi6on to file a protest”, which opens the door to a “prolifera.on” of “frivolous protests”.
– Violates Organic Act: Neither the Public Auditor nor the Superior Court may “second guess the Governor” as to what ac6on is necessary in order to avert a public emergency.
Was the Governor Correct?
Non‐Aggrieved Persons Cannot Protest Bill 32‐224 did NOT change law that ‘only (i) actual or prospec6ve bidders … (ii) who may be aggrieved, may protest’. • 224 simply made clear that an “aggrieved” protestor must either
– Be in a compe<<ve posi<on to actually win; or – Raise an issue significant to the procurement system or its integrity.
• See 5 GCA § 5703: The Public Auditor must use her jurisdic6on “to promote the integrity of the procurement process”.
• See 4 CFR 21.2(c): “GAO, for good cause shown, or where it determines that a protest raises issues significant to the procurement system, may consider an un<mely protest.”
• Fundamental underlying purposes and policies of the law are to: – provide safeguards for the maintenance of a procurement system of
quality and integrity; and – provide for increased public confidence in the procedures followed.
• 5 GCA § 5001(b)
Does the Governor have unrestricted power to spend in emergency?
• The restric6ons on spending money in an “emergency” have been unchanged since 1986. – The 18th legislature defined “emergency” to mean a condi6on posing an imminent threat to public health, welfare, or safety which could not have been foreseen through the use of reasonable and prudent management procedures.
– The method of source selec6on in an “emergency”, requires compe66on and restric6ng quan66es to 30 day supply.
– Governors have open declared emergencies for foreseeable events; i.e., mismanagement, and for extended periods.
• The procurement law does not prevent the Governor from declaring an emergency; it limits the discre6on of the Governor to spend money when there is an event that proper management could/should have foreseen.
• Following the veto of Bill 224‐32, the two objec<ons of the Governor were addressed, and it was re‐introduced as Bill 20‐33.
• It was passed by the 33rd Legislature, 9‐5. • But, it was again vetoed.
Bill 20‐33
But why, this <me?
• Because … All protestors should be required to post a protest bond, in addi6on to bid bond, to discourage frivolous protests.
“It is unfortunate that the Legislature appears to be responding to pressure from the private sector….”
(The Chamber supported the original and amended bills.)
• Because ... under the principle of equitable estoppel expressed in the Bill
• a protester would be en.tled to ignore the law and the 6melines for filing a protest;
• a protestor will be able to file a protest at any <me.
Why Equitable Estoppel? “Equitable” • Equitable (Merriam‐Webster): “dealing fairly and
equally with all concerned”. • It is a purpose of the procurement law, “to ensure the
fair and equitable treatment of all persons who deal with the procurement system of this Territory”. (5 GCA § 5001(b)(4))
• Equitable estoppel, or “tolling”, provides limited relaxa6on of harsh and strict applica6on of specific filing 6mes.
Guam Law expressly Adopted Tolling of the Procurement Time Limit
• Since 1986, procurement law has expressly allowed the 6me limit for filing judicial review of a procurement maUer to be tolled: – 5 GCA § 5481(d) “The limita6ons on [filing judicial review of protests] are tolled during the pendency of any proceeding brought pursuant to § 5485 [a very robust procurement version of FOIA]”.
The US GAO regula6ons expressly Adopted Equitable Estoppel
4 CFR 21.2(c):
“GAO, • for good cause shown, • or where it determines that a protest raises issues significant to the procurement system,
• may consider an un6mely protest.”
The US Supreme Court has Already expressly Adopted Equitable Estoppel
• Irwin v. Department of Veterans Affairs, 498 US 89 (1990) – Time requirements in lawsuits between private li6gants are customarily subject to “equitable tolling”....
– But our previous cases dealing with the effect of 6me limits in suits against the Government have not been en6rely consistent....
– We therefore hold that the same rebuUable presump6on of equitable tolling applicable to suits against private defendants should also apply to suits against the United States.
US Supreme Court Cases con<nued
Young v. United States, 535 US 43 (2002)
– It is “hornbook law” that limita6ons periods are "customarily subject to `equitable tolling' " ....
Scarborough v. Principi, 541 U.S. 401 (2004)
– “Clarity would be facilitated if courts and li6gants used the label ‘jurisdic6onal’ not for such claim‐processing rules, but only for prescrip6ons delinea6ng the classes of cases (subject‐maUer jurisdic6on) and the persons (personal jurisdic6on) falling within a court's adjudicatory authority.”
• That is, don’t call 6me limits “jurisdic6onal”.
The Guam Supreme Court has Already expressly Adopted Equitable Estoppel
GHURA v. Dongbu Insurance, 2001 Guam 24
• “We adopt the doctrine of equitable tolling....” • This prac6ce encourages the seUlement of [insurance] claims by requiring inves6ga6on of claims diligently before denying them, and simultaneously securing a claimant’s rights.
• Safeguarding the claim during this interim period also prevents an insurer from stalling the processing of a claim in order to invoke a technical forfeiture of benefits.
• The doctrine of equitable tolling protects the reasonable expecta<ons of the claimant by demanding good faith and fair dealing on behalf of the [insurance company] reviewer.
Guam Supreme Court Cases con<nued
Mobile v. Lee, 2004 Guam 24 • “The doctrine . . . is designed to
prevent a miscarriage of jus6ce”. • Guam has codified the doctrine
of equitable estoppel in Title 6 GCA §5106(3)....
Lim<aco v. Guam Fire Department, 2007 Guam 10 Again, we turn to the Mariano case, 1983 WL 30227. • In finding that the Government of
Guam should be estopped from denying Mariano's claim because they induced inac6on on Mariano's part, the court stated, "[t]o hold otherwise would be contrary to public policy and would require an employee to file a formal grievance with his employer 15 days from the date his check was due instead of informally aBemp6ng to resolve the problem with his superiors.“
• [W]e adopt with approval the Appellate Division's use of estoppel against the Government.
The Guam Superior Court has recognized Equitable Estoppel in Procurement Cases
• Pacific Security Alarm v. DPW, CV 0591‐05, D&O, July 11, 2006 – Equitable estoppel applied to toll a 6me limit under the facts of that case.
• TRC Environmental v. OPA, SP 160‐07, D&O, Nov. 21, 2008 – Equitable estoppel recognized as applicable doctrine but was not jus6fied under the facts of that case.
Does Equitable Estoppel Really “Allow a Protester to Protest at Any Time”?
NO: Irwin v. Department of Veterans Affairs • Federal courts have typically extended equitable relief only sparingly. • We have allowed equitable tolling in situa6ons
• where the claimant has ac6vely pursued his judicial remedies by filing a defec<ve pleading during the statutory period,
• or where the complainant has been induced or tricked by his adversary's misconduct into allowing the filing deadline to pass. • We have generally been much less forgiving in receiving late filings where the claimant failed to exercise due diligence in preserving his legal rights.
• A Protestor cannot protest at his leisure.
Does estoppel allow a Protestor to ignore the law?
NO: Mobile v. Lee, 2004 Guam 24 • The doctrine is to be used cau6ously. • Because the doctrine is an affirma<ve defense, the party
relying upon the doctrine of equitable estoppel has the burden to prove the existence of the four required elements essen6al to its applica6on. – No estoppel can arise where all the par6es interested have equal
knowledge of the facts, or where the party seyng up the estoppel is chargeable with no6ce of the facts, or is equally negligent or at fault.
• Lee’s disregard of the FHB statements illustrates that he did not exercise . . . reasonable diligence to learn the truth. – Thus, while acknowledging the validity of equitable estoppel/tolling,
the facts in this case did not jus6fy invoking the doctrine.
Ar6cle 9 and 12 Redux
• Notwithstanding the ques6onable bases for the serial vetoes of the original Bill 224‐32 and revised Bill 20‐33, Senator Tom Ada appears willing to make further compromises to meet the objec6ons expressed by the Governor.
• The Chamber should again consider giving any compromise proposal full support when it is introduced. – The art of poli6cs is compromise, but not abdica6on of proven principals.
“Old Bill 246‐32” Changes in Methods of Source Selec6on
• There are two major changes in store in the “new” Bill 246‐32. – Although it did receive a hearing in the 32nd, and was men6oned in the roundtables, it was set aside in an aUempt to deal with 224 first.
• The first and most major change is to re‐adopt Compe66ve Sealed Proposals (“RFCPs”).
• The second authorizes what the federal procurement regime refers to as a “Bridge Contract”.
“RFCPs”: Requests for Compe66ve Sealed Proposals
• The RFCP method was actually adopted in the original PL 16‐124, but, for reasons unknown*, it was repealed in PL 18‐44. – * Perhaps because it gives significant discre6on to procurement
officers.
• RFCP must be dis6nguished from the other proposal method (RFP) intended to be used to acquire “professional services”.
• A “beefed‐up” RFCP regime was adopted in the Amendments to the ABA MPC in 2000 as part of its “Public Infrastructure Project” reform.
• The RFP will likely eventually be expanded to expressly include complex technical and managerial services in addi6on to the tradi6onal professional services.
The Role of Price in Source Selec6on • The most dis6nguishing feature of the RFCP, from IFBs and RFPs, is the way it deals with price: – it is the midpoint of a price factor spectrum between the 2 other methods.
• In an IFB, price is paramount: What’s your bid? • In an RFP, price is an aperthought: What’s the best service I can get, and, oh, what’s it cost me?
• In an RFCP, price is one factor among others to be weighted and weighed to determine award.
RFCP= “Best Value”
Value, like Beauty, is in the
Eyes of the Beholder
Need not be Lowest Cost or Best Qualified to Win Award
• The compe66ve sealed proposal method of source selec6on is available to procure supplies, services or construc6on if price is not intended to be a determining factor for selec6on.
• Under compe66ve sealed proposals, the quality of compe6ng products may be compared and trade‐offs made between price and quality of the products offered, as described in the Request for Compe66ve Proposals.
Image: Scales of Jus6ce for Women By Sandra Scheetz‐Wise, fineartamerica.com
Objec6vity of the Factors • A specific weigh<ng shall be applied to the price factor,
which must not be more than fipy percent (50%) of all relevant factors. – Price is weighed against other factors by the process of assigning weights to all factors.
• If price is intended to weigh more than 50% of all factors, the Mul6‐step Compe66ve Sealed Bid method or, in the case of professional services, the Request for Proposal method, as provided in this Part, shall be used. – When price exceeds 50% it is the determining factor.
• All other evalua<on factors shall be as objec<vely defined, as is prac6cable to specify, by outcomes, func6ons or performance specifica6ons desired.
Evalua6on
• All evaluators must be impar6al persons ac6ng in the best interests of the government, with sufficient knowledge of the government’s needs and experience to capably appreciate the nature of the product being procured and independently assess and apply the proposals submiUed to the evalua6on criteria. – If qualified evaluators are unavailable, use another method.
Discussions with Offerors
• As is common with nego6ated contrac6ng, discussions are allowed with one or more of the offerors, subject to restric6ng rules.
• The rules on appropriate discussions are complex and not always intui6ve or clear. – See this ar6cle, Can we talk? at the following link: hUp://bloggeddowninprocurement.blogspot.com/2014/08/can‐we‐talk.html
Bridge Contracts
• A Bridge Contract is one wriUen to avoid the disrup6on in the con<nued or recurring provision of supplies or rendi6on of services which are cri6cal to governmental opera6ons, between the end of one contract, the “exis6ng” contract, and the beginning of the next, the “new” contract. • The exis6ng contract may be current, expired or terminated. • The new contract is intended to con<nue the provision of the same or func<onal equivalent supply or service as was provided under the exis6ng contract.
‐ Why? A material change in terms of a contract requires a new solicita6on.
Moral Hazard In a nutshell, Moral Hazard is the lack of incen6ve to guard against risk where one is protected from its consequences, e.g., by insurance. It is the unintended consequence of efforts to minimize risk or cost of foreseeable damages.
Bridge Contracts ARE Moral Hazard • If there were no restric6ons on use of Bridge Contracts, the incen<ve to plan for contract expiries and uninterrupted supply is sharply diminished, to be sure.
• Moral hazard favors incumbent, giving further advantage to efforts to delay.
• See Bridge contracts vs Planning principle – hUp://bloggeddowninprocurement.blogspot.com/2015/03/bridge‐
contracts‐vs‐planning‐principle.html
• The Bridge Contracts envisioned in Bill 246‐32 contain many condi6ons and restric6ons on usage, to minimize rewarding failure.
Requirements for Bridge Contract
• Par6cularized determina6on of need. • The contract is at least $250,000 over max original term of 4 months, renewable monthly to total 9 months.
• Cannot bridge from an emergency or other bridge contract.
• Governor must approve the bridge contract and each renewal.
Other Consequences of Bridge Contract
• Exis6ng contract can be extended for 30 days to put bridge contract in place.
• It can be protested, but no automa6c stay, so the 6me on the bridge con6nues to run.
• Expedited 6melines for resolving, deciding and administra6ve review of protest.
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