In a previous post we saw that an ambiguity can be used aggressively to throw out a bid even after contract award.  There is more to the story. When a bid specification is ambiguous, the burden is not entirely on the specification drafter.  If the protester had opportunities to seek clarification and failed to do so, then its interpretation will not be reasonable and the specification will not be ambiguous.  In re: Protest of Andersen Consulting, SC Procurement Review Panel 1993-18 (http://www.procurementlaw.sc.gov/MMO/legal/decisions/93-18.pdf ).  Andersen Consulting stated in their proposal that “several assumptions have been made.”  This statement was not well-received by the Panel.  The Panel repeatedly referred to the impropriety of making assumptions in light of the various steps available to get clarification.  The procedures provided for in the Request for Proposals (RFP) included a pre-proposal conference, question and answer time, and the ability to ask about answers to previous questions published in amendments to the RFP.  The Panel ruled that because Andersen “did not take the proper steps” to have its questions answered, it could not claim an ambiguity, and thus the requester’s determination that Andersen’s proposal was non-responsive was upheld.

When a solicitation of bids is drafted, it is important for the requestor to be familiar with the precise requirements that lead to the procurement.  This should enable the drafter to create bid documents that are clear and specific.  Otherwise, the bid process may have to be re-done, even after an award was made. 

A specification is ambiguous if it “is of uncertain meaning and can reasonably be interpreted in more than one way.”  In re: Protest of Warehouse Distributing Company, SC Procurement Review Panel 1988-2 (http://www.procurementlaw.sc.gov/MMO/legal/decisions/88-2i.pdf).  Where a protesting bidder interpreted the specification differently than the drafter intended, the bid protester need only show that its interpretation of the specification was “reasonable” in order to establish ambiguity.  In re: Protest of Pitney Bowes, Inc., SC Procurement Review Panel 1988-14(II)  (http://www.procurementlaw.sc.gov/MMO/legal/decisions/88-14ii.pdf).

In the Pitney Bowes case, the alleged ambiguities pertained to the use of the word “reservoir” in one part of the specification and the word “and” in another part.  The specification called for a mailing machine that used an “ink reservoir,” where the requestor intended the broader, dictionary definition of the term rather than the more technical, industry-specific meaning ascribed to it by Pitney Bowes.  Further, the specification required a system capable of producing “daily, weekly, monthly, and yearly transaction and summary reports.”  Pitney Bowes asserted that the winning bidder’s machine was non-responsive in that it could not produce reports for all four time periods.  Even though the Review Panel noted that there is no such thing as a daily summary report and a yearly transaction report would be prohibitively large, Pitney Bowes’ literal interpretation of this provision was considered reasonable.  The Panel relied on both of these ambiguities in ordering the specification re-written and the contract re-bid.

The requirement that specifications not be “unduly restrictive” is an important pro-competition provision of South Carolina’s procurement law.  SC Code Ann §11-35-2730 (1973) (http://www.scstatehouse.gov/code/t11c035.htm).  Unduly restrictive specifications have been held “inadequate” or “not independently arrived at in open competition” under SC Code of Laws Regulation 19-445.2085(C) (http://www.scstatehouse.gov/coderegs/c019.htm).  In re: Protest of B&D Marine and Industrial Boilers Inc, SC Procurement Review Panel 2000-12 (http://www.procurementlaw.sc.gov/MMO/legal/decisions/00-12.pdf).  This can lead to cancellation of an award or contract and the issuance of a new award or bid solicitation. 

A specification that calls for products from only one manufacturer isn’t automatically unduly restrictive.  In re: Protest of CambexCorp., SC Procurement Review Panel 1992-7 (http://www.procurementlaw.sc.gov/MMO/legal/decisions/92-7.pdf).  SC Code of Laws Regulation 19-445.2140 (http://www.scstatehouse.gov/coderegs/c019.htm) permits a bid specification to use a brand name, so long as it can serve as a basis for meeting the State’s need in a cost-effective, nonrestrictive manner.  Cambex, a computer memory manufacturer, protested an Invitation for Bids (IFB) for an upgrade from one IBM model to another IBM model.  The IFB specified that “no other make or model will be considered” and “all parts … must be manufactured by IBM.”  South Carolina’s Division of Information Resource Management (DIRM) declined to consider Cambex’s product an acceptable alternative, citing several concerns, including the complexity of maintenance and repair in a multi-vendor environment.  The Procurement Review Panel applied the familiar administrative law standard of review, deferring to the agency’s position unless the specification is “unreasonable, arbitrary, capricious, or contrary to the Procurement Code.”  The Panel upheld the DIRM’s decision to limit its IFB to a single manufacturer because Cambex failed to show that the concerns stated as a basis for doing so were “unrealistic or unreasonable.”  Additionally, the Panel noted that the use of a brand-name specification without providing for alternatives did not make the IFB a single-source procurement because the secondary used market for IBM products allowed several vendors to bid on the job. 

On the other hand, merely reciting the phrase “or approved equal” isn’t a magic bullet against undue restrictiveness.  In re: Protest of B&D Marine and Industrial Boilers Inc, SC Procurement Review Panel 2000-12 (http://www.procurementlaw.sc.gov/MMO/legal/decisions/00-12.pdf).  B&D protested an Invitation for Bids (IFB) from USC that called for a boiler to be “Cleaver-Brooks Model CBLE200-800-150ST or approved equal by Kewanee or Burnham.”  The specification drafter admitted that when he wrote the IFB, he did not know if there was an approved equal made by the named manufacturers.  It was later learned that the named manufacturers did not offer an approved equal.  Although USC allowed prospective bidders to submit technical data for approval of additional products, none of the alternates were approved.  Therefore, no approved equals were considered, and as a result, the Panel deemed the IFB an unduly restrictive single-source procurement.   The Panel then held that the finding of undue restrictiveness indicated that the IFB did not meet the State’s requirements for the goods because of the failure to assure competition under SC Code of Law Regulation 19-445.2085(C).  Thus, the Panel upheld the cancellation of the award and re-solicitation of bids.

             A frequent issue when protesting decisions by local government on bidding is whether the local codes meet the requirements of The South Carolina Consolidated Procurement Code (the State Code).  The State Code at § 11-35-50 requires all political subdivisions of the State to develop and adopt procurement laws.

            “All political subdivisions of the State shall adopt ordinances or procedures embodying sound principals of appropriately competitive procurement no later than July 1, 1983, S.C. Code Ann. § 11-35-50 (2007).”  The local codes must be “substantially similar” to the State Code.

            In a case decided October 23, 2008 entitled Edward D. Sloan v. Greenville County, et al., § 11-35-50 was construed.  The State Code contained a preference for competitive bids over competitive proposals and required a written reason if the State used competitive proposals rather than competitive bids.  The Greenville Code did not contain such a requirement.  Sloan challenged the Greenville Code.  The Court said the issues were moot because the contracts which were subject to the protest had been cancelled or fully performed by the time the Court considered the issue. 

The Court did, however, address the issue of whether the local code had to mirror the State Code in part by saying the State Code did not require local governments to adopt specific methods of procurement or the process by which to apply them, and that § 11-35-50 “clearly was intended to afford local governments flexibility to determine what is ‘appropriately competitive’ in light of the public business they must transact.”  However, this was not the holding of the case. 

            As noted above, the Court did not directly decide the issue but pointed out that the same issue was on its docket to be decided in Sloan v. Greenville Hospital System and in that case, the issue was more developed and ripe for decision.

Earlier this year, South Carolina’s Chief Procurement Officer for Construction (CPOC) determined that Instructions to Bidders for competitively bid projects are part of the contract documents and are therefore binding on both bidders and agencies. Tyler Construction Group, Inc. v. University of South Carolina, http://www.procurementlaw.sc.gov/webfiles/OSE_main/Protests/
Tyler_v_USC.pdf. This decision had the effect of requiring USC to award the contract to the higher bidder on the actual scope of work to be performed.

Bids were solicited for a renovation project, including a base bid and an alternative bid for additional work. The bid documents included Standard Supplemental Instructions to Bidders (Form 00201-OSE). Section 5.4.2 of the Instructions stated that the contract would be awarded to the “apparent low bidder,” the bidder with the lowest total base plus alternative bids.

After receiving the bids, USC determined that their budget would only allow for the work in the base bid, and awarded the contract to the bidder with the lowest base bid. However, another bidder had offered a lower combined bid and was therefore the apparent low bidder. When the apparent low bidder protested, the CPOC found that they should have been awarded the contract and directed USC to award the contract according to the terms of the Instructions.

Not surprisingly, the standard form has been modified since this determination was made. http://www.mmo.sc.gov/webfiles/OSE_manual/Appendices/
0201_OSE_Standard_Supplemental_Instructions_to_Bidders.pdf. The instructions now call for bids to be in the form of “Alternate Base Bids” rather than a base bid plus alternatives, such that contracts will be awarded on the basis of the lowest bid for the alternative that is actually to be used. The alternate base bids are treated as separate bids. This means that a low bidder on one alternative may be awarded a contract for that alternative, notwithstanding that their bid was not the lowest for, or even responsive to, other alternatives.