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.

A public entity issued an RFP for insurance. Two parties responded, “A” and “B”. The executive of the public entity favored “A” for personal reasons. The executive ordered an independent analysis of the proposals. The expert recommended “B.” The executive sought another opinion. The second opinion criticized both “A” and “B”. Immediately the entity issued a determination that the RFP had been inadequate and determined to use its emergency procurement powers to obtain its insurance. “B” protested.

“B” alleged that the entity acted arbitrarily in cancelling the RFP when its proposal had been found to be the best by one expert and had not been found to be inadequate by either expert although it was criticized by the second expert. “B” alleged that the “emergency” claimed by the entity was manufactured because the entity had known from the beginning about the pretextual reasons it used to say the RFP itself was inadequate.

“B” alleged the cancellation was demonstrably capricious since (1) each of the criticisms was either patently false or could be easily remedied and (2) one of the key distinctions between an RFP and a hard bid is that RFP responses are inherently negotiable. Where a bid states a certain result the entity wants, an RFP states a problem the entity has and seeks a proposal for responding to it.

“B” also alleged that the executive had a personal conflict of interest in that the executive’s brother stood to gain financially if “A” was selected.

The protest was to be decided under the entity’s procurement policy. The entity was not a state agency. Therefore the South Carolina Consolidated Procurement Code did not apply although a state statute required that the entity’s procurement policy be “substantially similar.” The entity first argued that cancellation of a solicitation is not protestable. The procurement policy, however, said “Any …offeror… who is aggrieved in connection with the solicitation of a contractor shall protest…with in fifteen days of the Request for proposal….”

After “B” ’s bid protest unequivocally demonstrated that “B” ‘s proposal (a) was better than “A” ’s (b) met the entity’s needs and (c) the executive was acting out of self interest, the matter was settled. The moral of the story is that public entities have an obligation to the public to avoid arbitrary and capricious behavior in public procurement.

A third consideration in determining bidder responsibility is the bidder’s experience. A poor performance history or lack of experience could cause the bidder to be non-responsible.

The SC Consolidated Procurement Code allows the procurement officer to issue a request for qualifications (RFQ) before issuing the bids. The RFQ “must require information concerning the prospective bidders’ product specifications, qualifications, experience, and ability to perform the requirements of the contract.”

In negotiated procurements, the use of past performance data plays a heightened role. Recent changes to FAR Part 15 require the evaluation of contractor past performance in most negotiated procurements. Interestingly, performance history is considered twice: first in determining whether the bidder is responsible and then in evaluating his proposal.

A Procurement officer’s determination concerning whether experience is adequate will be upheld if it is reasonable.

Past performance and experience are easily confused. Past performance focuses on the quality of the contractor’s work in prior jobs while experience focuses on the type of work the contractor has performed.

Finally, in order to avoid the conundrum set up by an inexperienced contractor being barred form contracting because of a lack of experience and never being able to gain experience because of his lack of experience, the FAR provides: “A prospective contractor shall not be determined responsible or non-responsible solely on the basis of a lack of relevant performance history, except as provided in FAR 9.104-2.
FAR 9-104-1(c)

Bidder Responsibility

In this article we will begin by looking at the definition of responsibility and the difference between responsibility and responsiveness. One of the primary purposes of public bidding is to allow the people to receive their money’s worth of whatever they are contracting for. Awarding bids only to responsible bidders is one way to guard against default. There are others such as performance bonds and excellent contract administration which are beyond the scope of today’s blog.

The South Carolina Consolidated Procurement Code (Procurement Code) at 11-35-1410 provides the following definition:

(6) “Responsible bidder or offeror” means a person who has the capability in all respects to perform fully the contract requirements and the integrity and reliability which will assure good faith performance which may be substantiated by past performance.

The federal statutes give a lengthier definition that expressly touches on adequate financial resources, ability to comply with the schedule, prior performance record, integrity, organizational controls, skills and experience, adequate facilities, etc. See 41 USC 403(7). The Federal Acquisition Regulation is essentially the same.

Bidder Responsiveness Distinguished

Bidder responsibility and responsiveness are not the same thing. Where bidder responsibility concerns whether the bidder is capable of performing the job, bidder responsiveness refers to the terms of the bid offering to provide exactly what the owner wants to have performed. Sometimes the two concepts can seemingly apply to the same set of facts. For example if the solicitation requires site management by a person with ten years experience and the bid offers a person with five years experience, then the bid could be seen as no-responsive because the bid did not provide what the offeror sought but it could also be viewed as not responsible because the minimum amount of experience was not offered.