Is the issue responsiveness or responsibility? Are you sure?

Report
IS THE ISSUE
RESPONSIVENESS OR
RESPONSIBILITY?
ARE YOU SURE?
VAGP Spring Conference
March 19, 2014
Al Elias
AGENDA
INTRODUCTION
DEFINITIONS
INFORMALITY
RESPONSIBLE
RESPONSIVE
CASES
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
 § 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.
 § 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.
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
 “Responsible bidder” 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.
 “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)
 “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
 § 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.
 “Responsive bidder” means a person who has submitted
a bid that conforms in all material respects to the
Invitation to Bid.
 “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)
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.
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.
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.
Bean Dredging vs U.S
By failing to include the “Plant and Equipment Schedule”
with its bid was NATCO nonresponsive ?
Bean Dredging vs U.S
Court 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.”
Bean Dredging vs U.S
Court 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.”
Bean Dredging vs U.S
Court 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…”
Bean Dredging vs U.S
Court 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.”
Bean Dredging vs U.S
Court 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.”
Facilities Department vsCity 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)”
Facilities Department vsCity 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.
Facilities Department vsCity 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.
Facilities Department vsCity 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?
Facilities Department vsCity Attorney
Opinion
 The question was about qualifications which would
normally be
responsibility.
a
consideration
when
determining
 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.
Great West Contractors Inc. vsIrvine 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.
Great West Contractors Inc. vsIrvine 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.
Great West Contractors Inc. vsIrvine 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?
Great West Contractors Inc. vsIrvine School District
Trial 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.
Great West Contractors Inc. vs Irvine School District
Court 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.”
Great West Contractors Inc. vs Irvine School District
Court 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.
Great West Contractors Inc. vsIrvine School District
Court 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
Great West Contractors Inc. vsIrvine School District
Court 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.
Great West Contractors Inc. vsIrvine School District
Court 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.
Madsen-Johnson vsCity 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.
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.”
Madsen-Johnson vsCity 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.
Madsen-Johnson vsCity 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.
Madsen-Johnson vsCity 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.
Madsen-Johnson vsCity 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.
Madsen-Johnson vsCity 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?
Madsen-Johnson vsCity 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.”
Madsen-Johnson vsCity 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…”
Madsen-Johnson vsCity of Becker, MN
Court 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.”
Madsen-Johnson vsCity of Becker, MN
Court 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…”
PDI-SheetzConstruction -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.
PDI-SheetzConstruction -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.
PDI-SheetzConstruction -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.
PDI-SheetzConstruction -Maryland Board of Contract Appeals
 November 1
 SHA rejected both Allied’s and Mercier’s’ bids as non-responsive for
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
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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.
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?
PDI-SheetzConstruction - Maryland Board of Contract Appeals
Board Discussion
 The SHA IFB included the special instructions with all
of the words capitalized, unlike the words in the rest
of the IFB.
 SHA started using such Special Bidding Instructions
in IFBs in 1996 to protect against unbalanced bidding
 Testimony showed that it was understood in the
industry that these instructions were to be followed
absolutely.
 When asked, all witnesses said they had never seen
or heard of a bid being found responsive that had
failed to comply with a special bidding instruction
PDI-SheetzConstruction - Maryland Board of Contract Appeals
Decision
 The procurement officer changed his mind and decided to
deviate from the IFB Special Bidding Instructions by
determining the failure to comply to be a minor irregularity.
 SHA cannot just ignore the language of its own Special
Bidding Instructions.
 It is well settled, that responsiveness must be determined
from the face of the bidding documents.
 It is fundamental that an agency may not solicit quotations on
one basis and then make award on another. While a
procurement officer has wide discretion, a procurement
officer cannot waive a material requirement of the IFB.
PDI-SheetzConstruction - Maryland Board of Contract Appeals
Decision
 SHA can draft IFBs any way it wants.
 The language of the provisions, if used, must mean
something uniform for all bidders.
 SHA’s action to deem Allied’s non-conformance with the
Special Bidding Instructions by failing to meet minimum
unit prices as a minor irregularity is arbitrary, capricious
and unreasonable.
W.B. Construction and Sons vsDepartment of the Army
 The Department of the Army issued and IFB with the
intent to award as a fixed-price contract, for a base year
with four 1-year option periods.
 The IFB required bidders to submit pricing for all of the
378 line items with the award made based upon the total
of the extended prices of all of the line items for the base
period.
 Only two bids were received.
 W.B.
 Tanner
$8,984,611.70
$9,291,020.50.
W.B. Construction and Sons vsDepartment of the Army
 The agency rejected W.B.'s bid as nonresponsive and
made award to Tanner. W.B.'s bid was rejected as
nonresponsive for two reasons:
 (1) it failed to provide a price for line item 0036, and
thus, the bid did not obligate W.B. to provide this
item therefore this omission affected the price and
the bidder's overall obligations under the contract
and could not be waived as a minor informality
 (2) the bid contained unbalanced pricing in that a
number of W.B.'s line item prices were significantly
higher or lower than the prices contained in the
revised IGE (independent government estimate).
W.B. Construction and Sons vsDepartment of the Army
 W.B. filed a protest with the GAO the next day asserting
that the agency unreasonably rejected its bid. W.B.
claims that:
 the omission of the one line item price in its bid was a
waivable minor informality and did not render the
bid nonresponsive; and
 the agency failed to conduct the risk analysis
required by FAR § 15.404-1(g) before a bid can be
rejected as unbalanced.
W.B. Construction and Sons vsDepartment of the Army
While W.B.'s bid omitted the price for line item 0036, it provided
prices for all other of the tree removal line items (Example).

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For 11 to 20 trees
Line Item
Size of tree
0027
6 inches
0028
6 to <12
0029
12 to <24
0030
24 to <36
Est Qty
40
40
40
40
Unit Price
$165
$165
$198
$275
Ext Price
$4,400
$5,280
$6,600
$11,000
There is no dispute that W.B. failed to submit a price for line item
0036 of the IFB's bid schedule (Below)
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For 21 to 50 trees:
Line Item
Size of tree
0033
6 inches
0034
6 to <12
0035
12 to <24
0036
24 to <36
Est Qty Unit Price
Ext Price
40
$110
$4,400
40
$132
$5,280
40
$165
$6,600
40
_________________________
W.B. Construction and Sons vsDepartment of the Army
Was the Department correct in rejecting the bid because of
the failure to include a price on one line item?
W.B. Construction and Sons vsDepartment of the Army
Discussion
 To be responsive a bid must constitute an unequivocal
offer to perform the exact thing called for.
 Because the failure to include a price for an item
evidences a bidder's intent not to be bound to perform
the item, as a general rule, a bid must be rejected as nonresponsive if the bid, as submitted, does not include a
price for every item requested by the IFB.
W.B. Construction and Sons vsDepartment of the Army
Discussion
 However, where the omission pertains to some
immaterial defect in or variation of a bid from the
exact requirements of the IFB, it can be corrected or
waived where it is not prejudicial to other bidders.
 Thus, a contracting agency may waive the failure to
bid on an item as a minor informality if the item for
which the price is omitted is divisible from the
solicitation's overall requirements, de minimis as to
total cost, and would not affect the competitive
standing of the bidders
W.B. Construction and Sons vsDepartment of the Army
Decision
 Because the agency was not obligated to order any of
indefinite-quantity work, this line item cannot be
reasonably said to be an essential or integral part of the
overall contract.
 Moreover, the price for line item 0036 is de minimis as to
the total cost and would not affect the competitive
standing of the bidders
 W.B.’s ”unit prices per tree were lower as the total
quantities of trees became higher…. logical to
assume that W.B.'s bid for the removal of 21 to 50
trees would be lower than its bid for 11 to 20 trees.
…assuming that W.B. would have priced line item
0036 at the same price as for removal of 11 to 20 of
the same-sized trees (line item 0030), that is, $275,
the maximum total price for this line item would be
$11,000, which is .12 percent of W.B.'s overall bid
price.”
W.B. Construction and Sons vsDepartment of the Army
Decision
 Accordingly, the agency's rejection of W.B.'s bid as
nonresponsive... was improper. We also find that
W.B.'s omission of line item 0036 could properly be
waived as a minor informality.
 We recommend that the agency re-evaluate W.B.'s
bid to determine if the lack of balance in its bid
posed an unacceptable risk to the government. If the
agency determines that the lack of balance does not
pose an unacceptable risk, the agency should make
award to W.B. after waiving W.B.'s bid's omission of
the one line item price as a minor informality
Informality or not? Have any opinions changed?
 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
QUESTIONS

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