Transcript Title Arial 40 pts - The NYS Forum, Inc

LEGAL AND ETHICAL CONSIDERATIONS IN
NYS PROCUREMENT
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
AGENDA
•
Procurement Lobbying Law
•
Debriefings
•
Protests
•
Q &A
2
Procurement Lobbying Law
Anne Phillips
Associate Counsel
NYS Office of General Services
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).
Hypothetical
•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
•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
•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
Questions:
•In what ways, if any, does this procurement violate the
Procurement Lobbying Law?
•What is the remedy for the violation(s)?
State Finance Law §§ 139-j and 139-k
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
• 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.
State Finance Law §§ 139-j and 139-k
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
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
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
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.
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.
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.
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.”
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.
Resources
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.ht
ml
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
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).
Hypothetical
•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
•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
•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
Questions
•In what ways, if any, does this procurement
violate the Procurement Lobbying Law?
•What is the remedy for the violation(s)?
Questions
25
Debriefings
State Finance Law Section 163 (9) (c)
Vanessa Saiid
Attorney Trainee
NYS Office of the State Comptroller
Good Debriefings
Transparency
More Viable Competition
Better New York State Contracts
Debriefings & American Idol
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.
SFL § 163 (9) (c) Requirements
1.
Notice of the opportunity for a debriefing must be
provided in the solicitation documents.
2.
Reasonable time to request a debriefing must be
given.
3.
Upon request by offeror, agencies must provide a
debriefing.
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?
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.
3 Different Agency Approaches to
Conducting Debriefings
1.
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.
2.
Minimum Disclosure: no disclosure of information on the
successful proposal, focusing rather on the strengths and
weaknesses of the debriefed parties proposal only.
3.
Middle Ground: provide scores and limited information
concerning the winning proposal.
Do’s in the Procurement Process
• DO
– Ask questions before submitting the proposal.
– Understand what is being asked for in the
solicitation and be responsive.
• DO
– Provide the agency with questions prior to the
debriefing.
• DO
• DO
– Come to the debriefing prepared.
• DO
– Take advantage of the debriefing.
Questions
35
PROTESTS
John Dalton
Associate Counsel
NYS Office of the State Comptroller
PROTESTS
AGENDA
•
OSC Bid Protest Procedures
•
Dos and Don’ts in the Protest Process
•
Frequent Issues Raised In Procurement Protests
•
Questions and Answers/Discussion
PROTESTS
OSC BID PROTEST
PROCEDURES
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.
How Protests Come to OSC
• Part
of Procurement Record
• Appeal of
Agency Determination Filed with
OSC
• Initial
Protest Filed with OSC
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)
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
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
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
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
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
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
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
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
General Information
• Link
to OSC G-Bulletin 232
“OSC Contract Award Protest Procedures”
http://www.osc.state.ny.us/agencies/gbull/g_232.htm
Do’s & Don’ts For Participating in Protests
•
Do’s For Protesters:
•
Be Specific
•
Fully and clearly state the legal and factual grounds for the
protest, the relief requested and include all relevant
documentation
Dos & Don’ts For Participating in Protests
•
Don’ts For Protesters
•
Be vague or conclusory - “My proposal was better and I should
have won.”
•
This rarely succeeds since OSC generally gives deference to
agency determinations regarding the merits of the proposals
submitted
Dos & Don’ts For Participating in Protests
•
Dos for Winning Bidders:
• Carefully respond to issues raised in protest, particularly where
assertions relate to winning bidder or its proposal
•
Don’ts for Winning Bidders:
• Assume there is no need to reply
• Assume OSC will deny the protest
• Assume the agency will provide a sufficient response
Legal Representation in Protests
•
Do I need to hire a lawyer to succeed on a bid protest?
•
No. Many protests filed with OSC are not filed by lawyers,
particularly where the issues raised are strictly technical or
business in nature
•
However, since the protest process is always adversarial, a lawyer
may prove helpful and is certainly advisable where legal issues
are involved
Frequent Issues Raised in Bid Protests
• Winning
bidder did not meet mandatory/minimum
specifications
• Must
be proven by protesting party with specific
documentation
• SFL
163(10) requires that contracts shall be awarded to
a responsive and responsible offerer
• “Responsive” means
a bidder meeting the minimum
specifications in the solicitation
Frequent Issues Raised in Bid Protests
Waiving Technicalities, Deviations or Omissions
•
A procuring agency:
i.
may decline bids that fail to comply with the literal
requirements of the specifications; or
ii. may
waive a technical noncompliance with the bid
specifications if the deviation is minor or not substantial; but
iii.must
reject a bid if the non-compliance is material or
substantial.
Frequent Issues Raised in Bid Protests
Waiving Technicalities, Deviations or Omissions
•
Agencies should always do a review of their RFP to identify every
“must” “shall” and “will” and then ask whether they really want to
make that specification mandatory and, therefore, non-waivable.
•
Entering into a contract that materially varies from the bid
specifications, in favor of the successful bidder, would have the
effect of altering the specifications after the bidding process and
would give the successful bidder an unfair advantage over other
bidders and those who chose not to bid.
Frequent Issues Raised in Bid Protests
Waiving Technicalities, Deviations or Omissions
A variance is material or substantial when it would:
i.
impair the interests of the procuring agency,
ii. place the successful bidder in a position of unfair economic
advantage, or
iii. place other bidders or potential bidders at a competitive
disadvantage.
Frequent Issues Raised in Bid Protests
The evaluation methodology was not established in advance of
the initial receipt of offers, or was not followed as described in
the procurement record
•
SFL 163(7) requires agencies to document, in the procurement
record and in advance of the initial receipt of offers, the
evaluation criteria and the process to be used in the
determination of best value
•
While not explicitly stated, OSC interprets this statute to
implicitly require agencies to also follow the previously
established evaluation methodology during its selection process
Frequent Issues Raised in Bid Protests
The Agency failed to establish within its evaluation
methodology relative weights for technical and cost
•
SFL 163(9)(b) requires agencies to describe in the solicitation
the general manner in which the evaluation and selection shall
be conducted and, where appropriate, the relative weight of cost
and technical criterion to be considered by a state agency in its
determination of best value
•
This must therefore also be done in advance of the agency’s
receipt of offers
Frequent Issues Raised in Bid Protests
The evaluation methodology itself was flawed
•
SFL 163(3) requires agencies to award contracts for commodities
on the basis of low cost
•
SFL 163(4) requires agencies to award contracts for services
(including technology) on the basis of best value
• Best Value = A Cost/Benefit Analysis
• Therefore, service and technology contracts generally require
an award that considers both cost and technical merit
• However, an agency may award solely on the basis of low cost
where, for practical purposes, low cost actually = Best Value
• For example, where 1) The service/technology is routine, or 2)
the technical specifications were narrowly prescribed
Frequent Issues Raised in Bid Protests
“My proposal was better and I should have won.”
•
As noted above, vague and conclusory assertions such as this rarely succeed
since OSC review generally focuses on whether methodology established by
the agency is reasonable, appropriate and in compliance with applicable legal
requirements
• Typically OSC does not overturn the actual scoring, particularly where it
is within the expertise of the procuring agency
• But there are exceptions:
• For example, where the argument can be verified with objective data
and the agency’s choice was egregiously incorrect or obviously wrong
•
Protests are more likely to be successful when based on a flaw in the
evaluation process itself or in the construction of the solicitation
Questions
63
For questions involving any of the presented topics, you
may contact us at:
OSC Legal Services
(518) 474-6011
Or email: [email protected]